Hiring freezes, staff cuts and service fears hit regional hospitals

Bendigo Health and Albury Wodonga Health have both warned staff of employment freezes and the potential for cuts to jobs and services, with budget negotiations likely to stretch well into July.

The pressure on the larger regional services follows ACM revealing "brutal" funding clawbacks of up to 40 per cent hitting dozens of small rural health services across the state.

Melbourne's major health services have been delivered similar austerity requirements.

Health Minister Mary-Anne Thomas and Premier Jacinta Allan said the budgets haven't been finalised and denied the sector was facing cuts.

"There's a lot of fearmongering and politicking going on," Ms Thomas said.

"Let me be clear: our government delivered an additional $8.8 billion into our hospitals at our most recent budget. This year alone, $20 billion is being invested into our hospitals."

But the Victorian Healthcare Association - which represents the state's public hospitals - condemned the cuts, with CEO Leigh Clarke saying services would be lost if the government insisted on the current budgets.

"If the Victorian government doesn't change course, we will inevitably see these cost-cutting measures ripple through the system with significant consequences for the delivery of care and services in the community," Ms Clarke said.

Bendigo Health CEO Eileen Hannagan wrote to staff on June 28 to foreshadow tough decisions because of the new budget.

"On 14 June we received a modelled budget from the Department of Health that is significantly different from this year's," Ms Hannagan said.

"Subsequently, we have been asked to develop a break even budget model for Bendigo Health."

She said the service had tried to create a budget "with as minimal risk to services and staffing as we can".

"The Department of Health and the Government will make the decisions on what is acceptable within that budget model," she said.

"As yet there is not a confirmed time frame for us to receive feedback on the budget model and the associated reductions of services."

But staff had already been told a hiring freeze would begin from June 30.

"Effectively business cases for more resources/positions which are not already processed or funded have been put on hold. And there will be a push to find savings throughout the organisation," a message to staff said.

Staff at Albury Wodonga Health (AWH) were sent a similar message on June 7.

"We are required to achieve a breakeven financial position for the fiscal year 2024-25," the message said.

"A savings target of $3 million has been identified as part of our Financial Management Improvement Plan, which will appear as a negative grant line."

The message noted any wage increases - such as the newly minted nursing pay rise - would have to be absorbed within the current budget.

It also revealed the hospital was running on a month-to-month expenses cap, a cap on external staff like agency nurses and locum doctors, and a hiring freeze except to replace departing staff on a "like for like" basis.

ACM asked AWH where the $3 million in savings would come from, what it would do if only a locum was available to perform a critical service, and how it would absorb wage increases without reducing staff numbers.

AWH referred the questions to the Department of Health, which did not provide any direct answers.

Neither Bendigo Health nor AWH detailed the effects of the budgets on elective surgery.

Health Minister Mary-Anne Thomas said the budgets were an exercise in "fiscal discipline" for the hospitals.

"We want to ensure that the money.. is being used to focus on the delivery of front line care," Ms Thomas said.

"It's time to get rid of waste and duplication.

"It's time to take a hard look at the number of executives, the number of communications and marketing people, at whether or not it's really necessary to travel overseas for professional development."

She couldn't guarantee hospitals wouldn't cut jobs and services, but said that wasn't what the government wanted.

"Our government has not asked any service to cut health services," Ms Thomas said.

"There should be no impact to patient care."

But Ms Clarke pushed back strongly at the government's claims.

"Any suggestion that these measures are only there to address wastage in the system is false," Ms Clarke said.

"These measures will go way beyond that - this is cuts to services."