State and territory leaders have met to break a deadlock on federal hospital funding as research reveals billions of wasted dollars.

Premiers and chief ministers talked turkey on Wednesday morning as crunch time approaches on negotiations with Canberra on a new five-year public hospital funding deal.

Federal Health Minister Mark Butler promised to cover 42.5 per cent of public hospital running costs by 2030 and 45 per cent by 2035, in a deal struck in late 2023.

At Wednesday's meeting, state and territory leaders agreed the pledge must be honoured.

Labor NSW Premier Chris Minns said the share of federal funding would be closer to 37 per cent under the Albanese Labor government's latest offer, calling it a "massive decline".

"Right across Australia, Queensland, Western Australia, South

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