Health was a prominent policy issue in the 1972 Australian federal government elections, and the policy of the new Labor Government at that time emphasised the regional approach to health service delivery, including community-based services and preventive health programs, in close cooperation with the states.

The Hospitals and Health Services Commission Act 1973 (Cwlth) was passed in December 1973 and members of the new Commission were appointed in April 1974.

The Commission had broad-ranging functions and powers that had major influences on national health policy development in Australia.

Major accomplishments of the Commission included the Community Health Program, which incorporated: the Hospitals Development Program, health services planning and research, a review of the School of Public Health and Tropical Medicine at the University of Sydney, diagnostic services, rehabilitation, Aboriginal health, rural health, health transport, nursing personnel, health careers and occupational health, many of which were long-neglected areas of public health.

The National Health and Hospitals Reform Commission established by the Rudd Labor Government in February, 2008, while welcome, is an investigative body, whereas the Hospitals and Health Services Commission was responsible for both health policy development and implementation.