The $20 billion deal, under which funding will be tied to hospital performance, was brokered by Prime Minister Julia Gillard with state and territory leaders on Sunday.
A national pool of combined commonwealth-state money will now be used to fund local hospital networks for each procedure they perform from 2012.
The federal government will also bring forward $200 million to help hospitals meet targets for emergency departments and elective surgery.
Australian Medical Association president Andrew Pesce said working towards consistent health goals was important.
"But I don't think we should get hung up on targets," he told ABC Television on Monday.
Ms Gillard said that while some of the goals would be difficult to reach, the new agreement would put an end to the health funding blame game.
"The buck stops with me to make sure that there is money flowing to our public hospitals," she told Sky News.
Federal opposition health spokesman Peter Dutton said he was disappointed the plan didn't mention mental health or aged care.
"Let's call it for what it was: Julia Gillard desperately needed a political win and that's what she got," he said.
"She didn't get real health reform."
NSW Opposition Leader Barry O'Farrell, widely tipped to be the state's next premier, said he needed more time to decide whether to support the health reform deal.
"I won't be a part of any agreement that sells (the public) short once again, as they have been sold short so many times by this state Labor government," he told Sky News.
But Victorian Premier Ted Baillieu welcomed the agreement, which meant more money upfront for his state, better protection for local health networks, home and community care.
"This is a much better deal than the deal that was in place which Victoria had signed up to (last year under former prime minister Kevin Rudd)," Mr Baillieu told ABC Radio.
"It's a better deal for patients."
