Annual Report 2015 · 30 June 2015 In accordance with the Financial Management Act 1994, I am pleased to present the Report of Operations for Latrobe Regional Hospital for the year

Person-centred care � Integrity � Excellence � Working together

Annual Report 2015

Our hospitalOur shared visionWe will be a leading regional health careprovider delivering timely, accessible,integrated and responsive services tothe Gippsland community.

Strategic direction� Enhance services available to the

community

� Improving service models

� Improving quality

� Enabling people

� Supporting education, training and research

� Building leadership

� Developing infrastructure

� Developing partnerships

Latrobe Regional Hospital is Gippsland’s specialist referral centre and providesa comprehensive range of services for a population of more than 260,000.

LRH came into existence in 1991, bringing together the Latrobe Valley Hospitalin Moe, the Central Gippsland Hospital in Traralgon and St Hilary’s Nursing Homein Morwell. LRH became the major provider of mental health services in the regionin 1995, taking over from Hobson Park Hospital, Traralgon.

A new public hospital to service the region opened its doors in 1998. It wasbuilt and operated by Australian Hospital Care Limited, however two years later,the Victorian Government assumed responsibility for its operation.

LRH offers complete medical services in-house including emergency care, electivesurgery, pharmacy, maternity, medical and radiation oncology, rehabilitation, mentalhealth and aged care. We have 289 beds and treatment chairs. The GippslandCancer Care Centre opened at LRH in 2006, significantly expanding the rangeof services.

We are closely affiliated with Monash University’s School of Rural Health andFederation University and provide placements and clinical experience for students.

The objective of Latrobe Regional Hospital, an incorporated body, is to providepublic hospital services in accordance with the principles of the Australian HealthCare Agreement (Medicare) and the Health Services Act 1988 (Vic).

In addition, LRH sets other objectives that encompass the shared vision,core values and strategic direction of the hospital.

From 1 July 2014 to 29 November 2014 LRH was accountableto the Hon. David Davis, Minister for Health and theHon. Mary Wooldridge, Minister for Mental Health.

Following the Victorian election on 29 November, theresponsible ministers are the Hon. Jill Hennessy, Ministerfor Health and the Hon. Martin Foley, Minister forMental Health.

2: Highlights of our year

3: Report from the Chair and CEO

6: Organisational chart

7: Our Board

8: Our Executive team

9: Executive reports

11: Our people

12: Statement of Priorities: PART A

15: Statement of Priorities: PART B

17: Statement of Priorities: PART C

18: Reporting requirements

20: Summary of Financial Results

23: Attestations

24: Additional information

25: Disclosure index

28: Financial contents

Contents

1

Highlights of our year

2

130,388patients treated,

an increase of 8421on the previous year

31,966Emergency Department

patients, a slight riseon last year

$22 millionGippsland Cancer

Care Centre expansionofficially opened

$5.3 millionconstruction of new

Agnes Unit andHDAU completed

$3.964 millionoperating surplusfor year ending30 June 2015

$503,428community and corporate

support for fundraisingand events

9645surgical procedures

including 5117 electivesurgery patients

790babies delivered

including eight setsof twins

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Report from the Chair and CEOKELLIE O'CALLAGHAN and PETER CRAIGHEAD

Demand for Latrobe Regional Hospital’s services increases eachyear and as a result we must keep evolving to deliver qualitycare to the people of Gippsland.

Building works are not an uncommon sight at our hospitalprecinct as we strive to deliver new and expanded services.

This year we welcomed the opening of the Gippsland CancerCare Centre expansion, a new mental health High Dependencyand Assessment Unit and our Agnes parent and infant unit.

The Agnes unit has brought a new level of mental healthsupport to parents across the region seeking specialist carefor postnatal difficulties after the birth of their child. Since itopened in December 2014, the five-bed unit has helped manyparents connect with their newborn babies and each other.

The Gippsland Cancer Care Centre is substantially largerafter a $22 million redevelopment which increased the sizeof the chemotherapy and renal dialysis units. A second linearaccelerator was installed and a third radiotherapy bunker builtshould demand increase. Our oncologists now have dedicatedconsulting rooms on the second storey of the centre.

Major works have also been carried out to expand the medicalimaging department which will greatly improve facilities forprivate provider Regional Imaging. The development includedthe installation of a new magnetic resonance imaging (MRI)machine.

Our attention has turned to the northern side of the hospitalwhere early works are underway for a $73 million developmentdue to begin in the next financial year.

Stage 2a of our master plan will significantly enhancecardiology services with the inclusion of a cardiaccatheterisation laboratory, enabling patients with hearthealth issues to be treated at LRH.

Our Emergency Department will double in size and there willbe a 12-bed short stay unit, two day rooms for endoscopies,

a 30-bed acute ward, a satellite imaging area and a newentrance.

We would like to acknowledge the contribution of LRH boarddirectors Mary Draper and Elizabeth Board whose terms drewto a close. Both were appointed to the board in 2011.

The board welcomed the appointments of John Rasa,Marcia Coleman and Mary Aldred.

Another notable departure was the Director of CorporateServices Catherine Greaves and the appointment of Gary Grayin that role.

Activity

We treated 130,388 patients, an increase of more than8000 on the previous year. Included in that figure are 33,290inpatients and 65,132 outpatients.

The number of Emergency Department patients rose slightlyto 31,966.

Elective surgery exceeded the targets set for each quarterin 2014-15 with 5117 procedures. Overall there were 9645surgical procedures in our four theatres.

Accreditation

The quality of care provided by LRH is guided by 10 nationalstandards focusing on areas like medication safety, fallsprevention, communication with people who use our serviceand governance.

These standards measure our performance in delivering safeand quality health care. The National Safety and Quality HealthService Standards are the foundation for a hospital’saccreditation.

LRH went through an extensive process to achieve fullaccreditation across our general services, mental health

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Report from the Chair and CEO(continued)Accreditation (continued)

and aged care. It was the first time LRH had been measuredagainst all 10 national standards.

A survey team from the Australian Council of HealthcareStandards spent four days at LRH examining our policiesand processes and speaking with staff, patients and visitors.It used each of the 10 national standards to determine thevalue we place on quality care and the safety of people whouse our service.

The survey team verified LRH had satisfactorily met all of thecore national standards and achieved 26 ‘met with merit’actions. Among the met with merit achievements were ourauditing and reporting of hand hygiene compliance, regularassessment of the medication management system and ourefforts to reduce risks associated with transfusion practices.

According to the survey team, the result indicates “a strongquality and safety climate” at LRH.

During the same visit our mental health service was measuredagainst not only the 10 national standards but also the NationalMental Health Standards.

The survey team was impressed by the care provided to peoplein our mental health inpatient unit and those who access ourcommunity services.

Accreditation was also achieved by our Macalister aged carefacility which met all 44 outcomes required by the AustralianGovernment’s Aged Care Quality Agency. The survey teamleader noted our management, safety and clinical systemswere sound.

Closing the Gap

LRH strengthened links with local Koori health providers duringour inaugural Close the Gap Day event in March.

The gathering coincided with national Close the Gap Day whichraised awareness about indigenous health issues and the needto invest in partnerships to ensure Aboriginal and Torres StraitIsland people have equal access to health care.

About 50 people took part in an exchange of information andideas to help LRH and local health providers address the healthneeds of indigenous people.

The day highlighted the quality of health care across Gippslandbut recognised more needed to be done to encourage andsupport Aboriginal people to use local services. One strategy isfor health providers to work together and share their expertise.

Aboriginal community members and representatives fromvisiting health agencies were given a tour of some of theservices at LRH and information on how they might beaccessed.

Community support

Our community has made a significant contribution to assistingus with the purchase of equipment to enhance care at LRH.

Donations totalling $503,428 have been received fromindividuals, community groups and businesses across theregion.

The Keith Chenhall Charitable Trust provided us with fundingfor a bladder scanner for our Nicholson Geriatric EvaluationManagement (GEM) Unit. We greatly appreciated such supportfrom the trust which honours the legacy of the late KeithChenhall, a Traralgon stalwart who dedicated his life tovolunteer work and generous endeavours.

Another key contributor to LRH was running club, TraralgonHarriers which donated $15,500 from the 2015 WIN NetworkTraralgon Marathon and Running Festival in June.

Our fundraising focus this year has been on mental health.Our Mental Health Appeal embraced the theme, ‘Talk About It.

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Responsible BodiesDeclaration as at30 June 2015In accordance with the Financial Management Act1994, I am pleased to present the Report ofOperations for Latrobe Regional Hospital forthe year ending 30 June 2015.

Kellie O’CallaghanChair, Board of Directors

Traralgon West11/08/2015

Make a Difference’ to raise awareness about mental healthissues and the services available to people across Gippsland.

As a result of the efforts of our staff and partner agencies,we’re delighted to see and hear our community talking morefreely about mental health. The conversation has reachedcorporate, community and sporting organisations.

Those groups and many individuals have also raised $131,445to help us redevelop the outdoor courtyards in our Flynn mentalhealth inpatient unit.

The project has gone to tender with construction to beginin the next financial year.

Currently, the concrete courtyards used by adults andadolescents have little or no greenery and limited seating.

The new outdoor environment for adults will feature asynthetic turf lawn, planter boxes for herbs or vegetables,seating, decking and pathways.

The area mostly used by younger people will also havea synthetic lawn and water feature and activities such asbasketball and table tennis.

A key contribution to the appeal was made by broadcastersTRFM and Gold 1242, organisers of the LRH Gala Ball. Theglittering night raised $46,800 and helped us share our mentalhealth awareness campaign with the corporate sector.

We were delighted to have Kay Nesbit as guest speaker at ourInternational Women’s Day luncheon in March. Kay shared hercourageous physical and emotional recovery after being shotin the face at close range in 1985. She now lives in Gippslandand has a keen interest in mental health and youth issues.

The mental health theme carried into our Christmas Givinginitiative which exceeded the target of $58,000 to upgrade28 beds in the Flynn Unit.

Our thanks must also go to the many volunteers who havegiven freely of their time and businesses and individuals inour community who have made in-kind contributions of goodsand services.

Open Day

Our ongoing capital works have created much interest so it wasfitting to share some key developments with our community.

An Open Day in September 2014 gave the public abehind-the-scenes look at the newly completed GippslandCancer Care Centre expansion and the $8 million AlliedHealth redevelopment which features a large gymnasium,a purpose-built kitchen and work room for occupational

therapy, outdoor areas for physiotherapy, a special area forpaediatric patients and a meeting space for community-basedrehabilitation.

The day included tours of the facilities, a community healthexpo which was well supported by local groups, a barbecueto support Rotary Centenary House and plenty of entertainmentfor families.

Governor’s visit

It was a pleasure to host a visit by the outgoing Governorof Victoria, Alex Chernov and his wife Elizabeth.

The Governor and Mrs Chernov spent the day in the LatrobeValley visiting key industries, schools and meeting with thecommunity.

Their visit to LRH was the final stop on a hectic schedule butthe Governor and Mrs Chernov were generous with their timeand genuinely interested in the services provided by LRH.

The official party was shown through the Gippsland CancerCare Centre and took the time to speak with patients inchemotherapy and dialysis.

The Governor and Mrs Chernov were particularly engagedby a demonstration of state-of-the-art equipment at WilliamBuckland Radiotherapy Gippsland, situated in the GCCC andmet with a patient undergoing treatment for prostate cancer.

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Organisational Chartas at June 2015

7

Our BoardBoard Chair:Kellie O’Callaghan Appointed 2005Qualifications: Bachelor of Arts (Social Science), Graduate Diploma Mental Health Science,Graduate Australian Institute of Company Directors.Committees: Board and Finance Committee and Executive Performance Committee (Chair),LRH Foundation (Chair), Community Advisory Committee (Chair) ex-officio member of Audit and RiskCommittee, Appointments and Scope of Practice Committee, Population Health Committee, QualityCommittee. 11 board meetings - 10 attended

Deputy Chair:Ian Gibson Appointed 2009Qualifications: Bachelor of Economics, Bachelor of Arts, Masters of Public Policy and Management.Committees: Board and Finance Committee (Deputy Chair), Appointments and Scope of PracticeCommittee (Chair), Population Health Committee (Chair), Executive Performance Committee (member),Credentials Committee. 11 board meetings - 11 attended

Director:Leah Young Appointed 2010Qualifications: Bachelor of Business, Graduate Diploma of Business, Company Directors CourseDiploma (FAICD), Governance Institute of Australia Certificate in Governance and Administration GIA (Cert).Committees: Board and Finance Committee (member), Audit and Risk Committee (Chair) (independent),Executive Performance Committee (member). 11 board meetings - 9 attended

Director:Dr Annie Moulden Appointed 2012Qualifications: Bachelor of Medicine, Bachelor of Surgery, Fellow of the Royal Australasian Collegeof Physicians, Graduate of the Australian Institute of Company Directors.Committees: Board and Finance Committee (member), Quality Committee (Chair), Appointmentsand Scope of Practice Committee (Deputy Chair). 11 board meetings - 9 attended

Director:Sean Dignum Appointed 2012Qualifications: Bachelor of Arts, Member of the Risk Management Institution of Australia (MRMIA).Committees: Board and Finance Committee (member), Population Health Committee (Deputy Chair),Audit and Risk Committee (Deputy Chair) (independent), LRH Foundation (Deputy Chair). 11board meetings - 10 attended

Director:John Rasa Appointed 2014Qualifications: Bachelor of Arts (Clinical Psychology), Graduate Certificate Industrial Law and IndustrialRelations, Master of Health Planning, Australian Institute of Company Directors.Committees: Board and Finance Committee (member), Appointments and Scope of PracticeCommittee (member), Quality Committee (member), Population Health Committee (member).11 board meetings - 10 attended

Director:Marcia Coleman Appointed 2014Committees: Board and Finance Committee (member), Quality Committee (member) and PopulationHealth Committee (member). 11 board meetings – 9 attended

Director:Mary AldredAppointed 2014Qualifications: Bachelor of Arts (Honours), Master of Agribusiness, Graduate of the Gippsland CommunityLeadership Program.Committees: Board and Finance Committee (member), Audit and Risk Committee (member) (independent),LRH Foundation (member). 11 board meetings - 9 attended

Under the Health Services Act 1998,board directors are responsible for thecorporate and clinical governance ofLatrobe Regional Hospital on behalfof the State Government of Victoria.

In discharging their responsibilities,the directors are active membersof various committees set up toassist the board in monitoring theoperations of the hospital.

These committees cover:� audit and risk� finance� quality� appointments and scope of practice� human research ethics� remuneration and executive

performance� LRH Foundation� population health� Community Advisory Committee

In accordance with the by-laws ofLatrobe Regional Hospital, the boardplaces great important on makingclear any existing or potential conflictsof interest. Any such conflicts ofinterest of board directors areofficially documented at everymeeting of the board and recordedin a Disclosure of Interest Register.

OurExecutiveteam

8

Chief Executive OfficerPeter CraigheadThe Chief Executive Officer is responsible to the Board of Directors for the efficientand effective management of Latrobe Regional Hospital. Responsibilities includethe development and implementation of operational and strategic planning, qualityimprovement and the enhancement of local health care through collaborativemanagement and consultation with staff and the community.

Director of Nursing, Midwifery and Clinical ServicesAmanda CameronThe Director of Nursing, Midwifery and Clinical Services is a registered nursewith experience at a senior level managing a diverse health care environment.The director is responsible for all the wards of the hospital and same-day servicessuch as chemotherapy, dialysis and allied health services. The position is integral toensuring LRH continues to improve the healthcare delivered to the community.

Chief Medical OfficerDr Simon FraserThe Chief Medical Officer (CMO) is a medical practitioner with experience in hospitaladministration. As a member of the hospital executive the CMO provides high-leveladvice and support on a range of issues. The CMO also supports the senior and juniormedical staff, general managers working within the hospital and indirectly the HealthInformation Unit.

Director of Mental HealthCayte HoppnerThe Director of Mental Health (DMH) is a senior mental health nurse with experiencein mental health service management. The DMH leads the mental health team inimplementing mental health reform and provides high-level advice as a memberof the LRH executive.

Director of Corporate ServicesGary GrayThe Director Corporate Services provides business and support services to front linepatient, client and residential services. The directorate also includes Pharmacy andAboriginal health, in partnership with LRH Mental Health Service.

9

Executive reportsNursing, Midwifery and Clinical Services� Sustained high achievements in elective surgery with more

patients admitted for surgery than the target.

� Awarded full accreditation under the 10 National Safetyand Quality Health Service Standards and National Standardsin Mental Health Services until June 2018.

� Successful implementation of Advanced Care Planning intothe organisation with more than 100 plans in place.

� Despite increased demand, waiting times in the EmergencyDepartment have improved and no patient has stayed for24 hours. The ED continues to exceed the state target forambulance transfers.

� Our chemotherapy unit expanded to 16 chairs.

� A review of the Consumer Advisory Committee resultedin restructured meetings and greater involvement in theorganisation’s activities.

� The Residential In Reach Program continues to make asignificant contribution to the delivery of care in residentialaged care facilities.

� Successful involvement in the Productive Operating Theatreas part of the state wide Redesigning Hospital Care Program.Commencement of a redesign project in Chemotherapy.

� Opening of four new Surgical High Dependency Beds.

� Recruitment of a continence specialist to the urodynamicsservice.

� Integration of the Pre-Admission Clinic with the FederationUniversity Primary Care Clinic.

� We recorded a staff influenza vaccination rate of 80 per cent.

� We were the lead agency in a number of regional projectsincluding a Gippsland clinical referral pathway involving all11 hospitals in the region.

Medical Services� A Clinical Lead Intensive Care position was created and

Dr Judit Orosz was appointed to the role.

� Dr David Simon was appointed Clinical Lead Obstetricsand Gynaecology and Dr Rob Dawson Clinical LeadAnaesthetics.

� A number of new senior medical staff were appointedincluding a general physician with haematology subspecialtyinterest (Dr Tricia Wright), an intensivist (Dr KushaharanSathianathan), a geriatrician with an interest in urodynamics(Assoc. Professor David Fonda), a chronic pain clinic specialist(Dr Katarzyna Ibrahim), obstetrician and gynaecologists (DrsPamela Cardoza, Genevieve Read, Carin Black and NarelleMackay), a gynaecology oncologist

(Dr Kym Reid), anaesthetists (Drs Watson Gomez andKatarzyna Ibrahim) and paediatricians (Drs Annette Connellyand Roshni Sonawane).

� Additional registrar positions were created followingsuccessful funding applications. These include an obstetricsand gynaecology registrar, a third orthopaedic registrar (inconjunction with West Gippsland Healthcare Group) anda second general practitioner anaesthetics registrar).

� Dr David Ogilvy was recruited to a new position inortho-geriatrics.

� Our new General Manager Medical Services is Angela Jacob,following the resignation of Sally Stiberc who held the positionsince 2010.

� We have recruited a medical management registrar forthe third year.

� Examinations have been held for the Royal AustralasianCollege of Physicians (adult examinations).

� We welcomed the re-accreditation of the obstetrics andgynaecology registrar training position with the RoyalAustralian and New Zealand College of Obstetricians andGynaecologists and the re-accreditation of the surgicalregistrar training positions with the Royal AustralasianCollege of Surgeons.

� The Gippsland Rural Intern Training Program wasexpanded from 10 to 15 places (for the 2016 calendar year).A considerable number of the interns are local medicalstudent graduates and are staying on for a second yearat LRH after completing their intern training.

� Funding was received from the Australian College forEmergency Medicine for an Emergency Medicine Educationand Training program. The focus is to increase and improveeducation and training by emergency physicians to supportnon-specialists providing emergency care in the Gippslandregion.

� We acknowledge the contribution of Dr Fred Mattheysewho resigned from the Acting Director of Anaestheticsposition which he held since 2008.

Mental Health Services� LRH Mental Health Services met all of the National Standards

for Mental Health Services during our recent accreditationsurvey.

� Our Macalister aged care facility achieved accreditationafter meeting all 44 outcomes required by the AustralianGovernment’s Aged Care Quality Agency.

Continued on page 10

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Mental Health Services (continued)� A new Mental Health Act took effect from 1 July 2014.

More than 300 staff and external stakeholders participatedin education sessions about the new Act.

� A new High Dependency and Assessment Unit at LRHofficially opened in November 2014.

� The Agnes Unit for parents and infants also opened inNovember 2014.

� We implemented the Optimal Health Program, a recoverybased self-management tool, across all of the communitymental health sites in Gippsland.

