Proper Funding—A New Funding Model

• Proper Funding—A New Funding Model (PDF 30 KB)

Equal partnership in funding growth
Transparent National Health Funding Pool
Increased performance, accountability and information
More information on the performance of hospitals and other health services

The Commonwealth Government is committed to providing a strong financial basis for our health system into the future.

Under National Health Reform, the Commonwealth Government will increase its contribution to efficient growth funding for hospitals to 45 per cent in 2014-15, increasing to 50 per cent from 2017-18.

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. 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.

Equal partnership in funding growth

This means that from 2017-18 the Commonwealth will fund half of every dollar required to meet increases in the efficient cost of public hospital services, including growth in demand.

Under National Health Reform, the Commonwealth has guaranteed that it will provide at least $16.4 billion in additional efficient growth funding over the period 2014-15 to2019-20.

This is in addition to the contribution the Commonwealth Government would otherwise have made to base funding under the National Healthcare Specific Purpose Payment arrangements.

This funding will ensure Australians can access the health care they need, where and when they need it.

Transparent National Health Funding Pool

Through National Health Reform, the Commonwealth Government will ensure that there are more streamlined, collaborative, flexible and transparent funding processes through the creation of a single National Health Funding Pool and an independent Administrator. Payments will be made from the Pool to Local Hospital Networks using a nationally consistent approach to activity based funding.

The Administrator will oversee both the Commonwealth, and state and territory funding of the public hospital system and will publicly report on what funds were provided to each Local Hospital Network, and on what basis, to ensure that all tax payers’ money goes to where it is intended. These arrangements will 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.

The National Health Funding Pool will contain separate state accounts, which will be audited and have complete transparency in reporting and accounting.

Additionally, legislation will provide that state accounts within the pool will be quarantined from any other monies used for any other purpose.
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Increased performance, accountability and information

Through National Health Reform, the Commonwealth Government is delivering higher national performance standards and unprecedented transparency across the health system.

For the first time, there will also be nationally consistent and locally relevant reporting on the performance of health care providers.

Strong national standards will drive improved performance across the health and hospital system.

Australians will be able to access transparent and nationally comparable performance data and information on their local hospitals and health services — including emergency department and elective surgery waiting times and reporting of adverse events and hospital acquired infections.

Under the new Performance and Accountability Framework, the National Health Performance Authority (NHPA) will develop and produce Hospital Performance Reports and Healthy Communities Reports (on primary health care performance) which will help Australians make more informed choices about their health services and help ensure the standard of care patients receive continues to improve. The framework will be used to improve performance across hospital, GP and primary health care services.

The MyHospitals website, launched on 10 December 2010, provides increased transparency on hospitals’ performance by making it possible to compare the performance of individual hospitals against the national average. The website currently provides information on emergency department and elective surgery waiting times, as well as other information about the services hospitals provide. This is the first time nationally consistent hospital level performance information has been published.

Over time, information provided on the MyHospitals website will be enhanced and expanded and will include information on hospitals’ performance on safety and quality measures.

These increased transparency measures will allow for ready identification of high-performing hospitals, support sharing of innovative practices across Local Hospital Networks and help to create continuous improvement within the hospital system.

More information on the performance of hospitals and other health services

Australians will be able to access transparent and nationally comparable performance data and information on their local hospitals and health services - including the financial performance of Local Hospital Networks and Medicare Locals.

These increased transparency measures will allow for ready identification of high-performing hospitals, support sharing of innovative practices across Local Hospital Networks, and help to create continuous improvement within the hospital system.
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