Ministers agree to commence public hospital funding review

The five-year agreement on public hospital funding between the Australian Government and all states and territories is being independently reviewed as agreed and commissioned by all Australian Health Ministers. 

The funding and delivery of public hospital services in Australia is governed by the National Health Reform Agreement (NHRA), as agreed by all state and territory governments with the Commonwealth in 2020 and runs to 2025. 

Two independent reviewers, Rosemary Huxtable PSM and Michael Walsh PSM, have been appointed to the review and will commence work immediately.  

Ms Huxtable and Mr Walsh both have long experience at the most senior levels of public service and are highly respected in the fields of health and public policy. Ms Huxtable is the former Secretary of the Commonwealth Department of Finance and Deputy Secretary of the Department of Health and Mr Walsh is a former Director-General of Queensland Health. 

The NHRA sets out arrangements for public hospital funding. While the states and territories have primary responsibility for public hospitals, the Australian Government makes a significant contribution to their costs through the NHRA.  

Mark Butler MP, Minister for Health and Aged Care, said “There’s no doubt that hospitals around the country are under pressure. The Australian Government is committed to strengthening Medicare and reducing the pressure on our hospitals so they can provide the quality care our people deserve. 

“This review will help identify areas for improvement and I welcome working with all states and territories throughout this process.” 

AMA President Professor Steve Robson said Australia’s public hospitals have been in crisis for years, with cracks starting to show even before the pandemic and they are in dire need of more support.  

“It should be clear to anyone following the news; anyone waiting for surgery; anyone who can’t get in to see a specialist; anyone who ends up waiting for hours in the back of an ambulance outside a hospital — it should be clear, in fact, to everyone, that our hospitals are at crisis point,” Professor Robson said.  

“The AMA has been campaigning on this issue since before the last election to ensure it gets the attention from governments it deserves. We must move to shared 50–50 Commonwealth-state funding for public hospitals, and remove the artificial cap that stops our system meeting community demand. 

“For their part, the states and territories need to commit to improve hospital performance by re-investing that extra five per cent. And both need to fund additional ongoing performance improvement, capacity expansion, and ways to reduce avoidable admissions. 

“The next agreement must also be designed to ensure that we fund the expanded capacity, improved performance and a focus on avoidable admissions that we know we will need in the future.”  

Professor Robson said the AMA had only recently released a report showing that out of around 200 public hospitals analysed, only three were meeting performance targets in elective surgery and emergency department wait times.  

“We also know that unless something changes soon, by the middle of this year around 500,000 Australians will be stuck waiting for elective surgery, many of them unable to even get in to see a specialist to get onto an official waiting list, many of them in excruciating pain.  

“After the recent re-launch of our Hospital Logjam Finder we heard from many Australians who are quite literally desperate for help. So while the announcement is an excellent first step in addressing these issues and hopefully seeing changes to the funding arrangements for the next agreement, there is still a need for action now.  

“We need a plan now to tackle the current backlog and get those hundreds and thousands of Australians out of pain. That plan can’t wait. We need May’s federal budget to be a health budget to address the issues happening now.”  

Under the Terms of Reference, the Review will consider whether the objectives of the NHRA are being met, including: 

• the impact of external factors (such as the COVID-19 pandemic) on the demand for hospital services and the flow-on effects 
• the performance of small rural and small regional hospitals 

• the implementation of the long term reforms and other governance and funding arrangements, and 
• any unintended consequences such as cost-shifting, perverse incentives or other inefficiencies that impact on patient outcomes. 

It will also consider whether the NHRA remains fit-for-purpose given shared priorities for better integrated care and more seamless interfaces between the health, disability, and aged care sectors. 

 The Review will complement other work between Health Ministers to make it easier for Australians to access healthcare and relieve pressure on the public hospitals. 

The reviewers will provide an interim report to all Health Ministers in August 2023, and a final report in December 2023. 

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