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December 2002.
Full Title: An Independent Report on the Threat to the Survival of One of Australia's Most Important Regional Hospitals. Mt Gambier Hospital - South Australia
As at 13 December 2002
Prepared by
Stephen Milgate
Executive Director
Australian Doctors' Fund
NB: This report may be updated as new information comes to light.
"We need to preserve the critical mass of medical specialty in many parts of Australia, particularly in rural and regional areas."
The Honourable John Howard, Prime Minister of Australia
Wednesday, 23 October 2002. Hansard P. 8168.
"Labor will work with regional communities to attract and maintain the services and skills of needed health professionals."
The Honourable Mike Rann, Premier of South Australia
Labor SA 2002 Election Policy
"The Mt Gambier Hospital is there to deliver an adequate and proper service. That it has been forced to cut its surgery services in an outrage. The hospital should not have to carry over its near million-dollar debt into the financial year. That would mean more staff would have to be cut and serious health services would be so limited that they would be completely ineffective."
Ms Lea Stevens, Shadow Minister for Health SA
The Border Watch. 28 May 1998
(Lea Stevens is currently the SA Minister for Health)
Mt Gambier Hospital, a 78 bed publicly operated, privately owned hospital (incorporating a 20 private public bed collocated ward) situated on South Australia's coastline, mid way between Melbourne and Adelaide, has been the subject of ongoing disputation concerning funding almost since its inception in June 1997.
Uncertainty created by constant budgetary problems has seen a number of administrators come and go, the resignation of some important medical specialists (to date two obstetrician and gynaecologists and the town's only physician leaving the town without any future obstetrics and gynaecology), the removal of the town's general practitioners from participation in the hospital as the town's accident and emergency specialists, and an inability to find a satisfactory solution that meets the requirements of the specialist practitioners and the South Australian Government.
Matters came to a head in August 2002 when the hospital's 2002-03 budget was announced with a substantial reduction in the amount of money to be spent on surgical procedures.
The impact of the reduction has been debated ever since. Dr Henry Forbes, Chairman of the Medical Staff Association, states that the reduction is in the order of $450,000 pa in fee for service payments for procedures. This figure has not been disputed by the hospital or SA Department of Health administration.
The uncertainty over the future of Mt Gambier Hospital feeds into the anxiety of the Mt Gambier community. The travel time for the journey to other major hospitals in Melbourne or Adelaide, is approximately 5 hours by road.
This means Mt Gambier Hospital is of lifesaving importance for anyone unfortunate enough to need acute and urgent medical treatment. Its viability is of particular concern to residents who are ageing and/or chronically ill.
Residents from Mt Gambier and surrounding districts are faced with few options should they need emergency or critical medical care. They rely on the hospital to meet their urgent needs since the travel time to Adelaide or Melbourne is 5 hours each way.
Having access to a full range of services at Mt Gambier Hospital means a patient can be supported in the hospital by relatives and friends who would find the trip to Adelaide or Melbourne far more onerous.
For some illnesses, particularly strokes, cardiac failure and other chronic conditions, treatment within the first hour ("The Golden Hour") can be of life saving importance.
For these patients it is not just a matter of having access to an A&E unit or any doctor, it is a matter of having a doctor available who has treated you for some time, who knows your condition and who has already anticipated a response given a crisis situation.
A fully functioning general hospital at Mt Gambier is of vital importance to those who want to live and stay in the town.
Mt Gambier has experienced positive but modest growth in population in the last five years (2.4% pa).
For any regional town to attract investment it and ensure growth, it has to be in a position to offer two important services - good hospitals and good schools.
All businesses within the town and surrounding areas benefit from economic growth in the region. As business grows, jobs grow and people spend. Given that Mt Gambier is halfway between Melbourne and Adelaide, it has the opportunity to capture a greater proportion of disposable income than other country towns more closely situated to major metropolitan areas.
The bottom line for Mt Gambier is that without a fully functioning hospital the region will find it more difficult to attract businesses which rely on skilled labour and/or a mobile workforce.
From a positive point of view, if the town has a highly regarded and fully functioning hospital with a full complement of medical specialties, it has a major selling point in attracting population and investment. It also will find it easier to retain population.
