National Health Reform

In August 2011, the Council of Australian Governments (COAG) agreed to major structural reforms to the organisation, funding and delivery of health care, and new financial and governance arrangements for Australian public hospital services, to enable the future sustainability of the Australian health system. Following the COAG meeting, the Commonwealth and all state and territory governments entered into the National Health Reform Agreement (the Agreement) outlining their shared intentions to work together to establish the foundations of Australia’s future health system.

Under the Agreement, the Commonwealth, state and territory governments are jointly responsible for funding public hospital services through either activity based or block funding.

More about the Agreement . . .

The aim of the Agreement is to deliver a nationally unified and locally controlled health system, through:

  • Introducing new financial arrangements for the partnerships of the Commonwealth, state and territory governments
  • Confirming the roles state and territory governments play in public health and as system managers for public hospital services
  • Using activity based funding to improve public hospital efficiency and patient access to services
  • Increasing Commonwealth contributions to public hospital funding to ensure funding sustainability
  • Improving the transparency of public hospital funding through a National Health Funding Pool (the Pool)
  • Improving local accountability and responsiveness to the needs of communities through establishing local hospital networks
  • Introducing new national performance standards and better outcomes for hospital patients.

The National Health Funding Body Annual Report outlines the activities undertaken during the
2012-13 financial year to support the delivery of these obligations.

The Administrator of the National Health Funding Pool

The Administrator of the National Health Funding Pool (the Administrator) is a single, independent statutory office holder, appointed by the Standing Council on Health. The Administrator is not subject to the control or direction of the Commonwealth Minister. The role of the Administrator was created through the National Health Reform Agreement, National Health Reform Act 2011 and corresponding state and territory national health reform legislation.

The role of the Administrator is to administer the National Health Funding Pool (the Pool) according to the Agreement, to oversee payments into and out of the Pool account for each state and territory and to report on various funding and service delivery matters. The National Health Funding Body (NHFB), a Commonwealth interjusrisdictional agency was created to assist the Administrator in the discharge of these requirements.

More about the Administrator . . .

The responsibilities of the Administrator include:

  • calculating the Commonwealth national health reform funding contribution to states and territories and ensuring funds are deposited into Pool accounts in line with the Agreement
  • administering the Pool which receives all Commonwealth and activity based state and territory hospital funding
  • authorising payment instructions
  • reporting publicly on all activities of the Pool
  • reconciling estimated and actual service delivery volumes.

The NHFB also provides effective and efficient administrative mechanisms and primary policy advice in the development and operation of those functions.

The funding provided through these arrangements is the biggest single investment in health services made by the Commonwealth and states and territories.

The core of the Administrator’s reporting obligations is to ensure the transparency of Australian hospital system funding, provided to the general public and jurisdictions on the Public Hospital Funding website, together with the comprehensive information contained in the Administrator’s Annual Report (6MB).

 The National Health Funding Pool

The Pool consists of eight state and territory bank accounts held with the Reserve Bank of Australia. The bank accounts that make up the Pool are known as state pool accounts and were established under state and territory legislation for the purpose of:

  • receiving all Commonwealth block funding
  • receiving activity-based state and territory public hospital funding
  • distributing funds and making payments according to the Agreement.
More about the Funding Pool . . .

The Administrator governs the Pool, with the assistance of the Funding Body. The funding contributors are the Commonwealth Government and state or territory governments for their own state and territory activity and cross border funding for interstate patients. National health reform occurs when all contributors have paid into a state pool account or state managed fund.

The payment recipients are the local hospital networks, third parties on behalf of the local hospital networks, state and territory Health Departments and other providers. Recipients receive payments from the state pool account or state managed fund.

For more information about national health reform funding and payment flows, see Payment and Funding Flows.