Victorian Budget 2024-25: what’s in it for health?

By Alison Choy Flannigan, Karl Rozenbergs, Natalie Bannister and James Morvell

The Victorian Government’s State Budget published on 7 May revealed a budget deficit. However, it outlined a goal to achieve a budget surplus by June 2026.

The 2024/25 budget includes an investment of more than $11 billion in its health system.

This will ensure hospitals can keep caring for patients as they continue to recover from the impacts and increased costs of the pandemic.

An additional $1.7 billion will continue to improve hospitals and health infrastructure, including upgrades at the Monash Medical Centre and the Northern and Austin Hospitals.

They are building new hospitals and better health facilities right across the state, with 62 projects underway. This budget delivers $1.7 billion to continue the Victorian Government’s work.

While the two planned medical towers at the Arden development precinct in North Melbourne won’t go ahead due to electromagnetic interference from the new Metro Tunnel station, the existing facilities at Parkville will be expanded instead.

The funding provisions encompass investments in frontline health and hospital upgrades, which we detail below.

  • $8.8 billion to fund hospitals over the long term, giving them certainty in planning their future budgets. This multi-year investment addresses structural changes to care because of the ongoing impact of the pandemic and associated staffing disruptions.
  • $1.2 billion to address the reduction in Commonwealth funding for Victoria’s hospitals under the current National Health Reform Agreement.
  • $755 million to open and operationalise new hospital facilities, including the Latrobe Regional Hospital’s expansion, and to continue to support additional beds and services established during the pandemic.
  • $146 million to ensure Ambulance Victoria continues to meet the needs of our growing state. This will support secondary triage services, including our Priority Primary Care Centres and Medium Acuity Transport Service, which will free up ambulances to respond to the most time-critical patients.
  • $126 million to continue to supply blood and blood products and blood services for Victorians who need it.
  • $35 million to protect health services from cyber-attacks.
  • $28 million to support our healthcare workforce through programs including Registered Undergraduate Student of Nursing and Midwifery positions and other training and development initiatives.
  • $18 million to support 12 women’s health organisations to provide preventative health services and community outreach.
  • $813 million to start construction at the Northern Hospital, including a new emergency department with a dedicated paediatrics zone, a mental health, alcohol and other drugs hub, as well as additional inpatient beds.
  • $535 million to expand the Monash Medical Centre, including expanded maternity care facilities, new operating suites and a new intensive care unit.
  • $275 million to build a new emergency department for the Austin Hospital, expanding capacity and including a dedicated paediatrics zone.
  • $118 million to upgrade infrastructure at The Alfred, ensuring it can continue to deliver the very best care to patients.
  • $40 million to continue upgrading and replacing essential engineering infrastructure at hospitals across Victoria to improve safety and reliability.
  • $36 million to establish a Community Health Hub in the City of Melbourne to address alcohol and drug-related harm.
  • $35 million for new and upgraded medical equipment, supporting operating suites, emergency departments, surgical wards, intensive care units and neonatal and maternity services in hospitals across the state.
  • $24 million to purchase and fit-out a quadra scanner in the Paula Fox Melanoma Cancer Centre, helping Victorians get a diagnosis sooner.

Our expert insight into latest health trends

Given the overall budget deficit and lessons learnt from COVID-19 on improving service coordination, we anticipate two trends in the public hospital system:

  • possible amalgamation; and
  • cost savings for efficiencies, especially in back-office services such as IT.

Through our involvement in advising hospitals across corporate (including mergers), commercial, regulatory and infrastructure areas, we’ve gleaned several key lessons:

  • the importance of engaging with stakeholders, including government, boards, management, medical practitioners, employees, patients, unions and advocacy groups;
  • ensuring thorough due diligence to identify and plan for issues and risks;
  • properly planning hospital infrastructure projects from the outset to minimise the need for variations, and when variations are required, incorporating them without penalty;
  • building essential principles aligned with government policy into contracts and incorporating a flexible integration process to accommodate changes, including evolving government requirements; and
  • recognising the importance of a robust communication strategy.

These lessons underscore the critical elements for successful projects.

Contact

Alison Choy Flannigan

Partner & Co-Lead, Health & Community

Karl Rozenbergs

Partner & Co-Lead, Health & Community

Natalie Bannister

Partner & Commercial National Practice Leader

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