Medical specialists need a critical mass of work and revenue to meet the costs of maintaining a viable medical practice.
Cost increases in medical practice across Australia are closely related to average weekly earnings. These cost increases average 4%-5% per annum, excluding one-off factors such as medical indemnity extra payments (Calls) and industrial award adjustments for employees.
In addition to the costs of staying in practice, a medical specialist, like any other investor, needs to see a 10-15 year period of certainty in revenue growth moving forward in order to invest in a particular specialty and practice location. Once established, the costs of moving a medical practice, both professionally and personally, can be substantial and are best avoided.
A medical specialist has approximately 15 years to maximise his or her income in order to obtain a return on the 22 years spent in training and education. They must also to provide for retirement since doctors in private practice must provide their own superannuation.
This means that the bulk of a doctor's income must be obtained between the ages of 40-55 yrs. A career period of 15 years.
Proceduralists are vulnerable to loss of their career if during their working life they develop problems with hand co-ordination and/or any aspect of psycho-motor functioning that would cause them to cease operating.
This possibility must be provided for by way of income support and disability insurance covering temporary or partial incapacity.
Any uncertainty regarding future income is detrimental to the recruitment and retention of medical practitioners.
This is particularly the case in rural and regional Australia where the entrenched stereotype of a rural medical practice is an isolated unsupported doctor, working exceptionally long hours, in an under funded regional facility, to the detriment of his or her own health and the growing unhappiness of his/her family.
South Australian public sector nurses have threatened industrial action against the South Australian Government to lower nurse-patient ratios. A mass meeting was held on 3 September 2002 to "put the Government on notice".
According to The Guardian:
"This stop work meeting endorsed the use of legal action against the Rann Labor Government in the Federal Court, over its failure to meet agreed nurse-patient ratios under the current Enterprise Bargaining Agreement.
As part of the campaign nurses will also adhere to minimum nursing levels in operating theatres and emergency and casualty wards.
Ms Thomas [Lea Thomas, Secretary of the SA Branch of the Australian Nursing Federation] stresses that the action by nurses is about securing a safe and professional working environment for nurses and patients. She said the situation in rural hospitals was even more drastic with staffing levels falling even lower than metropolitan hospitals.
"This situation is made even worse by country nurses being required to take on the roles of ward clerks and orderlies, as well as administrative duties."
"Nurses are angered and disappointed. We need long-term solutions to the nursing shortage but also short-term solutions to ensure patient safety.1"
To what extent these sentiments expressed by nursing union officials exists at Mt Gambier Hospital is unknown. But given the widespread resentment of the nursing profession to ongoing nursing shortages in public hospitals it is hard to see these views being totally out of place at a hospital the size of Mt Gambier.
Governments and health departments allocate finance by way of forward estimates and budgets. These budgets are not determined solely by clinical need since there is an infinite need (demand) for the provision of public health services. Budgets follow an historic trend providing incremental increases or decreases on previous years expenditure or proposed expenditure.
Funding is generally allocated on a hospital by hospital basis with hospital administrators making decisions as to how the budget is allocated within each hospital.
Administrators are generally asked to meet all the requirements of an area from a fixed sum of money. In some states, financial incentives are provided if executives "meet" or "go under" budget. Administrators are expected to "manage" any fall out that comes from an obvious shortfall in a particular area and to negotiate solutions with participants known as "stake holders".
The emphasis is on minimising adverse publicity (spin) in this politically sensitive area.
Costs in a hospital, as in any organisation or business, are divided into fixed and variable costs. The costs of administration and existing structure are treated as a fixed costs which must be covered regardless. The services provided by the hospital are treated as variable costs which can be reduced or increased (varied) according to the dictates of the budget.
Surgical Services are considered a major variable cost of the hospital. They are the first to be cut in any downward revision since the cost of the reduction is transferred to patients in the form of longer and longer waiting lists (rationing), or longer waiting time for operating theatres and beds (bed access block). Particularly vulnerable are elective surgical procedures, including orthopaedic, some general and ophthalmic surgery.
