Overtime payments for health workers and contract staff, such as locum doctors and agency nurses, will be slashed to help achieve an $89 million cut in the budget for NSW hospitals this year.
The Health Minister, Jillian Skinner, said she was concerned some paramedics were being paid as much as $115,000 in annual overtime on top of base salaries, which average $64,000 to $70,000.
One ambulance officer from rural NSW said he earned $180,000 last year, including base pay of $76,000. Speaking on the condition of anonymity, he said money was wasted on overtime shifts to transfer patients between hospitals after hours.
Other than insisting the jobs of nurses be protected, the minister has given responsibility for $775 million in budget cuts over four years to local health districts.
The labour expense cap, which the Premier, Barry O'Farrell, has imposed on all departments, is on top of $2.2 billion in savings over four years NSW Health has been asked to make.
''I'm leaving it up to the local health districts as to how they deal with the labour expense cap. But nurses are exempt,'' Ms Skinner said. ''Under my devolved system I am not micromanaging.''
Local health districts are targeting overtime payments and expensive contract staff to make savings. The $2.2 billion in savings will be redirected to frontline services. The Department of Education has been forced to save $1.7 billion over four years but the money will return to Treasury.
Mrs Skinner acknowledged that the 5.4 per cent increase in this year's health budget, to deliver $16.4 billion in recurrent spending, would not keep up with rising costs and patient demand.
Hospitals will be expected to deliver an extra 50,000 emergency department visits, 30,000 overnight hospital stays and 2000 elective surgery procedures this year.
Mrs Skinner said hospitals would need to be more efficient. Westmead Hospital had reduced emergency department costs and patient waiting times by involving senior doctors in the early stage of triage.
The director of emergency medicine at Westmead, Matthew Vukasovic, said this meant decisions were made earlier and unnecessary admissions were avoided. But such improvements can go only so far to make up for what doctors, nurses and paramedics say is a chronic shortage of staff and resources.
The general secretary of the NSW Nurses Association, Brett Holmes, said not all area health services were protecting nurses' jobs. ''Nurses are being offered voluntary redundancies in the Hunter New England area. They are picking positions of high value such as clinical nurse consultants and nurse managers and offering voluntary redundancies.''
The president of the Australian Medical Association's NSW branch, Brian Owler, said one teaching hospital in Sydney was planning to cut an outpatient clinic that provides specialist care for public patients.
Instead of being bulk billed at the clinics, patients will need to visit doctors in private rooms at a cost of about $300 a time.
''That is going to be a big issue not only for patient care but also for doctor training, because those clinics provide the training,'' Dr Owler said. ''We are already seeing the loss of a doctor because of these cuts.''
The opposition spokesman on health, Andrew McDonald, said nurses made up half the 100,000-strong NSW Health workforce. He estimated the government would shed about 3600 jobs - or 3 per cent - over four years. ''Many of these people are frontline workers,'' he said. ''Allied health will bear the brunt of the cuts.''
A Health Services Union representative, Tom Stevanja, said there was a shortage of 770 ambulance officers in NSW, which forced many to work overtime.
''There has been no increase in staffing of the ambulance service for over 10 years but demand has been increasing by about 4 per cent per annum,'' he said.
The secretary of the Emergency Medical Service Protection Association, Wayne Flint, said: ''The overtime generally is a forced condition on the paramedics, particularly in rural centres.''