The health expenditure reporting and data landscape

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The Australian National Health Accounts

The ANHA aims to support a long-term, whole-of-system understanding of health spending nationally and over time. This system is unique in Australia and it varies from other health system reporting in scope, degree of stability over time and classification systems used. Other systems tend to focus on specific funding programs, jurisdictions or time periods.

The long-term holistic approach requires developing methods to appropriately allocate spending figures from multiple, often overlapping and changing data sources. In doing so, care is taken to avoid the risk of misallocation, unnecessary breaks in the time series, missed data and double counting.

The methods used in the ANHA are overseen by the Health Expenditure Advisory Committee (HEAC). The HEAC includes subject matter experts and representatives from the Australian Government, all state and territory governments and the private sector. The AIHW has worked with the HEAC over many years to develop approaches to maximise the completeness and accuracy of the estimates over time and minimise the risk of double counting. For example, when estimating total spending on hospital services in a year, the funds the Australian Government gives to states and territories is subtracted from the hospital spending reported by the states and territories to derive the amount that the states and territories spent from their own resources.

This holistic approach, unique classification system and methods developed mean the figures reported here often vary from other data sources, particularly where other reporting tends to focus on specific funding programs, institutions, funders or purposes. For example, program-specific reporting such as for the Medicare Benefits Scheme, government budget papers or health department annual reports vary from the figures here due to differing classifications, scopes and methods used to account for double counting.

As part of ongoing data quality improvement activities, the AIHW, through the HEAC, works with the ABS, the Australian Government, state and territory governments, the NHFB, the OECD and other data suppliers to ensure the estimates presented in the ANHA are as complete and accurate as possible and reflect changes in health system financing over time.

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Australian Bureau of Statistics

The Australian Bureau of Statistics (ABS) publishes Government Finance Statistics (GFS) to provide statistics about the finances of the general government and non-financial corporations sector. The data is generally provided by Treasuries/Departments of Finance (Commonwealth and states and territories) and is taken from government finance systems. The basis for these systems is the general ledger transactions that are recorded in the various government agencies, including departments of health. GFS expenditure statistics are classified on the basis of the Classification of the Functions of Government (COFOG), which is an international statistical standard. One of the Divisions within COFOG is ‘Health’. This Division is broken down into six Groups, which are further broken down into a number of classes.

The ABS also publishes System of National Accounts (SNA) statistics which provide a comprehensive and systematic set of statistics on the structure of the economy. Within the National Accounts, estimates of government final consumption expenditure and household financial consumption expenditure on health are published. Estimates of government final consumption expenditure are further broken down into estimates of general government national final consumption expenditure and general government state final consumption expenditure. These estimates are based, respectively, on the COFOG and the Classification of Individual Consumption According to Purpose (COICOP).

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Government health authorities

All governments within Australia produce a range of financial reports, including annual reports, budget papers and specific program data. The source data for these reports are audited financial statements and ‘general ledgers’.

The AIHW works with the states and territories to improve the quality and consistency of health expenditure reporting. In addition, the AIHW has been working with jurisdictions to better understand the drivers of variability between the expenditure statistics reported in jurisdictional reports compared with the ANHA statistics. The result of the first phase of this work were published in the Health expenditure Australia 2018–19 report (published in 2020) to examine issues of consistency and alignment between different health expenditure estimates, and presented in Table C2 in the report since HEA 2018–19.

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State and Territory Department of Health Annual reports:

National Health Reform Agreement funding

The Administrator of the National Health Funding Pool, supported by the National Health Funding Body (NHFB) publishes data on funding and payments through the National Health Funding Pool (NHFP) that was established under the National Health Reform Agreement (NHRA). These data form an important component of the spending outlined in this report, particularly with public hospital spending. However, not all public hospital spending outlined in this report is administered through the NHFP, so additional information sources are drawn on to capture the full scope of public hospital spending. From the perspective of the Australian Government, this includes spending such as by the Department of Veterans’ Affairs (DVA), the PBS Section 100 programs, the DoHAC own programs, including blood and organ programs, all of which operate outside of the NHFP. From the perspective of the states and territories, their funding contributions through the NHFP do not match their figures provided through the GHE NMDS for a variety of reasons, including:

  • additional ‘top-up’ funding provided to hospitals outside the NHFP where the cost of providing services exceeds the National Efficient Price under NHRA funding mechanisms and/or the particular services are outside the scope of NHRA arrangements,
  • locally sourced revenue and associated spending may not be administered through the NHFP. Where hospitals have local revenue sources (for example, private patients, accommodation charges, sub-rent revenue and car parking fees) and this is used to fund hospital services, this funding may not be administered through the NHFP but is captured in the ANHA,
  • funding related to centrally managed programs such as pathology and diagnostics services, where the provider for multiple hospitals might be contracted directly by the state/territory’s health department (outside the NHFP), rather than these services being sourced by individual hospitals,
  • non-hospital services funded through the NHFP. In some jurisdictions, services such as community care and public health may be funded by contributions administered through the NHFP. This spending is reported and treated separately under the ANHA, and
  • differences between cash and accrual accounting cycles, which mean timing of cash payments, expenses and reporting can vary.

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Independent Health and Aged Care Pricing Authority

The Independent Health and Aged Care Pricing Authority (IHACPA, previously named Independent Hospital Pricing Authority IHPA) collects, validates and reports public hospital costing data under the National Hospital Cost Data Collection (NHCDC) to determine the National Efficient Price and National Efficient Cost for the purpose of Activity Based Funding (ABF) and Block Funding under the NHRA. These data have different scopes and standards compared with the ANHA. The IHACPA does not report public hospital spending in the aggregate level.

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International reporting of health expenditure

Each year the AIHW provides a derivation of the ANHA to the Organisation for Economic Co-operation and Development and the World Health Organisation in accordance with the classification used for international reporting, known as the System of Health Accounts. Despite being derived from the same source data, differing classification systems can result in variations in expenditure for particular components of the health system.

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