For this report the AIHW used an approach consistent to that used in Hospital Performance: Costs of acute admitted patients in public hospitals from 2011–12 to 2013–14 (NHPA 2016).
Six principles were used to support fair comparisons between hospitals:
- Comparable costs: this process involved a review of the national consistency of costs information and the materiality of any differences between states and territories. Where appropriate, some costs are excluded to support comparability (Table 2 and Table 3). In other instances, some costs are included because it is not possible to exclude them. In these instances, the materiality of this approach was assessed (see Hospital Performance: Costs of acute admitted patients in public hospitals in 2011–12, Technical Supplement for more details)(NHPA 2015).
- Patients: admitted and discharged (including a change in care type) within a financial year are included in the report. This approach also aligns with the scope used by the IHPA for the NEP Determination 2017–18.
- Units of activity: this process is necessary to standardise costs by accounting for the differences between the relative complexity of patients admitted to a hospital and the patient’s individual characteristics which may lead to legitimate cost variation, relative to the patient’s length of stay.
- Rounding results: the AIHW has rounded cost per NWAU in a way that acknowledges any remaining uncertainty in estimates. Each hospital’s result has been rounded to the nearest $100.
- Suppression of results: where cost and activity data from a hospital were not fully available or comparable, rules inform decisions to suppress information based on a lack of comparability (see Hospital results included in the report for more information).
- Peer groups: this process involves grouping hospitals so that they can be compared to their peers (see below for more information).
Hospital peer classification system
Peer groups allow hospitals to be compared to other similar hospitals. They minimise the effect caused by comparing hospitals of differing size, services and rurality.
The report includes major, large and medium public hospitals only, and hospitals are classified according to the 2015 Australian hospital peer groups (AIHW 2015). Large and medium hospitals are further split into metropolitan and regional groups using the 2011 Australian Statistical Geography Standard (ASGS) remoteness categories (ABS 2013).
Both the report and the website focus on comparing and contrasting information from major, large and medium public hospitals, as these hospitals account for the vast majority of same-day and overnight admissions.
The average cost per NWAU for a peer group is calculated by tallying the total comparable cost for all hospitals within the peer groups with a complete three-year time series of data and dividing by the total number of NWAU for those hospitals. This overall peer group average is considered more accurate than individual hospital results and is rounded to the nearest $10.
The measure is used to compare 121 major, large and medium public hospitals against their peers, based on the size and location of the hospital. Cost per NWAU was calculated for:
- 28 major hospitals
- 29 large metropolitan hospitals
- 26 large regional hospitals
- 18 medium metropolitan hospitals
- 20 medium regional hospitals.
Contextual information has been provided to assist with the interpretation of results. The percentage of private patients has been calculated by dividing the number of private insurance and self-funded patient separations by total in-scope separations.