� LRH introduced Safewards, 10 evidence-based interventionsdesigned to enhance staff and consumer relationships,promote hope and reduce conflict and aggression in theinpatient setting.

� Owen Connolly became our second endorsed NursePractitioner. Owen has developed and implementedthe Suicide Prevention Service across Gippsland.Nurse Practitioners have an advanced scope of practiceand can prescribe medications and order diagnostic tests.

� Our successful reduction in the use of seclusion washighlighted by a staff poster presentation at the NationalSeclusion and Restraint Forum.

� There have been improvements in our key performanceindicators, in particular pre-admission contact, post-dischargefollow-up and outcome measures. This demonstrates we areproviding care at the right time and people are experiencingimprovements in their overall mental health.

� There has been a reduction in the use of compulsorytreatment orders for consumers in the delivery of mentalhealth care.

Corporate Services� A number of capital works projects have been completed

including the new Agnes Unit which provides support toparents and infants and the expansion of the Flynn Unit toaccommodate people requiring a higher level of mentalhealth care. An expansion of Medical Imaging accommodateda fixed MRI unit. We now have a new Pharmacy Aseptic Suitecomplying with the latest standards for manufacturing ofchemotherapy and sterile preparations. Other works includea switchboard upgrade, the installation of new generatorssupporting community-based services, a redesign ofPharmacy and the decommissioning of old chillers inreadiness for the installation of new equipment.

� Corporate Services has a role in the project management ofearly works supporting our Stage 2a redevelopment. The

early works included sewage and high voltage diversion,demolition and preparation of the site for main works.

� A car park has been expanded to cater for a further 180vehicles to offset the impending loss of car parking facilitiesdue to the new development.

� A new dishwasher and plate stripping station has beenpurchased for our Food Services area.

� We have signed off on the replacement of units controllingthe temperature within the Latrobe Valley Community MentalHealth facility.

� LRH continues to employ Aboriginal cadets and trainees tofacilitate the objectives aligned to initiatives in Koolin Balit,the Victorian Government’s strategic direction for Aboriginalhealth.

� An Aboriginal Services Development Officer’s position hasbeen established to increase the focus on culturally sensitiveservices within LRH and with other agencies, to support thewellbeing of Koori people.

� LRH developed and delivered a Closing the Gap seminarwhich engaged health agencies in the region to share acollective experience and identify opportunities forimprovement.

� We implemented medication safety initiatives including amedication walk-around and a new medication incidentreview group.

� Our Pharmacy Department was involved in two of the10 National Safety and Quality in Health Service Standardswhich was part of the accreditation process in April 2014.Seven actions under medication safety (Standard 4) and fouractions under infection prevention and control (Standard 3)regarding antimicrobial stewardship were awarded met withmerit status.

� The implementation of e-pay and establishment of accountshave prepared LRH for compliance with an Investment Policymandated by the Victorian Treasurer.

� LRH’s internal audit program has been delivered and refined.

� Our website has been redeveloped to improve the deliveryof health information to the public.

� The hospital’s Risk Management Framework and Policy hasbeen reviewed and a process initiated to facilitate a strategicreview of risk by the LRH Board of Directors.

� A working party has been established to overseeimplementation of Health Victoria procurement governancerequirements.

� There has been a restructure within the division to aligninternal and external security responsibilities under theleadership of one manager.

Executive reports(continued)

11

Our peopleResources

In 2014-15 Latrobe Regional Hospital employed 1840 staffacross 10 locations throughout Gippsland. The biggestcategory of employees is nursing staff, which comprisesapproximately half of the hospital workforce.

As at 30 June 2015 staffing levels by labour category wereas follows:

Employment and conduct principles

LRH works with staff to identify desired behaviours and ensuresthat policy and practice adhere to public sector values and thehospital’s own core values which are approved by the boardof directors. Staff are expected to adhere to the Public SectorCode of Conduct for Victorian Public Sector Employees issuedby the Victorian Public Sector Commissioner. Our WorkplaceConduct Policy is consistent with the Charter of Human Rightsand Responsibilities Act 2006 (Vic) and promotes the principlesof equal opportunity and fair and reasonable treatment ofothers.

Health and Safety

Health and safety in the work environment is a high priorityfor all staff at LRH.

During 2014-15, incident reporting, bullying and harassment,occupational violence management and emergencymanagement (EMERGO - Train) were the focus areas forhealth and safety at LRH.

The active involvement of all staff and managers in healthand safety resulted in a marked decrease in staff injuries -approximately 22 per cent. This directly demonstrates agreater level of awareness and understanding of theimportance of incident reporting and safety management.It also demonstrates staff are committed to improved safetyoutcomes for patients and themselves.

In 2014-15 LRH established an Occupational Violence andAggression (OVA) Workgroup. The focus of this workgroupwas to review incidents of violence in the workplace and identifystrategies to reduce their rate of occurrence or severity.

One key component of this was the implementation of CodeGrey and Code Grey-Silent to complement Code Black, whichhas now been altered to indicate threat with a weapon. Theimplementation of these new codes has given staff a greaterdegree of control in the response to aggression and violence.The effectiveness of this change will be monitored over thenext 12 months and consistently reviewed for effectiveness.

LRH has also introduced the De-escalation, Engagement andPrevention (DEEP) training as an evolution of CARE trainingwhich is part of our safety processes, strategy and training.

Bullying and harassment education has been a focus overthe last year. LRH has implemented a number of strategiesto enhance the understanding of management and staff.Initiatives include an awareness campaign, promotionshighlighting the impact of bullying and harassment and theimplementation of a mandatory online training package toraise awareness and reduce the incidence of bullying in theworkplace.

LRH hosted its third Emergo-train exercise in May 2015.The aim of the exercise was to test the hospital’s Code Brown(external emergency) response to a large scale emergencyusing a real time scenario.

A regional approach was taken with the involvement ofAmbulance Victoria, Victoria Police, State EmergencyService, CFA and DHHS. The event was very successful anddemonstrated LRH’s ability to manage a large scale externaldisaster across all areas of the organisation and externally inpartnership with our regional emergency services. The feedbackfrom participating groups indicated positive learning outcomeshad been gained from the joint exercise.

LRH has maintained a representative on the Metropolitan andRegional Health OHS Executive, as part of our efforts to createa state-wide benchmark in the field of Occupational Health andSafety in Victorian hospitals.

Through this forum we have been working with the Departmentof Health and Human Services to facilitate system-wideimprovements to occupational health and safety managementand reporting in Victorian public hospitals. The coming yearshould see the roll out of an upgraded RiskMan system tobetter facilitate OHS incident reporting.

Labour Category JUNE Current JUNE YTD FTEMonth FTE (annual average)

2015 2014 2015 2014

Nursing 639.74 608.18 616.83 593.02Administration and Clerical 186.66 190.89 189.14 188.77Medical Support 76.45 66.26 73.26 64.81Hotel and Allied Services 84.67 94.25 89.76 90.61Medical Officers 24.83 23.02 24.59 29.24Hospital Medical Officers 101.98 100.68 100.30 94.71Sessional Clinicians 20.27 17.39 19.35 12.56Ancillary Staff (Allied Health) 129.64 114.33 120.37 113.05

Total Staff Employed - FTE* 1264.24 1215.00 1233.6 1186.77

12

Statement of PrioritiesPART A: STRATEGIC PRIORITIES

Priority Action Deliverable Strategies/Actions

Developing a system thatis responsive to people’sneeds.

� Develop an organisationalpolicy for the provision ofsafe, high quality endof life care in acute andsub-acute settings, withthe clear guidance aboutthe role of, and access to,specialist palliative care.

� Implement Advance CarePlanning training andeducation across theorganisation.

� Work in partnership withthe Gippsland PalliativeCare Consortia andDepartment of Health toprovide regionally-basedspecialist palliative careservices.

� Completed. Official launchin February 2015.

� Engage with local servicesystems to supportintegrated client careand service continuity forpeople affected by mentalillness.

� Participation in Partnersin Recovery, GippslandMental Health Allianceand Services Connectin Gippsland.

� In progress. SuicidePrevention Plan integratedinto the Catchment BasedPlan for Gippsland.Regional Educationworkshops completed.ASIST Train the Trainercompleted andimplementation planin development.

� Optimise timely accessto specialist care throughthe implementation of theAccess Policy for SpecialistClinics in Victorian PublicHospitals.

� Implement Access Policy. � In progress. Draft LRHAccess Policy beingcirculated.

� Progress partnerships withother services to improveoutcomes for regional andrural patients.

� Under StrengtheningGippsland:� Lead the development

of the Gippsland ClinicalReferral PathwaysProject.

� Completed. Projectimplemented with referralpathways agreed to andcommenced. TriallingHospital Coordinatorreferral form.

� Lead the GippslandMaternity Servicesand Newborn ServicesPlanning.

� In progress. Finalreport submitted to theStrengthening our RegionsCommittee. WorkingGroup established toreview.

� Jointly lead with WestGippsland HealthcareGroup a specialistmedical workforceproject.

� In progress. Request fortender document has beenprepared.

� In progress. Model of caredeveloped and sent toexecutive to consider.Draft sent to DHHS forconsideration. Discussionshave commenced withMonash and Calvary fora partnership approach.

13


Improving every Victorian’shealth status andexperiences.

� Use consumer feedback toimprove person and familycentred care, healthservice practice andpatient experience.

� Investigate and incorporatepatient stories intograduate orientationand unit study days.

� Completed. PersonCentred Care trainingplan for 2015 developed.Video available to clinicaleducators and staff onthe LRH intranet.

Expanding service,workforce and systemcapacity.

� Develop and implementa workforce immunisationplan that includespre-employmentscreening andimmunisation assessmentfor existing staff that workin high risk areas in orderto align with Australianinfection control andimmunisation guidelines.

� Develop plan to beimplemented by InfectionControl.

� Completed. Staff nowentering staff healthinformation into SAP.

� Support excellence inclinical training throughproductive engagement inclinical training networksand developing healtheducation partnershipsacross the continuumof learning.

� Progress planning towardexpansion of the GippslandRegional Intern Training(GRIT) in 2016.

� Completed. GRITnumbers will increasefrom 10 to 15 in 2016.

� Increase employmentof Aboriginal people inmainstream health servicesin line with the strategicobjectives of Koolin Balit:Victorian GovernmentStrategic Directors forAboriginal Health 2012-22and Karreeta Yirramboiworkforce participationtargets.

� Implement LatrobeRegional Hospital’sAboriginal EmploymentPlan and associatedtargets.

� In progress. Expression ofInterest application madefor Round 2 Koolin Balitfunding to supportimplementation ofAboriginal EmploymentPlan. Three peopleselected and commencedin Closing the Gaptraineeships for 2015-16.Funding provided forindigenous graduate nurse.Two second year nursingcadets have commencedtheir cadetships.

� Apply existing capabilityframeworks and clinicalguidelines to inform servicesystem planning.

� Lead the GippslandMaternity and NewbornService Planning Project.

� In progress. Final reportto be submitted to theStrengthening our RegionsCommittee, established toreview.

� Identify service userswho are marginalised orvulnerable to poor healthand develop interventionsthat improve outcomesrelative to other groupse.g. People affected bymental illness.

� Implementation of theRecovery Based Model ofCare for adult and agedcommunity and inpatientmental health services.

� In progress.Implementation of OptimalHealth Program completedin all adult communityteams. Training for allacute and bed basedsites planned for October2015. Consumer and carerworkshops for agedcompleted and dataanalysed.

14


Increasing the system’sfinancial sustainabilityand productivity.

� Identify and implementpractice change toenhance assetmanagement.

� Review asset maintenanceprograms to enhance theuseful life of assets.

� Completed. The assetmanagement plan hasbeen implemented andis updated quarterly. Anannual condition auditalso influences the assetmanagement plan.

Implementing continuousimprovements andinnovation.

� Drive improved healthoutcomes through a strongfocus on patient centredcare in the planning,delivery and evaluationof services and thedevelopment of newmodels for puttingpatients first.

� Implementation ofSafewards andparticipation in thestatewide Safewardspartnership group andevaluation.

� Completed. All 10interventions have beenimplemented.

Increasing accountabilityand transparency.

� Undertake an annual boardassessment to identify anddevelop board capability toensure all board membersare well equipped toeffectively dischargetheir responsibilities.

� Board members preparean annual self-assessmentto evaluate theirperformance and highlightany improvements requiredto effectively dischargetheir responsibilities.

� In progress.

Improving utilisationof e-health andcommunicationstechnology.

� Trial, implement andevaluate strategies thatuse e-health as an enablerof better patient care.

� Participate in theExpanding PaediatricTelehealth project with theRoyal Children’s Hospitaland Monash Children’s.

� In progress. Paediatriciansare telehealth consultinginto the Royal Children’sand Monash Children’s.Now working on nextphase to telehealth tolocal GPs and parents.

� Utilise telehealth to betterconnect service providersand consumers toappropriate timely services.

� Work with communitypartners to implement theE-care Planning Protocol.

� In progress. Staff trainedin use of e-care planningtool and currently triallingwithin Hospital AdmissionRisk Program.

� Ensure that gendersensitivity and women’ssafety are key principlesin the delivery of mentalhealth and alcohol andother drug services.

� Implementation of theGender Sensitivity ActionPlan.

� In progress. Gendereducation workshopdeveloped and forimplementation in late2015. New women’slounge and corridorunder development.

� Reduce health serviceadministrative costs.

� Prepare for theimplementation of HPVprocurement reformthrough development ofa procurement strategyand transition plan.

� In progress. Projectunderway commencingwith identification andmapping of LRH’sgovernance framework.Review of policies relatingto contractor engagement,procurement and tenderingpolicies under review.

15

Statement of PrioritiesPART B: PERFORMANCE PRIORITIES

Safety and Quality Performance

Key Performance Indicator Target ActualPatient Experience Outcomes

Victorian Health Experience Survey Full compliance Achieved

Healthcare associated infection surveillance No outliers Achieved

ICU central line associated blood stream infections (ICU CLABSI) No outliers Achieved

SAB rate per occupied bed days < 2/10,000 0.9

Maternity - Percentage of women with prearranged postnatal home care. 100 100

Mental Health - 28 day readmission rate (%) 14% 18%

Mental Health - Post-discharge follow-up rate (%) 75 94%

Mental Health - Seclusion rate per occupied bed days < 15/1,000 3

Financial Sustainability Performance

Key Performance IndicatorFinance Target Actual

Annual operating result ($'m) $1.0m 3,964

Creditors <60 days 45 days

Debtors <60 days 44 days

Percentage of WIES (public and private) performance to target 100 1.02

Governance, Leadership and Culture Target Actual

People Matter Survey Patient Safety Culture 80 82%

Asset Management Target Actual

Basic Asset Management Plan Full compliance Achieved

Safety and Quality Target Actual

Health Service Accreditation Full compliance Achieved

Residential aged care accreditation Full compliance Achieved

Cleaning standards Full compliance Achieved

Cleaning standards (AQL-A) 90 Achieved

Cleaning standards (AQL-B) 85 Achieved

Cleaning standards (AQL-C) 85 Achieved

Hand Hygiene (rate) - quarter 2 75 83%



Health care worker immunisation - influenza 75% 81%

16

Access Performance

Key performance indicator Target ActualEmergency Care

Percentage of Ambulance transfers within 40 minutes. 90 95%

Percentage of Triage Category 1 emergency patients seen immediately. 100% 100%

Percentage of Triage Category 1 to 5 emergency patientsseen within clinically recommended times 80% 76%

NEAT - Percentage of emergency presentations to physically leave the emergencydepartment for admission to hospital, be referred to another hospital fortreatment, or be discharge within four hours. 81% 68%

Number of patients with length of stay in the emergency departmentgreater than 24 hours. 0 0

Statement of PrioritiesPART B: PERFORMANCE PRIORITIES (continued)

Elective Surgery Target Actual

NEST - Percentage of Urgency Category 1 elective patients treated within 30 days. 100% 100%

NEST - Percentage of Urgency Category 2 elective surgery patientsadmitted within 90 days 88% 99%

NEST - Percentage of Urgency Category 3 elective surgery patientsadmitted within 365 days 97% 99%

Number of patients on the elective surgery waiting list 890 1011

Number of Hospital Initiated Postponements (HiPs) per 100 scheduled admissions. 8 5

Number of patients admitted from the Elective Surgery waiting list - quarter 1 1,331 1,372




Critical Care

Adult ICU number of days below the agreed minimum operating capacity. 0 0

17

Access Performance

Funding Type 2014-15 Activity AchievementAcute Admitted

WIES Public 18096

WIES Private 1435

Total WIES (Public and Private) 19,531

WIES Department of Veteran Affairs (DVA) 311

WIES Transport Accident Commission (TAC) 97

TOTAL WIES 19,939

Acute Non-admitted

Emergency Services - Non Admitted 31,966

Specialist Clinics 34,568

Sub Acute Admitted

Rehab Public 10,552

Rehab Private 2,056

Rehab DVA 546

GEM Public 6,274

GEM Private 1,302

GEM DVA 561

Palliative Care Public 1,155

Palliative Care Private 191

Palliative Care DVA 49

Transition Care - Residential 6,374

Transition Care - Home Based 5,290

Sub Acute Non-admitted

Health Independence Program 29,810

Health Independence Program - DVA 87

Victorian Artificial Limb Program 667

Mental Health Services & Drug Services

Mental Health Inpatient - Bed Days 17,902

Mental Health Inpatient - WOT N/A

Mental Health Ambulatory 60,410

Mental Health Contacts 118,268

Mental Health - Residential (CRCU) 3,989

Mental Health Service System Capacity N/A

Mental Health Sub Acute (PARCS) 2,155

Drug Services N/A

Statement of PrioritiesPART C: ACTIVITY AND FUNDING

18

Reporting requirementsFinancial Management

The information requirements listed in the FinancialManagement Act 1994 (the Act), the Standing Directions ofthe Minister for Finance under the Act (Section 4 FinancialManagement Reporting) and Financial Reporting Directionshave been prepared and are available to the relevant Minister,Members of Parliament and the public upon request.

Government Advertising

LRH did not engage in any government advertising campaignsreportable per FRD 22F for 2014-15.

Freedom of Information

Latrobe Regional Hospital provides access to documentsheld by the hospital in accordance with the Victorian Freedomof Information Act 1982.

Compliance with Building Act

LRH complies with the building and maintenance provisions of

the Building Act 1993. We obtain building permits for all new

projects where required and certificates of occupancy or

certificates of final inspection for all completed projects.

LRH controls properties located at the corner of Princes

Highway and Village Avenue, Traralgon West and within the

Princes Street, Washington Street and Garden Grove precinct

in Traralgon. A number of administrative and residential services

are provided from these properties.

LRH owns and occupies an additional five buildings located

at the Traralgon West campus which operate as specialist

consulting clinics and administration offices. LRH also provides

non-residential health services from 10 properties not under its

direct control. These are located throughout Gippsland.

A further 34 properties are used as residential accommodation

for staff, 15 of which are under the control of LRH and 19 that

are leased from private vendors and not under the control of

LRH.

LRH ensures all buildings owned or occupied by staff or

patients meet the standards for essential safety measures.

Likewise, all LRH buildings are audited annually for compliance

against the occupancy certificate and building regulations.

Victorian Industry Participation Policy

LRH complies with the intent of the Victorian Industry

Participation Policy Act 2003. The Act requires local industry

participation in supplies wherever possible, taking into

consideration the principle of value for money and transparent

tendering processes.

For the financial year ending 30 June 2015 LRH:

� Did not commence any new contracts that require disclosure.

� Initiated one regional building contract for the hospital’s$2 million Imaging Department upgrade, meeting all VIPPcommitments.

� Completed the $22 million Gippsland Cancer Care Centreredevelopment. DHHS managed all aspects of this projectrelating to the VIPP.

� Initiated the design phase of the Stage 2a development usingfunding from DHHS. Tenders for construction will be let in the2015/16 financial year and all VIPP requirements will need tobe met.

National Competition Policy

Latrobe Regional Hospital has observed and complied with

all requirements of the Victorian Government policy statement,

Competitive Neutrality Policy Victoria for all significant business

activities.

Freedom of Information requests1 July 2014 - 30 June 2015

Requests received 331

Access granted in full 308

Access granted in part 2

Access denied in full 0

Not yet finalised* 2

Not finalised in 2013-14^ 14

Other# 21

* A decision with regard to release had not been made at30 June 2015.

^ Indicates valid requests not finalised in 2013-14 that werefinalised during 2014-15.

