Hospital developments are being announced across NSW, but the government has refused requests from its own department to adequately fund new medical staffing. By Rick Morton.

Exclusive: Cabinet documents show funding for new hospital staff refused

NSW Premier Dominic Perrottet during a visit to the Liverpool Hospital construction site earlier this year.
NSW Premier Dominic Perrottet during a visit to the Liverpool Hospital construction site earlier this year.
Credit: AAP Image / Gaye Gerard

Dozens of new and redeveloped hospitals across New South Wales have been left without adequate funding after the state government rejected a $3.1 billion proposal from its own health department to cover increased demand and operating expenses.

Leaked documents marked “cabinet in confidence” reveal the NSW Ministry of Health made two separate funding requests for “ongoing operating costs … of major hospital builds” for both 2020-21 and 2021-22, valued at $510 million and $2.6 billion over a 10-year period. 

These proposals were over and above any other budget concerns Health may have had and were designed specifically to address the recurrent budget pressures of expanded or new health facilities.

The Saturday Paper can reveal both these requests were rejected by cabinet, which, at the time, was led by Gladys Berejiklian as premier and Dominic Perrottet as treasurer. 

NSW Health was clear in its submissions that, although the election commitments from 2015 and 2019 had resulted in a $10 billion capital program creating “modern facilities to provide additional capacity to respond to growing demand for health services”, this was only one half of the equation.

“It is critical that the annualisation impact of these new facilities are recognised to meet the ongoing service delivery and operational demands from the community,” says the 2020-21 submission, requesting a net cost of service increase of $510 million.

“The additional operating costs cannot be accommodated through increased activity nor accelerated reform options in the first few years of opening.”

The following year, in 2021-22, Health noted that nine capital projects were due for “commission” in the state, which would deliver “nearly 630 overnight and ambulatory beds, over 35 chairs for services such as chemotherapy, over 90 treatment spaces in emergency departments and over 20 operating theatres”.

“This increase in activity cannot be accommodated within the existing funding envelope,” it said in a submission, requesting $2.6 billion over 10 years to meet the costs of these projects. “This proposal will allow NSW Health to meet increasing operational demands which cannot be absorbed within the existing growth envelope for the new facilities opening in 2021-22.” 

One such hospital project was the $200 million centrepiece of the Hornsby Ku-ring-gai redevelopment, which includes a seven-storey clinical services building with a new 12-bed intensive care unit, four new 28-bed inpatient units, an expanded emergency department, two 28-bed rehabilitation wards and a litany of other enhancements. 

Hornsby sits within the Northern Sydney Local Health District alongside other flagship hospitals such as the Royal North Shore and Northern Beaches hospitals and facilities at Ryde, Macquarie and Mona Vale. 

Despite all of this, the total budget for hospitals in this district increased by less than $30 million in the year from 2020-21 to 2021-22. 

Under “outcome” budget arrangements set by the NSW government, funding is allocated to different outcomes in each portfolio. In Health these include “keeping people healthy through prevention and health promotion” and that “people can access care in and out of hospital settings”. There is also an outcome allocation for people receiving care in hospitals, to which the below figures refer.

In the wake of the Covid-19 pandemic, where some $9 billion was invested elsewhere in Health, the recurrent budget for people receiving care in hospitals across the entire state fell by $200 million to $14 billion in the same year. That figure increased to $16 billion in this year’s budget. NSW Health declined to answer questions about whether the rejection of its proposals created underfunding in the system, even against the backdrop of rising funding elsewhere. It declined to list new capital works projects and any increase in operational budgets funded for these.

“The NSW government has committed a record $11.3 billion in health infrastructure over the next four years to 2025-26,” a NSW Health spokesperson said.

“Since 2011, more than 170 health capital works projects have been completed in NSW, with more than 110 projects currently under way. Of these, almost two-thirds are in rural and regional NSW.

“When the impact of one-off factors is excluded, the 2022-23 NSW Health recurrent budget has increased by 10 per cent over the previous year. NSW Health continues to work with NSW Treasury throughout the budget cycle to ensure we continue to deliver world-class health services.”

A large chunk of this increase, as in every budget, is growth in salary and wages. This is a separate consideration to the additional funding sought by Health.

In fact, in its annual report for the past financial year, Health notes that the department has put a lot of work into precisely detailing the operational costs of new hospital builds and redevelopments. “The NSW Ministry of Health and Health Infrastructure have developed a framework to capture the recurrent impacts of capital investment, with the resulting data used for budget negotiations with NSW Treasury,” it said.

“This has increased understanding of the impacts of these investments across the health system to address associated costs.”

