more_vert
Last week the Federal government agreed to $25 billion in new funding for hospitals and foundational supports.
InSight+ spoke with the Australian Medical Association (AMA) about what the funding means, whether it’s enough, and where it may fall short.
Last Friday, the Albanese government announced a new funding agreement between state and federal governments for hospitals and community foundational supports.
The agreement included an increase in spending of $25 billion over five years. The total spending will be $220 billion in the new period from 2026-27 to 2030-31, or an increase of 12%. The agreement has been under negotiation for the last two years, with an extension of one year and stop-gap funding of $1.7 billion.
The agreement should recoup the shortfall in Commonwealth funding present since 2018, and restore the Commonwealth’s share of public hospital funding to 45% by 2035.
As part of the agreement, states and territories have agreed to match a $2 billion commitment to the Thriving Kids program, which will attempt to begin to provide foundational supports to children with developmental disorders.
A long time coming
While state and territory governments have praised the agreement, the tone may be one of relief rather than enthusiasm in a health care system continuing to increase in size and complexity.
Dr Danielle McMullen is a GP and President of the Australian Medical Association (AMA).
Dr McMullen says federal funding must reflect the complexity and growth of our health system as a whole, and hospitals in particular.
“Our hospitals are in a logjam. Ambulance ramping gets a lot of airtime in the media, but it’s a symptom of a bigger problem. The flow into a hospital is stymied; it’s difficult to get people from emergency into the wards because you can’t move them from the wards to home, through exit block. People who need aged care or disability supports can’t leave hospital because those supports aren’t available,” says Dr McMullen.
“That’s going to take time, cooperation, and funding, to solve. This week we finally saw an agreement between Commonwealth and state governments for funding for the next five years. That’s been more than two years in the making,” she said.
“Anyone who tries to run a practice understands that not having certainty of funding is disruptive to a system. On top of that, since 2017, we’ve seen a relative decline in the Commonwealth contribution to that funding. State hospital systems were being squeezed tighter and tighter, and in the meantime there’s growing demand year on year. You’re trying to do more with less.”
“Last week’s announcement about the additional $25 billion from the Commonwealth does correct that shortfall. They’ve stuck to their commitment of 45% of funding by 2035.”
“I would have liked that to have been brought forward to 2030.”
Dr McMullen said that the negotiations have been longstanding.
“In 2023 [the Commonwealth’s] first offer was about $13 billion dollars. Just in the past two years, the cost of delivering care has meant that that offer had to go from $13 billion to $25 billion just to be equivalent.”
“So we’re welcoming that certainty of funding, but it’s only the beginning of the road.”
Clearing the logjam
Dr McMullen said that the main issue is what funding can be secured in the future.
“The more interesting conversation is: what are we going to do for the end of the next 10 years?”
“We’ve got an aging population. As a country we need to get better at preventive health; reducing preventable hospital admissions; boosting aged care and home services; general practice; and having a much more coordinated health system.”
“I think some of the reporting has been like, ‘Oh good: the deal was signed, so our hospitals are going to be sorted tomorrow.’”
“There’s no amount of funding that will turn around hospital performance overnight.”
“It is a positive step. No deal would have been disastrous. But [we need to] think of innovative ways to do things differently.”
“We saw really big investments in health in the last budget in general practice, and they’re now in hospitals. This does show that there’s a commitment to health and catching up where they haven’t been contributing.”
It’s not just about money
Dr McMullen encourages the federal government to take a holistic approach to improving the health system and its efficiencies.
“Now that we’ve got, at the commonwealth level, Health, Disability, and Aging in the one portfolio, there are opportunities for synergies.”
“[Ministers] should recognise that what we do in aged care has an impact on hospitals and general practice, and so on. We could have a much more coordinated system which saves money in the longer run.”
“It’s not the most expensive parts of our health system that could make the biggest difference to the performance of our system.”
Dr McMullen said it would be important to address how the states were passing on funding.
“How do we make sure that the states and territories ensure all of [the funding] flows through to their hospitals?” she said.
“We’ll be working hard to make sure they do. We expect they should. Our campaign called for them to invest any increases in innovation to improve the performance in hospitals.”
“Whether that’s looking at out-of-hospital care options, or how to streamline or deal with planned surgery wait lists.”
What needs to happen next?
Dr McMullen said that there are ways to make the health care system function better.
“If it was us, we would have brought the additional funding quicker, to relieve that pressure on our hospital system sooner. But generally speaking, we need to think of our health system as a whole, rather than the silos of general practice, hospitals, and private practice.”
“The Huxtable review had recommendations about how the National Health Reform Agreement (NHRA) could be more future-thinking.”
“Now we’ve got the funding part sorted, but there were so many other recommendations that are worth taking another look at. So I think we need to pull that off the shelf.”
Dr McMullen said that looking around the world, it’s easy to see how important it is to get healthcare right.
“There was a Commonwealth fund report about a year ago that still ranked Australia as the world’s top health care system.
“But that means it’s worth protecting.”
“We don’t need just more of the same. It’s not just about the funding; funding always buys us a bit of time, and arrests the decline in performance of our hospitals.”
“But more of the same is not going to fix rising chronic disease, an aging population. We just won’t keep up with that demand unless we think about doing things differently.”