Activity Based Funding (ABF) is a way of funding hospitals whereby they get paid for the number and mix of patients they treat. If a hospital treats more patients, it receives more funding. Because some patients are more complicated to treat than others, ABF also takes this in to account.
ABF funding should support timely access to quality health services, improve the value of the public investment in hospital care and ensure a sustainable and efficient network of public hospital services. ABF payments should be fair and equitable, including being based on the same price for the same service across public, private or not for profit providers of public hospital services.
The National Health Reform Agreement, signed by the Commonwealth Government and all states and territories in August 2011, commits to funding public hospitals using ABF where practicable.
IHPA plays a pivotal role in ABF through the key functions, outlined in section B3 of the National Health Reform Agreement.