The Commonwealth Budget was expected to be a difficult one for the NSW Health System but it turned out to be much worse than expected. Even before the 2014/15 Budget was brought down by the current Commonwealth Government, NSW Health knew that it would be losing $320 million due to the ceasing of two Commonwealth/NSW Partnership Agreements by the former Commonwealth Government.
The current Commonwealth Government has reduced the anticipated levels of Health Funding for NSW Health. It has ended the “guaranteed” growth that NSW Health would have received in 2014/15. The bonus funding that NSW Health had being relying on to assist it to undertake more Surgical procedures and to provide more timely Emergency Department treatment has also been cut from 2014/15 onwards. As well, other Partnership Agreements have also been ceased or unilaterally amended, which means that some anticipated funding for services like Health Promotion will not be received.
Each year the situation gets worse. From 1 July 2015, the Commonwealth Government will introduce co-payments for General Practitioner (GP), Pathology and Medical Imaging Services. This change will be a particular problem for NSW Hospitals. Their Medical Imaging Services and the Statewide Pathology Services rely on bulk billing of their services to raise revenue. As they will not charge the co-payment, they will lose revenue, which supports Hospital expenditure. Without this revenue, Hospitals will have to reduce their expenditure. Another difficulty for Hospitals will be Patients presenting sicker and requiring more complex and expensive treatment, because they put off going to the GP, because they could not afford the cost. This is likely to add significantly to pressures on Public Hospitals.
The changes to Medicare Locals to rename them as Primary Health Care Organizations and to make them much bigger will not cost the Hospital System more but will be a missed opportunity. They will no longer be local and so it will be more difficult for them to engage with LHDs in particular parts of the State. Instead they will concentrate on the biggest population centres within their boundaries. This will make it much more difficult for the Primary Health Organizations to assist LHDs to change the way care is provided, through initiatives such as improving the Integration of Care between different providers, especially between Primary and Secondary Health Care Providers.
But the news gets still worse! In the “out years” of the Commonwealth Budget Forward Estimates and Projections, the current Commonwealth Government has cut $50 billion from the amount that the former Commonwealth Government intended to invest into the Australian Health System. This change is brought about by indexing the Health Budget to Consumer Price Index movements and population growth and not taking account of population ageing and technological advances, which are the other major drivers of increasing health costs.