Health system spending on disease and injury in Australia 2023–24

The main source of information for this web report is the AIHW’s Disease Expenditure database. It contains estimates of spending by Australian Burden of Disease Study condition, age group, and sex for:

• hospital services
  • public hospital admitted patients
  • public hospital emergency departments
  • public hospital outpatient services
  • private hospital admitted patients
• primary health care
  • general practitioner services
  • allied health services
  • benefit paid pharmaceuticals
  • dental services
• referred medical services
  • specialist services
  • medical imaging
  • pathology

The methods used for estimating disease spending is a mixture of ‘top-down’ and ‘bottom-up’ approaches. A ‘top-down’ approach is where total spending across the health system is estimated and then allocated to the relevant conditions based on the available service use data.

Although this approach produces consistency, good coverage and totals that add up to known expenditure, it is not as comprehensive for any specific disease as a detailed ‘bottom-up’ analysis, which would include the actual costs incurred for that disease. A lack of amenable data sources means that a more granular ‘bottom-up’ analysis is not possible.

Estimates in the AIHW Disease Expenditure database have been derived by combining information from the following data sources:

• National Hospital Morbidity Database (NHMD)
• National Non-admitted Patient Emergency Department Care Database (NNAPEDC)
• National Non-admitted Patient Databases (aggregate, NAPAGG, and unit record, NAPUR)
• IHACPAs National Weighted Activity Unit (NWAU) calculators and the National Efficient Price (NEP)
• Private Hospital Data Bureau (PHDB) collection
• Bettering the Evaluation and Care of Health (BEACH) survey
• Medicare Benefits Schedule (MBS)
• Pharmaceutical Benefits Scheme (PBS)
• Health Expenditure Database.

It is not technically appropriate or feasible to allocate all spending on health goods and services by disease. For example, neither administration expenditure nor capital expenditure can be meaningfully attributed to any particular condition due to their nature.

This study includes payments from all sources of funds, such as the Australian and state and territory governments, Private Health Insurance, and out of pocket payments by patients.

Some components of recurrent spending are allocated differently between the AIHW Health Expenditure database, and the Disease Expenditure database. This approach was taken to reflect patterns of healthcare use for particular conditions, which is the focus of disease expenditure analysis, rather than health funding arrangements. Refer to Table 2.3 from the accompanying methods report that is available from the Related material section for a comparison of expenditure in the health expenditure database and disease expenditure database.

Expenditure information is added to hospital activity data for every admitted patient record in the NHMD, all emergency department presentations in the NNAPEDC, and all service events in the National Non-admitted Patient Databases. Data sets have been constructed for all private hospital admitted patient separations. Aggregated data sets by sex, age group, state/territory and SA3 geographical area, including patient co-payments, have been created for MBS services by provider specialty and subgroup, and pharmaceuticals by Anatomical Therapeutic Classification (ATC). All of the data sets include expenditure estimates for each ABDS condition.

Changes to methodology compared to the 2022–23 study

The scope of expenditure and methods used in this disease expenditure study are similar to those used in the 2022–23 report (AIHW 2024c, 2024d) however there are changes that have been made that make comparison of data between the 2022–23 report and this report to be done with caution.

The key changes and improvements to disease expenditure reporting are outlined below.

Revisions to MBS and PBS expenditure allocated by disease

Updates were made to the MBS and PBS mapping files that allocate expenditure to conditions to improve some disease mappings. The MBS and PBS analysis was updated for all years in the time series.

Revisions to public and private hospitals spending by disease

Revisions were made to public and private hospitals total expenditure to align with methodological changes in the AIHW health expenditure database regarding capture of some in-hospital MBS costs in total estimates.

Mapping of ICD-10-AM to ABDS

The ICD-10-AM is the foundation for much of the work attributing expenditure to the ABDS conditions. The ICD-10-AM is updated every two years, and the 12th edition of the ICD-10-AM was used for coding the records of patients admitted to hospitals over the 2023–24 reporting period. Forward mapping files are used to update the ICD-10-AM to the current version. An error was identified regarding the mapping of the ICD-10-AM and ABDS conditions to the 11th and 12th editions. This study corrected the forward mapping file implementation to ensure consistency of disease coding.

Inclusion of expenditure by remoteness and on a per person basis

In the 2023–24 study, effort was placed into being able to report disease expenditure by remoteness and on a per person basis. Disease expenditure by remoteness is now presented in a separate section within the web report for 2023–24. In addition, expenditure estimates per 100,000 population were presented throughout the report to provide more context for age and sex specific data.

Inclusion of dental services expenditure by age group and sex

In the 2023–24 study, dental expenditure was estimated for the first time by age group and sex. The age and sex profile was estimated using demographic data from fees charged for private health insurance general treatments. While there are limitations with this method as it is not dental specific data, the highest share of spending within the private health insurance general treatment group is for dental services, and is a reasonable proxy for distributing expenditure for dental by age group and sex.

Inclusion of expenditure on cancer screening programs

Spending on the national breast cancer, bowel cancer and cervical screening programs was added into a separate section within the web report.

COVID–19

The costs identified as COVID–19 in the disease expenditure database are those that can be identified by age group and sex. COVID–19 related costs that are not included in the disease expenditure database include:

• Australian Government payments to the state and territory health authorities under the National Partnership on COVID–19 Response (NPCR)
• Australian Government Department of Health and Aged Care payments related to COVID–19 that are outside of the NPCR including programs for private hospitals, medical services, community health, pharmaceuticals, public health, administration, health research, health workforce, capital and aged care services
• State and territory government health authority payments under the NPCR
• Estimated costs for out-of-pocket payments for respirators, face masks and shields

The report Health system spending on the response to COVID–19 in Australia 2019–20 to 2022–23 (AIHW 2024a) examines Australia’s health system spending in response to the COVID–19 pandemic over the period 2019–20 to 2022–23. The report covers funding by government and non–government sources, in key areas of expenditure: primary health care, (including MBS unreferred medical services, community and public health), hospitals, referred medical services, health related aged care services and other health related areas of spending. In addition, this report compares Australia’s COVID–19 spending to other OECD countries and provides a comparison of excess mortality during the pandemic.