Elderly patients needing cataracts and hip replacements are considered less likely to generate adverse publicity or complain publicly if their "non-life threatening" procedures are delayed by virtue of being placed on a waiting list.
The Government has determined that Mt Gambier Hospital exceeded its budget provision for a number of years. The extent of this overrun is said to be in excess of $4 million (debt) as at 20022. It is now claimed by Mr Tom Neilson, Chief of South East Area Health Services, that this debt has been reduced to $2 million in August 20023.
Just what led to the totality of this blow out is unknown. The Mt Gambier Hospital 2001 Annual Report shows a 91% increase in the category entitled "Other Expenses". This category is significant at $2.52 million ($1.32 million).
On page 33 of the Mt Gambier Hospital Annual Report 2001, the explanatory notes under 3(e) Other Expenses, are Other Expenses recorded within the Statement of Financial Performance comprised:…… Other Expenses!
Hence, no specific information is available as to what constituted this category and why there was a 91% increase.
The hospital's budget also indicates the cost borrowing at 30 June 2001 was $1.72 million per annum ($1.64 million), presumably this is related to the finance lease liability of $21.797 million as detailed in 22(c) of the explanatory notes on page 44 of the annual report. The Gross liability commitments however, are said to be $55,754 million with executory costs of $15,183 million (refer page 13 and 14 of this report).
Hence, the hospital's budget has to meet the costs of borrowings (its initial building cost was $25 million), as it is not owned by the state government. This cost is obviously not born by other public hospitals who have been totally financed from taxpayers funds.
This is a significant issue. It means, in effect, that the residents of Mt Gambier, unlike the residents elsewhere in South Australia, suffer the after affects of a $1.72 million charge on their public hospital. And, to meet these costs their medical services are being cut.
Given that the hospital is essentially a public hospital, albeit, creatively financed, it would seem equitable that its borrowing costs be entirely met from the capital works budget of South Australia and that the hospital be allowed to use the $1.72 million in annual repayments for borrowings to provide for medial services for the hospital.
The SA Health Department strategy for reducing this debt is to cut variable costs essentially surgical services in order to reduce the current level of expenditure to a lower level consistent with historic budget allocations (get back on budget).
Administrative costs rarely, if ever, come into consideration when budgets have to be reduced. No CEO or area health manager has ever been known to offer to reduce their own salary as part of a budget cut back. Administrative costs are seen in the same light as other fixed costs ie untouchable.
Hence, the SA Health Department argues that by incrementally increasing the historic budget (as opposed to the real expenditure level) it is in fact increasing the budget and exercising fiscal responsibility.
The reality is that it is attempting to enforce a level of expenditure which has historically proven unrealistic and grossly inadequate.
Those doctors who rely on current levels of expenditure to meet patient demand argue that cuts to this expenditure will hurt patients and make them (the doctors) sufficiently non-viable as to cause them to seek alternative posts outside Mt Gambier.
Should this occur we will see the demise of one of Australia's most important regional hospitals at a time when every government in Australia, of every political persuasion, is forthrightly proclaiming that it is committed to maintaining and obtaining quality medical services for the population of Australia's regional and remote areas.
"We need to preserve the critical mass of medical specialty in many parts of Australia, particularly in rural and regional areas."
The Honourable John Howard, Prime Minister of Australia
Wednesday, 23 October 2002. Hansard P. 8168.
"Labor will work with regional communities to attract and maintain the services and skills of needed health professionals."
The Honourable Mike Rann, Premier of South Australia
Labor SA 2002 Election Policy
"The Mt Gambier Hospital is there to deliver an adequate and proper service. That it has been forced to cut its surgery services in an outrage. The hospital should not have to carry over its near million-dollar debt into the financial year. That would mean more staff would have to be cut and serious health services would be so limited that they would be completely ineffective."
