Review of Activity Based Funding data

Review of Activity Based Funding data

Australian Government Department of Health
Duration: June – July 2017


Since August 2011, the Australian Government has contributed to the funding of public hospital services using Activity Based Funding (ABF) where practicable in accordance with the National Health Reform Agreement. From 2014-2015 the ABF model was uncapped and allocated funding for growth in activity or complexity of services at the rate of a national efficient price. The funded growth between 2014-15 and 2015-16 had been significantly higher than the 4% that had been anticipated.

The Australian Government Department of Health was seeking to understand the drivers of these recent patterns in the increase in reported activity, in the context of the efficient growth arrangements under the National Health Reform Agreement. The review undertaken by AHSRI supplemented other analyses that had recently been undertaken by the Australian Government.

What we did

Previously completed investigations into the difference between the estimated and the actual levels of service delivery were provided to AHSRI in addition to four years of national health activity data. A high level review of the data was completed, with a focus on the potential effect of changes in classifications and coding standards on growth in activity. The issue was investigated separately for different care types – acute admitted, admitted mental health, non-admitted and subacute and non-acute.

The period of analysis included the very early years of national ABF during which time there were a number of changes to the classifications systems and ongoing development of the definitions and mechanisms for data collections across the care types. These changes were identified for each care type. Additionally, the different jurisdictions varied significantly in how well established their local activity based systems were at the commencement of national ABF and the amount of system development that was undertaken in the early period of the new system. The impact of these factors on the stability of the activity data and amount of change over the four years was found to vary across the different care types and between jurisdictions.

The short timeframe of this project was sufficient to enable a high level overview to be undertaken, while identifying areas where a more detailed analysis might be valuable.

Last reviewed: 22 May, 2018

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