National health reform

On 2 August 2011 all states and territories agreed to a range of National Health Reforms, by signing the National Health Reform Agreement, a revised National Healthcare Agreement and National Partnership Agreement on Improving Public Hospital Services.

The nation-wide reforms will result in changes to the organisation, funding and delivery of our health care system.

Under the National Health Reform Agreement (DOC 339KB) the Australian Government and states and territories will have joint responsibility for funding public hospital services to meet the increase in health service demand.

The Australian Government will contribute half the efficient price of growth in public hospital services by 1 July 2017. Activity based funding (DOC 335KB) will be adopted as the primary basis for funding the majority of public hospital services. Some services, such as some smaller country hospitals, will continue to be “block funded” which means that they will receive a set contribution rather than funding based on individual services provided.

Public hospital services will be delivered through Local Hospital Networks (LHNs), called Local Health Networks in South Australia, which must be established nation wide by 1 July 2012.  South Australia has five Local Health Networks (LHNs) which came into effect on 1 July 2011. The five LHNs will ensure that our public hospitals are accountable and responsive to the needs of the South Australian community.  

Medicare Locals (MLs) will coordinate and integrate GP and primary care services in local communities.  The Australian Government is establishing five MLs in South Australia.

The reforms focus on increased accountability and transparency. The new funding arrangements and performance and accountability requirements are the focus for the establishment of four independent national bodies:

• Independent Hospital Pricing Authority
• National Health Funding Authority
• National Health Performance Authority
• Australian Commission for Safety and Quality in Health Care

Independent Hospital Pricing Authority

The Independent Hospital Pricing Authority’s (IHPA) main function will be to determine the national efficient price for public hospital services and the efficient cost of block funded services and teaching training and research.  The IHPA will determine the public hospital services that will be eligible for Australian Government funding contribution and formulate standards and requirements in relation to data to be provided by the states relating to health care services provided by public hospitals.

National Health Funding Authority

A National Health Funding Authority and National Health Funding Pool (NHFP) will be established. The NHFP holds a Reserve Bank of Australia ‘pool’ account for each state.  The NHFP will be administered by an independent statutory officer who will be jointly appointed by all jurisdictions.

The ABF system will include the setting of a national efficient price for each service upon which Australian Government and State funding will be allocated for each service provided.  Where appropriate, services and programs will be block funded.

All Australian Government public hospital funding and state activity-based funding will flow through the NHFP to LHNs.

National Health Performance Authority

The National Health Performance Authority (NHPA) will be responsible for monitoring and reporting publicly on the performance of LHNs in addition to public and private hospitals, Medicare Locals and other health bodies.

A Performance and Accountability Framework (DOC 349KB) (PAF) including key performance indicators will support the work of the NHPA.

Australian Commission for Safety and Quality in Health Care

The Australian Commission for Safety and Quality Health Care (ACSQHC) has existed for some time under the auspice of Health Ministers.  The ACSQHC will now have extended powers as a permanent independent statutory authority to lead, coordinate and monitor improvements in safety and quality in health care.  ACSQHCs responsibilities also include the development of nationally agreed clinical standards and standards for safety and quality improvement.

The National Partnership Agreement on Improving Public Hospital Services

The National Partnership Agreement on Improving Public Hospital Services is part of the package of reforms agreed on 2 August 2011.  It outlines additional Australian Government funding available to the states and territories for meeting set performance targets (DOC 349KB) in relation to elective surgery, emergency department waiting times and subacute beds. Reward arrangements are included for the elective surgery and emergency department targets.

The national reforms build on our state health reforms delivered under South Australia’s Health Care Plan 2007-2016 and the South Australian Government’s response to the Stepping Up Report on Mental Health Services.
Under these national reforms, it is estimated that South Australia will receive an extra $1.15 billion between 2014-2015 and 2019-20 to fund our public hospitals.

The changes will deliver a South Australian health system with greater local control, greater efficiency and improved responsiveness and transparency.