Warley Hospital reflects private health issues

During the 2003-04 year Warley Hospital discharged 602 medical patients and treated a further 2200 in A & E. Assumably those numbers have increased over the past three years, yet the hospital Board reports that Warley is no longer financially viable.

This situation has not occured overnight. Records from the Victorian Department of Human Services show consistent financial assistance to Warley Hospital over the past 5-7 years. In 2001 the Bracks Government provided additional funding of $22,000 to help maintain emergency services, $68,000 towards capital improvements and almost $200,000 towards the cost of developing an improved primary care facility. Again in 2005 the Bracks Government provided Warley with a one-off funding grant of $300,000 to enable the hospital to provide emergency services through to the end of 2006. A condition of the funding was that
Warley Hospital undertake business planning. In addition there has been significant private fundraising over the same period. This would suggest the issue is not necessarily one of poor management; rather an issue of ongoing cost escalation against declining revenues. That is assuming the Board and management have taken all the strategic cost cutting measures available to them!

Being a private hospital there are no publicly available records such as annual reports. This means we have to assume appropriate management of the hospital. If a private hospital is continuing to seek financial support from public funds then it needs to make its accounts and reports available for examination. Transparency is critical to ensure effective decision making.

Warley Hospital is a small, private, not-for-profit, hospital on Phillip Island in Victoria, Australia. According to the hospital profile, containing information that is three years old, the hospital has 13 acute beds, some of which are 'temporarily' closed and 30 residential aged care beds. The fact that Warley Hospital has been providing services to residents on Phillip Island for the past 80 years is off little consequence; the reality is that a combination of low levels of acute beds plus a low number of residential beds equates a low revenue base with few opportunities to increase revenues; at the same time costs continue to increase. Unlike public hospitals, private hospitals do not receive operational funding from the Federal Government. Private hospitals are funded from a mixture of benefits paid by health insurance providers and charges levied on services provided. Clearly a hospital that is not fully utilising an already low number of acute beds is limited in its ability to impose service charges, similarly its ability to attract benefit payments from health insurers is also restricted.

Should either the Federal Government or the State Government step into rescue Warley Hospital? Both the new incoming Rudd Government, through Health Minister, Nicola Roxon and the Victorian State Premier John Brumby appear to be distancing themselves from Warley Hospital. Perhaps they are viewing the long history of additional support funding and saying its time to draw a line in the sand!

Obviously the Phillip Island community would like to see all possible support for their hospital continued. Yet is a 45 minute drive on a good road, albeit the only road, to the next hospital that big an obstacle? Is it even necessary to have a full acute hospital service within the Port Phillip community? Could a smaller, satellite campus, serve the basic emergency needs of the community, before transfer to a regional hospital by ambulance? These are the sort of question that will be asked and need to be answered before the ongoing future of the facility can be assured. If it has a future.

A total of 80 people are employed by Warley Hospital, representing about four million dollars of salaries and wages being injected into the Port Phillip community. The hospital serves a permanent population of 8000. This swells to around 50,000 during the holiday periods and at the time of the Grand Prix. The reality is that a small acute hospital with restricted bed use is only going to be able to cope with minor emergencies; in the event of a major accident at the Grand Prix for example, emergency helicopter services would deliver patients to other larger providers.

It would be fair to suggest that in there rests the problem. Warley is private hospital based amongst a permanent population of only 8000, not all of whom have private health insurance. Despite the best intentions of the community and their desires for their own hospital, it is possible the community simply does not have the population base to sustain Warley. Furthermore the patient output figures would suggest, that within the current health environment, Warley Hospital is operating close to its capacity. If there is to be a future for Warley Hospital it would appear to be a future that requires increasing, ongoing, financial support. Should that be the case then the question becomes one of where will the money come from? Or maybe more importantly what value is Warley Hospital to either the Victorian State Government or the Australian Commonwealth?