It ends an ugly political impasse between Canberra and Spring Street over funding and population figures that caused bed closures, surgery cancellations, mental health care reduction and angst for thousands of people.

Yesterday, hospital managers were seeking to reorganise surgery lists and re-open beds as quickly as possible.

South West Healthcare’s Warrnambool Base Hospital, which had the region’s largest funding gap of $1.43m, expects to be able to chisel away at its 1300-patient waiting list and 260 surgery cancellations soon. 

In January, the hospital announced it would have to close operating theatres for five weeks between March 25 and June 26 and maybe longer while nine beds in the women’s health and rehabilitation units were shut almost immediately.

Yesterday, chief executive John Krygger said while the decision to reinstate the money directly to hospitals was extremely welcome it would be tricky to quickly reverse closures because several key staff had been scheduled to take leave.

“We’ll be determining how we get back to normal in the next week or two,” Mr Krygger said.

“Unfortunately, it’s not a tap you can quickly turn off and on. A number of the theatre staff, both doctors and nurses, have scheduled annual leave as a response to the cuts, so we’re going to have to get together to formulate a response to enable us to restart our elective surgery activity.

“We’ll have to find what resources we now have available, but the positive news we have received overnight does mean the extended theatre closure will be reduced.”

He said he was not expecting additional money from the state to immediately follow the federal announcement.

“The way this campaign has been run thus far is that it’s a Commonwealth clawback of $107m and that has been reinstated,” he said. 

“I understand the state has given its full allocation for this year.”

Wannon MP Dan Tehan congratulated hospital leaders and the community for waging strong protests against the Gillard government’s cuts.

He called on federal Health Minister Tanya Plibersek to apologise for the stress and worry caused by the impasse.

Corangamite MP Darren Cheeseman said he personally met the Health Minister and Prime Minister to directly put the case that the funding issue needed to be resolved, especially for Colac Area Health which had decided to close its emergency wing at night. Now, he said, the state government should reverse its cuts — a view put by Ms Gillard to Victorian Premier Ted Baillieu overnight.