Hospital efficiency - Quality patient outcomes must be a goal, not just cost cutting

Wednesday, March 5, 2014


The variable cost of providing health services across Australia has again been highlighted by a Grattan Institute report, released today.

“The cost variation between hospitals shows that there is potential for more efficient service provision, however the drive for efficiency cannot be at the expense of quality,” says Alison Verhoeven, AHHA Chief Executive.

“Public hospitals are already very focussed on improving efficiency and value for money as Australia’s healthcare system moves toward more use of activity-based funding and greater transparency and accountability.

“Activity-based funding and pay-for-performance models are already being used to drive improved efficiency.  However, in isolation, financial incentives can be a blunt instrument which do not fully account for varying degrees of complexity in health service delivery.  For example, a recent study reported in the Australian Health Review found the existing activity-based funding model does not adequately compensate hospitals for the cost of treating major trauma. To be effective, funding models must provide incentives for high quality care not just lower cost care.

“While refinement of the existing funding model is required, there should also be a focus on models that include rewards for continuous improvement that are applied at the point of service provision.  This approach, in combination with transparent benchmarking and reporting and clinician engagement in the improvement process, can achieve the dual goals of improved efficiency and better patient outcomes,” says Alison Verhoeven.

Media inquiries:

Alison Verhoeven, Chief Executive, Australian Healthcare and Hospitals Association 0403 282 501