Activity Based Funding (ABF) Overview
The implementation of a nationally consistent approach to Activity Based Funding (ABF) for health services was established by the Council of Australian Governments (COAG) as part of the National Health Reform Agreement (NHRA), August 2011.
The NHRA sets out the shared intention of the Federal, State and Territory governments to work in partnership to improve health outcomes for all Australians and ensure the sustainability of the Australian health system. Part of the need for this agreement was a realisation of the many pressures placed on hospitals including an ageing population, an increasing prevalence of chronic diseases, increasing costs associated with improved medical technologies and
increased consumer expectations.
ABF is an important tool for health service management in monitoring and understanding patient activity and cost profiles assisting the budget management and improvement in quality of services provided. Increased transparency under ABF will provide sharing of innovative practices with other hospitals. In combination with a comprehensive governance framework and appropriate performance and quality measures, it is anticipated ABF will assist the delivery of cost effective health services.
Hospital and Health Service funding will be based on the services provided and an agreed price and methodology of calculation. The State will purchase services and in that way provide funding to the hospital and health services. Smaller hospitals and other health services will be funded by block grants