The basis used to determine NHR payments to LHNs in South Australia was advised by the SA Department of Health to be as follows:
In determining the annual funding allocation for all Local Hospital Networks, the budget has been built up predominantly on an activity basis applying an internally developed allocation methodology that is designed to equitably distribute funding to each Local Hospital Network relative to all Local Hospital Networks in South Australia. This occurs within the confines of a limited funding pool that includes adjustments to recognise cost improvements and the attainment of service efficiencies that are also equitably allocated on an activity basis. Supplementation is provided as Block Funding where an activity-based approach is not appropriate. This captures the provision of services including sub-acute, teaching, training and research, some mental health services and the delivery of out of hospital strategies incorporating primary health.
Monthly allocations to Local Hospital Networks will vary for a variety of reasons, but they are predominantly cash flow financed based on need which includes the activity demand on hospital services.