To meet the reporting requirements of Section 240 of the National Health Reform Act 2011, the Administrator is to include the basis of each State and Territory’s National Health Reform (NHR) funding and payments.
The State contribution to the funding of public hospital services and functions is calculated on an activity basis or provided as block funding in accordance with the National Health Reform Agreement – Addendum 2020-25. The State determines the amount they pay for public hospital services and functions and the mix of those services and functions and will meet the balance of the cost of delivering public hospital services and functions over and above the Commonwealth contribution.
System-wide terms and conditions for government-funded healthcare organisations are detailed in Policy and Funding Guidelines Policy Guide and Funding Rules (https://www.health.vic.gov.au/policy-and-funding-guidelines-for-health-…(Opens in a new tab/window)).
State funding is paid on an activity basis to Local Hospital Networks (LHNs) based on the price set by the State (that is reported in the Policy and Funding Guidelines - Funding Rules) and the volume of weighted services as set out in Statement of Priorities for each service category. Non-price grants are also provided where local service delivery does not support activity-based funding.
To provide consistency in methodology and with the Addendum to the National Health Reform Agreement 2020-25, the Victoria funding model has implemented the National Weighted Activity Unit (NWAU24) and a Metropolitan, Regional, and Subregional Victorian Efficient Price as the currency for local activity based funding (ABF) facilities.
The National Efficient Cost (NEC24) block funding model is used as the currency for small rural hospitals, standalone hospitals providing specialised mental health services, rural and regional local hospital networks delivering a low volume of community mental health services, and eligible community health services. The NEC24 block funding model is also used as the currency for teaching training and research, non-admitted home ventilation, High Cost, Highly Specialised Therapies, and other public hospital programs.
Operational grants are also provided to the LHN covering services performed and activities undertaken that are not within scope for NHRA block funding or ABF. For example: alcohol and drug services, public health, dental services, maternal, child health and parenting services, primary care and community health, ageing and aged care, and home and community care.
The Minister for Health and the LHN can agree amendments to the Statement of Priorities to adjust service volumes or pricing to take account of such matters as changing health needs, variations in actual service delivery and hospital performance.
The Statements of Priorities are available at https://www.health.vic.gov.au/funding-performance-accountability/statem…(Opens in a new tab/window).
Further information regarding the Basis for National Health Reform payments in both 2024-25 and previous financial years is included at www.publichospitalfunding.gov.au.