New South Wales basis for National Health Reform payments 2023-24

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.

State funding paid on an activity basis to Local Hospital Networks is based on the price set by the State (which is reported in Service Agreements) and the volume of weighted services as set out in Service Agreement for each service category.

To provide consistency in methodology and with the Addendum to National Health Reform Agreement 2020-25, the 2023-24 New South Wales Funding Model has implemented the State Efficient Price and National Weighted Activity Unit (NWAU23) as the currency for Activity Based Funding (ABF) facilities.

The National Efficient Cost (NEC23) for small rural public hospitals model is used for small regional and remote hospitals. New South Wales has retained an alternative methodology to better account locally for the significant challenges faced by small hospitals in rural settings and better integrate care between small regional and remote hospitals and ABF hospitals.

The ABF component of NHR payments in New South Wales are based on activity outlined in the Service Agreement between local health districts/specialty health networks (districts/networks) and the Secretary, New South Wales Health.

In determining activity targets consideration is given to the size and health needs of a district/network's population and provision of services to residents outside the local area. Accordingly, targets are adjusted considering factors appropriate to each district/network and service type. Activity targets are developed by the Ministry and districts/networks based on analysis of activity level drivers. Provisional activity estimates are created at district/network level to provide the basis for discussion and negotiation with individual health services to determine their agreed activity targets.

Service Agreements set the performance and accountability requirements for health services measured against key performance indicators for 2023-24. The agreements clearly document New South Wales Health Strategic Priorities, service delivery and performance expectations, activity volumes and funding provided to each organisation.

The Service Agreement outlines:

• the schedule of services to be delivered by or on behalf of the district/network and funding to be provided in relation to the provision of those services
• Block funding to be provided for:
  • Small rural hospitals, standalone hospitals providing specialist mental health services and eligible community mental health services
  • districts/networks for: 
    • Non-admitted home ventilation
    • Teaching, training and research
    • Highly Specialised Therapies
• operational and Block funding to districts/networks covering services provided and activities undertaken that are not within scope for ABF
• standards of patient care and service delivery to ensure the provision of equitable, safe, high quality and human centred healthcare services
• performance standards, performance targets and performance measures for districts/networks that are monitored in line with the NSW Health Performance Framework
• requirements for districts/networks to report on performance, as required or otherwise
• a performance management process that is in continuous operation for each district/network.

Further information regarding the Basis for National Health Reform payments in both 2023-24 and previous financial years is included at www.publichospitalfunding.gov.au