Melbourne's Royal Children's Hospital says it will not reverse the cuts its already made, despite the Commonwealth's decision to directly inject funds into Victoria's hospitals.
The Federal Government has, but is bypassing the State Government and will pay the money directly to hospitals.
Chief executive officer Christine Kilpatrick says the hospital's share of the cut was $3.6 million this year, with ongoing reductions in subsequent years.
"We had no advance notice of the Federal Government's plan to reinstate the funding.
"Right now, my priority is to get clarity on when and how revenue will be returned to us and what this will mean for the Royal Children's Hospital.
"In the meantime two important points need to be made.
First, the funding to be reinstated is this year's only.
"The government's planned revenue reductions for next year and beyond have not changed.
"Second, the reversal of our funding cut was unforeseeable.
"When the cuts were announced we developed a strategy that was considered and responsible.
"This meant positions were declared redundant in January.
"These roles will not be reinstated under the new circumstances."
Hospital funding 'no victory'
While the Victorian Premier Ted Baillieu has welcomed the $1.7 million Commonwealth injection, he says the damage has already been done.
"This is a short term fix and we certainly have not had a victory on this," he said.
"It is going to take some time for the hospitals who receive the money to reverse the changes they have put in place.
"They have to re-hire staff and they have to reschedule patients.
Mr Baillieu says hospitals will also face more cuts on July 1.
The State's Health Minister David Davis says it could be some time before hospitals can re-adjust.
"You just can't bring a highly-experienced professional staff on and off like this," he said.
"This was why we were so opposed to the mid-year cut by the Commonwealth.
Mr Baillieu says the funding stoush with the Commonwealth is far from over.
"There is a further $368 million that is not being restored," Mr Baillieu said.
"This 1.6 million cut announced in November based on dodgy figures.
"The Prime Minister was concerned that the evidence is mounting at the Senate inquiry, that they got this completely wrong.
"I suspect this is more about the Federal Government turning up to a hospital with a cheque for a photograph."
"If it's good enough for the Federal Government to reverse their cutbacks, to admit that they got it wrong, then Mr Baillieu should do exactly the same thing," he said.
"That's what our doctors want, it's what our nurses want, and most importantly, it's what Victorian public hospital patients need."