The Productivity Commission has released a supplementary report into Public and Private Hospitals. This report supplements the final research report which was released back in March. The final report reported on the performance of public and private hospitals and compared costs, infection rates and other indicators. The results in the report were based on a single year (2006-07) because the Commission faced significant delays in accessing data for other years. The Commission has finally been able to access data for other years and has used this to produce the supplementary report. This report draws on an additional three years of data, as well as improved quality and estimation methods, to report on HSMRs and efficiency in public and private hospitals for the period 2003-2007.
The findings of the supplementary report are in line with the original findings in the March Final Report. As with the previous report, the Commission has been careful to qualify its findings with caveats about data quality and possible explanatory reasons for the results. The commentary within the report paints a picture of there being only slight differences between public and private hospitals, and where differences exist these are usually explained away in terms other than private hospitals being more efficient.
Looking beyond the neutral tone of the text, the following key points can be taken from the supplementary report:
Hospital-standardised mortality ratios
• In-hospital mortality rates vary substantially according to the ownership and size of hospitals.
• In-hospitality mortality rates were over two-and-a-half times higher for public hospitals (1.48 per cent of separations) than for private hospitals (0.54 per cent of separations)
• To ensure that the comparisons between different hospitals reflect their underlying performance, as distinct from their roles, functions and characteristics of their patient population, the Commission risk-adjusted each hospital’s mortality rate.. After taking these factors into account the Commission found that the Hosiptal-Standardised Mortality Ratio for private hospitals was 90.8, and for public hospitals was 102.5.
• This means that private hospitals have a HSMR which is 8.2% lower than would be expected, and public hospitals have a HSMR which is 2.5% higher than would be expected.
• The estimated mean HSMRs of private hospitals are lower than those of public hospitals by almost 12 percentage points. This overall difference was statistically significant in aggregate.
• Hospital-standardised mortality ratios were estimated to be generally similar between very large public and private hospitals
• Smaller private hospitals had noticeably better mortality ratios than similar-sized public hospitals. This might be explained by management performance.
Efficiency of public and private hospitals
• After taking into account the factors outside a hospital’s control such as patient characteristics and severity of illness, the Commission produced estimates of efficiency. This is done by comparing all the inputs into a hospital with the resulting outputs using multi-variate analysis.
• Private hospitals had slightly higher input-oriented technical efficiency scores than public hospitals (91.4% compared to 89.1%). This would mean that on average hospitals are operating at about 10% below best practice.
• The estimation results also showed a strong relationship between a hospital’s quality and its efficiency. The most efficient hospitals were also those with the lowest in-hospital mortality. This suggests that the factors that contribute to a well-managed hospital also improve health outcomes.
• For-profit and ‘public contract’ hospitals were estimated to be significantly more efficient than public hospitals.
• Smaller public hospitals were found to be less efficient than similar-sized private hospitals. This might be due to lower occupancy rates.
The Commission also sought to measure the determinants of hospital costs, but the available financial data, such as capital and medical costs were inadequate. The Commission found various shortcomings in data quality and availability that would need to be overcome if policy analysts are to produce improved estimates of efficient costs of providing hospital care.
The supplementary report can be downloaded at: http://www.pc.gov.au/projects/study/hospitals/supplement
