State and territory hospital funding negotiations are on pause according to the federal health minister in an effort to focus on the overhaul of the National Disability Insurance Scheme (NDIS), despite public hospitals being under pressure.

All state and territory health ministers sent an open letter to Mark Butler ahead of a roundtable that was held in Adelaide on Friday and made several demands of the federal government in their open letter, including more funding for public hospitals, as the current funding arrangement is due to run out in a year. 

However, Mr Butler said he had received direction from Prime Minister Anthony Albanese to pause hospital funding negotiations and allow disability negotiations to "catch up". 

"I’m keen to restart that process as soon as we possibly can, there's been a really good level of consensus amongst health ministers about what the next possible funding deal should look like. But obviously, we've got to wait until disability ministers and others are able to progress their work," he said.

Last year, the state and territory governments committed at a national cabinet meeting, to financially contribute to the NDIS scheme, in line with its growth at 4 per cent and capped at 8 per cent — the remainder of the cost growth would be covered by the Commonwealth in July, 2028. 

The federal government went into that cabinet meeting seeking additional support from states and territories as it embarked on reforming the NDIS, which is forecast to grow at 10.4 per cent each year over the next decade, making it the highest-growing government payment.

Mr Butler said those NDIS negotiations were a "little bit behind hospital negotiations, it's a very big piece of work in the disability reform space".

In that same cabinet meeting last year, premiers and chief ministers agreed to a package worth $1.2 billion to "take pressure off" hospitals, endorsing funding from the Commonwealth towards the National Health Reform Agreement and Medicare. And, the government said it would continue to "boost" funding towards more urgent care clinics.

"National cabinet endorsed [the] Commonwealth increasing National Health Reform Agreement contributions to 45 per cent over a maximum of a 10-year glide path from 1 July 2025, with an achievement of 42.5 per cent before 2030," the Prime Minister's Office said in a statement. 

'Health system under pressure'

The health ministers said the country was in a national crisis, ahead of the Adelaide roundtable. South Australia's entire public hospital system is currently operating under an internal emergency, known as a "code white", with long patient wait times and delayed elective surgeries.

"Everywhere in Australia, the health system is under pressure," the open letter read. 

"This is a national problem that requires a national solution."

The ministers also noted a steady decline in general practice over the past decade being felt across the country, with accessibility to bulk billing and fewer new doctors training to become GPs, being major contributing factors to the pressure on public hospitals. 

"As a result, state and territory governments are currently spending billions of dollars to intervene in what are fundamentally federal government responsibilities," the letter said. 

"We recognise that this situation has been exacerbated by a decade of freezing Medicare rates and aged care underfunding. But there is more that can be done and needs to be done to tackle this national crisis."

The demands from the state and territory health ministers to the federal government included: