States demand federal health funding boost ahead of ‘most critical’ stage of Covid pandemic

Australia’s states and territories are demanding the Morrison government provide an immediate funding boost to help them manage the “unrelenting strain” on health and hospital systems because of the Covid-19 pandemic.

Guardian Australia has obtained a copy of a letter of demand that state and territory health ministers sent to the federal health minister, Greg Hunt, on Thursday. Premiers and chief ministers backed in the new funding demand during Friday’s national cabinet discussion.

The letter warns Australia’s hospital systems are “entering the most critical phase of the Covid-19 pandemic response for our hospital systems”.

“All states and territories require immediate additional commonwealth funding to support pressures currently on our health systems,” the letter says. “States and territories are under unrelenting strain due to the current Covid-19 demands and the pre-existing trend of increased hospital activity.

“The increase in activity is compounded by the rapid increase in service delivery costs due to additional infection control procedures, PCR testing, maintenance of bed capacity during fluctuating demand, and capacity to respond to surges in Covid-19 cases.”

The letter notes that it will take “several years” for the additional service delivery costs to be reflected in the efficient price for activity contained in the national funding model for hospitals. That time lag, the state and territory ministers say, will create “risks around sustaining services until then”.

“This effective underpayment for activity occurs at the same time that the Australian government has stopped its Covid-19 funding guarantee to health services,” the letter says. “We need an urgent, practical, collaborative funding solution until we get to a living with Covid point, and the national funding model has time to reflect these higher costs.”

This week, one of Victoria’s largest public hospitals was forced to close its Covid screening clinic and divert resources to emergency and intensive care patients, as the state’s health system strains under pressure from a surge in cases.

NSW hospitals are trying to recruit nurses from interstate and overseas to help cope with the predicted peak in Covid cases later this month.

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The states and territories have also told Hunt they need “innovative funding solutions to manage the high number of Covid-19 cases that will be managed in the community”.

“As cases have increased, most people with Covid-19 have been safely cared for in the community using models such as hospital in the home and Covid positive pathways, which are funded by the states and territories.

“Commonwealth support is now urgently required for funding of community Covid care, including hospital in the home and increased support for GP care of community Covid patients.”

The jurisdictions have asked Hunt to retain the commonwealth’s funding guarantee for a further three years, until June 2023 – and for 50-50 cost sharing between the commonwealth and the states and territories to continue “until at least the end of 30 June 2023”.

They have also asked for additional support to provide mental health services, and for full cost recovery for the care of all NDIS and aged care patients who are in the hospital system.

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“The admission of NDIS participants and older patients into our hospitals has continued unabated, and there has been no improvement in the discharge rates once these individuals are clinically ready for discharge,” the letter to Hunt says.

During Friday’s national cabinet meeting, the federal health secretary, Brendan Murphy, provided an update on the work he has been leading examining whether or not the health system can cope with the number of cases that are likely to occur once the lockdowns end.

A further submission to that work, which has not yet been released publicly, was added on Friday. National cabinet is not expected to meet again until 5 November.

Friday’s national cabinet statement says premiers and chief ministers received advice about surge planning, and “all states and territories confirmed that effective systems were in place at a state and territory level”.

Further analysis was sought about local health area networks, primary care networks, and “collaborative care pathways”.