National health reform payment and funding flows

NHFB Flowchart cropped


National health reform funding types

Funding Type


Activity based funding

A system of funding based on the number of services provided to patients and the cost to be paid for delivering those services

Block Funding
Block funding is provided to states and territories to support teaching and research undertaken in public hospitals, particularly for smaller rural and regional hospitals.

Public health funding
Funding identified in the National Health Reform Agreement and paid by the Commonwealth to state or territory health departments for national public health, youth health services and essential vaccines

Cross-border activity based funding
When a resident of one state or territory receives hospital treatment in another state or territory, the ‘resident’ state or territory compensates the ‘provider’ state or territory for the cost of that cross-border activity based payment


When a state pool account has an overnight credit balance, interest accrues in the account and is paid by the Reserve Bank of Australia to the state or territory

Over deposit

If more money is deposited than required, this can be paid back to the state or territory health department or used for the next payment to the state or territory

For more information about national health reform and the role of the Administrator of the National Health Funding Pool, see Health Reform.