Activity Based Funding Analysis

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Have you ever gone to a hospital, had a procedure and walked out of the hospital without anyone asking you to make a payment? That’s because hospital treatments in Australia are funded under Activity Based Funding (ABF) a subsidy program where hospitals receive funding for providing treatment and cost effective patient care that is, accessible and high quality (Baxter et al., 2015).

What is Activity Based Funding? Activity Based Funding is defined as ‘a way of funding for hospitals whereby they get paid for the number and mix of patients they treat’, which promotes and ensures consistency, fair and equitable payments for administering similar or equivalent services and treatments provided across all Australian public, private and …show more content…

These classifications allow for medical information to be captured, analysed and compared according to patient treatment with resources required and resources consumed which correlates to state-wide funding cost and this data is linked up against costs incurred by the hospital and compared to other hospitals, this is a integral component as this forms the basis of hospital funding budgeting and funding ("Classifications", n.d.). During the classification process the AR-DRGs bundle similar treatments with other interventions that are equal in complexity or consume similar amounts of resources and results in the hospital receiving an amount of money based on the treatment difficulty provided ("AR-DRG V9.0", 2017). However, the purpose of ABF is to ensure that hospitals are utilising their resources to maximize patient care and prevent hospitals from using unnecessary resources such as keeping patients in hospital for excessive amount of time, the graph on the poster highlights the cost associated with patients length of stay, as the length of stay increases the costs substantially rise (Independent Hospital Pricing Authority, 2016). Therefore, the focus of ABF is

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