Ms Lea Stevens, Shadow Minister for Health SA
The Border Watch. 28 May 1998
(Lea Stevens is currently the SA Minister for Health)
The solution to the funding problems of Mt Gambier Hospital as advocated by the SA Health Department was articulated by the Department's South East Regional Health Board Chairman, Mr Bill DeGaris:
"There is no reason for the surgeons to lose income as claimed by some of the surgeons. They can keep to the same activity that they are doing now, providing they are prepared to support the private hospital in Mound Gambier. And to that end the region has instituted a reform process with Mount Gambier Private Hospital in an effort to make sure the hospital is supported, that surgical activity is increased in the private hospital, and that the private hospital contributes to the of the public hospital."4
[NB: The "reform process" that Mr DeGaris has referred to is unknown to the medical practitioners at the hospital.]
What Mr DeGaris is proposing is that the doctors ration public operating theatre time to predetermine "budget" levels, and offer "quick" access to those patients who are prepared to use their private health insurance, particularly for elective surgery such as orthopaedic and some general and eye surgery ie that the doctors grown their private practice by "stealth" to supplement their public practice income.
This strategy cannot work.
What Mr DeGaris and the SA Health Department has failed to realise is that the strategy of collocated hospitals is flawed.
As Associate Professor Dr Don Sheldon explained in 1998;
"The community is best served by independent, competing public and private institutions. Short term advantages of collocation are short sighted and will end in chaos. The profession should selectively patronise those institutions which demonstrate commitment to excellence and compassion. We should also ensure that public facilities are maintained at the highest level to attend to those members of their society unable to fund their own health care. Private institutions should maintain maximum independence from Governments and the manipulation of politicians. On campus private hospitals will always be in jeopardy."5
Evidence of this failure is that there are several collocated private hospitals on the market across Australia, including Flinders Private in Adelaide.
Mt Gambier Hospital however, is in an even worse situation than a freestanding collocated hospital. It can only offer a collocated ward (20 private beds were established within the facility in January 1998).
What this means in practice is that patients residing in Mt Gambier understand that as public patients they will get the same doctor as they would if they were private. They are fully aware that they will receive the same standard of accommodation and nursing care as they would if they were public patients.
Mt Gambier Hospital does not and cannot offer an effective private patient service because there is in reality no private product to be offered. What is offered is a public ward with a sign on it stating "Private Wing".
In Mt Gambier it is rational for potential patients not to have or not to use private health insurance, and cost conscious patients are very rational.
In Mt Gambier there is no effective alternative to being a public patient in a public hospital.
Nor will the establishment of greater public hospital waiting lists for elective surgery make the strategy work. The facts are that Mt Gambier already has considerable waiting lists for public patients as well as waiting lists of appointment times to see medical specialists, particularly in orthopaedics.
Given that the solution of growth through private practice is at best severely limited in a hospital such as Mt Gambier, the viability of specialist practice will continue to rely on the pubic allocation of funds for surgical specialties. This will continue until such time as a freestanding private hospital is established offering a noticeably different product than can be provided by the public hospital.
Unless there is evidence6 of future financial growth, optimism and a likely return on investment, medical practitioners facing the proposition of working long hours, struggling to meet practice costs and seeing no prospect of attracting other colleagues, will look for other alternatives. Doctors too, are rational human beings.
News of uncertainty spreads like wildfire across the medical profession and adds to the difficulty in attracting alternate and additional specialists to a town.
This in turn leads to overseas recruitment strategies which try to entice overseas doctors who may or may not fit into the particular role after significant recruitment costs have been committed.
There is evidence6 that Mt Gambier is committing a considerable sum of money to recruitment agents to replace existing staff. The American Management Association estimates that the costs per employee of filling a vacancy ranges from 25% to 200% of annual salary when all costs are considered7. The total cost of replacing experienced medical specialists may be even greater.
Overseas doctors are often seen as a solution. However, it is seldom realised that overseas trained doctors harbour significant ambition to improve the situation for themselves and their families.
Having been prepared to move countries they have little difficulty in moving on to major metropolitan areas chasing opportunities to advance their careers.
Like locally trained doctors they will also act rationally and seek to avoid uncertainty. Hence, ongoing budget problems are likely to result in overseas trained doctors moving on at the first available opportunity.
The central issue at Mt Gambier Hospital is that the hospital does not and cannot offer in the future an opportunity for the existing medical specialists to grow their private practice, hence making them reliant on public work for the majority of their revenue. Cuts to surgical revenues have significant and dramatic impact on the viability of medical specialists practice.
