Prime Minister Julia Gillard today announced the key aspects of the health deal the Government will aim to finalise at COAG on Sunday - aimed at delivering a better deal for patients.
The deal will include a 50/50 funding arrangement for all public hospital funding growth, including delivering over $16 billion in hospital funding over the next decade.
Rather than focusing on complex accounting arrangements, the new deal aims to give patients a better deal by delivering more money combined with changes to the way health services are delivered.
Under the new deal:
* The Federal Government will step up to permanently pay 50 per cent of the growth in hospital costs.
* This will be done in two stages, increasing to 45 per cent in 2014-15 and to 50 per cent in 2017-18.
* Once this kicks in, the States and the Commonwealth will share future funding growth in a 50/50 partnership.
* If an agreement is reached, the States and Territories will receive $16.4 billion in extra hospital funding to 2019-20.
* The Commonwealth will not seek to take back any GST from the States.
However, there will be no blank cheques - without this crucial reform to give patients a better deal, the Government will not be delivering extra funding.
In return for this extra funding, the Gillard Labor Government will demand significant reform from the States and Territories, including:
* Greater local control of hospitals.
* A price on hospital services - through activity based funding to drive efficiency and reduce waste.
* Strict national standards, including a four-hour target for emergency waiting times, a 95 per cent elective surgery target, and a National Access Guarantee to ensure that no Australian experiences extremely long waits for elective surgery.
* More transparency through strict reporting via the MyHospital website.
As part of the changes announced today, the Commonwealth will have a renewed focus on the delivery of stronger primary health care, to get people the services they need in their local communities and keep people well and out of hospital.
Clinicians are at the heart of the health system and need to be at the heart of health reform.
Implementation of these reforms will include stronger clinical engagement to ensure that the voices of clinicians all over the country are heard in the process.
This will be national health reform that will last, built on a genuine partnership between the federal government and state governments, that delivers real benefits to patients.
HEALTH FUNDING
The biggest challenge facing our health system is that it is running out of money.
There is a fundamental structural problem: hospital costs are rising faster than the states can raise money to pay for them.
Without structural reform, rapidly rising health costs will overwhelm State and Territory budgets within the next few decades.
The Government is committed to properly funding public hospitals to meet the rising costs of care into the future.
From 2014-15, the Commonwealth Government will increase its share of public hospital funding by funding 45 per cent of all efficient growth in public hospital services, increasing to 50 per cent in 2017-18.
That is, from 2017-18, 50 cents in every new dollar spent on efficient hospital costs will come from the Commonwealth.
This will mean a genuinely equal partnership between the Commonwealth and the States and Territories on how growth in hospital costs is paid for into the future.
The financial benefit of this arrangement to the States and Territories will be around $16.4 billion over the remainder of the decade.
NATIONAL FUNDING POOL
The Government will improve transparency of funding flows through the establishment of a single national funding pool.
Both Commonwealth and the State and Territory Governments will pay their share of base funding and efficient growth funding into a single national pool.
This body will be administered by an independent, jointly-governed national body, distinct from Commonwealth and State Health Departments, to be operational from 1 July 2012.
Funding from the national pool will be distributed to State-based accounts, and from there to Local Hospital Networks.
MORE EFFECTIVE, MORE EFFICIENT HOSPITALS
The Government is determined to deliver health reforms to give patients a better deal.
That means cleaning up our inefficient health system in which there is too much waste, by introducing solid market-based reforms to drive greater efficiency and innovation in the public hospital system.
Efficient Price
Instead of States receiving block grants - the equivalent of blank cheques - hospitals will be funded for each activity they undertake.
This will be based on the fair and efficient price for each service, set by an independent hospital pricing authority.
This will help identify our best hospitals, as well as some of our less effective hospitals - hospitals that are delivering services at far too high a price and as a result wasting important funds.
That means under-performance can be tackled and successful techniques used by our best hospitals can be shared.
In some instances, like payments to smaller regional hospitals and some highly specialised services, funding will continue to paid in block grants.
Standards
The Commonwealth Government will continue to insist on tough national standards for public hospital performance to drive shorter waiting times for both elective surgery and emergency departments.
We will work with the States and Territories on safe and effective implementation to deliver:
* The four-hour National Access Target - to reduce long waiting times in public hospital emergency departments, by aiming to have patients assessed, treated and discharged or admitted within 4 hours where clinically appropriate
* The National Access Target for elective surgery, ensuring that 95% of all patients waiting for elective surgery will be treated within clinically recommended times.
* The National Access Guarantee for elective surgery, which means that extremely long waits for elective surgery will become a thing of the past.
Transparency
The Government will also publish information about how each hospital performs so the public can choose the best care.
This is another important market principle which will drive improvements in patient outcomes across the nation
Local Control
National health reform will also give local communities and clinicians a greater say in the delivery of their local hospital services through the establishment of Local Hospital Networks.
A GREATER FOCUS ON PRIMARY CARE
The Gillard Labor Government also understands that a strong health system requires more focus and investment in primary care services.
Our primary care reforms aim to shift the centre of gravity from hospitals towards primary health care.
The Government is establishing Medicare Locals to drive improvements in primary health care and ensure that primary care services are better tailored to meet the needs of local communities.
The Government will strengthen its primary care reforms by:
* ensuring that Medicare Locals are locally responsive, and can demonstrate how they will connect to local communities and respond to local health needs - this will mean establishing more Medicare Locals than originally planned;
* bringing forward the establishment of more Medicare Locals to ensure more communities receive the concrete benefits from Medicare Locals sooner;
* fast-tracking reforms to after hours GP care, through which Medicare Locals will plan and support local face-to-face GP after hours services;
* ensuring that local communities have robust information about their local primary health care services - including key information on opening hours and availability of health care services, patient outcomes such as rates of preventable hospitalisations and information on the health status of the community, such as rates of chronic disease.
Over time, the Commonwealth will empower Medicare Locals with more flexible funding to target services to their local community's specific needs.
These are the key aspects of the deal the Prime Minister aims to finalise at COAG.
Together, they represent significant national health reform that will build a genuine and lasting partnership between the Federal Government and the State and Territory Governments to deliver real benefits to patients.