Managing the healthcare workforce: cost reduction or innovation

Labour costs are the largest proportion of total costs in the health industry in developed countries and are a target in health sectory reform. The Kennett government in Victoria introduced policies based on competition and cost reduction and the decentralisation of industrial relations through enterprise bargaining. These policies directly impacted on the health workforce leading to work intensification, labour shortages and poor morale. The Bracks government has since returned to centralisation. This paper argues that it is time for a more innovative approach to health workforce management based on recognising staff as an asset rather than a cost.