"The commercial centre of the South East of South Australia is a thriving city of over 23,000 residents and is set in a unique and ancient landscape of volcanic craters, lakes, caves and mysterious underground waterways."
"The message started coming through in the 1997 state election that country South Australia was moving politically. There were massive swings against the Liberals in rural seats - with the Liberals losing two key seats to independents and a third to the National Party."12
"The lease of the Health Facility to Mount Gambier Districts Health Service Inc. is for 25 years with an option for a 10 year renewal. After 35 years the land and buildings revert to the Department of Human Services. The lease commenced on 30 June 1997. The base rental for the 25 year term increases according to CPI each quarter. For the 10 year renewal the rental is determined according to a different method related to a valuation of the property and its replacement costs."
The annual report also states that the gross lease commitments were $55,754 million, including an item which is described as executory costs of $15,183 million. Nobody has been able to explain what these executory costs consist of. It would be extraordinary if they related to legal fees but are more likely to be related to the maintenance agreement, which was drawn up at the time of the finance lease, however confirmation is required.
In any event, the finance lease commitments of the hospital have put a substantial burden on its budget in a way that no other public hospital has had to cope with.
"The estimates do not include private sector provision of infrastructure. The amount estimated for 1997-98 is $150 million. This mechanism has been utilised by the Government to provide increased capacity to pursuer infrastructure development projects beyond capital funding included in the budget.
It is important to note that certain of these transactions will be subject to Audit assessment as to whether they are finance leases as was determined in respect to the Mount Gambier Hospital. Transactions so classified are to be included in capital outlays. Where transactions are not finance leases, they are not included in capital outlays. These transactions, however, generally carry with them ongoing obligations of one kind or another."16
Given that the finance lease was included in the capital outlays it is difficult to see why the hospital is still incurring borrowing costs of $1.728 million and showing a lease liability of $21,797 million in its annual accounts.
This discrepancy needs to be further investigated. Whatever the arrangement it would appear that Mt Gambier Hospital, unlike many other hospitals, is burdened with a substantial cost, merely for the provision of a public hospital.
Responding to budget cuts in May 1998 the then Shadow Health Spokesman, now Health Minister, Lea Stevens, told a meeting at Mt Gambier:
"The Mt Gambier Hospital is there to deliver an adequate and proper service. That it has been forced to cut its surgery services in an outrage. The hospital should not have to carry over its near million-dollar debt into the financial year. That would mean more staff would have to be cut and serious health services would be so limited that they would be completely ineffective."
On Friday 8 September 2000 the South Australian Minister for Human Services, Mr Dean Brown, commented specifically on Mt Gambier Hospital in a media release announcing a 5.8% ($2.13 million boost) for hospital funding in the south east of South Australia. According to Minister Brown:
"While funding for individual hospitals in the South-East is yet to be finalised by South East Regional Health Service, the allocation represents a funding increase for the region," says Mr Brown.
"The additional funding will give local services the opportunity to better cope with increased demand and costs to deliver services in the South-East."
Mr Brown says unfortunately, the Mount Gambier Hospital budget situation continues to be of concern.
"The newly appointed Chief Executive Officer, Ken Barnett, with the Hospital Board, is currently considering strategies which will allow the Hospital to move towards an improved budget situation," he says.
Mr Brown stressed that services must not be reduced at the Mt Gambier Hospital.
"Strategies to reduce the Hospital's debt must not impinge on the current level of health services provided at the Hospital," says Mr Brown.
"Savings must be made through efficiencies and better procurement procedures." [underline added]
The Minister says overall, State health funding in the South-East will ensure hospitals will be able to meet growing demand.
Mr Brown says he will continue to pressure the Federal Government to ensure health funding to the States matches inflation and the increase in demand on the health system17.
