The Australian Government will for the first time become the majority funder of the public hospital system.
To deliver these changes, the Commonwealth will fund:
- 60 per cent of the efficient price of every public hospital service;
- 60 per cent of public hospitals' recurrent expenditure on research and training functions;
- 60 per cent of the cost of maintaining and improving public hospitals infrastructure; and
- Up to 100 per cent of the efficient price of 'primary health care equivalent' outpatient services provided to public hospital patients over time.
These changes will end the blame game, eliminate waste, and shoulder the burden of funding to meet rapidly rising health costs.
This amounts to a $30.9 billion takeover of funding responsibility for hospitals from the states and territories over the upcoming forward estimates.
This action will permanently reverse the decline in Commonwealth funding for public hospitals.
The Commonwealth will also leverage its increased financial stake in the public hospital system to better integrate health and hospital services across the country through strong national standards and improved transparency and accountability.
The Government will also change the way it pays for hospital services by funding Local Hospital Networks directly on the basis of an efficient price for each service they provide, rather than through block grants to the states and territories.
An independent umpire, at arm's length from governments, will set the efficient national price - taking into account factors such as remoteness and complexity of patients' needs.
These sweeping changes will ensure that that there is minimum waste in our hospital system and that our scarce health dollars are being freed up to deliver services as effectively and efficiently as possible.
These reforms come on top of the significant investments in public hospitals the Rudd Government has made since coming to office including:
- $64 billion over 5 years in health and hospital funding - a 50% increase on funding provided by the previous Government;
- $750 million to take pressure off Emergency Departments; and
- $600 million for elective surgery waiting lists.
The Government will announce further complementary investments to take pressure off hospitals and increase the availability of hospital beds over the coming weeks and months.