Search control section

Hospital Performance: Costs of acute admitted patients in public hospitals in 2011–12

Left hand navigation section

Download Report (PDF, 466 KB)

Summary

Hospitals account for a large share of the funds Australia spends on the health sector each year. In 2011–12, about 30% of the estimated $140.2 billion that Australia spent on health was spent on running costs for public hospitals (excluding property, plant and equipment costs).1 Having effective measures to help assess the efficiency of hospitals is therefore important, because the size of the hospital sector means efforts to improve efficiency, if well targeted, have a large potential to yield significant benefits.

One way to assess hospital efficiency is to see how much money each hospital uses in comparison to its peers to provide specific treatments or procedures. Conducting such comparisons is however very difficult, because sicker or more complex patients cost more to treat, and because there are a variety of reasons why some cost variations are unavoidable or why some hospitals use more resources than others. It is important to adjust for unavoidable cost variations and to adjust for these other differences before comparisons can be considered meaningful.

This report is the result of innovative development work by the National Health Performance Authority (the Authority) that for the first time allows these meaningful comparisons of the relative efficiency of more than 80 of Australia’s largest public hospitals.

To achieve this, the Authority includes two headline measures in the report, Cost per National Weighted Activity Unit (NWAU) and Comparable Cost of Care, both of which adjust as much as possible for the factors that can push hospital costs up unavoidably or in ways that mean they cannot fairly be compared to others. The main difference between the two measures is that Comparable Cost of Care includes emergency department (ED) costs for patients admitted through EDs (see Figure 1).

The first part of the report compares the overall performance of Australian public hospitals using Cost per NWAU and Comparable Cost of Care for acute admitted patients. Both measures report costs for activity units, which allow different treatments and operations to be compared fairly. The second part of the report breaks this down further into costs across major hospitals for 16 selected medical conditions or surgical procedures.

Key findings

Some hospitals were found to have twice the average cost per unit of activity in 2011–12 compared to others in the same peer group, after adjusting for the different types of services provided and complexity of patients (see Key findings: Cost per NWAU and Comparable Cost of Care, Figure 2 and Figure 3). The report highlights the top 10% and bottom 10% for major metropolitan hospitals (see tables below). The highest and lowest results for large metropolitan and major regional hospitals are highlighted in Key findings: Cost per NWAU and Key findings: Comparable Cost of Care.

Across the different types of hospitals in Australia, the average cost per unit of activity for acute admitted patients was as follows:

  • Using Cost per NWAU: costs were more than twice as high from the lowest to the highest hospital, ranging from $3,100 to $6,400
  • Using Comparable Cost of Care: costs were almost twice as high from the lowest to the highest hospital, ranging from $3,700 to $6,800.

The results are broadly the same for the two different measures, Cost per NWAU and Comparable Cost of Care.

Cost per NWAU

Across major metropolitan hospitals, the average Cost per NWAU for acute admitted patients at one hospital was 87% higher compared to another hospital, ranging from $3,100 to $5,800.

Top 10% of hospitals for this peer group:
$5,800 The Canberra Hospital (ACT)
$5,500 Sir Charles Gairdner Hospital (WA)
$5,300 Calvary Public Hospital (ACT)
$5,300 Logan Hospital (Qld)
Bottom 10% of hospitals for this peer group:
$3,400 Dandenong Hospital (Vic)
$3,400 Royal Melbourne Hospital [Parkville] (Vic)
$3,400 Sunshine Hospital (Vic)
$3,400 The Northern Hospital [Epping] (Vic)
$3,100 Maroondah Hospital [East Ringwood] (Vic)

Comparable Cost of Care

Across major metropolitan hospitals, the Comparable Cost of Care for acute admitted patients at one hospital was 76% higher compared to another hospital, ranging from $3,700 to $6,500.

Top 10% of hospitals for this peer group:
$6,500 The Canberra Hospital (ACT)
$6,300 Calvary Public Hospital (ACT)
$5,900 Sir Charles Gairdner Hospital (WA)
$5,700 Logan Hospital (Qld)
$5,700 The Prince Charles Hospital (Qld)
Bottom 10% of hospitals for this peer group:
$3,900 Royal Melbourne Hospital [Parkville] (Vic)
$3,900 Sunshine Hospital (Vic)
$3,900 The Northern Hospital [Epping] (Vic)
$3,900 Western Hospital [Footscray] (Vic)
$3,800 Dandenong Hospital (Vic)
$3,700 Maroondah Hospital [East Ringwood] (Vic)

Figure 1: What is measured: the difference between Cost per NWAU and Comparable Cost of Care

An infographic image showing the different ways patients are admitted to hospital and how their costs are accounted for using two separate measures: Cost per National Weighted Activity Unit and Comparable Cost of Care

This infographic image shows the different ways patients are admitted to hospital and how their costs are accounted for. The report provides information about the relative efficiency of public hospitals, using two separate measures: Cost per National Weighted Activity Unit and Comparable Cost of Care. Cost per National Weighted Activity Unit (NWAU) is a measure of the average cost of a unit of activity provided to acute admitted patients in a public hospital. Comparable Cost of Care is a measure that focuses on the comparable costs of acute admitted patients and includes the costs of emergency department patients who are subsequently admitted to allow for an assessment of the relative efficiency of public hospitals. Both measures report costs for activity units, which allow different treatments and operations to be compared fairly.

Across large metropolitan hospitals:

  • The average Cost per NWAU for acute admitted patients at one hospital was 96% higher compared to another hospital, ranging from $3,200 to $6,400 (Key findings: Cost per NWAU and Comparable Cost of Care, Figure 2)
  • The Comparable Cost of Care for acute admitted patients at one hospital was 71% higher compared to another hospital, ranging from $4,000 to $6,800 (Key findings: Cost per NWAU and Comparable Cost of Care, Figure 3).

Across major regional hospitals:

  • The average Cost per NWAU for acute admitted patients at one hospital was 46% higher compared to another hospital, ranging from $3,600 to $5,300 (Key findings: Cost per NWAU and Comparable Cost of Care, Figure 2)
  • The Comparable Cost of Care for acute admitted patients at one hospital was 36% higher compared to another hospital, ranging from $4,200 to $5,800 (Key findings: Cost per NWAU and Comparable Cost of Care, Figure 3).

1. Australian Institute of Health and Welfare. Health expenditure Australia 2011–12 [Internet]. Canberra: Australian Institute of Health and Welfare; 2013 Sep 25 [cited 2014 Feb 4]. AIHW cat.no. HWE 59. Available from: http://www.aihw.gov.au/publication-detail/?id=60129544658

Download Report (PDF, 466 KB)