The basis used to determine NHR payments to LHNs in Victoria was advised by the Victorian Department of Health and Human Services to be as follows:

Payments in Victoria are based upon "Statement of priorities" agreements between Victorian public health services (LHNs) and the Minister for Health (or Secretary). These annual agreements detail the service profile, strategic priorities and deliverables the Local Hospital Network will achieve in the year ahead; list the key financial, access and service performance priorities and agreed targets; and list funding estimates and associated service activity.

Funding details are aggregated into ABF funded services (including NWAU equivalent service volume), Block funded services and Other funding for the purpose of determining payments to and from the State Pool Account and the State Managed Fund.

Payments are made twice monthly on the basis of one-twelfth of the agreed funding budget, adjusted for cash flow requirements of individual Victorian public health services.

While the basis of NHR payments are reported on a cash basis by the Administrator, LHNs generally report revenue and expenditure on an accrual basis.

Victorian LHNs receive ABF, block and other payments for different services and purposes. Adjustments are made by the Victorian Department of Health for cash flow needs and costs administered by the Department on behalf of LHNs. Due to the timing and processing of these adjustments, The Royal Women's Hospital show a negative amount for the block payment in June 2014.

Calvary Health Care Bethlehem Limited was registered as an LHN in the Victorian Funding Pool in July 2013. For this reporting period, only the State funding contribution was paid through the Funding Pool. Victoria is yet to advise the Administrator of estimated NWAU services to attract a Commonwealth contribution for the services provided by this LHN.

Between March and June 2014, the Commonwealth provided Victoria with additional public hospital funding of $43,177,819.95 under the funding measure: National Partnership on public hospital system - additional funding. This funding was provided to offset the downward adjustments to 2013-14 NHR funding applied at the 2013-14 Mid-Year Economic and Fiscal Outlook (MYEFO) and the 2014-15 Budget, due to the application of updated NHR funding indexation parameters. A requirement of the provision of this funding was that it is passed on in full through the National Health Funding Pool and/or State Managed Fund to LHNs for activity based and Block Funding, and State and Territory health departments for public health funding.