Health Minister Mark Butler will convene with his counterparts in Brisbane on Friday as the federal government tries to lock in a new five-year agreement.
A deal has proven elusive since national cabinet in 2023 agreed to the Commonwealth increasing its share of public hospital funding to 42.5 per cent by 2030 and 45 per cent by 2035.
Prime Minister Anthony Albanese this week sent letters to state and territory leaders offering a $3 billion top-up of the additional $20 billion that's already on the table.
The amount being put forward is still considered by the states to be inadequate, AAP understands.
State and territory leaders in October said even with the additional $20 billion on offer, the actual share of Commonwealth funding would be closer to 35 per cent, "falling tens of billions of dollars short of what is needed".
Queensland Health Minister Tim Nicholls on Thursday told state parliament the latest offer was underwhelming and did not meet demand.
"Queenslanders who might have been expecting a Christmas gift from their federal government have instead heard from the Grinch," he said.
Mr Albanese hit back at Mr Nicholls for publicising details of the offer.
"If the Queensland government is serious about actually getting a breakthrough, they'll act in a mature way and engage in response to the letter that I sent in good faith," the prime minister told reporters.
WA Premier Roger Cook said the deal on the table was insufficient but he was keen to engage constructively with the federal government.
"I want to see a deal done by Christmas," he told reporters.
"We want them to do better. We think they need to be a stronger partner in our overall hospital system funding."
Labor placed health at the centre of its federal election campaign earlier in 2025, promising to inject more money into strained systems.
A report commissioned by the states and territories found up to one in 10 public hospital beds were being taken by "stranded" patients needing alternative accommodation in aged care and disability support.
It called on the federal government to take greater responsibility through funding.
Mr Butler said it was the responsibility of the states to ensure their hospital systems were operating efficiently and effectively.
"We want to work co-operatively to make sure at a time of huge increasing pressure on all of our health and aged care systems, we are getting the best bang for every single dollar that taxpayers put into the system," he told ABC radio.
"I don't think that's an unreasonable thing to do."
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