Performance of public and private hospital systems

report

  • Although there is significant diversity within and between the public and private hospital sectors, there are sufficient similarities to warrant comparing them, ideally in a way that takes account of differences in the services provided and patients treated.
  • Existing datasets on hospital costs are limited by inconsistent collection methods and missing information. The Commission has sought to address these limitations by drawing on various data sources and incorporating adjustments to make the data more comparable. Nevertheless, the resulting estimates should be considered experimental.
  • The Commission's experimental cost estimates suggest that, at a national level, public and private hospitals have similar average costs. However, significant differences were found in the composition of costs. General hospital costs were higher in public hospitals. Medical and diagnostics costs and prostheses costs were higher in private hospitals. Capital costs were higher in public hospitals, but this result is particularly reliant on a range of data sources and adjustments to make the data comparable.
  • Australia does not have a robust nationally-consistent data collection on hospital acquired infections. The limited available evidence suggests that private hospitals have lower infection rates than public hospitals, but this result could be misleading because private hospitals on average treat patients who have a lower risk of infection.
  • Other partial indicators show that:
    • private hospitals have higher labour productivity and shorter lengths of stay than public hospitals, but this is at least partly due to casemix and patient differences between the public and private sectors
    • elective surgery in public hospitals is more accessible for disadvantaged socioeconomic groups, but tends to be less timely than in the private sector.
  • A multivariate analysis of hospital-level data suggests that the efficiency of public and private hospitals is, on average, similar. The output of individual hospitals in both sectors is, on average, estimated to be around 20 per cent below best practice.
  • Improvements could be made to data collections to improve the feasibility of future comparisons. Foreshadowed changes under the National Healthcare Agreement will help in this regard, but more improvements could be made, such as consistent national reporting of costs and infections for both public and private hospitals.
  • Only a small proportion of patients incur out-of-pocket expenses without receiving sufficient prior information to give informed financial consent. The medical profession has facilitated best practice by educating practitioners and using internet-based packages to inform consumers.
  • The most appropriate indexation factor for the Medicare Levy Surcharge income thresholds is average weekly ordinary time earnings.