Below is a list of the main technical terms used in the report and accompanying Technical Supplement. To check the meaning of terms not listed here, or other health-related words, visit the online glossary at MyHospitals.

Activity Based Funding (ABF)

Activity Based Funding (ABF) is a way of funding hospitals under which they are paid for the number and mix of patients they treat. For example, if a hospital treats more patients, it receives more funding. However, because some patients are more complicated to treat than others, ABF also takes into account various adjustments.

acute care

Care in which the intent is to perform surgery, diagnostic or therapeutic procedures in the treatment of illness or injury. Management of childbirth is also considered acute care.

admitted patient A patient who undergoes a hospital’s admission process to receive treatment and/or care. This treatment and/or care is provided over a period of time and can occur in hospital and/or in the person’s home (for hospital- in-the-home patients).

Admitted Patient Care National Minimum Data Set (APC NMDS)


The Admitted Patient Care National Minimum Data Set (APC NMDS) collects information about care provided to admitted patients in Australian hospitals. The APC NMDS includes episodes of care for admitted patients in all public and private acute and psychiatric hospitals, free-standing day hospital facilities and alcohol and drug treatment centres in Australia. Hospitals specialising in dental, ophthalmic aids and other specialised acute medical or surgical care are also included. Hospitals operated by the Australian Defence Force, corrections authorities and in Australia’s off-shore territories may also be included. Hospital boarders and still births are not included as they are not admitted to hospital. Posthumous organ procurement episodes are also not included.

Australian Refined Diagnosis Related Group (AR-DRG)

A classification system that allows different types of patients to be categorised according to their condition, procedure or diagnosis.

average length of stay

The average (mean) number of days spent in hospital for each stay (episode of care) for patients who stayed at least one night.

block funding A method of funding public hospitals, used for hospitals deemed too small for Activity Based Funding to operate effectively, and in some other instances.

comparable cost of care

Comparable Cost of Care is a measure that focuses on the comparable costs of acute admitted patients and includes the costs of emergency department patients who are subsequently admitted to allow for an assessment of the relative efficiency of public hospitals.
compensable patient

A patient whose costs of care will be claimable by the hospital from motor vehicle accident, workers’ compensation insurance, Department of Defence or Department of Veterans’ Affairs.

cost per admission A measure developed by the Authority that shows how much money on average different hospitals spend to treat patients admitted for selected conditions or procedures.

cost per National Weighted Activity Unit (NWAU)

Cost per National Weighted Activity Unit (NWAU) is a measure of the average cost of a unit of activity provided to acute admitted patients in a public hospital.

Independent Hospital Pricing Authority (IHPA)

The Independent Hospital Pricing Authority (IHPA) is an independent government agency established by the Commonwealth as part of the National Health Reform Act 2011. Its primary function is to calculate and deliver the annual National Efficient Price.

indigenous patient adjustment

Accounts for the higher costs of treating patients of Aboriginal and Torres Strait Islander origin.

Intensive Care Unit adjustment

Accounts for higher costs of patients who required an admission to an intensive care unit (level III) during their stay in hospital where most patients with similar conditions would not.

Intensive care unit (ICU), level III

An intensive care unit, level III is a facility capable of providing complex, multisystem life support for an indefinite period; be a tertiary referral centre for patients in need of intensive care services and have extensive backup laboratory and clinical service facilities to support the tertiary referral role. It must be capable of providing mechanical ventilation, extracorporeal renal support services and invasive cardiovascular monitoring for an indefinite period; or care of a similar nature.

legitimate costs

Costs that, although higher, are considered unavoidable due to the characteristics of the patients involved. These include patients requiring: treatment in a specialist paediatric facility, psychiatric care, radiotherapy and admission to intensive care unit, level III. It can also include the increased ED, unavoidable costs of treating rural and/or remote patients and Aboriginal and Torres Strait Islander people.

Length of stay

See average length of stay.

Local Hospital Network (LHN)

A Local Hospital Network (LHN) is an organisation that provides public hospital services in accordance with the National Health Reform Agreement. Some states and territories use their own terminology to describe these networks, such as Local Health Districts (NSW), Hospital and Health Services (Qld), Local Health Networks (SA) and Tasmanian Health Organisations. LHNs can comprise one or more hospitals, and they are usually defined as the hospitals serving a particular geographic area or a community, or as hospitals serving a particular function (for example, children’s hospitals or other specialist facilities within a state or territory).

National Efficient Price (NEP)

The National Efficient Price (NEP) is a major determinant of the level of Australian Government funding for public hospital services through Activity Based Funding. It establishes a price signal for the efficient cost of providing public hospital services.

National Hospital Cost Data Collection (NHCDC)

The National Hospital Cost Data Collection (NHCDC) is the primary data collection used to develop the National Efficient Price (NEP) and the National Efficient Cost (NEC). It is an annual collection of public hospital cost data.

NWAU (National Weighted Activity Unit)

The National Weighted Activity Unit (NWAU) was developed by the Independent Hospital Pricing Authority (IHPA) to allow different hospital activities to be expressed as a common unit of activity and to set the pricing of public hospital services. The NWAU accounts for the differences in the complexity of patients’ conditions or procedures and individual patient characteristics that lead to increased costs.

Private patient   

Refers to a privately insured or self-funded patient.

Private Patient Service Adjustment

A discount to the NWAU for private patients to account for income received by a hospital from a health insurance scheme or self-funded patient.

Private sources

Patients admitted and paid for by motor vehicle accident insurance, workers’ compensation insurance, private health insurance or who are self-funded.

Property, plant and equipment

Includes land, buildings, magnetic resonance imaging (MRI) scanners and hospital furniture such as beds, where the costs were (a) capitalised and recorded as an asset and (b) expended through deprecation. These costs were not included as part of the costs analysed in this report. However, purchases of property, plant and equipment that were worth less than a certain amount, known as a ‘state and territory asset capitalisation threshold’, have been included as part of the analysis.

Radiotherapy Adjustment

Accounts for the higher costs in providing radiotherapy to admitted patients, compared to patients with similar conditions.

Remoteness Area Adjustment

Accounts for the higher costs of treating people who live in rural and remote areas.


A technical term for the end of an episode of care. This report presents episodes of care that have been completed so the number of separations equals the number of episodes of care within the financial year.
Specialist Paediatric Adjustment

Accounts for higher costs of patients treated in specialist paediatric facilities, where there is a statistically significant difference in the cost of delivering services, compared to other facilities.

Specialist Psychiatric Age Adjustment

Accounts for higher costs of patients who have one or more psychiatric care days during their acute admission, with the rate of adjustment dependent on the person’s age.

Special Purpose Accounts and Trust Funds

A set of accounts recorded in a separate general ledger to the hospital’s operating general ledger. The funds are not in trust to any particular person. The Trust Fund at some hospitals account for the income from admitted patients covered by private sources. The set of accounts recording this information may not necessarily be submitted to the National Hospital Cost Data Collection for respective hospitals.

Unit of activity 

A measure representing the volume and complexity of patients and increased resource requirements within a hospital.