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Budget 2016: Little to Celebrate in Health with not-for-profit Service Providers Feeling the Squeeze

May 2016

The federal budget has delivered little to celebrate in the health portfolio, with not-for-profit service providers collateral damage in the government’s efforts to obtain greater savings, according to hospital and aged care services group, St Vincent’s Health Australia (SVHA).

The not-for-profit organisation – Australia’s largest non-government provider of public hospitals – said it was concerning that the government had also expanded or remained wedded to unfair initiatives from previous years that will affect low income and sick Australians. 

“As far as health goes, there’s not much to celebrate in this year’s budget,” said Toby Hall, CEO of St Vincent’s Health Australia.

“There’s a theme developing in the government’s approach to health and aged care: it’s going after for-profit providers, using some very blunt policy instruments, in attempt to claw back savings.

“The problem is that not-for-profit service providers are being caught in the crossfire – we, and the vulnerable people we support – are at risk of becoming collateral damage.

Removal of bulk-billing incentives for pathology

“We’re disappointed to see the government dig in on removing, or winding back, bulk-billing incentives for pathology and diagnostic imaging services.

“We operate two in-house, not-for-profit pathology services and two diagnostic imaging services at our public hospitals in Sydney and Melbourne.

“The government’s view is that pathology providers will be able to absorb the lost revenue from their profits. For the large for-profit providers – which dominate 80% of the sector – that may be the case, but smaller, not-for-profit providers will either have to increase fees or become unviable.

“Fee increases will disproportionately impact on low income people – who have the least capacity to pay but carry the highest burden of chronic disease. These patients are also at highest risk of poor health outcomes if they delay or avoid necessary tests due to cost. The proposed pathology changes include no protections for concessional patients.

Aged care cuts

“We believe the government’s decision to seek $1.2bn in efficiencies from aged care over four years will have real impacts on not-for-profit service providers and the low income residents we care for.

“Not-for-profit providers have small margins. We – along with other not-for-profit providers – care for a significantly higher proportion of concessional residents than other aged care operators. These changes put services for this vulnerable group under threat as providers seek to stay sustainable.  

“People’s care needs are increasing. How are we expected to meet that demand with less funding?

“The aged care sector already has one of the lowest paid workforces in the country. We struggle to attract skilled staff into our industry. How will these cuts make that battle easier?

Extension of Medicare Rebate freeze

“We are concerned that the Government’s decision to extend the freeze on Medicare rebates to doctors and other health professionals for another two years will end up hitting patients in higher out-of-pocket costs.

“In the face of a two-year extension to the freeze, there’s also a risk that GPs and specialists who might previously have provided bulk-billing will now cease doing so. And who will be the hardest hit? The chronically ill and those least likely to be able to afford specialist care.

Aikenhead Centre for Medical Discovery

“Of course, as one of the lead organisations behind the proposed Aikenhead Centre for Medical Discovery (ACMD), we were disappointed by the Prime Minister’s budget-eve letter to the Victorian Premier that the federal government wouldn’t be supporting the project.

“The Victorian Government has made a solid commitment of $60m for the project. The other partners combined – including St Vincent’s Health Australia – have also put $60m on the table.

“We think the federal government’s lack of financial support is short-sighted.

Private health insurance

“We support the government’s direction in private health insurance reform.

“As an operator of eight private hospitals around Australia, anything that addresses that confusion and delivers greater transparency and better value to consumers is welcomed.

“This is especially important given the government has paused indexation on private health insurance thresholds for another two years – which will see more and more people lose their rebate over time as incomes rise.

New funding initiatives

“As an organisation that sees the extreme levels of damage that alcohol causes in our hospitals every day – not just in terms of accidents and injuries, but in terms of chronic disease and illness – we welcome the budget’s extra funding to combat Foetal Alcohol Spectrum Disorder (FASD), with a particular focus on rural and remote Aboriginal and Torres Strait Islander communities.

“We urge the Commonwealth to take a similar leadership role in other areas of responsibility around alcohol, including taxation and advertising and promotion.

“We also welcome the government developing a National Cancer Screening Register to replace current state and territory registers for the National Cervical Screening Program and the current register for the National Bowel Cancer Screening Program,” said Toby Hall.