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Financial performance

Efficiency of public hospitals

The data presented in this section provide insights into the efficiency of Australia’s largest public hospitals by comparing the costs they incur while providing care to acute admitted patients. A hospital is considered more efficient if it is able to deliver more services while consuming fewer resources. Measuring hospital costs against a measure of hospital output for a given service helps to show how efficient hospitals are compared to other similar hospitals

The National Weighted Activity Unit (NWAU) was developed by the Independent Hospital Pricing Authority (IHPA) as part of setting the National Efficient Price (NEP) of public hospital services. The NWAU allows different hospital activities to be expressed as a common unit of activity, by accounting for differences in the complexity of patients’ conditions or procedures and legitimate increases in costs. The notional ‘average’ hospital service is worth one NWAU.

Cost per National Weighted Activity Unit (NWAU) is a measure focusing on acute admitted patients whose treatment is eligible for funding Activity Based Funding. Therefore, the measure does not include any ED costs prior to a patient’s admission or costs relating to hospital services which are funded by other Commonwealth programmes, such as the Department of Veterans’ Affairs or other sources such as motor vehicle accident insurance, workers’ compensation or public liability damage claims. More about the measure, Cost per NWAU.

Cost per NWAU

In 2013–14, the Cost per NWAU at this hospital was $4,000, and the total NWAU was 29,510. This result compares to a peer average for Cost per NWAU of $4,470. The results include private patients in public hospitals, where 22% of the patients were privately funded.

Year Cost per NWAU* Peer average
Cost per NWAU*
Total NWAU* Percentage of private patients
* The NWAU for 2011–12 has been calculated using the National Efficient Price Determination 2014–15 (NEP14), and the NWAU for 2012–13 and 2013–14 has been calculated using the National Efficient Price Determination 2015–16 (NEP15).
2013–14 $4,000 $4,470 29,510 22%
2012–13 $3,400 $4,330 27,357 22%
2011–12 $3,800 $4,350 25,747

To view the latest cash funding provided by the National Health Funding Body see the Public Hospital Funding report for this hospital’s Local Hospital NetworkExternal link, opens in a new window.[http://www.publichospitalfunding.gov.au/reports/latest-local-hospital-network?lhnid=vic0000102669].

Comparable Cost of Care is a measure developed by the Authority to assess the relative efficiency of Australia’s largest public hospitals by focusing on the comparable costs of acute admitted patients. It measures the average cost of a unit of activity for acute admitted patients, but unlike the Cost per NWAU, it includes costs associated with the care provided in the ED prior to admission.

Additionally, Comparable Cost of Care includes patients whose treatment is not eligible for funding under the National Health Reform Agreement (NHRA) through Activity Based Funding, such as patients covered by the Department of Veterans’ Affairs or motor vehicle accident and workers’ compensation schemes. More about the measure, Comparable Cost of Care.

Comparable Cost of Care

In 2011–12, the Comparable Cost of Care at this hospital was $4,400, and the total units of activity were 27,418. This result compares to a peer average for Comparable Cost of Care of $4,900.

Year Comparable Cost of Care Peer average
Comparable Cost of Care
Total units of activity
2011–12 $4,400 $4,900 27,418

* The NWAU has been calculated using the National Efficient Price Determination 2014–15.

† The line of best fit has been calculated using all hospital results where Cost per NWAU and Comparable Cost of Care are available. Results for peer groups with fewer than eight hospitals for both measures are not shown on the graph.

Hospital name State Peer relationship Cost per NWAU * Comparable Cost of Care
Ballarat Health Services [Base Campus] Vic This hospital $4,000 $4,400