Three rural hospitals have been stripped of some maternity services and Victoria's health department is being overhauled after a scathing review sparked by baby deaths found things go wrong in hospitals far too often.
The work of health services expert Stephen Duckett, the review found patient safety largely being left in the hands of medical staff and local administrators without adequate support from the state's health department.
That led to holes in monitoring which meant the department couldn't confidently identify red flags that pointed to poor care.
Dr Duckett was asked to review public safety after two reviews into a spike in baby deaths at Djerriwarrh Health Service found 11 babies died potentially avoidable deaths at Bacchus Marsh between 2001 and 2014.
He wanted to see what Victoria could learn from the "terrible" tragedy at Bacchus Marsh.
"The care most Victorians get in our hospitals - both public and private - is excellent," Dr Duckett told reporters on Friday.
"But things go wrong too frequently, in my opinion."
Health Minister Jill Hennessy says his report is confronting and gaps in the quality and safety system have been overlooked for far too long.
"This is not good enough," Ms Hennessey said.
Maternity services have been downgraded at hospitals in Kerang, Terang and Myrtleford after it was found they were undertaking work beyond their capabilities.
Sale Hospital was downgraded from a level five to level four but it had only been operating as a level four hospital and there was no change to patient services.
"It's about making sure the right births are occurring at the right hospitals," Ms Hennessy said.
She said the government had already accepted in principle all of Dr Duckett's 179 recommendations.
An additional $13 million will be provided to support the changes and a new agency - Safer Care Victoria - will monitor avoidable harm.
Dr Duckett's recommendations include:
* making safety and quality improvement a core goal of the department and health system
* ensuring all boards are highly skilled, independent and effective
* improving the flow of information in the health system to better identify deficiencies in care
* using independent clinical expertise to help identify deficiencies
* holding all hospitals to account for improving safety and quality of care regardless of size and sector, and
* ensuring hospitals only offer care within their capabilities.
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