# Indicates requests that were withdrawn, did not proceedor nil documents available.

19

Protected Disclosure Act

The Protected Disclosure Act 2012 encourages and assistspeople in making disclosures of improper and corrupt conductby public officers and public bodies, provides protection topeople who make disclosures in accordance with the Actand establishes a system for the matters disclosed to beinvestigated and rectifying action to be taken.

LRH’s General Manager Support Services is the ProtectedDisclosure Officer for the purpose of the Protected DisclosureAct 2012. During 2014-15 there were no disclosures of corruptor improper conduct as defined by the Act.

Carers Recognition Act

The Carers Recognition Act 2012 acknowledges and values therole of carers and the importance of care relationships in theVictorian community.

LRH recognises the principles of the Act and has incorporatedthese into the hospital’s Rights and Responsibilities Policy,Consumer, Carer and Community Partnership Policy and otherrelevant policies.

The hospital established a plan to educate, promote, integrateand evaluate our progress against the principles of the Act andthis has been fully implemented. LRH received no disclosuresunder this legislation during 2014-15.

Environmental Performance

LRH has developed and adopted an EnvironmentalManagement Plan which sets baseline environmental principles.LRH is committed to sustainable practices to protect andenhance the environment for future generations.

The hospital was originally constructed with two water-cooledchillers providing chilled water for use in the centralairconditioning system. The chillers utilised two cooling towersto assist in their operation.

The chillers were recently decommissioned and replaced withsuper-efficient air-cooled ‘Power Pax’ chillers.

We have removed the cooling towers which presented ongoingenvironmental concerns and the potential for an infection risksuch as legionella.

Ex-gratia Expenses

We have not made any ex-gratia payments during 2014-2015.

20

Summary of financial resultsSummary of significant changesin financial position in 2014-15

During the 2014-15 financial year, the Victorian Governmentthrough the Department of Health and Human Servicesprovided $37.2 million in operating grants, $128.7 millionin activity-based funding payments via the National HealthFunding Administrator and other Commonwealth grantstotalled $12.9 million. The Victorian Government also provided$6.3 million towards targeted capital works and equipment.

Revenue from operating activities before capital and specificitems showed an increase of 4.0 per cent from the previousfinancial year. Revenue received included carry-over fundingtotalling $1.5 million and is scheduled for disbursement in2015-16.

Total expenses from operating activities increased by5.36 per cent from 2014-15. Employee Expenses increasedby 6.8 per cent, Non Salary Labour Costs increased by5.0 per cent, Supplies and Consumables increased by2.1 per cent and Other Expenses from Continuing Operationsincreased by 2.9 per cent.

Operating activities provided a net cash inflow of $8.3 millionwith a net cash outflow of $37.8 million from investing activities(includes $27 million invested with Treasury CorporationVictoria), an inflow of $3.0 million was received as contributedcapital from government and an outflow of $50,000 asrepayment of loan. The net result was a decrease of$26.5 million in cash held. Cash and cash equivalentsat end of financial year totalled $19.0 million.

Our current asset ratio at 30 June 2015 was 1.34.

Major capital works projects continued during the year,including the Gippsland Cancer Care Centre (GCCC)redevelopment and car park extension. The Mental HealthUnit was extended to include a six bed High DependencyAssessment Unit which required the loss of two mental healthbeds. A five-bed Parent and Infant Unit was established anda four-bed Surgical High Dependency Unit was constructedas an addition to one of our acute wards.

All projects were completed during the financial year at acombined cost of $23.4 million of which $22.6 million wasfunded by the Commonwealth and Department of Healthand Human Services, with the balance provided from hospitalreserves.

Projects commenced during the year were the Medical ImagingDepartment redevelopment, at a cost of $2 million being fundedfrom hospital reserves, women’s-only lounge and courtyardin the Mental Health Unit and early works for the Stage 2aredevelopment funded by the Department of Health andHuman Services.

Funding for all current capital projects and the planned Stage 2aredevelopment includes $75.7 million from the Commonwealthand Department of Health and Human Services and $8.8 millionfrom hospital reserves.

The final WIES results show our public/private WIESthroughput finished above target by 332 WIES (1.73 per cent).Compensable and other WIES finished 20 WIES down fromtarget bringing the overall WIES throughput to 312 WIES(1.59 per cent) over in our combined WIES targets.

There were no events subsequent to balance date which mayhave had a significant effect on the operations of LRH insubsequent years.

Total approved Expenditure FuturePurpose of project fee 2014-15 expenditure

Consultant consultancy Start date End Date (excluding GST) (excluding GST) (excluding GST)

Resolutions (Int.) Pty Ltd 5 day Health Jul-14 Jul-14 $12,635.50 $12,635.50 $0Information Services Audit

Details of individual consultancies

2014/15 2013/14

Number of consultants used to a value greater than $10,000 1 0

Number of consultants used to a value less than $10,000 0 3

Total cost of consultants used to a value less than $10,000 $0 $17,706

Consultancies engaged during 2014-2015

A number of consultants were contracted to work for Latrobe Regional Hospital in 2014/15. As required by the Victorian IndustryParticipation Policy Act 2003, a summary of the extent of contractual costs or consultants is provided below.

21

2014/15 2013/14 2012/13 2011/12 2010/11$'000 $'000 $'000 $'000 $'000

Total Operating Expenses 196,481 186,482 178,297 168,851 157,743

Total Operating Revenue 200,445 192,650 185,321 174,706 165,133

Net Operating Result Before Capitaland Specific Items Surplus/(Deficit) 3,964 6,168 7,024 5,855 7,390

Net Capital and Specific Items (2,519) 4,770 5,134 (1,804) (950)

Net Result for the Year Surplus/(Deficit) 1,445 10,938 12,158 4,051 6,440

Retained Surplus/(Accumulated Deficit) 59,194 59,425 50,058 37,617 33,563

Total Assets 196,454 193,758 160,245 147,803 138,240

Total Liabilities 44,452 45,243 40,801 40,517 35,005

Net Assets 152,002 148,515 119,444 107,286 103,235

Total Equity 152,002 148,515 119,444 107,286 103,235

Summary of Financial Results for the preceding four Financial Years

Total Total2015 2014

$’000 $’000

Interest 1,823 1,874

Sales of goods and services 14,425 12,781

Grants 178,809 172,587

Other Income 12,001 18,584

Total revenue 207,058 205,826

Employee expenses 127,245 119,156

Depreciation 8,788 8,406

Grants and other transfers 1,219 1,257

Other operating expenses 68,432 66,069

Total expenses 205,684 194,888

Net result from transactions - Net operating balance 1,374 10,938

Net gain/ (loss) on sale of non-financial assets 71 0

Net gain/(loss) on physical asset revaluation (1,018) 18,133

Total other economic flows included in net result (947) 18,133

Net result 427 29,071

- Information contained in this table does not form part of the audited financial statements.

Alternate presentation of Comprehensive Operating Statementfor Financial Year Ending 30 June 2015

22

Summary of financial results(continued)

Under 30 Days 31 - 60 Days 61 - 90 Days Over 90 Days Total 30/06/15 Total 30/06/14

Private 156,171 76,972 8,783 0 241,926 546,591

Transport Accident Commission 3,180 0 0 0 3,180 32,188

Victoria WorkCover Authority 35,220 0 2,586 10,693 48,498 55,681

Other Compensable 2,150 3,744 0 24,630 30,524 28,188

NHT 0 0 0 0 0 0

Residential Aged Care 4,334 2,028 4,865 45,639 56,865 45,131

Total 201,056 82,744 16,233 80,961 380,994 707,779

Patient debtors outstanding as at 30 June 2015

Average Collection Days2015 2014

Private 59.76 60.55

Transport Accident Commission 57.60 134.21

Victoria WorkCover Authority 108.79 226.94

NHT 0.00 0.00

Residential Aged Care 6.79 51.97

Revenue indicators

23

AttestationsAttestation on Data Integrity

I, Peter Craighead certify that the Latrobe Regional Hospital has put in place appropriate internal controls and processes to ensurethat reported data reasonably reflects actual performance. The Latrobe Regional Hospital has critically reviewed these controls andprocesses during the year.

Peter CraigheadChief Executive


Attestation for compliance with Standing Direction 4.5.5- Risk Management Framework and Processes

I, Peter Craighead certify that the Latrobe Regional Hospital has complied with Ministerial Standing Direction 4.5.5 - RiskManagement Framework and Processes. The Latrobe Regional Hospital Audit Committee verifies this.



24

Additional informationAdditional information available on request

Consistent with FRD 22F (Section 6.18) in the Report of Operations, details in respect of the items listed below have been retainedby Latrobe Regional Hospital and are available to the relevant Ministers, Members of Parliament and the public on request (subjectto the Freedom of Information requirements, if applicable):

(a) declarations of pecuniary interests have been duly completed by all relevant officers

(b) details of shares held by senior officers as nominee or held beneficially

(c) details of publications produced by the entity about itself and how these can be obtained

(d) details of changes in prices, fees, charges, rates and levies charged by the health service

(e) details of any major external reviews carried out on the health service

(f) details of major research and development activities undertaken by the health service that are not otherwise covered eitherin the Report of Operations or in a document that contains the financial statements and Report of Operations

(g) details of overseas visits undertaken including a summary of the objectives and outcomes of each visit

(h) details of major promotional, public relations and marketing activities undertaken by the health service to develop communityawareness of the health service and its services

(i) details of assessments and measures undertaken to improve the occupational health and safety of employees

(j) general statement on industrial relations within the health service and details of time lost through industrial accidents and disputes,which is not otherwise detailed in the Report of Operations;

(k) a list of major committees sponsored by the health service, the purposes of each committee and the extent to which thosepurposes have been achieved

(l) details of all consultancies and contractors including consultants/contractors engaged, services provided, and expenditurecommitted for each engagement

(m) a statement, to the extent applicable, that the information listed in Appendix 1 of FRD 15B, is available on requestto the relevant Minister, Members of Parliament or the public; [FRD22F, Sec 6.17d].

25

Disclosure indexThe annual report of the Latrobe Regional Hospital is prepared in accordance with all relevant Victorian legislation. This index hasbeen prepared to facilitate identification of the Department’s compliance with statutory disclosure requirements.

Legislation Requirement Page Reference

Ministerial DirectionsReport of Operations

Charter and purpose

FRD 22F Manner of establishment and the relevant Ministers Inside front

FRD 22F Purpose, functions, powers and duties Inside front, 3-5

FRD 22F Initiatives and key achievements 3-5, 9-10

FRD 22F Nature and range of services provided Inside front

Management and structure

FRD 22F Organisational structure 6-8

Financial and other information

FRD 10 Disclosure index 25-27

FRD 11A Disclosure of ex-gratia expenses 19

FRD 12A Disclosure of major contracts 18, 20

FRD 21B Responsible person and executive officer disclosures 78-79

FRD 22F Application and operation of Protected Disclosure 2012 19

FRD 22F Application and operation of Carers Recognition Act 2012 19

FRD 22F Application and operation of Freedom of Information Act 1982 18

FRD 22F Compliance with building and maintenance provisions of Building Act 1993 18

FRD 22F Details of consultancies over $10,000 21

FRD 22F Details of consultancies under $10,000 21

FRD 22F Employment and conduct principles 11

FRD 22F Major changes or factors affecting performance 20

FRD 22F Occupational health and safety 11

FRD 22F Operational and budgetary objectives and performance against objectives 15-16

FRD 24C Reporting of office-based environmental impacts 19

26

Disclosure index(continued)


FRD 22F Significant changes in financial position during the year 20

FRD 22F Statement on National Competition Policy 18

FRD 22F Subsequent events 20

FRD 22F Summary of the financial results for the year 20

FRD 22F Workforce Data Disclosures including a statement on the applicationof employment and conduct principles 11

FRD 25B Victorian Industry Participation Policy disclosures 18

FRD 29A Workforce Data disclosures 11

SD 4.2(g) Specific information requirements Inside front, 3-5

SD 4.2(j) Sign-off requirements 5

SD 3.4.13 Attestation on data integrity 23

SD 4.5.5 Risk management framework and process attestation 23

Financial Statements

Financial statements required under Part 7 of the FMA

SD 4.2(a) Statement of changes in equity 34

SD 4.2(b) Comprehensive operating statement 32

SD 4.2(b) Balance sheet 33

SD 4.2(b) Cash flow statement 35

Other requirements under Standing Directions 4.2

SD 4.2(a) Compliance with Australian accounting standardsand other authoritative pronouncements 36

SD 4.2(c) Accountable officer’s declaration 29

SD 4.2(c) Compliance with Ministerial Directions 18, 36

SD 4.2(d) Rounding of amounts 38

27


Legislation

Freedom of Information Act 1982 18

Protected Disclosure Act 2001 19

Carers Recognition Act 2012 19

Victorian Industry Participation Policy Act 2003 18

Building Act 1993 18

Financial Management Act 1994 18

28

29: Declaration letter

30-31: Auditor General’s Report

32: Comprehensive Operating Statement

33: Balance Sheet

34: Statement of Changes in Equity

35: Cash Flow Statement

36: Notes to the Financial Statements

Financialcontents

29

Declaration

Board member’s, accountable officer’s and chief finance and accounting officer’s declaration

The attached financial statements for Latrobe Regional Hospital have been prepared in accordance with StandingDirections 4.2 of the Financial Management Act 1994, applicable Financial Reporting Directions, AustralianAccounting Standards including Interpretations, and other mandatory professional reporting requirements.

We further state that, in our opinion, the information set out in the comprehensive operating statement, balancesheet, statement of changes in equity, cash flow statement and accompanying notes, presents fairly the financialtransactions during the year ended 30 June 2015 and the financial position of Latrobe Regional Hospital at 30 June2015.

At the time of signing, we are not aware of any circumstance which would render any particulars included in thefinancial statements to be misleading or inaccurate.

We authorise the attached financial statements for issue on this day.

Kellie O’CallaghanChair, Board of Directors


Nick MoisisChief Finance &Accounting Officer

Latrobe Regional HospitalTraralgon West

27 August 2015

30

31

32

Latrobe Regional HospitalComprehensive Operating Statement for the Year Ended 30 June 2015

TOTAL TOTAL2015 2014

Note $'000 $'000

Revenue from operating activities 2 193,234 185,368

Revenue from non-operating activities 2 7,211 7,282

Employee expenses 3 (127,245) (119,156)

Non salary labour costs 3 (11,422) (10,874)

Supplies and consumables 3 (36,502) (35,743)

Other expenses 3 (21,312) (20,709)

Net result before capital and specific items 3,964 6,168

Capital purpose income 2 6,613 13,176

Depreciation and amortisation 4 (8,788) (8,406)

Expenditure for Capital Purpose 3 (344) -

NET RESULT FOR THE YEAR 1,445 10,938

Other comprehensive income

Items that will not be reclassified to net result

Changes in physical asset revaluation surplus (1,018) 18,133

Total other comprehensive income (1,018) 18,133

Comprehensive result 427 29,071

This Statement should be read in conjunction with the accompanying notes.

33

Latrobe Regional HospitalBalance Sheet as at 30 June 2015


Note $'000 $'000

ASSETS

Current Assets

Cash and Cash Equivalents 5 18,980 45,511

Receivables 6 4,097 4,152

Investments 7 27,000 -

Inventories 8 1,161 1,190

Prepayments 727 353

Total Current Assets 51,965 51,206

Non-Current Assets

Receivables 6 3,028 2,760

Property, Plant & Equipment 9 141,461 139,792

Total Non-Current Assets 144,489 142,552

TOTAL ASSETS 196,454 193,758

LIABILITIES

Current Liabilities

Payables 10 9,108 10,672

Provisions 11 28,594 28,312

Other Current Liabilities 13 1,037 776

Non Interest Bearing Liabilities 14 50 50

Total Current Liabilities 38,789 39,810

Non-Current Liabilities

Provisions 11 5,274 5,023

Non Interest Bearing Liabilities 14 389 410

Total Non-Current Liabilities 5,663 5,433

TOTAL LIABILITIES 44,452 45,243

NET ASSETS 152,002 148,515

EQUITY

Property, Plant & Equipment Revaluation Surplus 15a 49,377 50,395

Restricted Specific Purpose Surplus 15a 16,787 15,111

Contributed Capital 15b 26,644 23,584

Accumulated Surpluses 15c 59,194 59,425

TOTAL EQUITY 15c 152,002 148,515

Commitments 18

Contingent Assets and Contingent Liabilities 19


34

Latrobe Regional HospitalStatement of Changes in Equity for the Year Ended 30 June 2015

PropertyPlant & Restricted

Equipment Specific AccumulatedRevaluation Purpose Contributions Surpluses/

Surplus Surplus by Owners (Deficits) TotalNote $’000 $’000 $’000 $’000 $’000

Balance at 1 July 2013 32,262 13,540 23,584 50,058 119,444

Net result for the year - - - 10,938 10,938

Other comprehensive incomefor the year 18,133 - - - 18,133

Transfer to accumulated surplus 15a,c - 1,571 - (1571) -

Balance at 30 June 2014 50,395 15,111 23,584 59,425 148,515

Net result for the year - - - 1,445 1,445

Other comprehensive incomefor the year (1,018) - - - (1,018)

Transfer to/returned from contributed capital - - 3,060 - 3,060Transfer to accumulated surplus 15a,c - 1,676 - (1,676) -

Balance at 30 June 2015 49,377 16,787 26,644 59,194 152,002


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Latrobe Regional HospitalCash Flow Statement for the Year Ended 30 June 2014


Note $'000 $'000

CASH FLOWS FROM OPERATING ACTIVITIES

Operating grants from government 178,434 174,650

Patient and resident fees received 3,545 2,552

Donations and bequests received 251 498

GST received from/(paid to) ATO 6,072 6,891

Interest received 2,082 1,802

Other receipts 17,623 16,715

Total receipts 208,007 203,108

Employee expenses paid (124,435) (116,126)

Payments for supplies & consumables (80,760) (77,402)

Total payments (205,195) (193,528)

Cash generated from operations 2,812 9,580

Capital grants from government 5,174 12,529

Capital grants from non-government 82 396

Capital donations and bequests received 208 108

NET CASH FLOW FROM/(USED IN) OPERATING ACTIVITIES 16 8,276 22,613

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of investments (27,000) -

Payments for non-financial assets (10,754) (15,298)

NET CASH FLOW FROM/(USED IN) INVESTING ACTIVITIES (37,754) (15,298)

CASH FLOWS FROM FINANCING ACTIVITIES

Contributed capital from government 2,995 -

Repayment of borrowings (50) (50)

NET CASH FLOW FROM/(USED IN) FINANCING ACTIVITIES 2,945 (50)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS HELD (26,533) 7,265

Cash and cash equivalents at beginning of financial year 45,496 38,231

CASH AND CASH EQUIVALENTS AT END OF FINANCIAL YEAR 5 18,963 45,496


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Latrobe Regional HospitalNotes to Financial Statements for the Year Ended 30 June 2015

Note 1: Summary of significant accounting policies

These annual financial statements represent the audited generalpurpose financial statements for Latrobe Regional Hospital forthe period ending 30 June 2015. The purpose of the report is toprovide users with information about the Hospital’s stewardshipof resources entrusted to it.

(a) Statement of compliance

These financial statements are general purpose financialstatements which have been prepared in accordance with theFinancial Management Act 1994 and applicable AASs, whichinclude interpretations issued by the Australian AccountingStandards Board (AASB). They are presented in a mannerconsistent with the requirements of AASB 101 Presentationof Financial Statements.

The financial statements also comply with relevant FinancialReporting Directions (FRDs) issued by the Department ofTreasury and Finance, and relevant Standing Directions (SDs)authorised by the Minister for Finance.

The Hospital is a not-for profit entity and therefore appliesthe additional AUS paragraphs applicable to “not-for-profit”Hospitals under the AASs.

The annual financial statements were authorised for issue bythe Board of Latrobe Regional Hospital on 27 August 2015.

(b) Basis of accounting preparation and measurement

Accounting policies are selected and applied in a mannerwhich ensures that the resulting financial information satisfiesthe concepts of relevance and reliability, thereby ensuring thatthe substance of the underlying transactions or other events isreported.

The accounting policies set out below have been appliedin preparing the financial statements for the year ended30 June 2015, and the comparative information presented inthese financial statements for the year ended 30 June 2014.

The going concern basis was used to prepare the financialstatements.

These financial statements are presented in Australian dollars,the functional and presentation currency of the Hospital.

