Senior staff at Victoria’s Royal Children’s Hospital (RCH) are worried the hospital’s CEO is being forced out of her position by the state government amid tensions over health funding.

The ABC understands RCH CEO Bernadette McDonald has been told to reapply for the job she has been doing for three years.

Health Minister Mary-Anne Thomas met with the chair of the hospital’s board on Monday and said the CEO would need to reapply for the role, even though the board wanted to reappoint her.

The ABC understands the board fears the government is trying to remove Ms McDonald from the role.

The government has argued the process is standard practice within the health industry, but senior hospital figures and the Australian Medical Association (AMA) have disputed that.

AMA Victoria president Jill Tomlinson told ABC Radio Melbourne it appeared to be an unusual situation.

“There are certainly significant concerns that’ve been raised and I haven’t seen these sorts of concerns being raised about the process previously,” she said.

Dr Tomlinson said senior staff had told her they were not happy with how the process was being handled.

“They have significant concerns about the process that is going on. They are in full support of the RCH CEO and they tell me that she does a very good job and they do not want her to go.”

Premier Jacinta Allan said it was “a matter for the board” of the hospital and denied the government was interfering.

“It is routine practice for CEOs, particularly of the larger organisations, to have those positions go through a broader recruitment process and indeed that’s standard practice for a large number of positions across government and the private sector as well,” she said.

Delay over hospital budgets ‘frustrating’

The reappointment dispute comes as hospitals continue to wait for their operating budgets to be confirmed by the government.

Hospitals have been warning the government’s efforts to squeeze budgets would have a dire effect on patient care, with bed closures and cancelled surgeries being considered.

Hospitals have also put a freeze on recruitment while budgets are negotiated with the health department.

Dr Tomlinson said the wait was “anxiety provoking” for hospitals.

“The longer it goes on the more frustrated we are and we consistently call on the government and the [health] department to meet with us to discuss and resolve this because it is having major workforce problems and implications,” she said.

Earlier this month, the premier said the government would consider additional funding for hospitals if there was a risk patient care was going to be compromised.