The Independent Hospital Pricing Authority (IHPA) today released the National Efficient Price (NEP) and National Efficient Cost (NEC) Determinations for Australian public hospital services for 2019-20.
As outlined in the National Health Reform Agreement, the NEP and NEC play a crucial role in determining the Commonwealth funding contribution to Australian public hospitals according to either hospital activity levels or, in the case of small rural hospitals, an allocation towards block funded services.
Currently, the majority of Commonwealth funding to public hospitals is determined by activity based funding. This is a way of funding public hospitals whereby they get paid for the number and mix of patients they treat. Approximately 460 public hospitals nationwide, including all the large metropolitan hospitals, receive funding based on their activity levels.