Dr McDonald, who works at Camden Hospital, was responding to speculation last week that some hospitals would be unviable if Prime Minister Kevin Rudd's pay-per-procedure model was introduced.

He said there would always be a role for Camden but its role was changing.

``No one in their right mind would ever close a hospital especially one in a growth area and as new as Camden,'' he said.

Under the proposed health care model the federal government would fund 60 per cent of health care.

Local hospital networks would run public hospital services and be paid for each service they provide.

An independent umpire would determine the cost of a service by taking into account the complexity of the patient's needs.

Camden MP Geoff Corrigan welcomed the funding takeover.

``We're committed to working with the government on making this change to the health system,'' he said.

Dr McDonald said the new funding model coupled with a group of doctors who would soon graduate would resolve the two problems that had long faced the hospital.

``The medical workforce shortage is not going to last forever and the other barrier for the development of Camden has been funding,'' he said. ``Camden leads the way. We need it for teaching and it has a world class palliative care unit.''

A health analyst who once called for Camden Hospital's emergency department to be closed said it was too soon to determine how the funding takeover would affect the hospital.

Stephen Leeder, director of the Australian Health Policy Institute at Sydney University, said: ``I can't see how people can say a hospital would be viable or would not be viable with the amount of detail we have so far''.

Brad Frankum, the consulting physician at Campbelltown and Camden hospitals and the dean of the University of Western Sydney Clinical School, hopes the federal government reforms will improve quality funding allocations and access to care.