"This $600m will be welcomed by public hospitals which have been struggling to cope with in adequate funding for years," Prue Power, Executive Director, has said.
"However, we need to make sure that it delivers real benefits for patients.
Other countries have found that incentives to reduce waiting lists can backfire if incentives and targets are not carefully chosen.
"For example, simplistic targets for waiting list reduction can result in 'gaming' (artificial lowering of waiting lists). It can also create incentives for hospitals to perform surgery earlier than is optimum for patients, for example, someone who is obese may need to lose weight to achieve the best possible outcome from surgery.
"It is also important to take into consideration that as waiting times for treatment reduce, demand will shift back from the private hospital sector."
The effect of this will be to increase waiting times, despite the fact that more people will be receiving treatment. It is important that this increase in demand is taken into consideration in setting targets and that hospitals are not penalised for this.
"AHHA supports increasing accountability and transparency of hospital funding but the way in which this is achieved is crucial. AHHA urges COAG to commit to working with the hospital sector to ensure that the quality and safety of patient care remains the highest priority in reducing waiting times for elective surgery", Power added.