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 the methodology and with the Addendum to the National Health Reform Agreement 2020-25 (NHRA), the 2023-24 Western Australia (WA) Activity Funding Model has implemented the 2023-24 National Pricing Framework, with some modifications to meet specific local costs, for Activity Based Funding (ABF) facilities.

The National Efficient Cost (NEC23) Block funded model is used to support the information for the calculation of funding for the small rural, remote, and very remote hospitals. The NEC23 includes WA’s estimated costs for standalone hospitals providing specialist mental health services (admitted and non-admitted), eligible community mental health services (for child and adolescents, adults, and older persons), non-admitted home ventilation services, Highly Specialised Therapies and clinical teaching, training and research provided in the major hospitals.

NHR payments in WA are based on the activity outlined in the Service Agreements and Deeds of  Amendment between Local Hospital Networks (LHNs) and the Director General of the WA Department of Health.

The Service Agreements outline:

  • the schedule of ABF services to be delivered by or on behalf of LHNs and the funding to be provided in relation to the provision of those services.
  • the Block funding to be provided to:
  • Small rural hospitals, standalone hospitals providing specialist mental health services and eligible community mental health services
  • Major hospitals for: 
    • Non-admitted home ventilation
    • Highly Specialised Therapies
  • Clinical teaching, training, and research
  • operational and Block grants to the LHN covering services provided and activities undertaken that are not within the scope for ABF, for example, dental services, primary care, home, and community care
  • supplementation grants at the ABF stream level, if necessary, in recognition that the LHN has reported average costs greater than the current allocation price

Via reference to mandatory policy frameworks:

  • standards of patient care and service delivery
  • performance standards, performance targets and performance measures for the LHN
  • requirements for the LHN to report on its performance, as required or otherwise
  • a performance management process that is to be in continuous operation in respect of the LHN

The ABF funded facilities’ service profiles are developed in negotiation with the LHN as follows:

  • Acute admitted, sub-acute and non-acute service activity volumes are modelled based on historical activity data and agreed growth rates (within State Government set parameters) and adjusted for known service capacity and profile changes
  • Emergency department and outpatient service volumes are modelled based on historical activity data and agreed growth rates (within State Government set parameters) and other known factors
  • Clinical teaching, training and research and home ventilation services are modelled based on historical expenditure profiles and adjusted for known changes
  • Small rural and remote hospitals are modelled based on historical expenditure profiles and other known growth factors
  • Standalone hospitals providing specialist mental health services (admitted and non-admitted) are modelled based on historical activity volumes and expenditure profiles and adjusted for known changes in service delivery and capacity
  • ABF services out of scope for NHRA funding, Block funded hospitals and non-hospital services are modelled based on historical expenditure profiles and other known growth factors
  • Any Supplementation Grant at the ABF stream level, if deemed necessary, are based on demonstrated need during the Service Agreement development process, supported by WA costing information used for the National Hospital Cost Data Collection process.

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