How the federal government plans to fund its reforms to the nation's health system remains a sticking point for the Victorian government.
Prime Minister Kevin Rudd and Premier John Brumby held a second round of talks in Melbourne on Tuesday to discuss aspects of federal Labor's plan to assume more responsibility for funding public hospitals and primary health care.
Mr Rudd described the talks as "good and substantive" while Mr Brumby said they were "positive" insofar as they discussed issues other than the "fundamental issues" of hospitals funding.
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"We've made progress I think on some of the health issues," the premier told Fairfax Radio Network after the meeting.
"We've also made good progress in relation to activity-based funding."
But there was not enough time to discuss the issue that concerns Victoria the most.
Under the plan the federal government will assume responsibility for 60 per cent of funding for public hospitals by taking a third of the states and territories' GST revenue.
"These have always been the big issues from my point of view," Mr Brumby said, adding he was keen to have more discussions with the federal government.
Mr Rudd said both sides were moving through the outstanding areas of disagreement "one by one".
"I believe we are making some progress," he told reporters.
But he didn't underestimate the problems "that we still have to work our way through".
"That's why we will continue to keep talking with the objective of resuming those discussions as early as tomorrow, or in any case, some stage soon," Mr Rudd said.
