4390.0 - Private Hospitals, Australia, 2008-09

Quality Declaration

ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 31/05/2010

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Contents >> Private Acute and Psychiatric Hospitals >> Expenditure

EXPENDITURE

Recurrent expenditure for Acute and psychiatric hospitals for the 2008-09 cycle amounted to $7,632m, a 16% increase over the previous cycle. This rise in percentage was slightly higher than the annual average increase in the five years to 2006-07 of 6.6%.

When recurrent expenditure is adjusted to remove the effects of price changes over the period, the average annual increase over the five years from 2003-04 ($6,030m) to 2008-09 ($7,395m) was 6.5%. This excluded 2007-08, because the Private Health Establishments Collection was not undertaken for the cycle. For further information on the use of chain volume measures to adjust income and expenditure, see Explanatory Note 23.

Wages and salaries (including on-costs such as employer contributions to superannuation and payroll tax) represented 51% of recurrent expenditure in 2008-09, comparable with the previous cycle. The next largest component of recurrent expenditure was Drug, medical and surgical supplies, which accounted for 27% of the total. This proportion was the same as 2006-07.

The average expenditure per patient day was $1,035 in 2008-09 compared with $935 in 2006-07. These average costs have increased from $817 in 2003-04. Over the past five years from 2003-04 ($940) to 2008-09 ($1,003) the average increase in expenditure per patient day in adjusted terms was 2.9%. This excluded 2007-08, because the Private Health Establishment Collection was not undertaken for the cycle.

Acute and Psychiatric Private Hospitals, Expenditure per patient 2003-04 to 2008-09(a)
Graph: Acute and Psychiatric Private Hospitals, Expenditure per patient 2003-04 to 2008-09

Graph: Acute and Psychiatric Private Hospitals, Expenditure per patient 2003-04 to 2008-09

The average cost per patient day rises as hospital size increases. This reflects the greater complexity of procedures undertaken at the larger hospitals. The more complex procedures necessitate greater use of highly trained staff, expensive equipment, drugs and medical supplies, as well as administrative expenses, maintenance and food supplies. In 2008-09, recurrent expenditure per patient day (unadjusted) at Acute and psychiatric hospitals with over 200 beds was $1,207, compared with the average of $622 for hospitals with 26-50 beds.

There were considerable differences in the average recurrent expenditure per patient day between the 'Profit' and 'Not for profit' sectors. Religious or charitable hospitals had the highest average costs per patient day ($1,173) in 2008-09. Other non-profit hospitals (comprising bush nursing, community and memorial hospitals) and hospitals operated for profit had lower average costs per patient day ($932 and $934 respectively).

Gross capital expenditure for Acute and psychiatric hospitals during 2008-09 increased by 33% over the previous cycle to $589 million and represented 7.7% of the total expenditure for the year. Capital expenditure is volatile in the Private Health sector due to the exceptional nature of such expenditure. Significant purchases or construction undertaken in any given year are unlikely to be repeated on a regular basis.