· In short: More than 20 Victorian health services have been told their budgets will be slashed, according to a member of a regional Victorian hospital board. 

· The ABC understands regional hospital managers were warned of clawbacks of up to 30 per cent.

· What's next? The Victorian government is considering advice on hospital mergers.

More than 20 regional Victorian health services have been told their budgets will be slashed by up to 30 per cent in the coming financial year, the ABC understands.

A member of a regional Victorian hospital board says 25 health services have been told they will receive cuts to their grants and will have to draw on reserves into 2025. 

The source, who does not want to be identified for fear of repercussions, said hospital bosses were shocked to learn of the planned cuts at a meeting between hospital chief financial officers and the health department on Thursday.

They said the large-scale cuts would have a "devastating impact on the services of small regional hospitals" and that they are "still awaiting advice on the outcome of the health services plan".

"It throws into question the health minister's assurances that there will be no hospital closures under the proposed health services plan," the source said.

The Victorian Healthcare Association is concerned clawbacks of up to 30 per cent would have "significant implications" for the cash reserves of small rural hospitals.

Hospital mergers considered

Victorian Health Minister Mary-Anne Thomas told ABC Central Victoria on Wednesday that the government would not close any hospitals as part of a shake-up of healthcare in Victoria. 

"There will be no hospital closures under my watch," Ms Thomas said.

However, when asked about potential hospital mergers, Ms Thomas acknowledged the Victorian healthcare network comprised many small, independently governed hospitals.

"We currently have 76 health services, all with their own boards ... that's great and it has served us well but it is time to look at whether it is the right model for the future," she said.

Hospital mergers will be considered as part of a range of options being investigated by an advisory board led by former Bendigo Labor MP Bob Cameron.

"We are open to a range of ideas that might help us," Ms Thomas said.

"The focus is on designing a system that can help those needs — no decisions have been taken but we are very seriously examining the challenges that are currently being faced and our focus is on putting patients at the centre of every decision we make."

Rising costs

Victorian Healthcare Association CEO Leigh Clarke said health services were grappling with rising costs year-on-year that have not kept pace with government funding, including insurance premiums, medical supply costs and COVID protections.

"Health services have already been asked to contain costs and find savings across non-clinical staff and services," Ms Clarke said.

"Given we are seeing funds pulled out of services, the question now becomes how do you do health service reform well and how do you do it without compromising on the delivery of high-quality care."

In a statement, a Victorian government spokesperson said individual health services would be consulted by the department of health before any budget modelling is finalised. 

The government spokesperson said planned funding would 'mark a return to pre-COVID funding models' and aims to ensure regional hospitals can reduce their 'reliance on top-up funding.'

The Shadow Minister for Health Georgie Crozier said communities have not been consulted about the changes.

"It is incredibly disappointing that the government has not been up-front with the community, hasn't communicated their plans, and as a result, loss of services will occur and job losses will happen and importantly a local voice will be lost," Ms Crozier said.