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Thursday, 23 June 1994
Page: 1958

Senator COOK —On 21 June I was asked a question by Senator Lees in my capacity as the minister representing the minister who represents the Minister for Human Services and Health. She asked a four-part question concerning the current and proposed closures and sales of public hospitals in a number of states. I now have an answer which runs to four pages. I am quite happy to read it into Hansard, but I seek leave to incorporate it.

  Leave granted.

  The document read as follows


Senator Lees asked:

I refer the Minister to the current and proposed closures and sales of public hospitals in a number of States and I ask:

  (1) Is the Commonwealth Government monitoring the sale and closure of public hospitals in the various States? If so can the Minister give an indication of how many hospitals have—or will be—closed or sold off in the next two years?

  (2) Is the Government concerned about these moves? If so what action is it taking to prevent States from selling off public hospitals?

  (3) What action is the Government taking to ensure the closure and sale of these hospitals does not result in inequities in access to hospital services especially for people in rural communities?

  (4) Will the Commonwealth Government now be contributing less money to those States which are closing down or selling off their public assets?


I am advised:

  (1) The Commonwealth Government is monitoring the sale of public hospitals. Furthermore, States have an obligation to advise the Commonwealth if a hospital ceases to be a recognised (public) hospital for the purposes of the Medicare Hospital Funding Agreements.

  NSW has decided to build a private hospital at Port Maquarie. This will involve the closure of the Hastings District Hospital. Following the integration of RGH Concord, NSW proposes to close Canterbury Hospital, and amalgamate the Bankstown and Lidcombe Hospitals into a new hospital (the Inner West Hospital). A small number of public hospitals in metropolitan and country regions have been closed and/or downgraded in recent years. NSW has also indicated that it intends to privatise a few more hospitals, including Hawkesbury.

  NSW is moving to allocate most of its health and hospitals resources to Areas and Districts on a population basis. This involves a consolidation of service, in some areas, with changes in functions and some closures, and expansion of services in other areas.

  WA had intended to build a private hospital at Bunbury instead of replacing the public hospital. However after consultation with the former Federal Health Minister, Graham Richardson, that proposal was withdrawn.

  In Victoria the Royal Melbourne Hospital has announced plans to build a "private hospital" on the grounds of the RMH using hospital funds. The intention is to lease this to a private operator.

  The Preston and Northcote Community Hospital (PANCH) will be downgraded as a result of the recent transfer of the nearby RGH Heidelberg.

  Victoria is also privatising power facilities in public hospitaLs, utilising the favourable tax treatment of infrastructure bonds to attract private capital.

  There has been extensive debate in Victoria about the future of some rural hospitals under the new casemix funding arrangements. A task force has reported to the Victorian Minister on this issue recently. While it appears that a number of hospitals may amalgamate or change their roles, none have been closed or are planned to close.

  In South Australia, the Onkaparinga Hospital has been closed as a public hospital but has been taken over by the local community and run as a private hospital.

  It is not known if there are other plans to sell hospitals.

  The Commonwealth has sold the Repatriation hospital in Perth as the State advised it was not prepared to take it. In Queensland, RGH Greenslopes is to be sold for the same reason.

  Various States have plans to rationalise the number of hospital beds and this may include some closures or changes in function eg the transfer of Repatriation hospitals can lead to rationalisation.

  (2) The Government is concerned about privatisation of public hospitals, especially given the segmented nature of the hospital market, with its public and private hospital components.

  Major concerns are:

  privatisation of public hospitals, or parts of hospitals, leads to higher costs for the privately insured and to subsequent pressure to increase insurance premiums;

  continuing access for public patients may be compromised, especially in rural areas, if there is only a private provider. In the case of Port Macquarie, NSW will be contracting with the private hospital to provide agreed levels of public services:

contracting with the private sector has always been allowed under the Medicare Agreements, but it is generally done on a much smaller scale than envisaged for Port Macquarie.

  the Commonwealth is concerned with public access rather than with public ownership per se. However, given the poor response to the recent approach to the private sector to treat patients on public hospital waiting lists, it is obvious that public access is reliant on the existence of a strong public sector.

  (3) The Commonwealth has been consulting with the States on this issue and advising them of the above concerns.

  We are also examining the use of the Commonwealth power to approve hospitals for private insurance purposes.

  The discussion paper issued by Senator Richardson, "Reform of Private Health Insurance", canvassed a move to equivalence (i.e. permitting public hospitals to recover the full cost of non-medical services for private patients). Inter alia, this would reduce the incentive to privatise.

  Through the Medicare Agreements which came into operation on 1 July 1993, the Commonwealth has secured the commitment of the States to the fundamental principle that:

  to the maximum practicable extent, a State will ensure the provision of public hospital services equitably to all eligible persons regardless of their geographical location.

Explanatory notes for this principle set out that:

  This principle does not require a local hospital to be equipped to provide eligible persons with every hospital service they may need.

  In rural and remote areas, a State should ensure provision of reasonable public access to a basic range of hospital services which are in accord with clinical practices.

  To the extent practicable, hospital services should be available at all recognised hospitals, however, where this is not possible, the State accepts responsibility for referring or transferring the eligible person to where the necessary hospital services are available.

  The Medicare Principles, together with the explanatory notes, either have been or will be incorporated in complementary State legislation.

  (4) As noted above, the Commonwealth's interest is in public access rather than in public ownership per se. To enhance the levels of public access, the Medicare Agreements include bonus and penalty mechanisms to increase or decrease funding to States according to the share of total occupied bed days used by public patients. This mechanism is providing an effective incentive for States to increase the public share. It is not in their own best interests to reduce public access, but if this does happen, they will suffer financial penalties.