The Victorian Healthcare Association measured sentiment across the sector for the first time, surveying 69 of 193 services within the state's 12 newly established local health networks.
In total, just over one in four health services surveyed suggested their current funding level was sufficient to support the implementation of the plan.
Nine out of 10 said funding was a "major challenge" for their organisation and 86 per cent reported workforce as a "significant concern".
More than 80 per cent were operating at capacity, with just under a third able to comfortably offer all healthcare services their communities needed.
Almost two out of three had not upgraded equipment or infrastructure as a response to funding challenges.
"This includes deferring workforce development initiatives (30 per cent of regional and rural healthcare organisations) and delaying infrastructure and equipment replacements (50 per cent), and upgrades (62 per cent)," the report said.
Workforce growth was "unlikely" to be fast enough to cope with demand driven by chronic disease, an ageing population and changing community demographics, the report said.
"The demand for our services has increased while our ability to attract and pay appropriate salaries for staff has decreased," one regional respondent said.
Some 63 per cent reported meeting service demand had become more difficult over the past 12 months, although 73 per cent were still actively looking into expanding their service to cater to community needs.
One metropolitan respondent said there was a "disconnect" between what the community wanted and what funding allowed services to provide.
"Funding is short term in nature and if renewed this is communicated either very close to contract expiration or post contract expiration," another metropolitan respondent said.
"Indexation is insufficient to cover cost increases and is advised and provided well after the new financial year."
The association's chief executive Leigh Clarke said the sector was facing a pivotal moment of transformation and the issues of rising cost of living, an ageing population and increasing chronic disease were not unique to Victoria.
"They are occurring right across the country and will require shared solutions between both the federal and Victorian government," she said.
The survey was conducted in early 2025 before the May state budget, which set aside $31 billion in health spending after the Allan Labor government rejected expert advice in 2024 to forcible merge health services in favour of the local networks plan.
In response to the peak body's report, the Victorian government pointed to the budget earmarking an extra $9.3 billion for hospitals and new funding for urgent care, pharmacies and virtual care.
"We're investing in our world-class health system and backing our frontline health workers - so Victorians get the care they need, when and where they need it," a government spokesman said.
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