Changes in total health expenditure over time
Using the revised AIHW Disease Expenditure Database methodology, the estimated spending on health care due to dementia in current prices (unadjusted for inflation) was:
- $1.06 billion in 2020–21
- $1.23 billion in 2021–22
- $1.46 billion in 2022–23
Estimated spending on health care due to dementia has therefore increased by 16% between 2020–21 and 2021–22 and 18% between 2021–22 and 2022–23.
Over the same period, total health expenditure in current prices was:
- $223.6 billion in 2020–21
- $244.9 billion in 2021–22
- $255.1 billion in 2022–23
Total health expenditure increased by 9.5% between 2020–21 and 2021–22 (due to increased government investment in the public health response to COVID-19) and 4.2% between 2021–22 to 2022–23 (a return to pre-pandemic spending). The proportional increase in health spending due to dementia is much higher than the proportional increase in total health spending. Further work is needed to understand the impact of factors such as population ageing or changing service patterns on the increase in health care costs due to dementia.
Hospital services expenditure
Admitted patient care in public hospitals
In 2022–23, almost $953 million was spent on public hospital admitted patient care for dementia, 65% of the total direct health care cost of dementia.
Of this, almost $389 million (or 41%) was for hospitalisations where dementia was the principal diagnosis - or the main reason for admission. The remaining $564 million (or 59%) was for hospitalisations where dementia was an additional diagnosis – where dementia impacted care but was not the main reason for being admitted to hospital (Table S17.4).
These estimates are for expenditure directly related to dementia and not for the management of other conditions in the same hospitalisation. For more information on these estimates by age group and sex, refer to the Spending on dementia data tables.
How does dementia affect the cost of hospitalisations in public hospitals for common principal diagnoses?
A diagnosis of dementia will influence the cost of a hospitalisation even when it is not the main reason for being admitted to hospital. To understand the costs related to dementia patients in hospital, the average costs of hospitalisations in a public hospital with an additional diagnosis of dementia were compared to those without dementia for 5 common principal diagnoses seen among older people.
The average cost per hospitalisation was generally greater among patients with dementia than patients without dementia for each principal diagnosis, reflecting greater clinical complexity or longer lengths of stay in hospital (Table S17.6). For example, the average cost per hospitalisation for atrial fibrillation and flutter is 2.2 times higher for those with dementia compared to those without dementia. This means that, on average, an additional $8,200 is needed to care for patients with dementia who are hospitalised for atrial fibrillation and flutter compared to the cost of caring for patients without dementia. Other examples include:
- abnormalities of gait and mobility (average cost of caring for patients with dementia is 2.1 times higher, requiring an additional $11,500),
- fracture of ribs, sternum and thoracic spine (average cost of caring for patients with dementia is 1.7 times higher, requiring an additional $9,500), and
- urinary tract infection (average cost of caring for patients with dementia is 1.7 times higher, requiring an additional $5,000).
In some cases, the cost of hospitalisation was slightly lower for patients living with dementia – including for people with Pneumonitis due to solids and liquids (0.9 times or 10% less) and Sepsis (0.8 times or 20% less). People with dementia who were hospitalised due to these conditions in 2022–23 had a shorter average length of stay compared to people without dementia, and were more likely to die during their hospitalisation. For both conditions, people with dementia were more likely to be admitted from and returning to a residential aged care home, which may also impact time spent in hospital
Public hospital outpatient clinics and emergency department care expenditure
In 2022–23, $220 million was spent on non-admitted patient care for dementia in public hospital outpatient clinics, equivalent to 15% of the total direct health care spending attributable to dementia (Table S17.1). Services provided in outpatient clinics include: consultations with specialist medical practitioners; allied health and specialist nursing care; diagnostic and other procedures; dispensing of medicines; and some community health services provided by hospitals (AIHW 2023).
A further $82 million was spent on emergency department care in public hospitals, equivalent to 6% of the total direct health spending due to dementia (Table S17.1). For more information on health condition coding in emergency department data, refer to the Technical notes.
For more information on average cost per public hospital outpatient clinic or public hospital emergency department care by age group and sex, refer to the Spending on dementia data tables.
Expenditure on out-of-hospital medical services
In 2022–23, over $172 million was estimated to have been spent on out-of-hospital medical services for dementia, such as GP and specialist services, allied health services, pharmaceuticals, and tests involved in the diagnosis and management of dementia.
Spending on out-of-hospital medical services is equivalent to 12% of the total direct health expenditure on dementia. These estimates are for services where dementia was directly managed and do not include services for patients with dementia where management and treatment related only to their other co-existing health conditions.
Services contributing to the out-of-hospital medical expenditure for dementia were:
- GP services – over $55 million
- diagnostic imaging – almost $46 million
- pharmaceuticals dispensed under the Pharmaceutical Benefits Scheme (PBS) –$26 million
- this includes dementia specific medicines ($22 million) and a range of other medications prescribed for the management of dementia symptoms
- specialist services – almost $25 million.
The estimates of expenditure on out-of-hospital medical services include Australian Government costs (under the Medicare Benefits Schedule (MBS) and the PBS), as well as out-of-pocket costs by individuals. The majority of out-of-hospital medical expenditure for dementia (89%, or just under $154 million) was paid for by the Australian Government (Table S17.11).
Expenditure on medications for dementia
There are 4 dementia-specific medications – Donepezil, Galantamine, Rivastigmine and Memantine – currently subsidised by the Australian Government through the Pharmaceutical Benefits Scheme (PBS) and the Repatriation Pharmaceutical Benefits Scheme (RPBS) for treatment of Alzheimer’s disease. For information on the dispensing of scripts for these medications in Australia in recent years, see Prescriptions for dementia-specific medications.
In 2022–23, the total expenditure on dementia-specific medications was just over $22 million (Table S17.12). This included Australian Government expenditure (over $17 million, or 78% of expenditure on dementia-specific medications) and out-of-pocket expenses by patients (nearly $5 million or 22%). Note, these estimates may include a small amount of expenditure for off-label prescribing of these medications which are not captured in the PBS or RPBS.
Of the total expenditure for dementia-specific medications, nearly half was on Donepezil (42% or $9.4 million), followed by Rivastigmine (29% or $6.6 million), Memantine (17% or $3.8 million) and Galantamine (12% or $2.6 million).
The Australian Government subsidised most of the expenditure on each type of dementia-specific medication (Figure 17.4; Table S17.12). For patients, the average out-of-pocket cost for a single prescription for a dementia-specific medication was about $7. The average government subsidised amount per prescription varied substantially - where the cost of Rivastigmine ($74) was over twice as much as Memantine ($34) and Galantamine ($31) and over 5 times as much as Donepezil ($14).