However, four months later in December 2000 the ABC reported that the hospital was still looking for funding:
"The Mt Gambier hospital is hoping to secure extra funding to cover serve budget blow outs and is currently negotiating with the Department of Human Services for extra funding, as well as looking at ways to cut costs in their budget. The hospital hopes to know early in the new year if it will receive extra funding."18
It appears the budget problems did not go away. On 21 November 2001, the ABC South East morning programme reported:
"It's been a big year for Mt Gambier Hospital. Troubled by financial problems, controversy over the appointment of SMOs, a select committee [of] inquiry and unhappy relations with local GPS. Anne [Mrs Anne Mulcahy, Chairman, Mt Gambier District Hospital] was surprised by the resignation of CEO, Ken Barnett [appointed July 2000]. Ken has stated the he has resigned for personal reasons, wanting to pursue further education in Canberra. Ken has been working towards developing a strategy to keep the budget back on track, which will continue with the new CEO. Anne says demand for emergency services have increased greatly, showing that the public has confidence in the hospital. Tom Neilson, Mid North [will act as a], facilitator to develop a budget strategy with Mt Gambier District Hospital."19
What the ABC did not mention is that in 2001 the Medical Staff Association at Mt Gambier Hospital passed a motion of no confidence in the Board. By October 2002 the medical staff had withdrawn its representative from the hospital Board and called for the Chairman of the Board to resign.
By November 2002 the problem of the funding issue had again raised its ugly head. The SA Department of Health expressed its determination to ensure that Mt Gambier Hospital get back on its historic budget (which it has said to have developed over previous years to an amount in excess of $4 million)20.
On 29 August 2002 Dr Henry Forbes was reported in The Border Watch as warning of a looming crisis to surgical services because of cuts to surgical budgets.
"Surgeons are furious that the hospital plans to trim $450,000 in fee for service payments for procedures and operations at the public health facility and have warned this could force specialists to leave Mount Gambier."
"As part of the campaign nurses will also adhere to minimum nursing levels in operating theatres and emergency and casualty wards."21
"He claimed the community could see changes to the service profile and access to theatre, but these would not be "dramatic". But Mr Neilson conceded the community could see waiting lists for theatre increase, designed to cut theatre overtime payments to staff."22
Mr Neilson repeated his intention to cut operating time by announcing on 29 August 2002 the introduction of new operating theatre management protocols.
"By doing that, then one would be confident that there is no unnecessary expenditure such as nurses' overtime occurring which would assist the hospital to operate within budget, " he said.
But Mr Neilson conceded these protocols could change hospital access and could see an increase in waiting lists23.
Local GPs replaced with paid SMOs
The Accident and Emergency Service at Mt Gambier Hospital was at one time manned on a voluntary basis by local general practitioners. These GPs were replaced in 2001 by salaried medical officers recruited through the South Australian Centre for Rural and Remote Health (SACRRH).
The SACRRH is said to be a joint venture of the university of South Australia and Adelaide university funded by the Department of Health and Aged Care, which commenced trading in 1997 and is said to have earned more than $3 million above its base line Commonwealth grant as at the end of 2000.
The SACRRH also manages students in rural placements utilising the facilities of rural hospitals.
The decision to remove the General Practitioners and replace them with salaried SMOs has added considerably to the annual operating costs of the hospital.
This matter was highlighted in August when Mr Tom Neilson, Chief of South East Area Health Services, announced that an additional $850,000 had to be injected into what he described as "…not sufficiently funded" accident and emergency unit24.
It is believed that there was a need expressed by the town's GPs for extra help with A&E matters, however the resulting decisions saw the GPs being totally left out of the new hospital arrangements.
The decision to remove the town's general practitioners is one of the most extraordinary decisions ever made by health bureaucracy. It is contrary to every known dictate about the need to involve experienced general practitioners in rural and regional hospitals as part of the continuum of care and extra provision for patient safety. Rural GPs are a unique group of the Australian medical profession. They are specialist generalists. The value of their participation has been highlighted in the current Victorian election campaign where Premier Bracks has pledged to:
"Encourage partnerships between hospitals and general practitioners to promote the provision of after-hours GP care and relieve pressure on hospital emergency departments."25
Mt Gambier hospital outpatients are seen in medical specialist rooms, not the hospital
The overwhelming number of hospital outpatients are directed to the rooms of the treating surgeon and hence do not place any burden on the salary hospital staff. This arrangement would not be tolerated in most parts of Australia where rooms are for initial consultation of public and private patients and where outpatients are seen at the hospital by junior doctors as part of their training. This particular concession by the contracted surgeons at Mt Gambier Hospital is a substantial saving to the hospital in staff time and use of premises. It represents a cost shift to the contracted surgeons and their practices.
