States given clear run on services

The full text of the deal, released yesterday, explicitly excludes any federal role in shaping service contracts between states and local hospital networks.

But a spokeswoman for federal Health Minister Nicola Roxon insisted the states would not be able to cap hospital services at current levels a leading cause of long surgery waiting lists because networks would be forced to meet national performance benchmarks.

Even so, health experts were disappointed at the federal concession, which was a backdown from the Prime Minister's original plan to pay federal funds directly to the networks.

Professor John Dwyer, who was founding chairman of the Australian Healthcare Reform Alliance, said it was a missed opportunity.

"I did like the principle that the Commonwealth would be keeping a much closer eye on things, making sure standards are met and getting first-hand experience at purchasing hospital services," he said. "I think it is a loss."

Under the deal, the Commonwealth will also set up and fund three new national bodies: a funding authority to collect federal health funds and the GST, a pricing authority and a performance authority.

All three will be run by a chairman chosen by Canberra and a deputy chairman and five other members chosen by the states.

The states and the national funding authority will pay money into state-based funding pools, which will have a board of supervisors. The funds will pay city hospital networks based on caseload, while block grants will be made to rural hospitals from a separate state-run fund that will also receive federal cash.

WHOS RUNNING THE SHOW?

The Commonwealth will set up a new NATIONAL FUNDING AUTHORITY to distribute

federal health funds including the retained GST.

It will send money to&

JOINT new ...

FUNDING AUTHORITIES IN EACH STATE

Which will collect federal money, state money and the GST and distribute funds for each operation or service performed in major public hospitals.

The state authorities will enter into contracts to pay&

LOCAL HOSPITAL NETWORKS

Which will govern a group of hospitals in each region.

The prices paid for each operation in a public hospital will be set by a new ...

INDEPENDENT HOSPITAL PRICING AUTHORITY

A national body that will decide the efficient price that should be paid for each type of hospital service.

The performance of hospital networks will be assessed by a new NATIONAL

PERFORMANCE AUTHORITY which will set benchmarks for hospitals and report to the

public four times a year on results.

Separately, the federal government will also pay money into ...

STATE-MANAGED FUNDS To finance research, training and block grants for small regional and rural hospitals

under a model to be agreed by COAG.

LOCAL PRIMARY HEALTH CARE ORGANISATIONS Which will be set up to co-ordinate GP and primary care in the regions. To be funded under contracts with the Commonwealth and will be required to co-ordinate services with local hospital networks.