Funding and Efficiency

Private hospitals are funded by their owners and operators. The services provided to patients treated in private hospitals are partially or fully subsidised from a variety of sources, including private health insurance funds, the Department of Veterans’ Affairs, Medicare, the PBS, and third party insurers.

 In 2008-09, the most recent period for which this data is available, public hospitals received a total of $33.4 billion to treat 60% of all hospital patients. In the same period, private hospitals received a total of $8.3 billion to treat 40% of all hospital patients. (AIHW, 2008-09c, pp. 44, Table 4.1)

• The Productivity Commission looked at the costs of treatment within public and private hospitals. It found that after adjusting for casemix differences that, on a total cost basis, private hospital costs were $130 lower per casemix-adjusted seperation. (PC, December 2009a, pp. 102-3, Table 5.2)
• The Productivity Commission found that of the 20 different Major Diagnostic Categories (MDCs), the cost per separation were (PC, December 2009a, p. 116):
  
• Lower in private hospitals for half of all MDCs
• Lower in public hospitals for and only for one fifth of all MDCs