The financial statements, except for cash flow information,have been prepared using the accrual basis of accounting.Under the accrual basis, items are recognised as assets,liabilities, equity, income or expenses when they satisfy thedefinitions and recognition criteria for those items, that is theyare recognised in the reporting period to which they relate,regardless of when cash is received or paid.

The financial statements are prepared in accordance withthe historical cost convention, except for:

� Non-current physical assets, which subsequent toacquisition, are measured at a re-valued amount beingtheir fair value at the date of the revaluation less anysubsequent accumulated depreciation and subsequent

impairment losses. Revaluations are made and are re-assessed with sufficient regularity to ensure that the carryingamounts do not materially differ from their fair values.

� The fair value of assets other than land is generally basedon their depreciated replacement value.

Historical cost is based on the fair values of the considerationgiven in exchange for assets.

Judgements, estimates and assumptions are required to bemade about carrying values of assets and liabilities that arenot readily apparent from other sources. The estimates andassociated assumptions are based on professional judgementsderived from historical experience and various other factors thatare believed to be reasonable under the circumstances. Actualresults may differ from these estimates.

The estimates and underlying assumptions are reviewedon an ongoing basis. Revisions to accounting estimates arerecognised in the period in which the estimate is revised if therevision affects only that period or in the period of the revision,and future periods if the revision affects both current and futureperiods. Judgements and assumptions made by managementin the application of AASs that have significant effects on thefinancial statements and estimates, with a risk of materialadjustments in the subsequent reporting period, relate to:

� the fair value of land, buildings, infrastructure, plant andequipment (refer to Note 1(k)

� superannuation expense (refer to note 1(h)) and

� actuarial assumptions for employee benefit provisions basedon likely tenure of existing staff, patterns of leave claims,future salary movements and future discount rates(refer to Note 1(l)).

Consistent with AASB 13 Fair Value Measurement, the Hospitaldetermines the policies and procedures for both recurring fairvalue measurements such as property, plant and equipment,investment properties and financial instruments, and for non-recurring fair value measurements such as non-financialphysical assets held for sale, in accordance with therequirements of AASB 13 and the relevant FRDs.

All assets and liabilities for which fair value is measured ordisclosed in the financial statements are categorised within thefair value hierarchy, described as follows, based on the lowestlevel input that is significant to the fair value measurement as awhole:

� Level 1 - Quoted (unadjusted) market prices in activemarkets for identical assets or liabilities

� Level 2 - Valuation techniques for which the lowest levelinput that is significant to the fair value measurement isdirectly or indirectly observable

� Level 3 - Valuation techniques for which the lowest levelinput that is significant to the fair value measurement isunobservable.



For the purpose of the fair value disclosures, Latrobe RegionalHospital has determined classes of assets and liabilities on thebasis of the nature, characteristics and risks of the asset orliability and the level of the fair value hierarchy as explainedabove.

In addition, the Hospital determines whether transfers haveoccurred between levels in the hierarchy by re-assessingcategorisation (based on the lowest level input that is significantto the fair value measurement as a whole) at the end of eachreporting period.

The Valuer-General Victoria (VGV) is Latrobe Regional Hospital’sindependent valuation agency.

The Hospital, in conjunction with VGV monitors the changesin the fair value of each asset and liability through relevant datasources to determine whether revaluation is required.

The estimates and underlying assumptions are reviewedon an ongoing basis. Revisions to accounting estimates arerecognised in the period in which the estimate is revised if therevision affects only that period or in the period of the revision,and future periods if the revision affects both current and futureperiods. Judgements and assumptions made by managementin the application of AASs that have significant effects on thefinancial statements and estimates, with a risk of materialadjustments in the subsequent reporting period, relate to:

� the fair value of land, buildings, infrastructure, plantand equipment (refer to Note 1(k)

� superannuation expense (refer to note 1(h)) and

� actuarial assumptions for employee benefit provisionsbased on likely tenure of existing staff, patterns of leaveclaims, future salary movements and future discount rates(refer to Note 1(l)).

(c) Reporting entityThe financial statements include all the controlled activitiesof the Hospital.

Its principal address is:Cnr. Princes Highway and Village AvenueTraralgon West,Victoria 3844.

A description of the nature of the Hospital’s operations and itsprincipal activities is included in the report of operations, whichdoes not form part of these financial statements.

Objectives and funding

Latrobe Regional Hospital’s overall objective is to providepublic hospital services in accordance with the principles ofthe Australian Health Care Management (Medicare) and theHealth Services Act 1988 (Vic), as well as improve the qualityof life to Victorians.

Latrobe Regional Hospital is predominantly funded by accrualbased grant funding for the provision of outputs.

(d) Principles of consolidation

Jointly controlled assets or operations

Interests in jointly controlled assets or operations are notconsolidated, but are accounted for by recognising in LatrobeRegional Hospital’s financial statements its proportionate shareof the assets, liabilities and any income and expenses of suchassets.

(e) Scope and presentation of financial statements

Fund Accounting

The Hospital operates on a fund accounting basis andmaintains three funds: Operating, Specific Purpose and CapitalFunds. The Hospital’s Capital and Specific Purpose Fundsinclude unspent capital donations and receipts from fund-raising activities conducted solely in respect of these funds.

Services Supported By Hospitals Agreement and ServicesSupported By Hospital and Community Initiatives

Activities classified as Services Supported by HospitalsAgreement (HSA) are substantially funded by the Departmentof Health and Human Services and includes Residential AgedCare Services (RACS) and are also funded from other sourcessuch as the Commonwealth, patients and residents, whileServices Supported by Hospital and Community Initiatives(H&CI) are funded by the Hospital's own activities or localinitiatives and/or the Commonwealth.

Residential Aged Care Service

The Residential Aged Care Service operation is an integralpart of Latrobe Regional Hospital and shares its resources.The results of the two operations have been segregated basedon actual revenue earned and expenditure incurred by eachoperation in Note 19 to the financial statements.

The Residential Aged Care Service is substantially fundedfrom Commonwealth bed-day subsidies.

Comprehensive operating statement

The comprehensive operating statement includes the subtotalentitled ‘net result before capital & specific items’ to enhancethe understanding of the financial performance of the Hospital.This subtotal reports the result excluding items such as capitalgrants, assets received or provided free of charge, depreciation,expenditure using capital purpose income and items of anunusual nature and amount such as specific income andexpenses. The exclusion of these items is made to enhancematching of income and expenses so as to facilitate thecomparability and consistency of results between yearsand Victorian Public Hospitals. The ‘net result before capital& specific items’ is used by the management of the Hospital,the Department of Health and Human Services and theVictorian Government to measure the ongoing operatingperformance of Hospitals.

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38

Capital and specific items, which are excluded from this sub-total, comprise:

� capital purpose income, which comprises all tied grants,donations and bequests received for the purpose ofacquiring non-current assets, such as capital works,plant and equipment or intangible assets. It also includesdonations of plant and equipment (refer Note 1 (g)).Consequently the recognition of revenue as capital purposeincome is based on the intention of the provider of therevenue at the time the revenue is provided.

� specific income/expense, comprises the following items,where material:

� Voluntary departure packages� Write-down of inventories� Non-current asset revaluation increments/decrements� Diminution/impairment of investments� Voluntary changes in accounting policies (which are not

required by an accounting standard or other authoritativepronouncement of the Australian Accounting StandardsBoard)

� impairment of financial and non-financial assets, includes allimpairment losses (and reversal of previous impairmentlosses), which have been recognised in accordance withNotes 1 (i)

� depreciation as described in Note 1 (h)

� assets provided or received free of charge (refer to Notes 1(g) and (h)) and

� expenditure using capital purpose income, comprisesexpenditure which either falls below the asset capitalisationthreshold or doesn’t meet asset recognition criteria andtherefore does not result in the recognition of an asset inthe balance sheet, where funding for that expenditure isfrom capital purpose income. Other economic flows arechanges arising from market remeasurements.

They include:

� gains and losses from disposals of non-financial assets

� revaluations and impairments of non-financial physicaland intangible assets

� remeasurement arising from defined benefit superannuationplans and

� fair value changes of financial instruments.

Balance sheet

Assets and liabilities are categorised either as current ornon-current (non-current being those assets or liabilitiesexpected to be recovered/settled more than 12 months afterreporting period), are disclosed in the notes where relevant.

The net result is equivalent to profit or loss derived inaccordance with AASs.

Statement of changes in equity

The statement of changes in equity presents reconciliations ofeach non-owner and owner changes in equity from openingbalance at the beginning of the reporting period to the closingbalance at the end of the reporting period. It also showsseparately changes due to amounts recognised in thecomprehensive result and amounts recognised in othercomprehensive income.

Cash flow statement

Cash flows are classified according to whether or not they arisefrom operating activities, investing activities, or financingactivities. This classification is consistent with requirementsunder AASB 107 Statement of Cash Flows.

Rounding

All amounts shown in the financial statements are expressedto the nearest $1,000 unless otherwise stated.

Minor discrepancies in tables between totals and sum ofcomponents are due to rounding.

Comparative Information

Where necessary the previous year’s figures have beenreclassified to facilitate comparisons.

(f) Change in accounting policies

AASB 11 Joint Arrangements

In accordance with AASB 11, there are two types of jointarrangements, i.e. joint operations and joint ventures. Jointoperations arise where the investors have rights to the assetsand obligations for the liabilities of an arrangement. A jointoperator accounts for its share of the assets, liabilities, revenueand expenses. Joint ventures arise where the investors haverights to the net assets of the arrangement; joint ventures areaccounted for under the equity method. Proportionateconsolidation of joint ventures is no longer permitted.

The hospital has reviewed its existing contractual arrangementswith other entities to ensure they are aligned with the newclassifications under AASB 11, and concluded there is nochange to the treatment of the Gippsland Health Alliancereporting requirements due to these changes.

AASB 12 Disclosure of Interests in Other Entities

AASB 12 Disclosure of Interests in Other Entities prescribes thedisclosure requirements for an entity’s interests in subsidiaries,associates and joint arrangements; and extends to the entity’sassociation with unconsolidated structured entities.

The Hospital has disclosed information about its interestsin associates and joint ventures, including any significantjudgement and assumptions used in determining the typeof joint arrangement in which it has an interest.



39

(g) Income from transactionsIncome is recognised in accordance with AASB 118 Revenueand is recognised as to the extent that it is probable that theeconomic benefits will flow to Latrobe Regional Hospital and theincome can be reliably measured at fair value. Unearned incomeat reporting date is reported as income received in advance.

Amounts disclosed as revenue is, where applicable, net ofreturns, allowances and duties and taxes.

Government Grants and other transfers of income(other than contributions by owners)

In accordance with AASB 1004 Contributions, governmentgrants and other transfers of income (other than contributionsby owners) are recognised as income when the Hospital gainscontrol of the underlying assets irrespective of whetherconditions are imposed on the Hospital’s use of thecontributions.

Contributions are deferred as income in advance when theHospital has a present obligation to repay them and thepresent obligation can be reliably measured.

Indirect Contributions from the Department of Healthand Human Services

- Insurance is recognised as revenue following advice fromthe Department of Health and Human Services.

- Long Service Leave (LSL) - Revenue is recognised uponfinalisation of movements in LSL liability in line with thearrangements set out in the Metropolitan Health and AgedCare Services Division Hospital Circular 05/2013.

Patient and Resident Fees

Patient fees are recognised as revenue at the time invoicesare raised.

Private Practice Fees

Private practice fees are recognised as revenue at the timeinvoices are raised.

Revenue from commercial activities

Revenue from commercial activities such as commerciallaboratory medicine is recognised at the time invoices areraised.

Donations and Other Bequests

Donations and bequests are recognised as revenue whenreceived. If donations are for a special purpose, they maybe appropriated to a surplus, such as the specific restrictedpurpose surplus.

Interest Revenue

Interest revenue is recognised on a time proportionate basisthat takes in account the effective yield of the financial asset,which allocates interest over the relevant period.

Sale of investments

The gain/loss on the sale of investments is recognisedwhen the investment is realised.

Fair value of assets and services received free of chargeor for nominal consideration

Resources received free of charge or for nominal considerationare recognised at their fair value when the transferee obtainscontrol over them, irrespective of whether restrictions orconditions are imposed over the use of the contributions,unless received from another Hospital or agency as aconsequence of a restructuring of administrative arrangements.In the latter case, such transfer will be recognised at carryingvalue. Contributions in the form of services are only recognisedwhen a fair value can be reliably determined and the servicewould have been purchased if not received as a donation.

Other income

Other income includes non-property rental, dividends,forgiveness of liabilities, and bad debt reversals.

(h) Expense recognition

Expenses are recognised as they are incurred and reportedin the financial year to which they relate.

Cost of goods sold

Costs of goods sold are recognised when the sale of an itemoccurs by transferring the cost or value of the item/s frominventories.

Employee expenses

Employee expenses include:� wages and salaries;� annual leave; � sick leave; � long service leave; and � superannuation expenses which are reported differently

depending upon whether employees are members ofdefined benefit or defined contribution plans.

Defined contribution superannuation plans

In relation to defined contribution (i.e. accumulation)superannuation plans, the associated expense is simply theemployer contributions that are paid or payable in respect ofemployees who are members of these plans during thereporting period. Contributions to defined contributionsuperannuation plans are expensed when incurred.

Defined benefit superannuation plans

The amount charged to the comprehensive operating statementin respect of defined benefit superannuation plans representsthe contributions made by the Hospital to the superannuationplans in respect of the services of current Hospital staff duringthe reporting period. Superannuation contributions are madeto the plans based on the relevant rules of each plan, and arebased upon actuarial advice.

Employees of the Hospital are entitled to receivesuperannuation benefits and the Hospital contributes to boththe defined benefit and defined contribution plans. The defined



40

benefit plan(s) provide benefits based on years of service andfinal average salary.

The name and details of the major employee superannuationfunds and contributions made by Latrobe Regional Hospitalare disclosed in Note 12: Superannuation.

Depreciation

All infrastructure assets, buildings, plant and equipment andother non-financial physical assets that have finite useful livesare depreciated (i.e. excludes land assets held for sale, andinvestment properties). Depreciation begins when the asset isavailable for use, which is when it is in the location andcondition necessary for it to be capable of operating in amanner intended by management.

Depreciation is generally calculated on a straight line basis,at a rate that allocates the asset value, less any estimatedresidual value over its estimated useful life. Estimates of theremaining useful lives, residual value and depreciation methodfor all assets are reviewed at least annually, and adjustmentsmade where appropriate. This depreciation charge is notfunded by the Department of Health and Human Services.

Assets with a cost in excess of $1000 are capitalised anddepreciation has been provided on depreciable assetsso as to allocate their cost or valuation over their estimateduseful lives.

The following table indicates the expected useful lives of non-current assets on which the depreciation charges are based.

Other operating expenses

Other operating expenses generally represent the day-to-dayrunning costs incurred in normal operations and include:

Supplies and consumables

Supplies and services costs which are recognised as anexpense in the reporting period in which they are incurred.The carrying amounts of any inventories held for distributionare expensed when distributed.

Bad and doubtful debts

Refer to Note 1 (k) Impairment of financial assets.

Fair value of assets, services and resources provided free of chargeor for nominal consideration

Contributions of resources provided free of charge or fornominal consideration are recognised at their fair valuewhen the transferee obtains control over them, irrespectiveof whether restrictions or conditions are imposed over the useof the contributions, unless received from another agency as aconsequence of a restructuring of administrative arrangements.In the latter case, such a transfer will be recognised at itscarrying value.

Contributions in the form of services are only recognised whena fair value can be reliably determined and the services wouldhave been purchased if not donated.

(i) Other comprehensive income

Other comprehensive income measures the change in volumeor value of assets or liabilities that do not result fromtransactions.

Net gain/(loss) on non-financial assets

Net gain/(loss) on non-financial assets and liabilities includesrealised and unrealised gains and losses as follows:

Revaluation gains/(losses) of non-financial physical assets

Refer to Note 1(k) Revaluations of non-financial physicalassets.

Net gain/(loss) on disposal of non-financial assets

Any gain or loss on the disposal of non-financial assetsis recognised at the date of disposal and is the differencebetween the proceeds the carrying value of the asset atthat time.

Net gain/(loss) on financial instruments

Net gain/(loss) on financial instruments includes:� realised and unrealised gains and losses from revaluations

of financial instruments at fair value;� impairment and reversal of impairment for financial

instruments at amortised cost (refer to Note 1 (k)); and� disposals of financial assets and de-recognition of financial

liabilities.

2015 2014

Buildings- Structure Shell Building Fabric 40 to 45 years 40 to 45 years

- Site Engineering Servicesand Central Plant 30 to 40 years 30 to 40 years

Central Plant

- Fit Out 20 to 25 years 20 to 25 years

- Trunk ReticulatedBuilding Systems 20 to 25 years 20 to 25 years

Plant & Equipment 10 years 10 years

Computer Equipment 1-5 years 1-5 years

Furniture and Fittings 10 years 10 years

Motor Vehicles 5 years 5 years

Leasehold Improvements 5 to 40 Years 5 to 40 Years

Site Improvements 40 to 45 Years 40 to 45 Years

Please note: the estimated useful lives, residual values and depreciationmethod are reviewed at the end of each annual reporting period, andadjustments made where appropriate. As part of the buildings valuation,building values were separated into components and each componentassessed for its useful life which is represented above.

Finance costs

Finance costs are recognised as expenses in the period inwhich they are incurred.



41

Revaluations of financial instrument at fair value

Refer to Note 1 (j) Financial instruments.

Share of net profits/(losses) of associates and joint entities,excluding dividends.

Refer to Note 1 (d) Basis of consolidation.

Other gains/(losses) from other comprehensive income

Other gains/(losses) include:� transfer of amounts from the reserves to accumulated

surplus or net result due to disposal or de-recognitionor reclassification.

(j) Financial instrumentsFinancial instruments arise out of contractual agreements thatgive rise to a financial asset of one Hospital and a financialliability or equity instrument of another Hospital. Due to thenature of the Hospital’s activities, certain financial assets andfinancial liabilities arise under statute rather than a contract.Such financial assets and financial liabilities do not meet thedefinition of financial instruments in AASB 132 FinancialInstruments: Presentation. For example, statutory receivablesarising from taxes, fines and penalties do not meet the definitionof financial instruments as they do not arise under contract.

Where relevant, for note disclosure purposes, a distinction ismade between those financial assets and financial liabilitiesthat meet the definition of financial instruments in accordancewith AASB 132 and those that do not.

The following refers to financial instruments unless otherwisestated:

Categories of non-derivative financial instruments

Loans and receivables

Loans and receivables are financial instrument assets with fixedand determinable payments that are not quoted on an activemarket. These assets are initially recognised at fair value plusany directly attributable transaction costs. Subsequent to initialmeasurement, loans and receivables are measured at amortisedcost using the effective interest method, less any impairment.

Loans and receivables category includes cash and deposits(refer to Note 1(k)), term deposits with maturity greater thanthree months, trade receivables, loans and other receivables,but not statutory receivables.

Financial liabilities at amortised cost

Financial instrument liabilities are initially recognised on thedate they are originated. They are initially measured at fairvalue plus any directly attributable transaction costs.Subsequent to initial recognition, these financial instrumentsare measured at amortised cost with any difference betweenthe initial recognised amount and the redemption value beingrecognised in profit and loss over the period of the interest-bearing liability, using the effective interest rate method.

Financial instrument liabilities measured at amortised costinclude all of the Hospital’s contractual payables, deposits heldand advances received, and interest-bearing arrangementsother than those designated at fair value through profit or loss.

(k) Assets

Cash and Cash Equivalents

Cash and cash equivalents recognised on the balance sheetcomprise cash on hand and cash at bank, deposits at calland highly liquid investments with an original maturity of threemonths or less, which are held for the purpose of meeting shortterm cash commitments rather than for investment purposes,which are readily convertible to known amounts of cash andare subject to insignificant risk of changes in value

Receivables

Receivables consist of:

- contractual receivables, which includes mainly debtors inrelation to goods and services, loans to third parties, accruedinvestment income, and finance lease receivables and

- statutory receivables, which includes predominantlyamounts owing from the Victorian Government and Goodsand Services Tax (“GST”) input tax credits recoverable.

Receivables that are contractual are classified as financialinstruments and categorised as loans and receivables.Statutory receivables are recognised and measured similarlyto contractual receivables (except for impairment), but are notclassified as financial instruments because they do not arisefrom a contract.

