Independent Hospital Pricing Authority releases 2016-17 National Efficient Price and National Efficient Cost for Australian public hospital services

The Independent Hospital Pricing Authority (IHPA) today released the National Efficient Price (NEP) and National Efficient Cost (NEC) Determinations for Australian public hospital services for 2016-17.

As outlined in the National Health Reform Agreement, the NEP and NEC determine the Commonwealth funding contribution to Australian public hospitals.

Currently the majority of Commonwealth funding is determined by Activity Based Funding (ABF). This is a way of funding public hospitals where by they get paid for the number and mix of patients they treat. The NEP underpins ABF to approximately 260 hospitals nationwide including all the large metropolitan hospitals.

Shane Solomon, Chair of the Pricing Authority said, “the National Efficient Price provides a clear benchmark for all Australian governments regarding the costs of delivering the services provided by public hospitals across Australia.

“IHPA continues to improve its pricing model ensuring that the costs of delivering the many different public hospital services are more accurately reflected and better understood.”
The NEP for 2016-17 is $4,883 per National Weighted Activity Unit (NWAU). This is approximately a two percent increase in price from the revised NEP for 2015-16.

The price of each public hospital service is calculated by multiplying the NWAU allocated to that service by the NEP.

For example:

  • A tonsillectomy has a weight of 0.7131 NWAU which equates to $3,482.
  • A coronary bypass (minor complexity) has a weight of 5.2430 NWAU which equates to $25,602.
  • A hip replacement (minor complexity) has a weight of 4.0965 NWAU which equates to $20,003.

The NEC for 2016-17 is $5.020 million. The NEC is used when activity levels are not suitable for funding based on activity such as small rural hospitals. In these cases services are funded by a block allocation based on size and location instead. This type of funding applies to approximately 380 small rural hospitals.

For a full copy of the National Efficient Price and National Efficient Cost and a guide to understanding the Determinations for 2016-17, visit www.ihpa.gov.au.

About the Independent Hospital Pricing Authority (IHPA)

IHPA is an independent Commonwealth agency established under Commonwealth legislation on 15 December 2011 as part of the National Health Reform Agreement (NHRA) reached by the Council of Australian Governments (COAG) in August 2011.

The NHRA sets out the intention of the Australian Government and state and territory governments to work in partnership to improve health outcomes for all Australians.

IHPA is charged with determining the National Efficient Price and the National Efficient Cost for public hospital services, allowing for the national introduction of Activity Based Funding (ABF).

 

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For more information contact:
Anna Flynn
Manager, Communication and Media
communications.ihpa [at] ihpa.gov.au 

T: 02 8215 1151 M: 0430 105 665


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