Comparisons of hospitals

When deciding on the specifications of an indicator, the Authority investigates and implements approaches to optimise fair comparisons of hospitals across Australia.

The Authority implements as many of these approaches as can be supported by the depth and quality of data available. For this report, the Authority used an approach consistent to that used for the report, Hospital Performance: Costs of acute admitted patients in public hospitals in 2011–12.

The following six approaches were used to support fair comparisons between hospitals:

  1. Comparable costs: this process involved a review of the national consistency of cost information and the materiality of any differences between states and territories. Where appropriate, some costs are excluded to support comparability (Table 1). In other instances, some costs are included because it is not possible to exclude them. In these instances the materiality of this approach was assessed (see Hospital Performance: Costs of acute admitted patients in public hospitals in 2011–12, Technical Supplement for more details)
  2. Patients: admitted and discharged (including a change in care type) within a financial year are included in the report
  3. Units of activity: this process is necessary to standardise costs by accounting for the differences between the relative complexity of patients admitted to a hospital and the patient’s individual characteristics which may lead to legitimate cost variation, relative to the patient’s length of stay (Table 2)
  4. Rounding results: the Authority has rounded Cost per NWAU in a way that acknowledges any remaining uncertainty in estimates. Each hospital’s result has been rounded to the nearest $100
  5. Suppression of results: where cost and activity data from a hospital were not fully available or comparable, the Authority determined rules that informed decisions to suppress information based on a lack of comparability (see Data sources - Hospital results included in the report for more information)
  6. Peer groups: this process involves grouping hospitals so that they can be compared to their peers (see Peer classification system for more information).

Peer classification system

Peer groups allow hospitals of differing size, service provision and rurality to be compared.

The peer group version used in this work is based on the Australian Institute of Health and Welfare’s (AIHW’s) peer classification that existed in 2011–12; and modified for rurality of a hospital. These peer groups categorise hospitals according to size and type.

The AIHW classification had three categories for major and large hospitals, according to hospital size and hospital type. The Authority modified these three groups into four appropriate groups: major metropolitan (A1.1), major regional (A1.2), large metropolitan (B1) and large regional (B2). This modification is presented in Table 4.

Hospitals in the major peer group were then split into metropolitan and regional groups using the Australian Standard Geographical Classification (ASGC) Remoteness Area, 2006.

The In Focus report and website focus on comparing and contrasting information from major and large public hospitals, as these hospitals account for the vast majority of same-day and overnight admissions; as well as a large proportion of hospital expenditure.

The In Focus report includes major metropolitan hospitals only (A1.1). The website includes these hospitals plus large metropolitan hospital and major regional and large regional public hospitals (A1.2, B1, B2).

The average Cost per NWAU for a peer group is calculated by tallying the total comparable cost for all hospitals within the peer groups that are included in the report, divided by the total number of NWAUs for those hospitals. This overall average is considered more accurate than individual hospital results and is rounded to the nearest $10.

Contextual information

Contextual information has been provided to assist with the interpretation of results. The percentage of private patients has been calculated by dividing the number of private and self-funded patient separations by total in-scope separations.

Table 4: Allocation of AIHW peer groups to modified AIHW peer groups

AIHW peer groups*

Rurality split

Modified AIHW peer groups

No. of hospitals†

No. of specialist hospitals

No. of nonspecialist hospitals with an emergency department

Principal referral

Major metropolitan


53 0 53

Principal referral

Major regional


27 0 27

Large major city

Large metropolitan

B1 23 5‡ 18

Large regional
and remote

Large regional

B2 17 0 17

* Australian Institute of Health and Welfare: Hospitals, Resourcing and Classifications Group, 2013.
Numbers are accurate for AIHW’s 2011–12 peer classification as at the date of publishing.
Calvary Mater Hospital [Newcastle] (NSW), Monash Medical Centre - Moorabbin (Vic), Peter MacCallum Cancer Centre (Vic), Repatriation General Hospital (SA) and The Royal Victorian Eye and Ear Hospital (Vic).