Receivables are recognised initially at fair value andsubsequently measured at amortised cost, using the effectiveinterest method, less any accumulated impairment.

Trade debtors are carried at nominal amounts due and aredue for settlement within 30 days from the date of recognition.Collectability of debts is reviewed on an ongoing basis,and debts which are known to be uncollectible are written off.A provision for doubtful debts is recognised when there isobjective evidence that the debts may not be collected andbad debts are written off when identified.

Inventories

Inventories include goods and other property held either forsale, consumption or for distribution at no or nominal cost inthe ordinary course of business operations. It excludesdepreciable assets.

Inventories held for distribution are measured at cost, adjustedfor any loss of service potential. All other inventories, includingland held for sale, are measured at the lower of cost and netrealisable value.

Inventories acquired for no cost or nominal considerationsare measured at current replacement cost at the date ofacquisition.

The bases used in assessing loss of service potential forinventories held for distribution include current replacementcost and technical or functional obsolescence. Technicalobsolescence occurs when an item still functions for some orall of the tasks it was originally acquired to do, but no longermatches existing technologies. Functional obsolescence occurs



42

when an item no longer functions the way it did when it was firstacquired.

Cost for inventory is measured on the basis of weightedaverage cost.

Property, plant and equipment

All non-current physical assets are measured initially at costand subsequently re-valued at fair value less accumulateddepreciation and impairment. Where an asset is acquired forno or nominal cost, the cost is its fair value at the date ofacquisition.

More details about the valuation techniques and inputs usedin determining the fair value of non-financial physical assetsare discussed in Note 9 Property, Plant and Equipment.

Land and buildings are recognised initially at cost andsubsequently measured at fair value less accumulateddepreciation and impairment.

Plant, equipment and vehicles are recognised initially at costand subsequently measured at fair value less accumulateddepreciation and impairment. Depreciated historical costis generally a reasonable proxy for fair value because of theshort lives of the assets concerned.

Leasehold improvements

The cost of a leasehold improvement is capitalised as anasset and depreciated over the shorter of the remaining termof the lease or the estimated useful life of the improvements.

Revaluations of non-current physical assets

Non-current physical assets are measured at fair value andare re-valued in accordance with FRD 103F Non-currentphysical assets. This revaluation process normally occurs atleast every five years, based upon the asset’s GovernmentPurpose Classification, but may occur more frequently iffair value assessments indicate material changes in values.Independent valuers are used to conduct these scheduledrevaluations and any interim revaluations are determined inaccordance with the requirements of the FRDs. Revaluationincrements or decrements arise from differences between anasset’s carrying value and fair value.

Revaluation increments are recognised in ‘othercomprehensive income’ and are credited directly to theasset revaluation surplus, except that, to the extent that anincrement reverses a revaluation decrement in respect of thatsame class of asset previously recognised as an expense innet result, the increment is recognised as income in the netresult.

Revaluation decrements are recognised in ‘othercomprehensive income’ to the extent that a creditbalance exists in the asset revaluation surplus in respectof the same class of property, plant and equipment.

Revaluation increases and revaluation decreases relating toindividual assets within an asset class are offset against oneanother within that class but are not offset in respect of assetsin different classes.

Revaluation surplus is not transferred to accumulated fundson de-recognition of the relevant asset.

In accordance with FRD 103E, Latrobe Regional Hospital’snon-current physical assets were assessed to determinewhether revaluation of the non-current physical assets wasrequired.

Prepayments

Other non-financial assets include prepayments whichrepresent payments in advance of receipt of goods orservices or that part of expenditure made in one accountingperiod covering a term extending beyond that period.

Disposal of non-financial assets

Any gain or loss on the sale of non-financial assets isrecognised in the comprehensive operating statement.Refer to note 1(i) - ‘comprehensive income’.

Impairment of non-financial assets

Apart from intangible assets with indefinite useful lives, all othernon-financial assets are assessed annually for indications ofimpairment, except for:

� inventories.

If there is an indication of impairment, the assets concerned aretested as to whether their carrying value exceeds their possiblerecoverable amount. Where an asset’s carrying value exceedsits recoverable amount, the difference is written-off as anexpense except to the extent that the write-down can bedebited to an asset revaluation surplus amount applicableto that same class of asset.

If there is an indication that there has been a change in theestimate of an asset’s recoverable amount since the lastimpairment loss was recognised, the carrying amount shallbe increased to its recoverable amount. This reversal of theimpairment loss occurs only to the extent that the asset’scarrying amount does not exceed the carrying amountthat would have been determined, net of depreciation oramortisation, if no impairment loss had been recognisedin prior years.

It is deemed that, in the event of the loss or destruction of anasset, the future economic benefits arising from the use of theasset will be replaced unless a specific decision to the contraryhas been made. The recoverable amount for most assets ismeasured at the higher of depreciated replacement cost andfair value less costs to sell. Recoverable amount for assetsheld primarily to generate net cash inflows is measured atthe higher of the present value of future cash flows expectedto be obtained from the asset and fair value less costs to sell.

Investments in joint operations

In respect of any interest in joint operations, Latrobe RegionalHospital recognises in the financial statements:

� its assets, including its share of any assets held jointly � any liabilities including its share of liabilities that it had

incurred

� its revenue from the sale of its share of the output fromthe joint operation

� its share of the revenue from the sale of the output bythe joint operation and

� its expenses, including its share of any expenses incurredjointly.

De-recognition of financial assets

A financial asset (or, where applicable, a part of a financialasset or part of a group of similar financial assets) isderecognised when:

� the rights to receive cash flows from the asset have expiredor

� the Hospital retains the right to receive cash flows fromthe asset, but has assumed an obligation to pay them infull without material delay to a third party under a ‘passthrough’ arrangement or

� the Hospital has transferred its rights to receive cashflows from the asset and either:

(a) has transferred substantially all the risks and rewardsof the asset or

(b) has neither transferred nor retained substantiallyall the risks and rewards of the asset, but hastransferred control of the asset.

Where the Hospital has neither transferred nor retainedsubstantially all the risks and rewards or transferred control,the asset is recognised to the extent of the Hospital’scontinuing involvement in the asset.

Impairment of financial assets

At the end of each reporting period Latrobe Regional Hospitalassesses whether there is objective evidence that a financialasset or group of financial asset is impaired. All financialinstrument assets, except those measured at fair value throughprofit or loss, are subject to annual review for impairment.

Receivables are assessed for bad and doubtful debts on aregular basis. Bad debts considered as written off andallowances for doubtful receivables are expensed. Bad debtwritten off by mutual consent and the allowance for doubtfuldebts are classified as ‘other comprehensive income’ in thenet result.

The amount of the allowance is the difference between thefinancial asset’s carrying amount and the present value ofestimated future cash flows, discounted at the effective interestrate.

Where the fair value of an investment in an equity instrument atbalance date has reduced by 20 percent or more than its costprice or where its fair value has been less than its cost price fora period of 12 or more months, the financial asset is treated asimpaired.

In order to determine an appropriate fair value as at 30 June2015 for its portfolio of financial assets, the Hospital obtained avaluation based on the best available advice using an estimatedvaluation method through a reputable financial institution. This

value was compared against valuation methodologies providedby the issuer as at 30 June 2015. These methodologies werecritiqued and considered to be consistent with standard marketvaluation techniques.

In assessing impairment of statutory (non-contractual) financialassets, which are not financial instruments, professionaljudgement is applied in assessing materiality using estimates,averages and other computational methods in accordancewith AASB 136 Impairment of Assets.

Net gain/(loss) on financial instruments

Net gain/(loss) on financial instruments includes:� realised and unrealised gains and losses from revaluations

of financial instruments that are designated at fair valuethrough profit or loss or held-for-trading;

� impairment and reversal of impairment for financialinstruments at amortised cost; and

� disposals of financial assets and de-recognition of financialliabilities

Revaluations of financial instruments at fair value

The revaluation gain/(loss) on financial instruments at fair valueexcludes dividends or interest earned on financial assets.

(l) Liabilities

Payables

Payables consist of:� contractual payables which consist predominantly of

accounts payable representing liabilities for goods andservices provided to the Hospital prior to the end of thefinancial year that are unpaid, and arise when the Hospitalbecomes obliged to make future payments in respect ofthe purchase of those goods and services. The normalcredit terms for accounts payable are usually Net 30 days.

� statutory payables, such as goods and services taxand fringe benefits tax payables.

Contractual payables are classified as financial instrumentsand are initially recognised at fair value, and then subsequentlycarried at amortised cost. Statutory payables are recognisedand measured similarly to contractual payables, but are notclassified as financial instruments and not included in thecategory of financial liabilities at amortised cost, becausethey do not arise from a contract.

Borrowings

All borrowings are initially recognised at fair value of theconsideration received, less directly attributable transactioncosts (refer also to note 1(m) Leases). The measurement basissubsequent to initial recognition depends on whether theHospital has categorised its borrowings as either, financialliabilities designated at fair value through profit or loss, orfinancial liabilities at amortised cost. Any difference betweenthe initial recognised amount and the redemption value isrecognised in net result over the period of the borrowingsusing the effective interest method.



43

The classification depends on the nature and purpose of theborrowing. The Hospital determines the classification of itsborrowing at initial recognition.

Provisions

Provisions are recognised when the Hospital has a presentobligation, the future sacrifice of economic benefits is probable,and the amount of the provision can be measured reliably.

The amount recognised as a liability is the best estimate ofthe consideration required to settle the present obligation atreporting date, taking into account the risks and uncertaintiessurrounding the obligation. Where a provision is measuredusing the cash flows estimated to settle the present obligation,its carrying amount is the present value of those cash flows,using a discount rate that reflects the time value of moneyand risks specific to the provision.

When some or all of the economic benefits required to settlea provision are expected to be received from a third party, thereceivable is recognised as an asset if it is virtually certain thatrecovery will be received and the amount of the receivable canbe measured reliably.

Employee benefits

This provision arises for benefits accruing to employees inrespect of wages and salaries, annual leave and long serviceleave for services rendered to the reporting date.

Wages and salaries, annual leave and accrued days off

Liabilities for wages and salaries, including non-monetarybenefits, annual leave and accrued days off are all recognisedin the provision for employee benefits as “current liabilities”,because the hospital does not have an unconditional right todefer settlements of these liabilities.

Depending on the expectation of the timing of settlement,liabilities for wages and salaries, annual leave and accrueddays off are measured at:

� Undiscounted value - if the hospital expects to whollysettle within 12 months; or

� Present value - if the hospital does not expect to whollysettle within 12 months.

Long service leave (LSL)

The liability for long service leave (LSL) is recognised in theprovision for employee benefits.

Unconditional LSL (representing 10 or more years of continuousservice) is disclosed in the notes to the financial statements asa current liability even where the Hospital does not expect tosettle the liability within 12 months because it will not have theunconditional right to defer the settlement of the entitlementshould an employee take leave within 12 months.

The components of this current LSL liability are measured at:� Undiscounted value – if the Hospital expects to wholly settle

within 12 months; and� Present value – if the Hospital does not expect to wholly

settle within 12 months.

Conditional LSL (representing less than 10 years of continuousservice) is disclosed as a non-current liability. There is anunconditional right to defer the settlement of the entitlementuntil the employee has completed the requisite years of service.This non-current LSL liability is measured at present value.

Any gain or loss followed revaluation of the present value ofnon-current LSL liability is recognised as a transaction, exceptto the extent that a gain or loss arises due to changes in bondinterest rates for which it is then recognised as anothereconomic flow.

Termination benefits

Termination benefits are payable when employment isterminated before the normal retirement date or when anemployee decides to accept an offer of benefits in exchangefor the termination of employment.

The hospital recognises termination benefits when it isdemonstrably committed to either terminating the employmentof current employees according to a detailed formal planwithout possibility of withdrawal or providing terminationbenefits as a result of an offer made to encourage voluntaryredundancy. Benefits falling due more than 12 months afterthe end of the reporting period are discounted to present value.

Employee benefit on-costs

Provisions for on-costs, such as payroll tax, workerscompensation and superannuation are recognised togetherwith provisions for employee benefits.

Superannuation liabilities

The Hospital does not recognise any unfunded defined benefitliability in respect of the superannuation plans because theHospital has no legal or constructive obligation to pay futurebenefits relating to its employees; its only obligation is to paysuperannuation contributions as they fall due.

(m) Leases

A lease is a right to use an asset for an agreed period of time inexchange for payment. Leases are classified at their inceptionas either operating or finance leases based on the economicsubstance of the agreement so as to reflect the risks andrewards incidental to ownership.

Leases of property, plant and equipment are classified asfinance leases whenever the terms of the lease transfersubstantially all the risks and rewards of ownership to thelessee. All other leases are classified as operating leases.

Operating leases

Entity as lessee

Operating lease payments, including any contingent rentals,are recognised as an expense in the comprehensive operatingstatement on a straight line basis over the lease term, exceptwhere another systematic basis is more representative of thetime pattern of the benefits derived from the use of the leasedasset. The leased asset is not recognised in the balance sheet.



44

Lease Incentives

All incentives for the agreement of a new or renewed operatinglease are recognised as an integral part of the net considerationagreed for the use of the leased asset, irrespective of theincentive’s nature or form or the timing of payments.

In the event that lease incentives are received by the lesseeto enter into operating leases, such incentives are recognisedas a liability. The aggregate benefits of incentives are recognisedas a reduction of rental expense on a straight-line basis, exceptwhere another systematic basis is more representative of thetime pattern in which economic benefits from the leased assetis diminished.

Leasehold Improvements

The cost of leasehold improvements are capitalised as an assetand depreciated over the remaining term of the lease or theestimated useful life of the improvements, whichever is theshorter.

(n) Equity

Contributed capital

Consistent with Australian Accounting Interpretation 1038Contributions by Owners Made to Wholly-Owned Public SectorEntities and FRD 119A Contributions by Owners, appropriationsfor additions to the net asset base have been designated ascontributed capital. Other transfers that are in the nature ofcontributions to or distributions by owners that have beendesignated as contributed capital are also treated ascontributed capital

Property, plant & equipment revaluation surplus

The asset revaluation surplus is used to record increments anddecrements on the revaluation of non-current physical assets.

Restricted specific purpose surplus

A restricted specific purpose surplus is established wherethe Hospital has possession or title to the funds but has nodiscretion to amend or vary the restriction and/or conditionunderlying the funds received.

(o) Commitments

Commitments for future expenditure include operating andcapital commitments arising from contracts. Thesecommitments are disclosed by way of a note (refer to note 18)at their nominal value and are inclusive of the GST payable.In addition, where it is considered appropriate and providesadditional relevant information to users, the net present valuesof significant individual projects are stated. These futureexpenditures cease to be disclosed as commitments oncethe related liabilities are recognised on the balance sheet.

(p) Contingent assets and contingent liabilities

Contingent assets and contingent liabilities are not recognisedin the balance sheet, but are disclosed by way of note and, ifquantifiable, are measured at nominal value. Contingent assets

and contingent liabilities are presented inclusive of GSTreceivable or payable respectively.

(q) Goods and Services Tax (“GST”)

Income, expenses and assets are recognised net of the amountof associated GST, unless the GST incurred is not recoverablefrom the taxation authority. In this case, the GST payable isrecognised as part of the cost of acquisition of the asset oras part of the expense.

Receivables and payables are stated inclusive of the amount ofGST receivable or payable. The net amount of GST recoverablefrom, or payable to, the taxation authority is included with otherreceivables or payables in the balance sheet.

Cash flows are presented on a gross basis. The GSTcomponents of cash flows arising from investing or financingactivities which are recoverable from, or payable to the taxationauthority, are presented as an operating cash flow.

Commitments for expenditure and contingent assets andliabilities are presented on a gross basis.

(r) Events after the reporting period

Assets, liabilities, income or expenses arise from pasttransactions or other past events. Where the transactionsresult from an agreement between the Hospital and otherparties, the transactions are only recognised when theagreement is irrevocable at or before the end of thereporting period.

Adjustments are made to amounts recognised in the financialstatements for events which occur between the end of thereporting period and the date when the financial statementsare authorised for issue, where those events provideinformation about conditions which existed at the reportingdate. Note disclosure is made about events between the endof the reporting period and the date the financial statements areauthorised for issue where the events relate to conditions whicharose after the end of the reporting period that are consideredto be of material interest.

(s) Foreign currency

All foreign currency transactions during the financial year arebrought to account using the exchange rate in effect at the dateof the transaction. Foreign monetary items existing at the end ofthe reporting period are translated at the closing rate at the dateof the end of the reporting period. Nonmonetary assets carriedat fair value that are denominated in foreign currencies aretranslated to the functional currency at the rates prevailingat the date when the fair value was determined.

(t) AASs issued that are not yet effective

Certain new Australian accounting standards have beenpublished that are not mandatory for the 30 June 2015reporting period. DTF assesses the impact of all these newstandards and advises the Hospital of their applicability andearly adoption where applicable.



45

As at 30 June 2015, the following standards and interpretationshad been issued by the AASB but were not yet effective. Theybecome effective for the first financial statements for reporting

periods commencing after the stated operative dates asdetailed in the table below. Latrobe Regional Hospital hasnot and does not intend to adopt these standards early.



46

Applicable forStandard/ Summary Annual reporting Impact on financial Statements

Interpretation periods beginning on

AASB 9Financialinstruments

1 Jan 2018 The assessment has identifiedthat the financial impact of availablefor sale (AFS) assets will nowbe reported through othercomprehensive income (OCI)and no longer recycled to theprofit and loss.

While the preliminary assessmenthas not identified any materialimpact arising from AASB 9,it will continue to be monitoredand assessed.

The key changes include the simplifiedrequirements for the classification andmeasurement of financial assets, a newhedging accounting model and a revisedimpairment loss model to recogniseimpairment losses earlier, as opposedto the current approach that recognisesimpairment only when incurred.

AASB 14Regulatory DeferralAccounts #

1 Jan 2016 The assessment has indicated thatthere is no expected impact, asthose that conduct rate-regulatedactivities have already adoptedAustralian Accounting Standards.

AASB 14 permits first-time adoptersof Australian Accounting Standardswho conduct rate-regulated activities tocontinue to account for amounts relatedto rate regulation in accordance withtheir previous GAAP.

AASB 15Revenue fromContracts withCustomers

1 Jan 2017(Exposure Draft 263- potential deferral

to 1 Jan 2018)

The changes in revenue recognitionrequirements in AASB 15 mayresult in changes to the timingand amount of revenue recordedin the financial statements. TheStandard will also require additionaldisclosures on service revenueand contract modifications.

A potential impact will be theupfront recognition of revenuefrom licenses that cover multiplereporting periods. Revenue thatwas deferred and amortised overa period may now need to berecognised immediately as atransitional adjustment againstthe opening returned earnings ifthere are no former performanceobligations outstanding.

The core principle of AASB 15 requiresan entity to recognise revenue when theentity satisfies a performance obligationby transferring a promised good or serviceto a customer.



AASB 1056SuperannuationEntities #

1 July 2016 The assessment has indicated thatthere will be no impact on theentity, as the Accounting Standardonly affects superannuationentities' own reporting.

AASB 1056 replaces AAS 25 FinancialReporting by Superannuation Plans.The standard was developed in light ofchanges in recent years, developmentsin the superannuation industryand Australia’s adoption of IFRS.Some of the key changes in AASB 1056include:

� the level of integration between AASB1056 and other AASB standards

� a revised definition of asuperannuation entity

� revised and consistent content for thefinancial statements

� use of fair value rather than net marketvalue for measuring assets andliabilities

� revised member liability recognitionand measurement requirements

� revised disclosure principles



47

AASB 2014 - 4Amendmentsto AustralianAccountingStandards -Clarification ofAcceptableMethods ofDepreciationand Amortisation[AASB 116 &AASB 138]

1 Jan 2016 The assessment has indicated thatthere is no expected impact as therevenue-based method is not usedfor depreciation and amortisation.

Amends AASB 116 Property, Plant andEquipment and AASB 138 IntangibleAssets to:

� establish the principle for the basisof depreciation and amortisationas being the expected pattern ofconsumption of the future economicbenefits of an asset;

� prohibit the use of revenuebasedmethods to calculate the depreciationor amortisation of an asset, tangible orintangible, because revenue generallyreflects the pattern of economicbenefits that are generated fromoperating the business, rather thanthe consumption through the useof the asset.

AASB 2014 - 1Amendmentsto AustralianAccountingStandards[Part E FinancialInstruments]

1 Jan 2018 This amending standard will deferthe application period of AASB 9to the 2018-19 reporting periodin accordance with the transitionrequirements.

