Hospital funding data confirms impact of rebate changes

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A new report from the Australian Institute of Health and Welfare has confirmed the impact of policy changes to the Private Health Insurance Rebate on the federal government's contribution to private hospitals.

According to the new report, Australia's hospitals at a glance 2018-19, Australia had more than 1,300 public and private hospitals that collectively provided almost 30.9 million days of patient care. This was up from 28.7 million in 2014–15.

In 2018–19, six-in-ten (seven million) hospitalisations were for patients who were admitted and discharged on the same day. 

"On average, people are spending less time in hospital - between 2014–15 and 2018–19 - the average length of stay for all hospitalisations fell from 2.8 days to 2.7 days. The average length of stay was longer in public hospitals than private hospitals," says the report.

Government spending on hospitals (federal, state and territory) is the single largest area of health expenditure.

In 2017–18, governments spent $57.7 billion was spent on public hospitals in Australia. The state and territory governments contributed the most funding with $29.9 billion (52 per cent).

The federal government contributed $22.7 billion (39 per cent) but this does not include payments it makes through Medicare for services associated with the treatment of private patients.

Private health insurers and other entities contributed $5.1 billion (8.9 per cent) to public hospitals.

According to the report, between 2007–08 and 2017–18, federal government expenditure on public hospitals increased 3.9 per cent per year on average and state and territory expenditure increased 3.6 per cent per year on average.

In 2017–18, 71 per cent ($11.6 billion) of the estimated $16.3 billion spent on private hospitals was funded by the non-government sector, primarily private health insurance providers ($8.2 billion).

The federal government contributed $3.8 billion (23 per cent) and individuals $2.2 billion (13 per cent).

Between 2007–08 and 2017–18, total funding on private hospitals increased by an average of 5.1 per cent each year. The proportion of funding provided by the Australian Government increased 0.5 per cent and funding from private health insurance by around 7 per cent.

The report says this may be as a result of policy changes to the Private Health Insurance Rebate that have combined to reduce the federal government's contribution to premiums.