Activity-based funding improving hospital efficiency, work must continue

Thursday, April 28, 2016

The Australian Healthcare and Hospitals Association (AHHA) welcomes the release of the National Health Performance Authority’s latest report, Hospital Performance: Costs of acute admitted patients in public hospitals from 2011-12 to 2013-14

“This report shows the importance of national work undertaken since 2011 by the Independent Hospital Pricing Authority and by all state and territory Health Departments to implement activity-based funding and a national efficient price as a basis for funding public hospitals. This has been complemented by significant efforts to achieve efficiencies across the public hospital sector, which are now paying off, notwithstanding increases in service demand,” says Alison Verhoeven, AHHA Chief Executive.

With three years of costs data now publicly available, the impact of this work is very clear: the average cost of care in Australia’s major metropolitan hospitals has risen at less than the rate of inflation. In some hospitals, there have been marked improvements in efficiency, particularly in Victoria where activity-based funding has been implemented over a longer period. 

In the previous two Commonwealth budgets, the Commonwealth Government flagged intentions to move away from an activity-based funding formula, though good sense has now prevailed with the 1 April 2016 COAG hospital funding announcement reverting to this mechanism.

“There is still more work to be done,” Ms Verhoeven said.

“Variations in costs of care across hospitals and jurisdictions should continue to be the focus of efficiency programs, although consideration must be given to factors such as service volume and workforce costs which vary across hospitals and which are not taken into account in this report.”

Efficiency is also only one aspect of a high-performing public hospital system. Safety and quality, effectiveness of care, and accessibility are integral features to a strong public hospital system that meets the needs of all Australians, and should not be overlooked in the quest for budget savings.

Media enquiries:
Alison Verhoeven
Chief Executive, The Australian Healthcare and Hospitals Association
0403 282 501