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

Activity Based Funding (ABF) is a way of funding hospitals under which they are paid for the number and mix of patients they treat. For example, if a hospital treats more patients, it receives more funding. However, because some patients are more complicated to treat than others, ABF also takes into account various adjustments.

Care in which the intent is to perform surgery, diagnostic or therapeutic procedures in the treatment of illness or injury. Management of childbirth is also considered acute care.

The Admitted Patient Care National Minimum Data Set (APC NMDS) collects information about care provided to admitted patients in Australian hospitals. The APC NMDS includes episodes of care for admitted patients in all public and private acute and psychiatric hospitals, free-standing day hospital facilities and alcohol and drug treatment centres in Australia. Hospitals specialising in dental, ophthalmic aids and other specialised acute medical or surgical care are also included. Hospitals operated by the Australian Defence Force, corrections authorities and in Australia’s off-shore territories may also be included. Hospital boarders and still births are not included as they are not admitted to hospital. Posthumous organ procurement episodes are also not included.

A classification system that allows different types of patients to be categorised according to their condition, procedure or diagnosis.

The average (mean) number of days spent in hospital for each stay (episode of care) for patients who stayed at least one night.

A patient whose costs of care will be claimable by the hospital from motor vehicle accident, workers’ compensation insurance, Department of Defence or Department of Veterans’ Affairs.

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.

Accounts for the higher costs of treating patients of Aboriginal and Torres Strait Islander origin.

Accounts for higher costs of patients who required an admission to an intensive care unit (level III) during their stay in hospital where most patients with similar conditions would not.

An intensive care unit, level III is a facility capable of providing complex, multisystem life support for an indefinite period; be a tertiary referral centre for patients in need of intensive care services and have extensive backup laboratory and clinical service facilities to support the tertiary referral role. It must be capable of providing mechanical ventilation, extracorporeal renal support services and invasive cardiovascular monitoring for an indefinite period; or care of a similar nature.

Costs that, although higher, are considered unavoidable due to the characteristics of the patients involved. These include patients requiring: treatment in a specialist paediatric facility, psychiatric care, radiotherapy and admission to intensive care unit, level III. It can also include the increased ED, unavoidable costs of treating rural and/or remote patients and Aboriginal and Torres Strait Islander people.

A Local Hospital Network (LHN) is an organisation that provides public hospital services in accordance with the National Health Reform Agreement. Some states and territories use their own terminology to describe these networks, such as Local Health Districts (NSW), Hospital and Health Services (Qld), Local Health Networks (SA) and Tasmanian Health Organisations. LHNs can comprise one or more hospitals, and they are usually defined as the hospitals serving a particular geographic area or a community, or as hospitals serving a particular function (for example, children’s hospitals or other specialist facilities within a state or territory).

The National Efficient Price (NEP) is a major determinant of the level of Australian Government funding for public hospital services through Activity Based Funding. It establishes a price signal for the efficient cost of providing public hospital services.

The National Hospital Cost Data Collection (NHCDC) is the primary data collection used to develop the National Efficient Price (NEP) and the National Efficient Cost (NEC). It is an annual collection of public hospital cost data.

Includes land, buildings, magnetic resonance imaging (MRI) scanners and hospital furniture such as beds, where the costs were (a) capitalised and recorded as an asset and (b) expended through deprecation. These costs were not included as part of the costs analysed in this report. However, purchases of property, plant and equipment that were worth less than a certain amount, known as a ‘state and territory asset capitalisation threshold’, have been included as part of the analysis.

Accounts for higher costs of patients treated in specialist paediatric facilities, where there is a statistically significant difference in the cost of delivering services, compared to other facilities.

Accounts for higher costs of patients who have one or more psychiatric care days during their acute admission, with the rate of adjustment dependent on the person’s age.

A set of accounts recorded in a separate general ledger to the hospital’s operating general ledger. The funds are not in trust to any particular person. The Trust Fund at some hospitals account for the income from admitted patients covered by private sources. The set of accounts recording this information may not necessarily be submitted to the National Hospital Cost Data Collection for respective hospitals.

A measure representing the volume and complexity of patients and increased resource requirements within a hospital.