Amends various AASs to reflect theAASB's decision to defer the mandatoryapplication date of AASB 9 to annualreporting periods beginning on or after1 January 2018 as a consequence ofChapter 6 Hedge Accounting, and toamend reduced disclosure requirements.



AASB 2014 - 10Amendmentsto AustralianAccountingStandards - Saleor Contribution ofAssets betweenan Investor andits Associate orJoint Venture[AASB 10& AASB 128]

1 Jan 2016 The assessment has indicatedthat there is limited impact, asthe revisions to AASB 10 andAASB 128 are guidance in nature.

AASB 2014-10 amends AASB 10Consolidated Financial Statements andAASB 128 Investments in Associates toensure consistent treatment in dealingwith the sale or contribution of assetsbetween an investor and its associateor joint venture. The amendmentsrequire that:

� a full gain or loss to be recognisedby the investor when a transactioninvolves a business (whether it ishoused in a subsidiary or not) and

� a partial gain or loss to be recognisedby the parent when a transactioninvolves assets that do not constitutea business, even if these assets arehoused in a subsidiary.

AASB 2015 - 6Amendmentsto AustralianAccountingStandards -Extending RelatedParty Disclosures toNot-for-Profit PublicSector Entities[AASB 10, AASB124 & AASB 1049]

1 Jan 2016 The amending standard will resultin extended disclosures on theentity's key management personnel(KMP), and the related partytransactions.

The Amendments extend the scopeof AASB 124 Related Party Disclosuresto not-for-profit public sector entities.A guidance has been included to assistthe application of the Standard bynot-for-profit public sector entities.



48

AASB 2014-9Amendmentsto AustralianAccountingStandards -Equity Method inSeparate FinancialStatements [AASB 1,127 & 128]

1 Jan 2016 The assessment indicates thatthere is no expected impact asthe entity will continue to accountfor the investments in subsidiaries,joint ventures and associates usingthe cost method as mandated ifseparate financial statements arepresented in accordance withFRD 113A.

Amends AASB 127 Separate FinancialStatements to allow entities to usethe equity method of accounting forinvestments in subsidiaries, joint venturesand associates in their separate financialstatements.

In addition to the new standards above, the AASB has issued a list of amending standards that are not effective for the 2014-15reporting period. In general, these amending standards include editorial and references changes that are expected to have insignificantimpacts on public sector reporting.



49

(u) Category groups

The Hospital has used the following category groups forreporting purposes for the current and previous financial years.

Admitted Patient Services (Admitted Patients) comprises all acuteand subacute admitted patient services, where services aredelivered in public hospitals.

Mental Hospitals (Mental Health) comprises all specialised mentalhealth services providing a range of inpatient, community basedresidential, rehabilitation and ambulatory services which treatand support people with a mental illness and their families andcarers. These services aim to identify mental illness early, andseek to reduce its impact through providing timely acute careservices and appropriate longer-term accommodation andsupport for those living with mental illness.

Non Admitted Services comprises acute and subacute nonadmitted services, where services are delivered in publichospital clinics and provide models of integrated communitycare, which significantly reduces the demand for hospital bedsand supports the transition from hospital to home in a safe andtimely manner.

Emergency Department Services (EDS) comprises all emergencydepartment services.

Aged Care comprises a range of in-home, specialist geriatric,residential care and community based programs and supportservices, such as Home and Community Care (HACC) that aretargeted to older people, people with a disability, and theircarers.

Primary, Community and Dental Health comprises a range ofhome-based, community-based, community, primary healthand dental services including health promotion and counselling,physiotherapy, speech therapy, podiatry and occupationaltherapy and a range of dental health services.

Residential Aged Care including Mental Health (RAC incl. MentalHealth) referred to in the past as psychogeriatric residentialservices, comprises those Commonwealth-licensed residentialaged care services in receipt of supplementary funding fromthe department under the mental health program. It excludesall other residential services funded under the mental healthprogram, such as mental health funded community care unitsand secure extended care units.

Other Services not reported elsewhere - (Other) comprises servicesnot separately classified above, including: Public Hospitalsincluding Laboratory testing, Blood Borne Viruses/SexuallyTransmitted Infections clinical services, Koori liaison officers,immunisation and screening services, Drugs services includingdrug withdrawal, counselling and the needle and syringeprogram, Disability services including aids and equipment andflexible support packages to people with a disability, CommunityCare programs including sexual assault support, early parentingservices, parenting assessment and skills development, andvarious support services. Health and Community Initiatives alsofalls in this category group.


50

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l Rev

enue

fro

m N

on-

Op

erat

ing

Act

iviti

es1,

193

3519

245

4-

--

5,40

87,

282

Cap

ital P

urpo

se In

com

e (e

xclu

ding

inte

rest

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--

--

--

13,1

7613

,176

Tota

l Cap

ital P

urp

ose

Inco

me

--

--

--

-13

,176

13,1

76

Tota

l Rev

enue

12

6,02

44,

976

12,7

9040

,111

996

-58

20,8

7120

5,82

6

Indi

rect

con

trib

utio

ns b

y D

epar

tmen

t of H

ealth

(1 J

uly

2014

-31

Dec

201

4)/D

epar

tmen

t of H

ealth

and

Hum

an S

ervi

ces

(1 J

an-3

0 Ju

ne 2

015)

.

Dep

artm

ent o

f Hea

lth/D

epar

tmen

t of H

ealth

and

Hum

an S

ervi

ces

mak

es c

erta

in p

aym

ents

on

beha

lf of

the

Hos

pita

l. Th

ese

amou

nts

have

bee

n br

ough

t to

acco

unt

inde

term

inin

g th

e op

erat

ing

resu

lt fo

r th

e ye

ar b

y re

cord

ing

them

as

reve

nue

and

expe

nses

.


52

Note

3: A

naly

sis

of E

xpen

ses

by S

ourc

e

RA

C in

c.A

dm

itted

No

n-M

enta

lM

enta

lP

atie

nts

Ad

mitt

edE

DS

Hea

lthH

ealth

Oth

erTo

tal

2015

2015

2015

2015

2015

2015

2015

$'00

0$'

000

$'00

0$'

000

$'00

0$'

000

$'00

0

Em

ploy

ee E

xpen

ses

70,0

612,

223

13,6

2836

,662

1,24

93,

422

127,

245

Non

Sal

ary

Labo

ur C

osts

10,9

06-

176

340

--

11,4

22

Sup

plie

s &

Con

sum

able

s27

,248

410

5,65

62,

011

451,

132

36,5

02

Oth

er E

xpen

ses

9,91

72,

514

2,27

35,

810

4075

821

,312

Tota

l Exp

end

iture

118,

132

5,14

721

,733

44,8

231,

334

5,31

219

6,48

1

Exp

endi

ture

for

Cap

ital P

urpo

ses

--

--

-27

327

3

Loss

on

disp

osal

of n

on-fi

nanc

ial

asse

ts (r

efer

no

te 2

a)-

--

--

7171

Dep

reci

atio

n &

Am

ortis

atio

n (r

efer

no

te 4

)-

--

--

8,78

88,

788

Tota

l Oth

er E

xpen

ses

--

--

-9,

132

9,13

2

Tota

l Exp

ense

s 11

8,13

25,

147

21,7

3344

,823

1,33

414

,444

205,

613

RA

C in

c.A

dm

itted

No

n-M

enta

lM

enta

lP

atie

nts

Ad

mitt

edE

DS

Hea

lthH

ealth

Oth

erTo

tal

2014

2014

2014

2014

2014

2014

2015

$'00

0$'

000

$'00

0$'

000

$'00

0$'

000

$'00

0

Em

ploy

ee E

xpen

ses

69,6

681,

795

8,90

934

,380

1,23

13,

173

119,

156

Non

Sal

ary

Labo

ur C

osts

10,2

52-

168

437

-17

10,8

74

Sup

plie

s &

Con

sum

able

s27

,308

945,

012

1,93

455

1,34

035

,743

Oth

er E

xpen

ses

10,1

932,

078

2,08

35,

520

5478

120

,709

Tota

l Exp

end

iture

11

7,42

13,

967

16,1

7242

,271

1,34

05,

311

186,

482

Exp

endi

ture

for

Cap

ital P

urpo

ses

--

--

--

-

Loss

on

disp

osal

of n

on-fi

nanc

ial a

sset

s(r

efer

no

te 2

a)-

--

--

--

Dep

reci

atio

n &

Am

ortis

atio

n (r

efer

no

te 4

)-

--

--

8,40

68,

406

Tota

l Oth

er E

xpen

ses

--

--

-8,

406

8,40

6

Tota

l Exp

ense

s 11

7,42

13,

967

16,1

7242

,271

1,34

013

,717

194,

888


53

Note 3a: Analysis of Expense and Revenue by Internally Managed and RestrictedSpecific Purpose Funds

TOTAL TOTAL TOTAL TOTAL2015 2014 2015 2014

$’000 $’000 $’000 $’000

Commercial Activities

Pharmacy Services Regional 413 585 413 585

Consulting Suites 518 565 618 572

ICT External Sales 143 156 260 258

Salary Packaging 147 147 499 461

Regional Biomedical 28 25 55 48

External Supply 40 79 44 79

Tandara Caravan Park 343 337 367 385

Television Service 5 4 117 111

Non-Commercial Activities

Gippsland Health Alliance 1,600 1,664 1,600 1,664

BreastScreen Victoria 1,465 1,465 1,587 1,530

Private Practice Fund 57 46 460 480

William Buckland (Rad/Onc) Special Projects 56 - 464 500

Cancer Care Donor Funds - - 107 95

General Donor Funds - - 92 180

Fundraising Operations 30 - 81 -

GCCC General Donor Fund 7 10 68 73

Medical Library Monash Fund 8 6 36 36

Critical Care Donor Funds 13 15 29 32

Chemotherapy Donor Funds 3 2 24 27

Allied Health Donor Donations 2 29 13 172

Gipps Cancer Sup Fundraising Grp 13 17 13 20

Other SPFI's Expenditure 116 20 40 98

TOTAL 5,007 5,172 6,987 7,406

EXPENSE REVENUE


$'000 $'000

Depreciation

Buildings 5,979 5,782

Site Improvements 137 160

Plant & Equipment

- Medical Equipment 2,062 1,945

- Non Medical Equipment 262 242

- Computers & Communication 115 81

- Furniture & Fittings 130 95

- Motor Vehicles 57 56

Total Depreciation 8,742 8,361

Amortisation

Amortisation of Leasehold Improvements 46 45

Total Amortisation 46 45

Total Depreciation and Amortisation 8,788 8,406

Note 4: Depreciation and Amortisation


54


$'000 $'000

Cash on hand 7,943 3,841

Patient Trust Account 17 15

Employee Salary Packaging Account 1,020 761

Deposits at call

- Government Agency 10,000 -

- Financial Institutions - 40,894

Total Cash and Cash Equivalents 18,980 45,511

Represented by:

Cash for Health Service Operations (as per Cash Flow Statement) 18,963 45,496

Total Cash and Cash Equivalents 18,963 45,496

Note 5: Cash and Cash EquivalentsFor the purposes of the cash flow statement, cash assets includes cash on hand and inbanks, and short-term deposits which are readily convertible to cash on hand, and aresubject to an insignificant risk of change in value, net of outstanding bank overdrafts.

All term investments have been placed with Treasury Corporation Victoria in compliancewith the Ministerial Standing Direction 4.5.6.


55


$'000 $'000

Note 6: Receivables

CURRENT

Contractual

Inter Hospital Debtors 626 471

Trade Debtors 898 864

Patient Fees 400 719

Accrued Investment Income 9 269

Sundry Debtors 1,482 1,212

Less Allowance for Doubtful Debts

Trade Debtors (41) (31)

Sundry Debtors (7) (126)

Patient Fees (57) (17)

3,310 3,361

Statutory

GST Receivable 787 791

787 791

TOTAL CURRENT RECEIVABLES 4,097 4,152

NON CURRENT

Statutory

Long Service Leave - Department of Health and Human Services 3,028 2,760

TOTAL NON-CURRENT RECEIVABLES 3,028 2,760

TOTAL RECEIVABLES 7,125 6,912

(a) Movement in the Allowance for doubtful debts

Balance at beginning of year 174 206

Amounts written off during the year (121) -

Increase/(decrease) in allowance recognised in net result 52 (32)

Balance at end of year 105 174

(b) Ageing analysis of receivables

Please refer to note 17 for the ageing analysis of contractual receivables.

(c) Nature and extent of risk arising from receivables

Please refer to note 17 for the nature and extent of credit risk arising from contractual receivables.


56


$'000 $'000

CURRENT

Loans and receivables

Term Deposit

Aust. Dollar Term Deposits > 3 months (i) 27,000 -

TOTAL INVESTMENTS AND OTHER FINANCIAL ASSETS 27,000 -

Represented by:

Health Service Investments 27,000 -

TOTAL INVESTMENTS AND OTHER FINANCIAL ASSETS 27,000 -

All term investments have been placed with Treasury Corporation Victoria in compliance with the Ministerial StandingDirection 4.5.6.(i) Term deposits under 'investments and other financial assets' class include only term deposits with maturity greater than

90 days.

(a) Ageing analysis of investments and other financial assets

Please refer to note 17 for the ageing analysis of investments and other financial assets.

(b) Nature and extent of risk arising from investments and other financial assets

Please refer to note 17 for the nature and extent of credit risk arising from investments and other financial assets.

Note 7: Investments and other Financial Assets


$'000 $'000

Pharmaceuticals

At cost 965 1,030

Other Consumables

At cost 196 160

TOTAL INVENTORIES 1,161 1,190

Note 8: Inventories


$'000 $'000

Land

Land at Fair Value 5,772 6,790

Total Land 5,772 6,790

Buildings & Improvements

Buildings & Improvements at Fair Value 121,055 99,701

Less Acc'd Depreciation 6,152 243

114,903 99,458

Site Improvements at Fair Value 2,297 2,281

Less Acc'd Depreciation 136 -

2,161 2,281

Total Buildings & Improvements 117,064 101,739

Leasehold Improvements

Leasehold Improvements at cost 183 1,238

Less Acc'd Depreciation 106 1,126

Total Leasehold Improvements 77 112

Plant and Equipment

Non Medical Equipment at Fair Value 3,308 2,741

Less Acc'd Depreciation 2,063 1,801

1,245 940

Medical Equipment at Fair Value 25,658 24,166


9,111 9,660

Computer Equipment at Fair Value 1,330 1,047

Less Acc'd Depreciation 757 642

573 405

Furniture & Fittings at Fair Value 1,991 1,585


779 503

Motor Vehicles at Fair Value 385 317

Less Acc'd Depreciation 305 248

80 69

Total Plant & Equipment 11,788 11,577

Under Construction

Assets under construction 6,760 19,574

Total Assets Under Construction 6,760 19,574

TOTAL PROPERTY, PLANT & EQUIPMENT 141,461 139,792

Note 9: Property, Plant & Equipmenta) Gross carrying amount and accumulated depreciation


57

Note 9: Property, Plant & Equipment (continued)b) Reconciliations of the carrying amounts of each class of asset

AssetsBuildings & Plant & Medical Under Leasehold

Land Improvements Equipment Equipment Construction Improvements Total$'000 $'000 $'000 $'000 $'000 $'000 $'000

Balance at 1 July 2013 4,697 84,025 1,757 10,107 12,889 157 113,632

Additions 561 7,055 634 1,498 14,616 - 24,364

Transfers from Works In Progress - - - - (7,931) - (7,931)

Revaluation Increments/(Decrements) 1,532 16,601 - - - - 18,133

Depreciation and Amortisation(note 4) - (5,942) (474) (1,945) - (45) (8,406)

Balance at 1 July 2014 6,790 101,739 1,917 9,660 19,574 112 139,792

Additions - 20 491 1,085 6,876 11 8,483

Assets transferred ascapital contributions - - - - 3,061 - 3,061

Transfers from Works In Progress - 21,490 833 428 (22,751) - -

Revaluation Increments/(Decrements) (1,018) - - - - - (1,018)

Disposals - (69) - - - - (69)

Depreciation and Amortisation(note 4) - (6,116) (564) (2,062) - (46) (8,788)

Balance at 30 June 2015 5,772 117,064 2,677 9,111 6,760 77 141,461


58

Land and buildings carried at valuation

In 2014, an independent valuation of the Hospital's land and buildings was performed by the Valuer-General Victoria todetermine the fair value of the land and buildings. The valuation, which conforms to Australian Valuation Standards, wasdetermined by reference to the amounts for which assets could be exchanged between knowledgeable willing parties inan arm's length transaction. The valuation was based on independent assessments.

Subsequently, as required by FRD103E 'Non Current Physical Assets' a managerial revaluation of land was undertakenat 30 June 2015. The indexation factors provided by the Valuer-General Victoria was used for this revaluation.

Other plant & equipment

All other plant & equipment (medical and non-medical) were reviewed using indexation (Health, Melbourne) due to a lackof a reliable second hand market. The Purchase Value and Written Down Value (WDV) are indexed to determine if a materialrevaluation exists. If the fair value adjustment of total plant and equipment is less than 10% of WDV, it would be considered thatWDV approximates fair value.


59

Carrying Fair value measurement at endamount as at of reporting period

30 June 2015 Level 1 (1) Level 2 (1) Level 3 (1)

Land at fair value

Specialised land 5,772 - 2,334 3,438

Total of land at fair value 5,772 - 2,334 3,438

Buildings at fair value

Specialised buildings 114,903 - - 114,903

Total of building at fair value 114,903 - - 114,903

Plant and equipment at fair value

Plant equipment and vehicles at fair value

- Vehicles 80 - - 80

- Plant and equipment 2,597 - - 2,597

Total of plant, equipment and vehicles at fair value 2,677 - - 2,677

Medical equipment at fair value

- Medical equipment 9,111 - - 9,111

Total medical equipment at fair value 9,111 - - 9,111

Assets under construction at fair value

Assets under construction 6,760 6,760 - -

Total assets under construction at fair value 6,760 6,760 - -

139,223 6,760 2,334 130,129

Note(i) Classified in accordance with the fair value hierarchy, see Note 1There have been no transfers between levels during the period.

Non-specialised land and non-specialised buildingsNon-specialised land and non-specialised buildings are valued using the market approach. Under this valuation method, the assetsare compared to recent comparable sales or sales of comparable assets which are considered to have nominal or no addedimprovement value.For non-specialised land and non-specialised buildings, an independent valuation was performed by independent valuers Opteonto determine the fair value using the market approach. Valuation of the assets was determined by analysing comparable sales andallowing for share, size, topography, location and other relevant factors specific to the asset being valued. An appropriate rate persquare metre has been applied to the subject asset. The effective date of the valuation is 30 June 2014.To the extent that non-specialised land and non-specialised buildings do not contain significant, unobservable adjustments, thesesets are classified as Level 2 under the market approach.

Specialised land and specialised buildingsThe market approach is also used for specialised land and specialised buildings although is adjusted for the community serviceobligation (CSO) to reflect the specialised nature of the assets being valued. Specialised assets contain significant, unobservableadjustments; therefore these assets are classified as Level 3 under the market based direct comparison approach.The CSO adjustment is a reflection of the valuer’s assessment of the impact of restrictions associated with an asset to the extentthat is also equally applicable to market participants. This approach is in light of the highest and best use consideration requiredfor fair value measurement, and takes into account the use of the asset that is physically possible, legally permissible and financiallyfeasible. As adjustments of CSO are considered as significant unobservable inputs, specialised land would be classified as Level 3assets.

VehiclesThe Health Service acquires new vehicles and at times disposes of them before completion of their economic life. The processof acquisition, use and disposal in the market is managed by the Health Service who set relevant depreciation rates during useto reflect the consumption of the vehicles. As a result, the fair value of vehicles does not differ materially from the carrying value(depreciated cost).

