Delivering National Health Reform

• NHRA Fact Sheet (PDF 47 KB)

Why do we need National Health Reform?
What’s changed under the National Health Reform Agreement since 2010?

Why do we need National Health Reform?

Australia has a good health system but we need to prepare it for the challenges of the future.

There are increased demands on our health and aged care system due to new treatments becoming available, an ageing population, increased rates of chronic and preventable disease and rising health care costs.

Without this reform, state and territory government budgets will be overwhelmed by their rising health spending obligations and their ability to provide the current range of services will be significantly strained.

States and local governments experienced growth in health spending of around nine per cent per year over the five years to 2009-10. This contrasts with growth in state and local government tax revenues of around six per cent a year over the same period. Projections show that by 2045-46, health spending alone would be more than all revenue collected by state and local governments.

The Commonwealth Government has taken action to address these challenges, working with states and territories to secure a truly national agreement on health reform.

The Commonwealth, states and territories have agreed to major reforms to the organisation, funding and delivery of health and aged care. These reforms will provide better access to services, improved local accountability and transparency, greater responsiveness to local communities and a stronger financial basis for the health system into the future.

The National Health Reform Agreement will improve access to care, drive improved efficiency, increase public information to enable comparison of health service performance and ensure more transparent funding of public hospitals based on services delivered and the efficient cost of delivering those services.

What’s changed under the National Health Reform Agreement since 2010?

A national agreement

This agreement includes all states and territories, meaning Australia now has a genuine National Health Reform Agreement which represents a national partnership between all Australian governments.

Hospital funding

Under the National Health Reform Agreement, the Commonwealth Government will increase its contribution to efficient growth funding for public hospital services, to 45 per cent in 1 July 2014, increasing to 50 per cent from 1 July 2017.

This means that from 2017-18 the Commonwealth Government will fund half of every dollar required by state and territory governments to meet increases in the efficient cost of public hospital services.

Without this reform, state and territory government budgets will be overwhelmed by their rising health spending obligations and their ability to provide the current range of services will be significantly strained.

The Commonwealth Government will also increase its commitment to additional funding for public hospital services to at least $16.4 billion between 2014-15 and 2019-20. This is in addition to the contribution the Commonwealth Government would otherwise have made to base funding.
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National Health Funding Administrator and National Health Funding Pool

Hospital funding will be provided through a single National Health Funding Pool. Payments will be made from this funding pool directly to Local Hospital Networks, using a nationally consistent approach to activity based funding.

The National Health Reform Agreement will create an Independent Hospital Pricing Authority (IHPA) to set the efficient price of delivering hospital services. This national activity based funding system will ensure that hospitals are paid according to the number and type of services they actually deliver—no more blank cheques.

The National Health Funding Pool will be established in 2012 and overseen by an Administrator, who will be independent from Commonwealth and state and territory government departments.

These arrangements will greatly improve transparency and accountability of current health funding arrangements, under which the Commonwealth writes each state and territory a cheque, without knowing where the money goes or what services it funds.

Improved Patient Services

Under the National Health Reform Agreement, the Commonwealth has guaranteed at least $16.4 billion over the period 2014-15 to 2019-20. This additional funding will meet the costs of around 2 million more admitted patient episodes of care, 2.9 million more services in emergency departments, and 19 million more outpatient consultations based on current patterns of hospital expenditure, than the Commonwealth would have funded under the previous health care agreement.

Emergency department and elective surgery targets

Many public patients are waiting too long to have elective surgery and to be treated in emergency departments.

The Commonwealth is providing the states and territories with additional funding to improve services and to introduce clear national targets and standards to drive hospital reform.

The Council of Australian Governments (COAG) agreed in February to establish a panel of experts including clinicians to review the emergency department and elective surgery targets, in order to ensure that they provided sufficient protection for patient safety and welfare. COAG has listened to this expert advice and has introduced more effective, clinically appropriate and safer targets to help achieve better public hospital services for all Australians. Following the Expert Panel’s review, the National Emergency Access Target for patients admitted, referred or discharged from emergency departments within four hours will be changed from 95% (where clinically appropriate) to 90% for all emergency department patients across all triage categories:

• This simplifies the implementation of the National Emergency Access Target, by removing complex exclusions and loopholes;
• The remaining 10 per cent reflects patients for whom it is clinically appropriate to remain in emergency departments longer than four hours (for example, where a longer period of observation is appropriate);
• Commencing from 2012, this target will be phased in over four years with annual interim targets across all triage categories to achieve the target by 2015.
• This staged introduction will allow Local Hospital Networks and states and territories to progressively adapt to the National Emergency Access Target.

