Who funds and manages public hospitals in Australia?

Who funds public hospitals?

The Australian Government, state and territory governments share funding of public hospitals in Australia. A small share of funding comes from non-government organisations such as private health insurers.

The Government currently reimburses the states and territories for about 45% of their overall costs with a 6.5% cap on the growth of health funding.

According to the Australian Institute of Health and Welfare, in 2020-21, the Australian, state and territory governments and non-government organisations spent $71 billion on public hospitals. The state and territory governments contributed 53%.  

The Government contributes funding for public hospital services through the National Health Reform Agreement (NHRA), which includes emergency departments, hospitals and community health settings.

The system is based on activity-based funding (ABF). This means the Government does not give state hospitals lump sums or blocks of funding to be spent as they see fit. ABF operates as a reimbursement for actual work done because some diagnoses cost more to care for than others.

In the 2022-23 Budget, the Government announced that over the next 5 years it will contribute an estimated $149.8 billion to public hospitals, including funding under the 2020-25 NHRA. 

Australian Government funding of public hospitals has grown from $13.3 billion in 2012-13 to an estimated $27.2 billion in 2022-23. It will increase 145% to an estimated $35.7 billion in 2025-26. 

The table shows estimated Australian Government public hospital funding for each state and territory for 2022-23 and 2025-26.

Source: Health Funding Facts: Australian Government Department of Health and Aged Care

Who manages public hospitals?

In Australia, the state and territory governments manage and administer public hospitals.