Under the National Health Reform (NHR) Agreement reforms to improve the transparency of public hospital funding, the Commonwealth, State and Territory governments are jointly responsible for funding public hospital services through the National Health Funding Pool (the Pool).

The Administrator of the National Health Funding Pool (the Administrator), with the assistance of the National Health Funding Body, has oversight of the payment of activity–based funding (ABF) and block funding through the Pool.

It is worth noting that public hospitals, operating under Local Hospital Networks (LHNs), are involved in broader non–hospital health services, including community health, preventive health, integrated care and regional health planning, the latter in conjunction with the relevant Primary Health Networks (PHNs).

Funding and payments

NHR funding occurs when the Commonwealth or States and Territories pay NHR funding into a State Pool Account or State Managed Fund.

NHR payments occur when funding is paid out of the State Pool Account by the Administrator, or is paid out of the State Managed Fund by the States and Territories.

The National Health Funding Pool

Established on 1 July 2012 through enabling legislation in each jurisdiction, the single Pool is comprised of a Reserve Bank of Australia (RBA) account for each State and Territory to receive all (ABF and block) Commonwealth and (ABF only) State and Territory public hospital funding.

Funds are also held in the jurisdictionally–controlled State Managed Funds. These are separate bank accounts or funds established by a State or Territory to receive or distribute Commonwealth and State and Territory block funding.

Commonwealth payments into the Pool are made as equal monthly instalments of an estimated annual payment. States and Territories can determine how much and when they deposit funds into the Pool and State Managed Funds.

The State Pool Accounts are established under State and Territory NHR legislation for the purposes of:

  • receiving all Commonwealth national health reform funding
  • receiving ABF State and Territory public hospital funding
  • distributing funds and making payments according to the National Health Reform Agreement.

To ensure payments from the Pool are correct, no payment is made until the respective State or Territory confirms the payment and instructs the Administrator to make payment on their behalf.

The Pool accounts are audited each year, have transparent accounting and reporting, and meet all other COAG and legislative requirements.

Who receives payments?

The payment recipients are LHNs, third parties on behalf of LHNs, State and Territory health departments, and other providers

The figure below highlights the source, types and amount of funding that flows through as payments to LHNs.

Public Hospital Funding Payment Flows

How do we manage deposits and payments?

The States and Territories work closely with the NHFB and the Administrator to process deposits and payments through the Administrator of the National Health Funding Pool Payments System (Payments System). Refer to the Payments System Procedures Manual to find out more about how this is managed. 

Payments System Procedures Manual

The National Health Reform Public Hospital Funding Procedures Manual and States and Territories Procedures Manual cover the procedures for authorised NHFB and State and Territory staff to process National Health Funding Pool deposits and payments through the Payments System.

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