Note 9: Property, Plant & Equipment (continued)(c) Fair value measurement hierarchy for assets as at 30 June 2015

60



Carrying Fair value measurement at endamount as at of reporting period

30 June 2014 Level 1 (1) Level 2 (1) Level 3 (1)

Land at fair value

Specialised land 6,790 - 2,746 4,044

Total of land at fair value 6,790 - 2,746 4,044

Buildings at fair value

Specialised buildings 99,458 - - 99,458

Total of building at fair value 99,458 - - 99,458

Plant and equipment at fair value

Plant equipment and vehicles at fair value

- Vehicles 69 - - 69

- Plant and equipment 1,848 - - 1,848

Total of plant, equipment and vehicles at fair value 1,917 - - 1,917

Medical equipment at fair value

- Medical equipment 9,660 - - 9,660

Total medical equipment at fair value 9,660 - - 9,660

Assets under construction at fair value

Assets under construction 19,574 19,574 - -

Total assets under construction at fair value 19,574 19,574 - -

137,399 19,574 2,746 115,079

Note(i) Classified in accordance with the fair value hierarchy, see Note 1.There have been no transfers between levels during the period.Non-specialised land and non-specialised buildingsNon-specialised land and non-specialised buildings are valued using the market approach. Under this valuation method, the assetsare compared to recent comparable sales or sales of comparable assets which are considered to have nominal or no addedimprovement value.For non-specialised land and non-specialised buildings, an independent valuation was performed by independent valuers Opteonto determine the fair value using the market approach. Valuation of the assets was determined by analysing comparable sales andallowing for share, size, topography, location and other relevant factors specific to the asset being valued. An appropriate rate persquare metre has been applied to the subject asset. The effective date of the valuation is 30 June 2014.To the extent that non-specialised land and non-specialised buildings do not contain significant, unobservable adjustments,these assets are classified as Level 2 under the market approach.

Specialised land and specialised buildingsThe market approach is also used for specialised land and specialised buildings although is adjusted for the community serviceobligation (CSO) to reflect the specialised nature of the assets being valued. Specialised assets contain significant, unobservableadjustments; therefore these assets are classified as Level 3 under the market based direct comparison approach.The CSO adjustment is a reflection of the valuer’s assessment of the impact of restrictions associated with an asset to the extentthat is also equally applicable to market participants. This approach is in light of the highest and best use consideration requiredfor fair value measurement, and takes into account the use of the asset that is physically possible, legally permissible and financiallyfeasible. As adjustments of CSO are considered as significant unobservable inputs, specialised land would be classified as Level 3assets.

Plant and equipmentPlant and equipment is held at carrying value (depreciated cost). When plant and equipment is specialised in use, such that it israrely sold other than as part of a going concern, the depreciated replacement cost is used to estimate the fair value. Unless thereis market evidence that current replacement costs are significantly different from the original acquisition cost, it is considered unlikelythat depreciated replacement cost will be materially different from the existing carrying value. There were no changes in valuation techniques throughout the period to 30 June 2015.For all assets measured at fair value, the current use is considered the highest and best use.


61


For the health services, the depreciated replacement cost method is used for the majority of specialised buildings, adjusting for theassociated depreciation. As depreciation adjustments are considered as significant and unobservable inputs in nature, specialisedbuildings are classified as Level 3 for fair value measurements.

An independent valuation of the Hospital’s specialised land and specialised buildings was performed by the Valuer-GeneralVictoria. The valuation was performed using the market approach adjusted for CSO. The effective date of the valuation is30 June 2014.

VehiclesThe Health Service acquires new vehicles and at times disposes of them before completion of their economic life. The processof acquisition, use and disposal in the market is managed by the Health Service who set relevant depreciation rates during useto reflect the consumption of the vehicles. As a result, the fair value of vehicles does not differ materially from the carrying value(depreciated cost).Plant and equipmentPlant and equipment is held at carrying value (depreciated cost). When plant and equipment is specialised in use, such that it israrely sold other than as part of a going concern, the depreciated replacement cost is used to estimate the fair value. Unless thereis market evidence that current replacement costs are significantly different from the original acquisition cost, it is consideredunlikely that depreciated replacement cost will be materially different from the existing carrying value. There were no changes in valuation techniques throughout the period to 30 June 2015.For all assets measured at fair value, the current use is considered the highest and best use.

(d) Reconciliation of Level 3 fair value

Plant and MedicalLand Buildings equipment equipment2015

Opening Balance 4,044 99,458 1,917 9,660

Purchases - 21,423 1,324 1,513

Sales - (69) - -

Gains or losses recognised in net result

- Depreciation - (5,909) (564) (2,062)

Subtotal - 15,445 760 (549)

Items recognised in other comprehensive income

- Revaluation (606) - - -

Subtotal (606) - - -

Closing Balance 3,438 114,903 2,677 9,111

Unrealised gains/(losses) on non-financial assets - - - -

3,438 114,903 2,677 9,111

2014

Opening Balance 2,556 80,690 1,757 10,107

Purchases - 7,010 634 1,498

Sales - - - -

Gains or losses recognised in net result

- Depreciation - (5,753) (474) (1,945)

- Impairment loss - - - -

Subtotal - 1,257 160 (447)

Items recognised in other comprehensive income

- Revaluation 1,488 17,511 - -

Subtotal 1,488 17,511 - -

Closing Balance 4,044 99,458 1,917 9,660

Unrealised gains/(losses) on non-financial assets - - - -

4,044 99,458 1,917 9,660

Note

Classified in accordance with the fair value hierarchy, see Note 1.

There have been no transfers between levels during the period.

62


Note 9: Property, Plant & Equipment (continued)(e) Description of significant unobservable inputs to Level 3 valuations:

Significant Range Sensitivity of fair valueSpecialised Valuation unobservable (weighted measurement to changes in

land technique inputs average significant unobservable inputs

Land - 9 Village Avenue, Traralgon 20%Sales evidence - Unit ofvalue by comparativebasis ($ per m2)

Market/Direct Comparisonapproach

Land - 10 Village Avenue,Traralgon

20%Sales evidence - Unit ofvalue by comparativebasis ($ per m2)



20% (i)Community ServiceObligation (CSO)adjustment

A significant increase or decreasein the CSO adjustment wouldresult in a significantly lower(higher) fair value

Market/Adjusted




Land - 158-160 Princes Hwy,Traralgon



Land - 158-160 Princes Hwy,Traralgon

20% (i)Community ServiceObligation (CSO)adjustment

A significant increase or decreasein the CSO adjustment wouldresult in a significantly lower(higher) fair value

Market/Adjusted

Specialised buildings

Buildings - 39 Valley Drive,Traralgon

$1,000 -$1,500/m2

($1,300)

Building Costs - Costapproach using bestavailable evidence fromrecognised buildingcost indicators and/orQuantity Surveyors andexamples of currentcosts

A significant increase or decreasein direct cost per square metreadjustment would result in asignificantly higher or lowerfair value

Cost Approach or DRC

Buildings- 10 Village Ave,Traralgon



Buildings - 10 Village Ave,Traralgon

$1,000 -$1,500/m2

($1,300)

Building Costs - Costapproach using bestavailable evidence fromrecognised building costindicators and/orQuantity Surveyors andexamples of currentcosts




Buildings - 158-160 Princes Hwy,Traralgon



Buildings - 158-160 Princes Hwy,Traralgon

$1,000 -$1,500/m2

($1,300)

Building Costs- Costapproach using bestavailable evidence fromrecognised building costindicators and/or QuantitySurveyors amd examplesof current costs



63

Note 9: Property, Plant & Equipment (continued)(e) Description of significant unobservable inputs to Level 3 valuations:

Significant Range Sensitivity of fair valueSpecialised Valuation unobserved (weighted measurement to changes in

land technique inputs average significant unobservable inputs

Plant and equipmentat fair value

Plant and equipment $9,000 -$10,000($9,500)

Cost per unit A significant increase or decreasein cost per unit would result in asignificantly higher or lower fairvalue

Depreciated replacement cost

5-10 years(7 years)

Useful life of PPE A significant increase or decreasein the estimated useful life ofthe asset would result in asignificantly higher or lowervaluation

Medical equipmentat fair value

Medical equipment $6,000 -$7,000($6,500)

Cost per unit Increase (decrease) in grossreplacement cost would resultin a significantly higher (lower)fair value


Assets under constructionat fair value

Assets under construction -various capital works

$500 - $600($550)

Cost per unit A significant increase or decreasein direct cost per unit adjustmentwould result in a significantlyhigher or lower fair value


10-15 years(12 years)

Useful life of medicalequipment

Increase (decrease) in useful lifewould result in a significantlyhigher (lower) fair value

Vehicles

Motor Vehicles $9,000 -$10,000per unit($9500per unit)

Cost per unit A significant increase or decreasein cost per unit would result in asignificantly higher or lower fairvalue


3-5 years(3 years)

Useful life of vehicles A significant increase or decreasein the estimated useful life ofthe asset would result in asignificantly higher or lowervaluation

(i) CSO adjustments of 20% were applied to reduce the market approach value for the Department’s specialised land.

64



$'000 $'000

CURRENT

Contractual

Trade Creditors (i) 4,237 3,177

Other Creditors 117 40

Accrued Expenses 4,201 5,234

Amounts payable to governments and agencies 252 583

8,807 9,034

Statutory

GST Payable 154 97

Department of Health and Human Services (ii) 147 1,541

301 1,638

TOTAL CURRENT 9,108 10,672

(i) The average credit period is 30 days. No interest is charged on the other payables. (ii) Terms and conditions of amounts payable to the Department of Health/Department of Health and Human Services

vary according to the particular agreement with the Department.

(a) Maturity analysis of payables

Please refer to note 17 for the ageing analysis of contractual payables.

(b) Nature and extent of risk arising from payables

Please refer to note 17 for the nature and extent of risks arising from contractual payables.

Note 10: Payables


65


$'000 $'000

Current ProvisionsEmployee Benefits (i)

Annual Leave- Unconditional and expected to be settled within 12 months (ii) 8,743 8,255- Unconditional and expected to be settled after 12 months (iii) 1,106 1,121

Long Service Leave- Unconditional and expected to be settled within 12 months (ii) 13,450 12,830

- Unconditional and expected to be settled after 12 months (iii)

Other- Unconditional and expected to be settled within 12 months (ii) 2,389 3,341

25,688 25,547Provisions related to Employee Benefit On-Costs- Unconditional and expected to be settled within 12 months (ii) 2,782 2,642- Unconditional and expected to be settled after 12 months (iii) 124 123

2,906 2,765

Total Current Provisions 28,594 28,312

Non-Current Provisions

Employee Benefits (i) 4,781 4,541

Provisions related to Employee Benefit On-Costs 493 482

Total Non-Current Provisions 5,274 5,023

Total Provisions 33,868 33,335

(a) Employee Benefits and Related On-Costs

Current Employee Benefits and related on-costs

Unconditional LSL Entitlement 14,964 14,274

Annual Leave Entitlements 11,176 10,639

Accrued Wages and Salaries 1,916 2,908

Substitution Leave 66 75

Accrued Days Off 472 416

Non-Current Employee Benefits and related on-costs

Conditional Long Service Leave Entitlements 5,274 5,023

Total Employee Benefits 33,868 33,335

On-Costs

Current On-Costs 9,076 9,076

Non-Current On-Costs 459 459

Total On-Costs 9,535 9,535

Total Employee Benefits and Related On-Costs 33,868 33,335

(b) Movements in provisions

Movement in Long Service Leave:

Balance at start of year 19,297 17,997

Provision made during the year

- Revaluations 132 7

- Expense recognising Employee Service 2,820 2,806

Settlement made during the year (2,011) (1,513)

Balance at end of year 20,238 19,297

Notes:(i) Provisions for employee benefits consist of amounts for annual leave and long service leave accrued by employees,

not including on-costs.(ii) The amounts disclosed are nominal amounts.(iii) The amounts disclosed are discounted to present values.

Note 11: Provisions

66


TOTAL TOTAL TOTAL TOTAL2015 2014 2015 2014

$’000 $’000 $’000 $’000

(i) Defined benefit plans:

First State - 7 - -

Defined contribution plans:

HESTA 4,973 4,476 90 141

First State 4,449 4,081 81 116

Other 186 171 - -

Total 9,608 8,735 171 257

(i) The bases for determining the level of contributions is determined by the various actuaries of the defined benefitsuperannuation plans.

Employees of the Hospital are entitled to receive superannuation benefits and the Hospital contributes to both defined benefitand defined contribution plans. The defined benefit plan(s) provides benefits based on years of service and final average salary.

The Hospital does not recognise any defined benefit liability in respect of the plan(s) because the entity has no legal or constructiveobligation to pay future benefits relating to its employees; its only obligation is to pay superannuation contributions as they fall due.The Department of Treasury and Finance discloses the State’s defined benefits liabilities in its disclosure for administered items.

However superannuation contributions paid or payable for the reporting period are included as part of employee benefits in thecomprehensive operating statement of the Hospital. The name, details and amounts expense in relation to the major employeesuperannuation funds and contributions made by the Hospital are as follows:

Note 12: Superannuation

Paid contribution Contribution Outstandingfor the year at Year End


$'000 $'000

CURRENT

Monies Held in Trust*

- Patient Monies Held in Trust 17 15

- Employee Salary Packaging Account 1,020 761

Total Current 1,037 776

* Total Monies Held in TrustRepresented by the following assets:

Cash Assets (refer to Note 5) 1,037 776

TOTAL 1,037 776

Note 13: Other Liabilities


$'000 $'000

CURRENT

Department of Health and Human Services - Funded Loan 50 50

NON-CURRENT

Department of Health and Human Services - Funded Loan 450 500

Department of Health and Human Services - Loan Discount (61) (90)

TOTAL 389 410

The Department of Health and Human Services provided the Hospital with an operating loan of $1,000,000 in 2001 to assist inthe transition from a privately operated facility. Annual repayments are $50,000 with the completion date being 30 June 2025.

Note 14: Non Interest Bearing Liabilities


67


$'000 $'000

(a) SurplusesProperty, Plant & Equipment Revaluation Surplus 1

Balance at the beginning of the reporting period 50,395 32,262Revaluation Increment/(Decrements)- Land (1,018) 1,532- Buildings - 16,601

Balance at the end of the reporting period 49,377 50,395Represented by: - Land 1,756 2,774- Buildings 47,621 47,621

49,377 50,395Restricted Specific Purpose SurplusBalance at the beginning of the reporting period 15,111 13,540Transfer from Accumulated Surplus 1,676 1,571Balance at the end of the reporting period 16,787 15,111Represented by: Business Unit - External Supply 80 76Business Unit - ICT External 1,005 885Business Unit - Regional Biomedical Engineering 293 266Business Unit - Salary Packaging 1,055 770Business Unit - TVs 375 264Business Unit - Tandara Caravan Park 2 3Capital Donations 198 80Chemotherapy Donor Funds 75 59Critical Care Donor Funds 54 44Dialysis Donor Funds 20 19Donor Funds 529 483Emergency Donor Funds 26 25Gippsland Cancer Support Group Donor Fund 51 52LSL Funds Received From DH 4,180 4,180Macalister Donor Funds 2 2ME Cole Staff Training Fund 38 37Medical Library Fund 141 113Mental Health - CA Mental Health Camp Donor Funds 20 20Mental Health - CRCU Accom & Patient Benefit Donor Fund 17 16Mental Health - East Patient Benefit Donor Fund 5 5Mental Health - Education Donor Funds 6 6Mental Health - Flynn Donor Funds 7 7Mental Health - Latrobe Valley Patient Benefit Donor Funds 9 9Mental Health - Patient Activities Donor Funds 29 28Mental Health - South West Patient Benefit Donor Fund 2 2Mental Health Training Fund 15 26Operation LRH Appeal Donor Fund 100 98Allied Health Donor 337 339Private Patient Scheme 1,158 810Gippsland Allied Health Symposium 4 5Radiation/Oncology Special Projects- Capital 2,415 2,019Radiotherapy (WBRG) Donor Fund 22 27Restricted Funds - BreastScreen Victoria 407 284Restricted Funds - Gippsland Cancer Care Centre 3,877 3,760Restricted Funds - ME Cole 50 50Sub Acute Donor Funds 64 62Tarra Paediatric Donor Funds 82 84Theatre Instrument Donor Funds 14 74Thomson Special Care Nursery Donor Funds 11 11Tyers Medical Surgical Donor Funds 12 11Total Restricted Specific Purpose Surplus 16,787 15,111Total Surpluses 66,164 65,506(1) The property, plant & equipment asset revaluation surplus arises on the revaluation of property, plant & equipment.

Note 15: Equity

68



$'000 $'000

(b) Contributed Capital

Balance at the beginning of the reporting period 23,584 23,584

Capital Contribution received from Victorian Government 3,060 -

Balance at the end of the reporting period 26,644 23,584

(c) Accumulated Surpluses/(Deficits)

Balance at the beginning of the reporting period 59,425 50,058

Net Result for the Year 1,445 10,938

Transfers to and from Surplus (to Restricted Special Purpose Surplus) (1,676) (1,571)



Note 15: Equity (continued)


$'000 $'000

Net result for the period 1,445 10,938

Non-cash movements:

Depreciation and amortisation 8,788 8,406

Non Cash Grants (1,083) (472)

Write down of inventories 39 43

Provision for doubtful debts 54 -

Movements included in investing & financing activities:

Movement in capital payables 361 (659)

Movements in assets and liabilities:

Change in operating assets and liabilities

(Increase)/decrease in receivables (213) (56)

(Increase)/decrease in prepayments (374) 222

Increase/(decrease) in payables (1,564) 1,953

Increase/(decrease) in provisions 533 2,383

Increase/(decrease) in other liabilities 261 22

Change in inventories 29 (167)

NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES 8,276 22,613

Note 16: Reconciliation of Net Result for the Year to Net Cash Inflow/(Outflow)from Operating Activities


69

The Latrobe Regional Hospital's principal financial instruments comprise of:

- cash assets

- term deposits

- receivables (excluding statutory receivables)

- payables (excluding statutory payables)

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurementand the basis on which income and expenses are recognised, with respect to each class of financial asset, financial liability andequity instrument are disclosed in note 1 to the financial statements.

The Hospital's main financial risks include credit risk, liquidity risk and interest rate risk. The Hospital manages these financial risksin accordance with its financial risk management policy. The Hospital uses different methods to measure and manage the differentrisks to which it is exposed. Primary responsibility for the identification and management of financial risks rests with the financialrisk management committee of the Hospital.

The main purpose in holding financial instruments is to prudentially manage the Hospital's financial risks within the governmentpolicy parameters.

Note 17: Financial Instruments(a) Financial risk management objectives and policies

Categorisation of financial instrumentsContractual Contractual

Financial FinancialAsset - loans Liabilities at& receivables amortised cost Total

$’000 $’000 $’0002015

Contractual Financial Assets

Cash and cash equivalents 18,980 - 18,980

Trade Debtors & Other Receivables 3,310 - 3,310

Other Financial Assets- term deposit 27,000 27,000

Total Financial Assets (i) 49,290 - 49,290

Financial Liabilities

Payables & Borrowings - 10,283 10,283

Total Financial Liabilities (ii) - 10,283 10,283

2014

Contractual Financial Assets

Cash and cash equivalents 45,511 - 45,511

Trade Debtors & Other Receivables 3,361 - 3,361

Total Financial Assets (i) 48,872 - 48,872


Payables & Borrowings - 10,270 10,270

Total Financial Liabilities (ii) - 10,270 10,270

(i) The total amount of financial assets disclosed here excludes statutory receivables (i.e. GST input tax creditrecoverable)

(ii) The total amount of financial liabilities disclosed here excludes statutory payables (i.e. Taxes payable)

70


Total interestincome/(expense) Total

$'000 $'000

2015

Financial Assets

Cash and Cash Equivalents (i) 1,823 1,823

Total Financial Assets 1,823 1,823


At Amortised Cost (ii) (29) (29)

Total Financial Liabilities (29) (29)

2014

Financial Assets

Cash and Cash Equivalents (i) 1,874 1,874

Total Financial Assets 1,874 1,874


At Amortised Cost (ii) (22) (22)

Total Financial Liabilities (22) (22)

Note 17: Financial Instruments (continued)(b) Net holding gain/(loss) on financial instruments by category

(i) For cash and cash equivalents, loans or receivables and available-for-sale financial assets, the net gain or loss iscalculated by taking the movement in the fair value of the asset, interest revenue, plus or minus foreign exchangegains or losses arising from revaluation of the financial assets, and minus any impairment recognised in the net result;

(ii) For financial liabilities measured at amortised cost, the net gain or loss is calculated by taking the interest expense,plus or minus foreign exchange gains or losses arising from the revaluation of financial liabilities measured atamortised cost; and

(iii) For financial assets and liabilities that are held-for-trading or designated at fair value through profit or loss, the netgain or loss is calculated by taking the movement in the fair value of the financial asset or liability.

