Albury Wodonga Health will receive close to $1 million as part of a Victorian government bid to support mental health services.
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The funding for The Willows community care unit at Beechworth is part of a $20 million statewide drive that includes 31 new healthcare and alcohol and drug services.
AWH interim CEO Janet Chapman said the funding boost fell in line with recommendations arising from the royal commission into Victoria's mental health system.
"The Victorian government is supporting the implementation of the findings of the royal commission and that's transformational," Ms Chapman said.
"We will see over the next two years significant investment in mental health services across Victoria in line with those recommendations and important changes including a focus on people with experience being part of that and different models and choices.
"We're thrilled - nearly a million dollars that will come for us to use to upgrade our facilities for mental health in Beechworth."
Ms Chapman said the funding boost to mental health services stretched wider than just the Beechworth Willows community care centre.
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"This facility is not only for Beechworth, it's part of our area's mental health service across a wide area that goes down to Mansfield in the south and north across Albury - we've got quite a large catchment," she said.
"We're doing all sorts of maintenance to drainage and other aspects of the facilities.
"The most exciting part of this is we're building an entirely new activities building.
"We can have a place for people to engage in group activities for things like cooking and exercise programs that give them the skills they need to transition from staying with use to going back in the community."
AWH Albury-Wodonga mental health operations director Leah Wiseman said the funding boost allowing the Beechworth upgrades would have a huge impact on people's lives.
"Beechworth tends to have people who are with us for a longer period of time and these people very much become part of the Beechworth community which is fantastic," Dr Wiseman said.
"It provides so many more therapeutic options which just changes the impact it has on people's lives."
Minister for Mental Health James Merlino said the $997,400 funding for AWH would deliver new activity and communal spaces, purpose built for both quiet one-on-one assessment, intervention, and group activities.
Statewide the fund will deliver 45 projects across the state including upgraded telehealth infrastructure, facility expansions, new clinical areas, waiting rooms and building refurbishment works.
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