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.

To provide consistency in methodology and with the Addendum to National Health Reform Agreement 2020-2025, the 2021-22 New South Wales Funding Model has implemented the State Efficient Price and National Weighted Activity Unit (NWAU21) as the currency for Activity Based Funding (ABF) facilities. The National Efficient Cost (NEC21) for small rural public hospitals model is used for small regional and remote hospitals however NSW 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 plan between the Minister for Health and the Secretary NSW Health. In determining activity targets consideration is given to the size and health needs of a LHD’s population and provision of services to residents outside the local area. Accordingly, targets are adjusted considering factors appropriate to each LHD and service type, rather than simple extrapolation from historical activity data. Activity targets are developed by the Ministry and LHDs based on analysis of activity level drivers. Provisional activity estimates are created at LHD level to provide the basis for discussion and negotiation with individual health services to determine agreed LHD level activity targets.

Service agreements set the performance and accountability requirements for health services measured against key performance indicators for 2021-22. The agreements clearly document the NSW 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 LHD and specialty health network and funding to be provided in relation to the provision of those services
  • the Block funding to be provided for:
    • Small rural hospitals, standalone hospitals providing specialist mental health services and eligible community mental health services
    • LHDs for: 
      • Non-admitted home ventilation
      • Clinical teaching, training and research
      • Highly Specialised Therapies
  • operational and Block grants to the LHDs covering services provided and activities undertaken that are not within scope for ABF, for example, alcohol and drug services, dental services, child health and parenting services, primary care, home and community care
  • 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 the LHDs and specialty health networks that will be monitored in line with the NSW Health Performance Framework
  • requirements for the LHDs and specialty health networks to report on performance, as required or otherwise
  • a performance management process that is to be in continuous operation in respect of the LHD or specialty health network.

Further information regarding the Basis for National Health Reform payments in both 2021-22 and previous financial years is included at www.publichospitalfunding.gov.au