Technical notes


This Technical Supplement summarises methods used to calculate descriptive measures presented in Hospital Performance: Costs of acute admitted patients in public hospitals in 2011–12. Due to the complexity of the methods used, this supplement is targeted at individuals with technical expertise in health informatics.

The report compares hospitals based on the costs of acute admitted patients. Admissions (sameday and overnight) are weighted to account for the complexity of a patient’s condition(s) and procedure(s) using the Australian Refined- Diagnosis Related Group (AR-DRG) classification system and adjusted for individual patient characteristics.

The aim of this work is to assess the relative efficiency of public hospitals through the use of comparable costs. The report also includes data showing the variation in the cost of 16 selected conditions and procedures that featured in the Authority’s earlier report Hospital Performance: Length of stay in public hospitals in 2011–12. The report has not accounted for the quality of care received by patients or their health outcomes.

The following measures are described in this Technical Supplement:

  • Cost per National Weighted Activity Unit (NWAU), including total NWAU
  • Comparable Cost of Care, including total units of activity
  • Cost per admission.

The report includes two headline measures. Cost per NWAU is calculated using methods established and made publicly available by the Independent Hospital Pricing Authority (IHPA). The second measure which was developed by the Authority, Comparable Cost of Care, is calculated using methods described in Comparisons of hospitals.

The following approaches were used to derive Comparable Cost of Care:

  • A nationally consistent approach to including and excluding costs to support comparability
  • Standardisation of those costs to account for differences between hospitals in the types of patients admitted
  • The allocation of public hospitals to peer groups to support comparisons across similar types of hospitals.

Results for more than 80 major and large Australian public hospitals are also available on MyHospitals.