The basis used to determine NHR payments to LHNs in Western Australia is as follows:

Service agreements between the Department of Health (the Department) and Health Service Providers (HSPs) are based on the Department’s funding and purchasing policies and resource allocation models.

The Western Australia Activity- Based Funding (WA ABF) model determines the price at which the Department purchases services from HSPs and the type and volume of services that are purchased. Metropolitan public hospitals and Regional and District rural hospitals are funded through the WA ABF model. The WA ABF model is based on the national ABF model however, it includes a range of modifications reflecting WA funding principles and purchasing mechanisms.

Small rural hospitals are funded through Block Funding arrangements which, although based on the National Efficient Cost Determination contain some funding modifications.

The vast majority of non-hospital services are block-funded. Block Funding is based on budget to budget build from the previous year using WA State Government funding parameters consistent with the WA State budget.