All the new hospital and Health capital works projects are election commitments – some of them dating back to 2015, with most from 2019 – and there will likely be many more in the forthcoming election. Political parties favour announcing new infrastructure because often it is sorely needed and, crucially, doesn’t get baked into budget spending every year. 

However, as one source in the Northern NSW Local Health District told The Saturday Paper on condition of anonymity, if operational budgets are not expanded to match increased services, then the government will “just be opening a shell of a facility” in the region.

Northern NSW, which has been devastated by record flooding this year, has been the site of a population boom over the past two decades. Outside of the major cities, the Tweed–Byron–Ballina–Lismore region is still one of the fastest-growing. 

In less than a year, the $725 million Tweed Valley Hospital redevelopment will officially open and “reduce the need for 5000 patients to travel outside the region each year to receive treatment”.

According to the Northern NSW Local Health District source, there has been no workforce planning for the new build, which will dramatically increase demand for local services. 

“We don’t even have a single cardiologist at this hospital,” the employee said. “You need to be doing that [workforce planning] years in advance for a hospital that’s such a larger size, and all those services are so complex and need specialised teams of at least 15 staff.

“To do that, you need to work out what is your clinical strategy now so that you can work out how many staff you need in order to budget for it so that you can ask Treasury for the funding. And it’s just, I mean, there are so many problems at the local level.”

For context, the budget allocation to run Tweed Valley Hospital in its current form is $223 million this year. In the year before, it was $206 million. Meanwhile, the budget for the entire health district, with its 12 hospitals, grew by $40 million. The workplace planning strategy for the region makes no mention of new hospital improvements or expansions.

The Saturday Paper has obtained vacancy reports for the Northern NSW Local Health District, which stretches from Grafton Base Hospital on the state’s Mid North Coast to Tweed at the border. On Monday, 17 per cent of the whole organisation’s full-time-equivalent staff was listed as permanently vacant. Almost two-thirds of these 837 permanently vacant positions are nurses. While a source says many of these gaps would be filled day to day with agency staff, locums and other temporary staff, some are filled with overtime, overwork or not at all.

“This is dangerous for the patients,” the source says. 

Earlier this month, the Bureau of Health Information released its most recent quarterly report on health system performance in the state. Almost every metric in emergency department monitoring was the worst it had been in any quarter since the record-keeping began in 2010.

Emergency department presentations were up 5 per cent in the April-June quarter this year compared with the same period in 2019 – Covid-19 being the driver in this instance – and treatment times were the longest on record. More than 76,000 people left an emergency department at which they had presented because waiting times were so long. Of these, nearly one-fifth were back at the same or another emergency department within three days.

Hospitals are still battling to get back on top of elective surgery queues since pauses throughout the pandemic.

“Waiting times for non-urgent surgery were the longest on record. Half of these patients waited longer than 339 days,” the bureau report says. “For semi-urgent surgery, one in 10 patients waited longer than 161 days – longer than any quarter since 2010.”

Things are as bad in the ambulance service. “The percentage of P1 [lights and sirens emergency] cases with a call to ambulance arrival time within 15 and 30 minutes was 35.0 per cent and 77.3 per cent, respectively – the lowest results since 2010.” 

Similarly, after an 85 per cent spike in the most urgent, life-threatening priority P1A calls, response times to these fell to the lowest on record. Just 57.6 per cent of patients at the centre of these calls saw a paramedic crew within 10 minutes.

“I know that there’s been senior staff in that current [Tweed Valley] hospital who’ve tried to notify their local members and say, you know, these things that you’re talking about every time you do a press conference, they’re not going to be delivered when you cut that ribbon,” the Northern NSW Local Health District source says. “And, you know, they said that, the local members, they don’t want to know that.”

It is not beyond the ken of government to see the need for service funding attached to the promise of increased services, either. In the 2019-20 financial year, NSW Health drafted a proposal requesting additional funding to meet the “operating costs associated with major hospital builds or redevelopments”. 

That request was approved. Then, as the Covid-19 pandemic hit and tested Health resources like never before, the funding dried up. For some staff, like the person in Northern NSW who has been left exasperated by the lack of planning for the new Tweed Valley Hospital, much of the blame should rest with middle managers.

“You know, they say, ‘Oh, they won’t give us the money.’ But your job is to advocate,” the source says.

“That hospital is already getting built. If you don’t ask and don’t pull that information together to justify why and how you came to, you know, determine that it costs $14 million to operate a cardiac catheter laboratory and cardiology service, then you’re the one that’s accountable, not them.”

This article was first published in the print edition of The Saturday Paper on September 24, 2022 as "Exclusive: Cabinet documents show funding for new hospital staff refused".

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