In this report, data is taken from Australia’s national health spending data in order to understand more about the people receiving care and the diseases and conditions being managed. Estimates are presented for the following areas of spending:

  • Public hospital admitted patients
  • Public hospital emergency departments
  • Public hospital outpatients
  • Private hospital services
  • Primary health care (general practitioner services, allied health and other services, pharmaceutical benefits scheme and dental expenditure)
  • Referred medical services (specialist services, pathology and medical imaging).

Estimates of spending on COVID–19 in the hospital setting as well as through Medicare have been included in this report.

All sources of funding, including patient co-payments, are included in spending estimates.

Box 1: How do we measure disease costs?

The cost of disease is not just financial: being unwell or suffering from a health condition has other effects on quality of life, affecting people’s ability to work or do the activities they enjoy. The spending estimates do not include direct costs from outside of the health care sector or estimates of the indirect costs due to illness.

How much is financially spent on treating, managing, or preventing conditions can be influenced by a range of factors such as the cost and availability of effective treatments, and disease prevalence. As such, the disease expenditure estimates in this report do not necessarily reflect the incidence or prevalence of those conditions, or the full ‘burden’, or human cost. The AIHW has produced separate estimates of disease burden in the Australian Burden of Disease Study reports.

It is not feasible (or appropriate) to allocate some forms of health spending to specific diseases. For example, administration expenditure and capital expenditure are generally unable to be attributed to any particular condition. In addition, most community and public health programs, which support the treatment and prevention of many conditions, do not have sufficient data to allocate to conditions. Therefore the disease expenditure estimates in this publication are not directly comparable with estimates published in the AIHW’s Health expenditure Australia reports (which cover all health spending). Refer to Figure 1 in the ‘Area of spending’ section within this report to see how total health spending for 2019–20 as reported in Health expenditure Australia 2020–21 relates to spending reported in Disease expenditure Australia 2019–20. Also refer to Table 2.2 in Disease Expenditure Study: Overview of analysis and methodology 2019–20 for more detailed information on the inclusions and exclusions.

For details on the estimation methods, scope of data included, and comparability to previous studies, readers are directed to Disease Expenditure Study: Overview of analysis and methodology 2019–20.

Health spending in Australia is generally managed through particular funding programs such as the National Health Reform Agreement or the Medicare Benefits Schedule (MBS). Often the relationship under these schemes between the spending, the particular diseases or conditions being managed, and the demographic characteristics of the people whose care the spending is for, is complex. It can be difficult, for example, to precisely identify for a hospital stay involving someone suffering from a number of ailments and including a range of procedures and treatments, which expenses were related to which conditions. Health spending is also often associated with the management of symptoms and issues for which there is no specific diagnosis (e.g. someone attending an Emergency Department with abdominal pain for which no specific cause can be identified).

The aim of this report is to use a range of modelling techniques to apportion health spending to population groups based on age, sex, and to disease expenditure groups using the International Statistical Classification of Diseases and Related Health Problems (ICD) and the AIHW’s ABDS conditions as far as is possible. Due to data availability, allocated spending is skewed towards activity in hospitals, and estimates should be interpreted with this in mind.

Whilst findings in this report are based on estimates (rather than direct observations) these data provide important insights into the nature and drivers of health spending, such as how an ageing population affects health spending.

The current disease expenditure study largely draws upon previously published methods. The changes that have been made in the 2019–20 study compared with the 2018–19 study are the following:

  • In the public hospital setting, care types 7.3 (Unqualified newborns), 9 (posthumous organ procurement) and 10 (hospital boarder) were excluded from the analysis. Similarly, hospitalisations in WA with a contracted patient status of ‘Inter-hospital contracted patient to private sector hospital’ were excluded to adjust for separations recorded on both sides of contractual care arrangements. These exclusions were made to align with AIHW Australian Hospital Statistics reporting. See ‘Changes from 2018–19 study’ within Disease Expenditure Study: Overview of analysis and methodology 2019–20 for further details.
  • The ABDS disease list is based on the International Statistical Classification of Diseases and Related Health Problems, Eleventh Revision, Australian Modification (ICD-10-AM) whereas the 2018–19 data was based on the Tenth Revision.
  • The inpatient fractions (or IFRACs) used to derive the admitted patient share of public hospitals spending was sourced from the Government Health Expenditure National Minimum Data Set (GHE NMDS) supplied to the AIHW by all state and territory health authorities through their annual data submissions. In 2018–19, the National Public Hospitals Establishments Database (NPHED) was used as the data source for the IFRAC but this was not available for 2019–20. For this reason, caution should be applied if comparing the spending for sub-categories of public hospitals spending between 2018–19 and 2019–20 due to the different methodology used.
  • Inclusion of COVID–19 as a new infectious disease within the ABDS conditions to capture the estimated spending for patients who were confirmed or suspected COVID–19 positive patients that were treated in either a public hospital emergency department, public hospital admitted patient or in a private hospital. This also includes estimated spending in cases where patients in the hospital setting suspected they had COVID–19 but where testing ruled this out. Pathology testing for COVID-19 claimed through the MBS has also been included. It excludes spending on MBS items where the ‘service is provided to a person who is a patient at risk of COVID-19’ or where ‘the medical practitioner is a health professional at risk of COVID-19 virus’. It also excludes health prevention measures such as the purchasing of personal protective equipment.