Improving health outcomes through hospital funding arrangements
Research paper
Released 17 / 04 / 2026
In Australia, governments give hospitals a set amount of funding for each service they provide to a patient, regardless of that patient's outcomes.
This paper asks whether reducing payments to a hospital when a patient develops certain complications can lower the risk of complications occurring.
It finds that, in states and territories that apply such a ‘funding adjustment’, patients were 25% less likely to develop a complication. This suggests financial mechanisms can lift the quality of care. However, these findings should be interpreted with caution and further work is needed before expanding the use of such mechanisms in Australia.
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Improving health outcomes through hospital funding arrangements (PDF 952.9 KB)
Improving health outcomes through hospital funding arrangements (DOCX 3.6 MB)- Preliminaries: Cover, Copyright and publication detail, Contents, and Acknowledgments
- Summary
- Are financial mechanisms effective in reducing HACs?
- 1. Introduction
- 2. The implementation of a funding adjustment for hospital-acquired complications (HACs)
- 3. Estimating the impact of the funding adjustment on the likelihood of a HAC
- 4. Interpretation of the findings
- 5. Conclusion
- A. Consultations
- B. Estimating the impact of the HAC-related funding adjustment
- B.1 Patient level data used to estimate the impact of the funding adjustment
- B.2 Methodology
- B.3 Results
- References
Printed copies of this paper can be purchased from Canprint Communications.
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