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Hospitals from hell: Over budget, inefficient and staff can't take a holiday

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Staff unable to take days off and hospitals unable to make money from parking and private patients caused a $70 million shortfall last year.

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In a report tabled in parliament this week, Auditor-General Brendan Worrall highlighted the growing number of Hospital and Health Service districts with budgets in the red.

Worrall said that seven of the 16 HHSs had accumulated an overall loss since they were formed in 2012. That was three more than the previous tally, with 11 HHSs recording an operating loss in the 2019-20 year when combined losses were $82 million – up from $34 million the year before.

This morning, Treasurer Cameron Dick was adamant the HHSs would be kept to budget this year.

“We have to be prudent and very careful with public money now,” Dick said.

While the pandemic has caused widespread disruption, it largely exacerbated pre-existing conditions in hospital administration, particularly with fewer clinical staff able to take leave. Worrall warned that catching up on holidays might require hospitals to recruit temporary workers as cover, while meeting new labour targets could also impact on performance.

Queensland Health director-general John Wakefield said additional funding from the Commonwealth was specifically for the pandemic, and came as hospitals were unable to raise their own revenue or clear leave loadings from their books.

“Queensland Health has estimated the combined negative operating statement impact of these two items was approximately $70 million across the HHSs in 2019-20,” Wakefield told Worrall, in a letter tabled with the report.

Worrall noted that some HHSs had not acted on previous audit findings, and after eight years some still did not have approved service level agreements with the department for the purchasing and payroll services the department performs on their behalf.

The measure used to determine the efficiency of hospital services is also blowing out because of a widening gap between what they are paid, under complex funding arrangements and a measure known as the Queensland Weighted Activity Unit, and what it costs them to deliver.

“The cost to deliver QWAUs has increased in all regions over the last three years, except at North West HHS within the rural and remote region,” Worrall found.

Worrall also found five of the 16 HHSs failed to meet best practice financial benchmarks require to show their sustainability, with a “significant future challenge in funding the anticipated maintenance of their buildings”.

“These HHSs may not have enough cash to pay for significant expenditure items as they arise, for example, construction payments. This means they may choose to hand back the operational management of these projects to the department.”

Under Treasurer Rachel Hunter, in a letter to Worrall, noted “the ongoing challenge in relation to financial sustainability within the health sector and the significant impact of COVID-19”. She offered no further comment.

Worrall also briefly referred to other audits in the sector: the Townsville Hospital Foundation and Gold Coast Hospital Foundation were red-flagged over the lack of controls to ensure cash donations and sales revenue were recorded, while Bundaberg Hospital Foundation and Townsville Hospital Foundation did not finalise their financial reports within the legislative deadline.

“For the fourth time in five years, we issued a qualified audit opinion for the annual ‘prudential compliance statement’ for Queensland Health’s aged care facilities across four HHSs,” Worrall wrote.

“In this statement, Queensland Health is required to outline to the Australian Government how it has managed refundable accommodation deposits, accommodation bonds, and entry contributions from aged care residents. We qualified our audit opinion because of significant non-compliance with several financial regulations. For example, the aged care facilities did not provide evidence that they have completed accommodation agreements with residents within the legislative timeframe.”

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