Similarly, the National Elective Surgery Target will replace the previously agreed elective surgery target and National Access Guarantee:

• Elective surgery targets, for those to be treated within clinically recommended times will be raised from 95% to 100% - by 2015;
• The implementation timeframe will be extended by one year to 2016 in Tasmania, the Australian Capital Territory, and the Northern Territory to support these smaller states in meeting the targets.
• Elective surgery reward funding will be split into two parts – one will increase the proportion of patients treated within clinically recommended times up to the 100 per cent target; the other will reduce the overdue wait times with a particular focus on those patients who have been waiting the longest.

To facilitate state and territory governments meeting these emergency department and elective surgery targets, the Commonwealth Government has brought forward a proportion of its reward payments as facilitation payments. Reward funding of $200 million will now be used as facilitation funding by state and territory governments. The funding available to the states and territories remains $1.8 billion over eight years (2009-10 to 2016-17).
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More sub-acute care beds

In addition, there will be a significant expansion of capacity in sub-acute care services across Australia. The Commonwealth Government is providing $1.6 billion from 2010-11 to 2013-14 for states and territories to deliver at least 1,316 new sub-acute beds (including ‘bed’ equivalent services in the community), across the following care types: rehabilitation, palliative care, sub-acute mental health, psycho-geriatric services, and geriatric evaluation and management.

This will free up acute hospital beds, thus increasing capacity and taking pressure off hospitals.

GP and primary health care

A strong health system requires more focus and investment in primary health care services. That is why the Commonwealth Government has strengthened its primary health care reforms. These reforms shift the centre of gravity of the health system from hospitals towards primary health care.

The first group of Medicare Locals were engaged from 1 July 2011 and a second group of Medicare Locals will be engaged from January 2012, with the remainder beginning operation from July 2012.

The after hours GP helpline commenced on 1 July 2011 through healthdirect Australia in New South Wales, Western Australia, South Australia, the Australian Capital Territory and the Northern Territory, with Queensland and Victoria to follow. Similar services are available in Tasmania through GP Assist.

The Commonwealth Government will also work with states and territories on system-wide policy and state-wide planning for general practice and primary health care services, including at the local level through Medicare Locals, to improve the delivery of health care in the local community.

The Commonwealth Government is also investing in the establishment of GP Super Clinics to make it easier for Australians to see and contact a health professional when they need to.

Goods and Services Tax (GST)

The previous agreement dedicated a proportion of GST revenue to meet the costs of public hospital and primary health care services.

The dedication of a proportion of GST funds is not a part of the financing arrangements for National Health Reform. This provides states and territories with additional financial flexibility, in order to fund roads, schools and other priorities.

Aged Care

Australia’s older population is rapidly increasing which means a growing number of older people will need aged care services. The current aged care system is fragmented with complex and often inconsistent arrangements for managing aged care services. Changes are needed to ensure the aged care system can respond to the growing demand for aged care services.

The Commonwealth Government is taking full responsibility for aged care in most states, resulting in a nationally consistent and better integrated aged care system. This system will have strong links to health and hospital services, providing a more coordinated effort to support older Australians.

The establishment of central entry points to the aged care system will make it easier for older Australians, their families and carers to access information, assessment and service linkage for aged care. These changes will provide a more streamlined and positive experience for older Australians.

This reform is supported by an investment of $36.8 million to improve information, intake and assessment and make it easier to access the aged care system.

The first stage of implementation of the new front end for aged care commenced on 1 July 2011 and includes the introduction of a new national phone number (1800 200 422) and improvements to the website (www.agedcareaustralia.gov.au)

These changes are the first steps in creating a nationally consistent system designed to make care options clearer and easier to understand.
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