How is care funded

The funding source describes the major source of funds used to pay for a hospitalisation. Funding source types are:

• Public patient
• Private health insurance
• Self-funded
• Workers compensation
• Motor vehicle third party personal claim
• Department of Veterans' Affairs
• Other (includes Department of Defence, Correctional facilities, Other hospital or public authority, Health service budget – no charge raised due to hospital decision)

A hospitalisation may be funded by more than one funding source, but information on those other funding sources is not always available. For example, Private health insurance is reported for any hospitalisation that used private health insurance to fund all or part of their admission, regardless of whether it was the major source of funds. In many cases, however, funding for these admissions is also derived from a combination of Medicare subsidies and out-of-pocket fees.

Highlights

In 2024–25:

• across all hospitalisations in both public and private hospitals, 54% were funded as Public patients, and 39% were funded by Private health insurance
• 87% of hospitalisations in public hospitals were funded as Public patients, compared with 6.0% in private hospitals
• for private hospitals, 82% of hospitalisations were funded by Private health insurance (compared with 11% in public hospitals) and 6.8% were Self-funded.

Funding source

In 2024–25:

• public hospitals accounted for 95% of Public patient hospitalisations and 16% of Private health insurance-funded hospitalisations
• private hospitals accounted for 4.4% of Public patient hospitalisations and 84% of Private health insurance-funded hospitalisations
• 15% of hospitalisations in Women’s and children’s hospitals and 13% of hospitalisations in Principal referral hospitals were Private health insurance-funded.

Between 2020–21 and 2024–25:

• Public patient hospitalisations increased on average by 2.5% each year overall. By hospital sector, they increased on average by 2.6% each year in public hospitals and decreased on average by 0.5% each year in private hospitals
• Private health insurance hospitalisations increased on average by 1.6% each year overall. By hospital sector, they increased on average by 0.8% each year in public hospitals and increased on average by 1.8% each year in private hospitals
• Self-funded hospitalisations decreased on average by 1.6% each year and Department of Veterans’ Affairs funded hospitalisations decreased on average by 3.1% each year.

Relative cost of admitted patient care (average cost weight)

Australian Refined Diagnostic Related Groups (AR-DRGs) classify hospitalisations into groups, each of which has a similar level of resource utilisation (cost). The ‘cost weights’ indicate the relative cost of hospitalisations in one AR-DRG compared to hospitalisations in another AR-DRG. A hospitalisation for an AR-DRG with a cost weight of 5.0, therefore, on average costs 10 times as much as a hospitalisation with a cost weight of 0.5.

There are separate cost weights (directly related to the AR-DRG assigned to the hospitalisation) in the public and private sectors, reflecting the differences in the range of costs in the different sectors.

In 2024–25:

• the average cost weight for public acute hospitals ranged from 1.12 in New South Wales to 0.56 in the Northern Territory
• in public hospitals, the lowest average cost weights were for Public patient hospitalisations (0.98), and the highest average cost weights were for hospitalisations funded by Motor vehicle third party personal claim (2.39)
• in private hospitals, the lowest average cost weights were for Public patients (0.51).

Over five years to 2024–25, the average cost weight for public acute hospitals has changed from 1.00 to 1.01.