June 30, 2017

No evidence for savings from McGowan’s medihotels

· Government’s medihotel cost savings not possible without hospital bed closures

· Six out of nine Victorian medihotels closed

· Medihotel beds within private hospitals cost more than acute care hospital beds

Shadow Health Minister Bill Marmion has called on the State Government to urgently reconsider its medihotel policy, saying the Victorian model, which Labor hailed a success, has failed with six of the nine facilities opened in that State now closed.

The three remaining medihotels offer only 41 beds in total, with two services operating in wards within the hospitals they serve and the third providing beds in repurposed student accommodation.

Mr Marmion said the State Government had not provided a business case or any justification around its claims that building multi-storey medihotels, which would commit the State Government to hundreds of millions of expenditure for decades to come, would result in any savings.

“Mr Cook has made some ludicrous claims about the savings that these facilities could achieve, based on what he says is the success of the Victorian model, however a report obtained by the Opposition found that in one example a medihotel increased costs,” Mr Marmion said.

“The State Government needs to come clean on how many acute care beds it intends to close to achieve the magnitude of savings it claims medihotels will make.

“A Victorian Department of Human Services report reveals that the 12-bed in-hospital unit at St Vincent’s Hospital Melbourne, is viable because “SVHM closed 10 acute care beds when the Medihotel opened to ensure the Medihotel provided a substitution service”.

“Mr Cook claimed when announcing the agreement for private developer Fini Group to build and operate WA’s first medi-hotel in Murdoch that it would lead to savings of up to $2800 per patient per day,” Mr Marmion said.

“This report shows those claims are completely fanciful and that even modest savings can only be achieved if a corresponding acute care bed is closed.”

The report showed that during a pilot of a medihotel at The Royal Melbourne Hospital, which used off-site accommodation in a nearby hotel – something Mr Cook has flagged for Royal Perth Hospital – it cost $74 more per day to care for a patient in the medihotel than in an acute care bed.

Mr Marmion said the Victorian Government had also committed only limited funds to the model because it had allocated unused ward space within existing hospitals to be repurposed to accommodate between 6 and 15 beds.

“With a population more than double the size of Perth, Melbourne has 41 medihotel beds operating. The WA State Government has proposed three facilities within the metropolitan area, potentially totalling 180 beds,” Mr Marmion said.

“Developers don’t build these facilities for free. The public have a right to ask what sort of long-term contract the developer has been offered in exchange for building the facility.

“Taxpayers have potentially been locked into paying tens of millions of dollars every year for decades for a facility that has the potential to increase health costs rather than decrease them.”

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