National Health Reform

A National Health and Hospitals Network: Further Investments in Australia's Health

Overview

1. Investing in the National Health and Hospitals Network

Earlier this year, the Government announced the establishment of a National Health and Hospitals Network – the most significant reforms to Australia’s health and hospital system since the introduction of Medicare, and one of the biggest reforms to the federation in its history. The National Health and Hospitals Network will drive major improvements in service delivery and better health outcomes for patients. It will equip the health and hospital system to serve Australians well into the future, and repair the finances of the Australian federal system.

The Government is now outlining major additional investments in the National Health and Hospitals Network to deliver better health and better hospitals for all Australians. From July 2010, the Government will invest $3.0 billion across:

• Hospitals – to reduce waiting times for emergency departments and elective surgery.
• General practice (GP) and primary health care – to improve access to GP services, tackle chronic disease and keep Australians healthy and out of hospital.
• Workforce – to ensure there are more health professionals to meet the growing need for health and hospital services across the country.
• Aged care – to improve access to high quality aged care and health services for older Australians.

These investments focus on the health services that Australians rely on most to keep them healthy, and to help them get better if they happen to fall ill. They will improve patients’ experience of the health and hospital system wherever they live.

For the first time, Australians will have a guarantee that they won’t have to wait too long for elective surgery.

For the first time, a National Four Hour Target will be established for hospital emergency departments.

For the first time, the Government will pay for better health outcomes rather than just one-off visits to doctors and specialists – through our plan for personalised care for patients with one of Australia’s most common chronic diseases, diabetes.

For the first time, the Government will assume full responsibility for aged care in Australia, delivering immediate improvements to help older Australians and their families better navigate the aged care system.

The Government will also deliver record investments in training more doctors so that in the future, patients can get better access to health services when they need them.

The Government is confident that these reforms will deliver significant improvements in services for patients, building on the major reforms to the structure of the health and hospital system that the Government has already outlined. Under the National Health and Hospitals Network:

• The Commonwealth Government will become the majority funder of Australian public hospitals, by funding 60 per cent of the efficient price for all public hospital services that Local Hospital Networks have agreed to provide, as well as 60 per cent of capital, research and training in our public hospitals.
• The Commonwealth Government will take full funding and policy responsibility for GP and primary health care services in Australia.
• Under these new funding arrangements, the Commonwealth Government will pay for the majority of growth in public hospital costs over time, including growth over and above the share of Goods and Services Tax (GST) the Commonwealth is allocating to a National Health and Hospitals Network Fund.
• The Commonwealth Government will require new, higher national standards and transparent reporting that will provide Australians with more information than ever before about national, state and local performance of the health system.
• Responsibility for hospital management will be devolved to Local Hospital Networks. This will increase local autonomy and flexibility so that services are more responsive to local needs.
• The Commonwealth Government will pay Local Hospital Networks directly on the basis of an efficient price per public hospital service they provide to public patients under service agreements between each Local Hospital Network and states. While paying Local Hospital Networks is integral to the National Health and Hospitals Network, some payments are still best made at the state level to allow for system-wide resource allocation. This is particularly true for research, training and block grants for small rural and regional hospitals to recognise Community Service Obligations.

The establishment of the National Health and Hospitals Network will reduce cost shifting and blame shifting. It will ensure that for the first time, the Commonwealth Government pays a fixed majority share of public hospital funding, as opposed to the current situation in which the Commonwealth’s hospital funding share has been declining year after year. Having one level of Government responsible for both the majority of hospital costs and all of GP and primary care services will clear up the perverse incentives that exist in the current system. For the first time, the Commonwealth will have a major financial incentive to provide better services outside of hospitals and drive improved efficiency and standards in hospitals.

It will also underpin the financial sustainability of the health and hospital system, by ensuring that state and territory government budgets are not consumed by rising health costs. The Commonwealth Treasury forecasts this to occur by 2045–46, and earlier in some states and territories (referred to throughout this document as ‘states’). Under the National Health and Hospitals Network, states will be relieved of a growing fiscal pressure, beginning with a projected $15.6 billion between 2014–15 and 2019–20.

The National Health and Hospitals Network builds on the major investments and existing reforms that the Government has already made in Australia’s health and hospitals system. These include:

• record investments in public hospitals;
• training a record number of doctors, nurses and allied health professionals;
• making smarter use of our workforce;
• reforming incentives for doctors to go to rural areas;
• building GP Super Clinics across the country; and
• making record investments in prevention. back to top