The National Health Reform Agreement (NHRA or Agreement) has its genesis in a substantial health reform agenda, dating back to 2011, that sought to improve and mature how the Commonwealth, States and Territories fund public hospitals, and provide a platform for broader collaboration that could achieve a connected, sustainable and equitable health system. In 2021-22, $59.2 billion in Commonwealth, State and Territory funding was administered under the NHRA.

The challenge for a future NHRA is to deliver models of care most likely to reduce the rate and complexity of acute hospital admissions and improve patient outcomes, using a variety of tools, and to be more adaptive and innovative in forecasting and planning for future challenges.

This review was conducted against the requirements set out in Clause 21 of the Agreement and further directions from Health Ministers, notably to consider the impact of the COVID-19 pandemic which coincided with the commencement of the 2020-25 Addendum. Its findings were informed by a wide-ranging consultation process comprising workshops, interviews with key stakeholders, a targeted call for written submissions, and extensive data retrieval and analysis.

Key findings:

• The Agreement has been successful in improving the technical efficiency and transparency of public hospital funding through the operation of ABF with nationally consistent classification and pricing systems and funding flows. It has been less successful in delivering the right care in the right place at the right time (allocative efficiency) to respond to the needs of an ageing population and one with higher rates of chronic and complex conditions, to incentivise high value care and optimal patient outcomes.
• The next stage of reform requires a single collaborative whole of health system Agreement, that incorporates a National Health Funding and Payments Framework that can deliver optimal models of care and increase the Commonwealth funding share over time. Critical system priorities and enablers need to be embedded into the Agreement, not just as aspirational statements, but with clear accountabilities and programs of action. A focus on innovation and reform and measurement of performance can better map and enable the system to respond to future pressures.