Prime Minister Kevin Rudd has unveiled a new health plan which will see the creation of a National Hospital Fund that allows hospitals to be "funded nationally, but run locally".
The PM says the federal takeover of state and territory-based hospital funding will end the blame game and ensure greater outcomes for patients.
"This action will permanently reverse the decline in commonwealth funding for public hospitals," he says.
Mr Rudd says the new funding model would create a single national network of hospitals, rather than the current model of eight separate systems.
The federal goverment would become the major stakeholder, but would require states and territories to give a certain percentage of their budget to hospitals.
News that makes sense
Your trusted source for staying up-to-date with the world around you. Get free daily news updates and analysis, straight to your inbox.
One-third of the states and territories' GST allocations will be required to fund the healthcare changes.
The Commonwealth will also skim back the amount given to state and territory governments and give this money to the National Hospital Fund.
Mr Rudd outlined his blueprint at the National Press Club in Canberra this afternoon.
Speculation surrounding the plan mounted even before details of the announcement were released, with states and territories vowing to fight mismanagement of the traditionally state-based portfolio.
The states and territories have yet to agree on the plan, but Mr Rudd says if they do not, the federal government will take it directly to the people via a referendum, possibly at the next election.
The PM says he has discussed the changes with Premiers and Chief Ministers, and the reaction from them has been 'mixed'.
Also as part of the reforms, the federal government announced it would take over the funding and policy responsibility for General Practitioners and frontline healthcare services.
Mr Rudd called the changes "the biggest single reform since the introduction of Medicare".
