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If a surgery is seriously botched, a medication is mixed up or an inpatient takes their own life, the Commonwealth will no longer foot the bill.
The federal government will stop funding medical care that involves a gross error resulting in a death or serious injury to a patient – known as a "sentinel event" – from July 1.
Police are searching for a man who stole the name and qualifications of an Indian doctor who treated patients across several Sydney hospitals for 11 years. Vision: Network Ten
A woman and her seven-year-old boy were killed in a car crash on the Hume Highway near Wilton, a seven-year-old twin sister is in a stable condition. Vision: Network Ten
A woman and her seven-year-old boy have died in a crash on the Hume Highway near Wilton, a seven-year-old girl is fighting for life with critical injuries.
A woman and a seven-year-old boy have died following a horrific crash on the Hume Motorway south of Sydney. A seven-year-old girl is fighting for life in hospital with critical injuries. Vision: Nine News.
The former head of the NSW gaming authority has said it was a mistake for the former NSW Premier Barry O'Farrell to grant a licence to James Packer to build a high rollers casino in Sydney without a public inquiry. ABC TV's Four Corners
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"The aim is to improve Australians' health outcomes and reduce avoidable demand for public hospital services," he said. "These are preventable events that result in death or serious harm to a patient. The Commonwealth simply won't pay for these sorts of unacceptable blunders."
A spokeswoman for Victorian Health Minister Jill Hennessy said the state government welcomed the move.
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"Victoria is in favour of quality funding as one way of driving down avoidable harm in our hospitals, and supports the proposed approach for sentinel events, which will result in funding being reduced to zero," she said.
The decision was made by the Independent Hospital Pricing Authority. It follows lengthy consultation, and was revealed in the authority's Pricing Framework for Australian Public Hospital Services report, released on Monday.
The state government's WA Meth Strategy will see 60 extra treatment beds open in January 2017 Photo: Louise Kennerly
Authority chairman Shane Solomon said it was also looking at reducing funding for situations where the patient suffers a complication as a result of the care they receive, such as a fracture from a preventable fall or a hospital-acquired infection.
"The inclusion of a strong price signal regarding the importance of safety and quality will encourage clinicians and managers to build on existing efforts to improve safety and quality in Australian public hospitals," Mr Solomon said.
Federal Health Minister Greg Hunt. Photo: Justin McManus
"IHPA recognises that pricing and funding plays just one part in the drive to improve safety and quality in public hospitals.
"The success of a pricing and funding mechanism for safety and quality is dependent on national, state and local health systems working together to support implementation of the model and ensure that it is working to improve safety and quality across all services."
Victorian Health Minister Jill Hennessy. Photo: Penny Stephens
The amount the Commonwealth will pay for hospital services was raised 1.6 per cent to $4910 for each nationally weighted activity unit. That translates to about $20,342 for a hip replacement, for example, because it has an activity unit of 4.14.
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