State governments have embraced a new hospital funding deal that the federal opposition says will do nothing to help Australia's ailing public health system.

Prime Minister Julia Gillard announced a national pool of state and federal money would fund hospitals from 2012.

Under the deal struck at the Council of Australian Governments meeting on Sunday, the commonwealth will inject $16.4 billion of growth funding into the pool from 2014 to 2020.

The new money is on top of $3.4 billion being channelled to elective surgery and emergency departments.

Queensland Premier Anna Bligh said patients could expect to see a 'dramatic' difference in the state's health system over coming years, with more money to go to nurses and doctors.

'When you see this kind of new money, these additional beds, and this kind of commitment to population growth, you can really look forward to significant improvements,' Ms Bligh said.

West Australian Premier Colin Barnett, who opposed former prime minister Kevin Rudd's plan to claw back GST revenue in exchange for hospital funding, was satisfied with the alternative.

'I think we'll end up with an efficient and effective scheme that people can understand and it will work well,' he told ABC Radio.

But doctors were divided on whether patients would be better off.

Australian Medical Association president Andrew Pesce said the new agreement would help cut red tape, but Rural Doctors Association of Queensland president Dan Halliday argued problems facing country doctors had not been addressed.

Federal opposition health spokesman Peter Dutton said there were no plans for mental health and aged care.

'No health deal is complete in this country without significant investment being made into mental health and aged care,' he told reporters in Canberra.

'It might be good politics for the prime minister but it's not going to deliver the sort of reforms in hospitals that patients want.'

Health Minister Nicola Roxon said the government's initial focus was on long-term rebuilding of the health system, but there was more work to be done in specific areas.

'We needed to deal with the financing of the health system, the key components of primary care and hospital care, before we dealt with some of the other areas that still need more work,' she told reporters in Melbourne.