Victorian hospitals will be given a $1.5 billion funding injection after the state government backed down from plans to force health services to merge.
The announcement comes as the government negotiates hospital funding arrangements for the 2024/25 financial year amid swirling claims that services could be forced to slash staff numbers if funding was cut.
The 2024/25 state budget included $8.8 billion to "kickstart a profound change" in the way hospitals were funded so Victoria could "more effectively and efficiently deliver world-class care" and "plan for the future".
Western Health, the operator of five hospitals in Melbourne's west, confirmed a hiring freeze and other measures to combat the "restrained fiscal environment" in late June.
On Wednesday, the government pledged an additional $1.5 billion in funding to protect frontline health care jobs and support hospitals to meet record demand.
"We know our hospitals have just seen their busiest year on record - that's why we're giving them the funding they told us they needed," a government spokeswoman said.
"We've worked with hospitals to develop their final budgets - making sure that every dollar prioritises patient care.
"We backed our nurses with a 28 per cent pay rise and now we're backing our hospitals."
A report by an independent expert committee looking into the structure and design of the Victorian health system, including the option of amalgamating some of its 76 health services, was handed to Health Minister Mary-Anne Thomas in May.
"No hospitals will close as a result of this process," she said at the time.
"What we have at the moment is a situation where, for instance, some of our regional hospitals are overflowing."
The state government on Wednesday backed down on mergers, promising they will not force hospitals to amalgamate.
Premier Jacinta Allan said the health department was finalising negotiations with the health services considering the impacts of the pandemic, inflation, work shortages and an ageing population.
"Our task is to work with hospitals to provide them with the funding and the support that they need to ensure that we can continue to have Victorians access great world class healthcare," she told reporters.
A survey by independent polling outfit RedBridge, published on Monday, revealed many voters in the 50 to 64 age range had shifted support from Labor to the coalition and other parties.
RedBridge director and former Labor campaign strategist Kos Samaras said the cohort was jumping ship over the reported health cuts.
