I rise this evening to make a statement on the Auditor-General’s report on the results of the 2013–14 audits of public hospitals. I begin by saying that this report outlines severe concerns regarding the financial sustainability of many public hospitals in this state. It covers the previous financial year and the effect this has had on delivering health services in this state.
The report states that public hospitals have continued to face challenges in delivering quality health services. It also shows that, despite prior reports, nothing was done by the previous government to address the financial sustainability risks faced by public hospitals.
Taking up the interjection by the former Minister for Health, he clearly has not read the Auditor-General’s report. Consistent with the previous report, the overall financial sustainability risk for the public hospital sector was assessed as ‘medium’, indicating that sufficient action was not taken following the previous report. There remains a concern regarding financial sustainability in public hospitals. The report states that, under the previous government, funding arrangements directly impacted on the financial sustainability risks of public hospitals, and this impact is heavily reflected.
If you look at page 18, you see that 69 public hospitals, or 79 per cent of public hospitals, had a high self-financing risk. Sixteen public hospitals, or 18 per cent of public hospitals, had a high liquidity risk. Twelve public hospitals, or 14 per cent of public hospitals, held cash that could only fund seven or fewer days of operating activity. The financial risk faced by our public hospitals is a real concern, with 32 public hospitals showing financial stress in the previous financial year.
This clearly shows that the former government neglected the public health system, and its inaction was mind blowing when it came to meeting the financial requirements of that system.
When it comes to capital replacement the report shows that rural public hospitals are not spending as much on renewing assets or building new assets as they are on their consumption of current assets. This puts public hospitals at great risk of not being able to continue providing services due to poor or obsolete assets. It is cited in the report that the former Department for Health was favouring grants to metropolitan over rural public hospitals, creating a concerning trend of ageing assets not being renewed as they should.
In chapter 5, which deals with asset maintenance, the report states that public hospitals can make improvements to their asset maintenance strategies and that 48 public hospitals did not have a policy or a strategy in place that addressed asset maintenance. It demonstrated a clear problem surrounding asset maintenance, particularly in rural Victoria, where a trend of lower maintenance spending was consistent over the period of the previous government.
The percentage of net asset base expenditure spent on asset maintenance also fell in regional and metropolitan Victoria, and it is very concerning that asset maintenance spending dropped across the board in the last financial year. The report directly states that the previous government’s cuts to health in the last state budget was among the reasons for reduced spending on asset maintenance across the sector.
Public hospitals have been left with concerning low levels of cash on hand, with 12 hospitals having enough funds to operate for seven days or less. Public hospitals were put at significant risk of not being able to fund operating activities, and rural public hospitals are not renewing fixed assets as they use them. Spending on asset maintenance continued to fall under the previous government. The previous government’s complete and utter mismanagement of Victoria’s health system has put many lives at risk and is just one part of why the people of Victoria voted it out after just one term.