The Assistant Treasurer, Chris Bowen, today announced that the Productivity Commission (the Commission) would undertake a study into the relative performance of the public and private hospital systems, and related data issues.

The announcement follows the Council of Australian Governments' agreement in November 2008 to reform the health and hospital system and introduce a nationally‑consistent approach to activity-based funding for public hospital services to allow comparisons of efficiency across public hospitals.

The Commission has been asked to examine the relative performance of the public and private hospital systems.  The study will compare treatment costs, including out-of‑pocket patient expenses and rates of fully‑informed financial consent.  Rates of hospital‑acquired infections and other indicators will also be considered. 

The Commission has also been asked to consider performance indicators and their ability to inform comparisons of hospital performance and efficiency.

In addition, the Commission will provide advice to the Government on the most appropriate indexation factor for the Medicare levy surcharge thresholds.

The Commission is required to provide the final report within 6 months.

To register an interest in the study or to find out more, details are available from the Commission at www.pc.gov.au or by calling 02 6240 3239.

The terms of reference for the review are attached.

Attachment

TERMS OF REFERENCE

Productivity Commission research study into public and private hospitals

The Productivity Commission is requested to undertake a study into public and private hospitals, and report back within 6 months of receipt of this reference.

Context

The Government is committed to improving transparency, accountability and performance reporting within the health system. This commitment is evident in the new National Healthcare Agreement and in COAG's agreement to introduce a nationally consistent approach to activity-based funding in public hospitals. It is also shown by the Government's commitment to move towards nationally consistent performance reporting for public and private hospitals.

In furthering the Government's commitment in this area, the Productivity Commission is requested to examine and report on the relative performance of the public and private hospital systems, and related data issues. As part of its study, the Commission should consider:

1. comparative hospital and medical costs for clinically similar procedures performed by public and private hospitals, using baseline data to be provided by states and territories under the new National Healthcare Agreement, and existing data provided to the Government by private hospitals. The analysis is to take into account the costs of capital, FBT exemptions and other relevant factors.
2. the rate of hospital-acquired infections, by type, reported by public and private hospitals, using baseline data to be provided by states and territories under the new National Healthcare Agreement, and existing data provided to the Government by private hospitals.
3. rates of fully informed financial consent for privately insured patients treated as private patients in both public and private hospitals, categorised by type of provider (that is, public hospital, private hospital, medical practitioner [by Speciality]), and by Statistical Local Area (SLA) or equivalent, including:
   1. the average cost of out of pocket expenses for patients who do not receive enough financial information from the provider to give fully informed financial consent, the range of these costs and the maximum out of pocket cost incurred by in-hospital patients categorised by type of provider (as detailed above).
   2. best practice examples where fully informed financial consent is provided for every procedure, (with a specific emphasis on any best practice examples occurring in specialties where lack of fully informed financial consent is most common).
4. other relevant performance indicators, including the ability of such indicators to inform comparisons of hospital performance and efficiency.
5. If any of the foregoing tasks prove not fully possible because of conceptual problems and data limitations, the Commission should propose any developments that would improve the feasibility of future comparisons.

The Commission will also provide advice to the Government on the most appropriate indexation factor for the Medicare Levy Surcharge thresholds.

The Commission is to consult with relevant experts and others as necessary and produce a final report within six months of receipt of this reference. The report will be published.