There are no junior surgical staff supporting contracting surgeons In any public hospital it is customary for surgeons to have registrars and junior staff who "work up" the patients and support treatment as part of their training. Many of the senior registrars would perform surgery under the supervision of their senior consultants on public patients.
Registrars are an important resource since they are able to cover for after hours work of a minor nature and give the senior consultants some roster relief.
Without this resource the senior surgeons bear the brunt of the entire workload, particularly the demanding after hours rosters.
Medical specialists at Mt Gambier Hospital do not receive any compensation for covering their public patients. This is contrary to the practice in other states where state governments cover doctors who treat public patients for their medical indemnity costs.
Cost of providing medical services means senior medical staff learn less than Salaried Medical Officers (SMOs) on an hourly basis.
Private medical specialist costs include the provision of rooms for public out patients and covering medical services normally done by junior hospital staff at other public hospitals. These costs are as follows.
| Item | Cost |
|---|---|
| Running costs of private rooms used for public outpatient service, including staff costs, leases, insurances etc. | $140,000 |
| Medical Indemnity (not including O&G) | $50,000 per annum |
| College and AMA subscriptions | $5,000 |
| Motor vehicle running expenses | $10,000 |
| Total | $205,000 per annum |
Once these costs are taken into account, the hourly rate of a visiting medical officer is less than that received by the junior salaried medical officers in the emergency department of the hospital.
Currently provided by three general surgeons. Two general surgeons prior to February 2001 have been working for 20 and 25 years respectively on a one in two roster. A young general surgeon, with an interest in vascular surgery was attracted to the hospital by the existing general surgeons without the assistance of the local or regional Board. He is highly regarded but is finding difficulty seeing a future in light of the management issues and lack of budgetary support for his specialty. Should this younger general surgeon leave, the burnout factor on the two existing general surgeons must place a question mark over their willingness to continue for any significant time.
Currently provided by two orthopaedic surgeons who work a one in two roster on weekdays and weekend as well as provide cover for holidays and sickness up to two to three weeks at a time. These doctors have been known to be on call for up to 500 hours at a time. With this rate of work the orthopaedic surgeons are approaching burnout and an alternative position would undoubtedly be attractive to them.
Currently provided by two resident O&G specialists, one of whom has resigned. In November 2002 an advertisement an advertising campaign commenced to find a replacement. If a replacement cannot be found soon the position will probably be covered by a locum if possible at a much higher rate of cost, hence eroding the surgical budget at a much faster rate and placing more pressure on the remaining resident obstetrician and gynaecologist.
This service is provided by a sole ophthalmologist looking after some 60,000 potential patients. The opportunity to attract an additional ophthalmologist was recently lost due to lack of budget. The loss was a double blow since the interested applicant's wife was an anaesthetist who could have added to the team.
Four local anaesthetists provide an excellent service, however with the decline in surgery their ability to sustain their practice is now questionable.
The region is currently serviced by a part time locum practitioner spending a few days to two weeks. When not available, all other medical care for conditions such as heart attack, asthma, pneumonia, and other medical emergencies become the responsibility of the salaried medical officer with the support of the director of medical services, this lack of service stands in contrast to nearby towns of Hamilton (half the population of Mt Gambier with 3 physicians) and Warnambool (slightly larger than Mt Gambier with 5 physicians). Patients in Mt Gambier must travel to these centres.
The Royal Australian College of Physicians has advised that a minimum of three physicians, and ideally five physicians, is required to service Mt Gambier properly. Attracting a single physician to Mt Gambier will prove extremely difficult given that the person would be working virtually constantly on call as there is no budget for any additional physician.
