An annual report by Safer Care Victoria highlighted 240 sentinel events in 2021/22, an increase of 43 per cent on the year before when 168 were recorded.
Of the 240 events, 38 involved children, which is also an increase on the year before.
A sentinel event is an unexpected incident that results in the death or serious physical or psychological harm to a patient as a result of system and process deficiencies.
In response to the report, the state government pledged to introduce a statewide escalation system to enable parents and carers to raise concerns about their child's condition.
It has also flagged the introduction of a 24-hour virtual pediatric consultation system, along with mandating the use of standardised and age-specific charts for recording a child's vital signs.
Health Minister Mary-Anne Thomas described the system as a safety net to ensure parents' voices were heard.
She apologised to impacted families, including those of eight-year-old girl Amrita Lanka and 23-month-old Zayne Hassan-Kramer who died in hospital in 2022.
"You knew your children best, you knew when they were not okay and your concerns were not properly escalated," she said.
"I'm so sorry that this has happened to you and to your families.
"We will never be able to make right what has happened but we are determined to make sure that it never happens again."
Amrita died from lymphocytic myocarditis, which is inflammation of the heart muscle, at Monash Children's Hospital in April 2022 after initially presenting to emergency with stomach pain.
A review found a test of her heart read as abnormal but doctors did not appreciate how severe her condition was until her heart stopped temporarily for the first time.
Since her death, father Chandra Lanka and mum Satya Tarapureddi have been campaigning for the state to implement an escalation system and calling for it to be named "Amrita's rule" in her honour.
In an emotional press conference, the pair said the new system would save lives but lamented the pathway not being in place when they needed it.
"It's human to make mistakes, we know that, but the number of mistakes that were made in Amrita's case is not acceptable," Mr Lanka said.
"Amrita's case is an extraordinary case of incompetence, negligence and blatant denial of treatment.
"We don't want that to happen to anyone."
He will be among a working group of families to be consulted on the rollout of the escalation system.
A similar set up operates in Queensland.
Safer Care Victoria has previously piloted a project to recognise, escalate and respond to deteriorating children in emergency departments.
2021/22 SENTINEL EVENTS REPORT:
* A third of the 240 incidents involved a deteriorating patient
* 25 per cent involved a clinical process or procedure
* Of the deteriorating patients, 25 per cent were in the emergency department, 22 per cent were on a ward and 13 per cent were in intensive care
* About 20 children were involved in sentinel events the year before
* For children, 50 per cent of cases related to the recognition and response of their deterioration
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