(c) Credit risk

Credit risk arises from the contractual financial assets of the Health Service, which comprise cash and deposits, non-statutoryreceivables and available for sale contractual financial assets. The Health Service’s exposure to credit risk arises from the potentialdefault of a counter party on their contractual obligations resulting in financial loss to the Health Service. Credit risk is measured atfair value and is monitored on a regular basis.

Credit risk associated with the Health Service’s contractual financial assets is minimal because the main debtor is the VictorianGovernment. For debtors other than the Government, it is the Health Service’s policy to only deal with entities with high creditratings of a minimum Triple-B rating and to obtain sufficient collateral or credit enhancements, where appropriate.

In addition, the Health Service does not engage in hedging for its contractual financial assets and mainly obtains contractualfinancial assets that are on fixed interest, except for cash assets, which are mainly cash at bank. As with the policy for debtors,the Health Service’s policy is to only deal with banks with high credit ratings.

Provision of impairment for contractual financial assets is recognised when there is objective evidence that the Health Service willnot be able to collect a receivable. Objective evidence includes financial difficulties of the debtor, default payments, debts whichare more than 60 days overdue, and changes in debtor credit ratings.

Except as otherwise detailed in the following table, the carrying amount of contractual financial assets recorded in the financialstatements, net of any allowances for losses, represents Latrobe Regional Hospital's maximum exposure to credit risk withouttaking account of the value of any collateral obtained.


71

Note 17: Financial Instruments (continued)(c) Credit risk (continued)

Financial Government Governmentinstitutions agencies agencies Other(AA- credit (AAA credit (BBB credit (min BBB

rating ) rating) rating) credit rating) Total$’000 $’000 $’000 $’000 $’0002015

Financial Assets

Cash and Cash Equivalents 8,969 10,000 - 11 18,980

Receivables

- Trade Debtors - 626 - 2,684 3,310

- Term Deposit - 27,000 - - 27,000

Total Financial Assets 8,969 37,626 - 2,695 49,290

2014

Financial Assets

Cash and Cash Equivalents 45,502 - - 9 45,511

Receivables

- Trade Debtors - 471 - 2,890 3,361

Total Financial Assets 45,502 471 - 2,899 48,872

(i) The total amounts disclosed here exclude statutory amounts (e.g. amounts owing from Victorian Governmentand GST input tax credit recoverable).

Credit quality of contractual financial assetsthat are neither past due nor impaired

Ageing analysis of Financial Assetsas at 30 June

The Latrobe Regional Hospital's exposure to credit risk and effective weighted average interest rate by ageing periods is set outin the following table. For interest rates applicable to each class of asset refer to individual notes to the financial statements.

ImpairedCarrying Due and Less than 1-3 3 Months 1-5 FinancialAmount Not Impaired 1 Month Months - 1 Year Years Assets

$'000 $'000 $'000 $'000 $'000 $'000 $'0002015

Financial Assets

Cash and Cash Equivalents 18,980 18,980 - - - - -

Receivables (i)

- Trade Debtors 3,310 1,853 861 460 122 14 -

- Term Deposit 27,000 27,000 - - - - -

Total Financial Assets 49,290 47,833 861 460 122 14 -

2014

Financial Assets

Cash and Cash Equivalents 45,511 45,511 - - - - -

Receivables (i)

- Trade Debtors 3,361 1,721 1,197 303 133 7 -

Total Financial Assets 48,872 47,232 1,197 303 133 7 -

(i) Ageing analysis of financial assets must exclude the types of statutory financial assets (i.e GST input tax credit).

There are no material financial assets which are individually determined to be impaired. Currently the Latrobe Regional Hospitaldoes not hold any collateral as security nor credit enhancements relating to any of its financial assets.

There are no financial assets that have had their terms renegotiated so as to prevent them from being past due or impaired,and they are stated at the carrying amounts as indicated. The ageing analysis table above discloses the ageing only ofcontractual financial assets that are past due but not impaired.

Past Due But Not Impaired

72


Note 17: Financial Instruments (continued)(d) Liquidity risk

Liquidity risk is the risk that the Health Service would be unable to meet its financial obligations as and when they fall due.The Health Services operates under the Government's fair payments policy of settling financial obligations within 30 daysand in the event of a dispute, making payments within 30 days from the date of resolution.

The Health Service’s maximum exposure to liquidity risk is the carrying amounts of financial liabilities as disclosed in the faceof the balance sheet. The Health Service manages its liquidity risk as follows:

Establish investment strategies to be used in the management of funds surplus to the immediate operating requirements ofLatrobe Regional Hospital and for deposits held by the Health Service (e.g. Long Service Leave amounts that are quarantinedand Restricted Special Purpose Funds).

Ensure that funds are invested in a prudent manner, with an appropriate spread of risk.

Ensure sufficient liquidity exists within the investment portfolio so that the Hospital can continue to meet its day to day cash flowrequirements and committed expenditure.

Ensure there is a minimal risk of loss.

Enable a regular and consistent income to be received from the investment of surplus funds.

The following table discloses the contractual maturity analysis for Hospital's financial liabilities. For interest rates applicable to eachclass of liability refer to individual notes to the financial statements.

Maturity analysis of Financial Liabilitiesas at 30 June

Carrying Nominal Less than 1-3 3 months 1-5Amount Amount 1 Month Months - 1 Year Years

$'000 $'000 $'000 $'000 $'000 $'0002015


Payables 8,807 8,807 8,807 - - -

Other 1,476 1,476 1,020 - 67 389

Total Financial Liabilities 10,283 10,283 9,827 - 67 389

2014


Payables 9,034 9,034 9,034 - - -

Other 1,236 1,236 761 - 65 410

Total Financial Liabilities 10,270 10,270 9,795 - 65 410

Maturity Dates

(e) Market riskThe Hospital's exposures to market risk are primarily through interest rate risk with only insignificant exposure to foreign currencyand other price risks. Objectives, policies and processes used to manage each of these risks are disclosed in the paragraph below.

Currency risk

The Hospital is exposed to insignificant foreign currency risk through its payables relating to purchases of supplies and consumablesfrom overseas. This is because of a limited amount of purchases denominated in foreign currencies and a short timeframe betweencommitment and settlement.

Interest rate risk

Exposure to interest rate risk might arise primarily through the Hospital's interest bearing liabilities. Minimisation of risk is achievedby mainly undertaking fixed rate or non-interest bearing financial instruments. For financial liabilities, the health service mainlyundertakes financial liabilities with relatively even maturity profiles.

Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in marketinterest rates.

The Hospital has minimal exposure to cash flow interest rate risks through its cash and deposits, term deposits and bank overdraftsthat are at floating rate.

The Hospital manages this risk by mainly undertaking fixed rate or non-interest bearing financial instruments with relatively evenmaturity profiles, with only insignificant amounts of financial instruments at floating rate. Management has concluded for cash atbank and bank overdraft, as financial assets that can be left at floating rate without necessarily exposing the Hospital to significantbad risk, management monitors movement in interest rates on a daily basis.


73

Note 17: Financial Instruments (continued)(e) Market risk (continued)

WeightedAverage Fixed Variable Non -Effective Carrying Interest Interest InterestInterest Amount Rate Rate Bearing

Rate (%) $’000 $’000 $’000 $’0002015

Financial Assets

Cash and Cash Equivalents 2.50% 18,980 51 18,920 9

Receivables

- Trade Debtors 0% 3,310 - - 3,310

- Term Deposit 2.255% 27,000 27,000 - -

49,290 27,051 18,920 3,319


Payables 0% 8,807 - - 8,807

Other 0% 1,476 - - 1,476

10,283 - - 10,283

2014

Financial Assets

Cash and Cash Equivalents 3.00% 45,511 50 45,452 9

Receivables

- Trade Debtors 0% 3,361 - - 3,361

48,872 50 45,452 3,370


Payables 0% 9,034 - - 9,034

Other 0% 1,236 - - 1,236

10,270 - - 10,270

Interest rate exposure of financial assetsand liabilities as at 30 June

Interest Rate Exposure

Sensitivity disclosure analysis

Taking into account past performance, future expectations, economic forecasts, and management's knowledge and experienceof the financial markets, the Hospital believes the following movements are 'reasonably possible' over the next 12 months(Base rates are sourced from the Reserve Bank of Australia).

- A shift of +1% and -1% in market interest rates (AUD) from year-end rates of 2.50% (3.00% 13/14);

The following table discloses the impact on net operating result and equity for each category of financial instrument heldby the Hospital at year end as presented to key management personnel, if changes in the relevant risk occur.

74


CarryingAmount Profit Equity Profit Equity

$’000 $’000 $’000 $’000 $’0002015

Financial Assets

Cash and Cash Equivalents 18,980 (189) (189) 189 189

Receivables

- Trade Debtors 3,310 - - - -

- Term Deposit 27,000 (270) (270) 270 270


Payables 8,807 - - - -

Other 1,476 - - - -

(459) (459) 459 459

2014

Financial Assets

Cash and Cash Equivalents 45,511 (455) (455) 455 455

Receivables

- Trade Debtors 3,361 - - - -


Payables 9,034 - - - -

Other 1,236 - - - -

(455) (455) 455 455

Note 17: Financial Instruments (continued)(e) Market risk (continued)

Interest Rate Risk

- 1% + 1%

(f) Fair value

The fair values and net fair values of financial instrument assets and liabilities are determined as follows:• Level 1 - the fair value of financial instrument with standard terms and conditions and traded in active liquid markets are

determined with reference to quoted market prices• Level 2 - the fair value is determined using inputs other than quoted prices that are observable for the financial asset or liability,

either directly or indirectly and• Level 3 - the fair value is determined in accordance with generally accepted pricing models based on discounted cash flow

analysis using unobservable market inputs.The Hospital considers that the carrying amount of financial instrument assets and liabilities recorded in the financial statementsto be a fair approximation of their fair values, because of the short-term nature of the financial instruments and the expectationthat they will be paid in full.The following table shows that the fair values of most of the contractual financial assets and liabilities are the same as the carryingamounts.

Carrying Fair Carrying FairAmount Value Amount Value

2015 2015 2014 2014$’000 $’000 $’000 $’000

Financial Assets

Cash and Cash Equivalents 18,980 18,980 45,511 45,511

Receivables

- Trade Debtors 3,310 3,310 3,361 3,361

- Term Deposit 27,000 27,000 - -

Total Financial Assets 49,290 49,290 48,872 48,872


At amortised cost

Payables 8,807 8,807 9,034 9,034

Other 1,476 1,476 1,236 1,236

Total Financial Liabilities 10,283 10,283 10,270 10,270

Comparison between carrying amountand fair value


75

Note 18: Commitments(a) Commitments other than public private partnerships


$'000 $'000

Capital expenditure commitments

Payable:

Land and buildings 1,520 2,725

Plant and equipment 263 536

Total capital expenditure commitments 1,783 3,261

Not later than one year 1,783 3,261

Total 1,783 3,261

Other expenditure commitments

Payable:

Maintenance Services Contracts 1,971 3,249

Total other expenditure commitments 1,971 3,249

Not later than one year 1,639 1,900

Later than 1 year and not later than 5 years 328 1,336

Later than 5 years 4 13

TOTAL 1,971 3,249

Lease commitments

Commitments in relation to leases contracted for at the reporting date:

Operating leases 1,196 1,113

Total lease commitments 1,196 1,113

Operating leases

Operating Leases- Motor Vehicles

Cancellable

Not later than one year 782 782

Sub Total 782 782

Operating Leases - Other

Cancellable

Not later than one year 194 175

Later than 1 year and not later than 5 years 220 156

Sub Total 414 331

Total operating lease commitments 1,196 1,113

Total lease commitments 1,196 1,113

Total Commitments (inclusive of GST) other than public private partnerships 4,950 7,623

less GST recoverable from the Australian Tax Office (426) (397)

Total Commitments (exclusive of GST) other than public private partnerships 4,524 7,226

Note 19: Contingent Assets and Contingent LiabilitiesDetails of estimates of maximum amounts of Contingent Assetsor Contingent Liabilities are as follows:


$'000 $'000

Contingent Assets

There were no known contingent assets. - -

Contingent Liabilities

There were no known contingent assets. - -

76


Note 20: Operating Segments

2015 2014 2015 2014 2015 2014$'000 $'000 $'000 $'000 $'000 $'000

REVENUE

External Segment Revenue 996 996 204,239 202,938 205,235 203,934

Total Revenue 996 996 204,239 202,938 205,235 203,934

EXPENSES

External Segment Expenses (1,334) (1,340) (195,491) (185,142) (196,825) (186,482)

Total Expenses (1,334) (1,340) (195,491) (185,142) (196,825) (186,482)

Net Result from ordinary activities (338) (344) 8,748 17,796 8,410 17,452

Interest Income - - 1,823 1,892 1,823 1,892

Depreciation & Amortisation Expense - - (8,788) (8,406) (8,788) (8,406)

Net Result for Year (338) (344) 1,783 11,282 1,445 10,938

OTHER INFORMATION

Segment Assets - - 196,454 193,758 196,454 193,758

Total Assets - - 196,454 193,758 196,454 193,758

Segment Liabilities - - 44,452 45,243 44,452 45,243

Total Liabilities - - 44,452 45,243 44,452 45,243

RAC Hospital Consolidated

The major products/services from which the above segments derive revenue are:

Business Segments Services

Hospital Provision of Acute, Sub-Acute and Mental Health care services

Residential Aged Care Services (RACS) Provider of residential aged care beds

Geographical Segment

Latrobe Regional Hospital operates predominantly in Traralgon, Victoria. More than 90% of revenue, net surplus from ordinaryactivities and segment assets relate to operations in Traralgon, Victoria.


77

Note 21: Jointly Controlled Operations and AssetsOwnership Interest

Name of Entity 2015 2014% %

Gippsland Health Alliance 23.28% 23.68%

Published Fair Value ($'000) 3,151 3,251

Interest in IT Alliance

Summarised Financial information of Jointly Controlled Assets & Liabilities

During 2009/10, the Alliance members signed a new agreement, which was effective 1 July 2009, which determines the interestin the Gippsland Health Alliance as a ‘jointly controlled asset’. Accounting for a ‘jointly controlled asset’ requires the memberHospital to now recognise its share of the Alliance’s assets and liabilities, together with any income and expenditure arising,under the respective line item in the member Hospital’s financial statements from the year ending 30 June 2010 onwards.This arrangement is now known as a Joint Operation.

The Hospital's interest in assets employed in the above jointly controlled operations and assets is detailed below. The amountsare included in the financial statements and consolidated financial statements under their respective asset and liability categories:


$'000 $'000

Current Assets

Cash and Cash Equivalents 906 989

Receivables 216 96

Other Current Assets 182 86

Total Current Assets 1,304 1,171

Non Current Assets

Property, Plant and Equipment 10 10

Total Non Current Assets 10 10

Share of Total Assets 1,314 1,181

Share of funds at beginning of the reporting period 868 804

Contributions made in current reporting period 1,600 1,579

Share of current year Surplus/(Deficit) (1,560) (1,515)

Share of funds at end of reporting period 908 868

The Latrobe Regional Hospital's interest in revenues and expenses resultingfrom jointly controlled operations and assets is detailed below:

Revenues

GHA revenue 682 681

Total Revenue 682 681

Expenses

Information Technology and Administrative Expenses 2,241 2,195

Depreciation 1 1

Total Expenses 2,242 2,196

Net result (1,560) (1,515)

78


Note 22a: Responsible Persons DisclosuresIn accordance with the Ministerial Directions issued by the Minister for Finance under the Financial Management Act 1994,the following disclosures are made regarding responsible persons for the reporting period.

Period

Responsible Ministers:

The Honourable David Davis, MLC, Minister for Health, Minister for Ageing 1/7/2014 - 3/12/2014

The Honourable Mary Wooldridge MLA, Minister for Mental Health,Minister for Community Services, Minister for Disability Services and Reform 1/7/2014 - 3/12/2014

The Honourable Jill Hennessy MLA, Minister for Health 4/12/2014 - 30/6/2015

The Honourable Martin Foley MLA, Minister for Mental Health,Minister for Housing, Disability and Ageing 4/12/2014 - 30/6/2015

Governing Boards

Kellie O'Callaghan (Chair) 1/7/2014 - 30/6/2015

Ian Gibson (Deputy Chair) 1/7/2014 - 30/6/2015

Annie Moulden OAM 1/7/2014 - 30/6/2015

John Rasa 1/7/2014 - 30/6/2015

Leah Young 1/7/2014 - 30/6/2015

Marcia Coleman 1/7/2014 - 30/6/2015

Mary Aldred 1/7/2014 - 30/6/2015

Sean Dignum 1/7/2014 - 30/6/2015

Accountable Officers

Peter Craighead 1/7/2014 - 30/6/2015

2015 2014No. No.

Income Band

$10,000 - $19,999 1 1

$20,000 - $29,999 6 5

$40,000 - $49,999 1 1

$390,000 - $399,999 - 1

$400,000 - $409,999 1 -

Total Numbers 9 8

Total remuneration received or due and receivable by Responsible Personsfrom the reporting entity amounted to: $617,064 $555,876

Amounts relating to Responsible Ministers are reported in the financial statements of the Department of Premier and Cabinet

$'000 $'000

Other Transactions of Responsible Persons and their Related Parties.

Ms Kellie O'Callaghan was a Latrobe City Council Councillor.

For the financial year, services billed to Latrobe City:- - 6

The Hospital was also billed for services provided from Latrobe City Council:- 103 68

ConsolidatedRemuneration of Responsible Persons

The number of Responsible Persons are shownin their relevant income bands;


79

Note 22a: Responsible Persons Disclosures (continued)Other details of Board member involvement are as follows:-

Board Member Related Parties

Kellie O'Callaghan Latrobe City Council - Councillor, Clean Resources Victoria, Chair -Advisory Committee, Gippsland Medicare Local, Non-Executive Director

Ian Gibson West Gippsland Catchment Management Authority, Latrobe City Council,Federation University of Australia, Planning Panels Victoria

Annie Moulden Monash Health

John Rasa National President of Australasian College of Health Service Management,CEO Networking Health Victoria, Adjunct Associate Professor La Trobe University

Leah Young Gippsland Medicare Local and St Paul’s Anglican Grammar School

Mary Aldred CEO of Committee for Gippsland, Federation University School of Businessand Economics, Gippsland Food Plan Implementation Committee, GippslandWorkforce Plan Steering Committee, Gippsland Regional Plan Leadership Group

Executive Management

Peter Craighead Gippsland Regional Integrated Cancer Service, Wellington Shire Audit Committee,Victorian Healthcare Association, Chair Gippsland Health Alliance

All transactions with related parties are normal, commercial transactions.

Note 22b: Executive Officer DisclosuresExecutive Officers' Remuneration

The numbers of executive officers, other than Ministers and Accountable Officers, and their total remuneration during the reportingperiod are shown in the first two columns in the table below in their relevant income bands. The base remuneration of executiveofficers is shown in the third and fourth columns. Base remuneration is exclusive of bonus payments, long-service leave payments,redundancy payments and retirement benefits.

2015 2014 2015 2014No. No. No. No.

$130,000 – $139,999 1 1 1 1

$140,000 – $149,999 1 - 1 -

$150,000 – $159,999 - 1 - 1

$190,000 – $199,999 - 1 - 1

$200,000 – $209,999 1 - 1 -

$240,000 – $249,999 - 1 - 1

$280,000 – $289,999 1 - 1 -

Total 4 4 4 4

Total annualised employee equivalents (AEE) (i) 4 4 4 4

Total Remuneration $776,781 $743,296 $776,781 $743,296(i) Annualised employee equivalent is based on paid working hours of 38 ordinary hours per week over 52 weeks

for a reporting period.

Total Remuneration Base Rumeration

80

Note 24: Events Occurring after the Balance Sheet DateThere have been no events occurring after reporting date which are likely to materially affect these financial statements.

Note 23: Remuneration of auditors


$'000 $'000

Victorian Auditor-General’s Office

Audit or review of financial statement 58 57


Design: Phil Smith DesignPrinting: easyazPhotography: Danae Photography, Latrobe Valley Express and Claire KentThank you to the staff and patients of Latrobe Regional Hospital.

Acknowledgements

PO Box 424 - P r inces H ighway, Tra ra lgon West , V ic to r ia , 3844

Tel (03) 5173 8000 Fax (03 ) 5173 84444

ABN 18 138 843 652

www. l rh .com.au

Documents

Annual Report 2015 · 30 June 2015 In accordance with the Financial Management Act 1994, I am pleased to present the Report of Operations for Latrobe Regional Hospital for the year