This service is provided by four full time salaried medical officers and some locums. There is no A&E consultant. The salaried medial officers are a varying experience and hence a defensive medical culture has seen the result in growing costs of radiology and pathology and hospital admissions. By the end of the year there will be only two salaried medical officers and hence the requirement to pay locums for night shift will place a considerable drain on the budget. These locums are flown in from all parts of Australia, provided with a car and motel accommodation. Hence, the overhead costs are considerable and drain the central hospital budget.
Cuts to Surgical Services at Mt Gambier Hospital
In the second half of 2002 the Government announced its determination to bring Mt Gambier Hospital back on budget. According to the South Australian Government, the overspending on Mt Gambier Hospital had to stop and the hospital had to work within its existing and pre-programmed centrally devised budgets.
According to the Minister's spokesperson:
"If you are looking at having the South East Regional Health Service in a sustainable, sound budgetary footing in the future, this is something that needs to be addressed. It's a significant issue and all we're saying is that doctors need to stick to their budget."26
An officer of the South Australian Government, with the unusual title of, Social Justice and Country Executive Director, Ms Roxanne Ramsey, expressed great confidence that the hospital could meet its budget. Ms Ramsey is located in Adelaide. She believes that the central problem was nighttime operating and overtime payments to theatre staff.
She said overtime payments to theatre staff were a major cause of the budget overruns.
"That's where doctors are expressing concerns, that there are practices that they have previously run, like elective surgery past what is a reasonable time of the day, into the night."27
As to the repercussions of longer public waiting lists because of cuts to elective surgery operating time;
"She [Ms Ramsey] said the department would monitor patient waiting lists to ensure they don't increase any more than what we think is a reasonable level".
Ongoing dialogue is also seen as a solution to the hospital's financial crisis.
Mr Bill DeGaris, Chairman of the South East Regional Health Board, has gone public assuring residents of the Mount Gambier community that there will be no reduction in hospital services at the Mount Gambier Hospital. He believes that ongoing dialogue and negotiation are the answer.
"There must be dialogue and the regional board has for 18 months stated publicly that it wants the dialogue to continue that it wants all the parties to come to the negotiating table and reach outcomes which are best in relation to Mount Gambier and the region."28
From the doctors' perspective it is an issue of cuts to expenditure that will render their medical practices non viable.
Medical Staff Association chairman and Mount Gambier orthopaedic surgeon Henry Forbes yesterday warned of a looming crisis at the Mount Gambier Hospital.
"We are in serious trouble and quite obviously no-one can support it. It is ridiculous and it is untenable and the whole thing is ongoing to collapse like a house of cards."29
Despite ongoing problems since 1997 there is no evidence that any meaningful progress has been made in fixing the systemic problems that are driving the Mt Gambier funding crisis. Rather than solving the problem, maximum attention has been given to managing and massaging the problem.
Defining the problem at Mt Gambier as being one of simple medical workforce industrial disputation capable of being resolved by manufacturing agreement to some less severe budget cuts would be very misguided.
An unhappy and resentful medical workforce serving out its time until greener pastures can be obtained coupled with an agenda driven health bureaucracy determined to "keep the lid on the doctors" is not a recipe for ongoing excellence in public health care at Mt Gambier or any public hospital.
The solution to Mt Gambier is to put the hospital for once and for all on a sound financial footing with ongoing certainty of realistic surgical budgets that provide a 10-15 year optimistic outlook for anyone working or wanting to work at the hospital.
"Ever since the new regional management structure was announced in September 1994, country hospitals have complained about the costs of rationalisation being met by funding intended for patient services.
Country hospitals say they are being forced to cut services to pay for expensive regional management costs.
Labor will consult regional health services and review existing funding models to ensure they are sensitive to the demands placed on country hospitals."30
This independent review should be conducted external to the South Australian Public Service, conducted by a person with no political affiliations or agendas and who has high standing in the community and strong credentials in judicial and financial administration. All public servants involved in the region's health care financing decision making should be invited to contribute to the inquiry.
The inquiry should also examine and consider that decision to remove general practitioners from Mt Gambier Hospital at a time when all parties are committed to strong cooperation with local general practitioners and local hospitals. The financial impact of this decision on tax payers and the health budget should be made public.
Footnotes:
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Australian Doctors Fund |