Funding Of Funding For Public Hospitals Essay

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6.2.1 Funding Policy Framework in Australia
Funding for public hospitals in Australia is mainly based on activity, known as Activity Based Funding (ABF). This is based on the actual quantity of services delivered to patients and aims to provide revenue based on the ‘efficient’ cost of delivering the services. Under this arrangement, the financial contribution made by the Commonwealth and the States/Territories for public hospitals’ activities and services is based on Australia DRG classifications, price weight and the National Efficient Price (NEP) which is determined by IPHA. The NEP is a benchmark to give government guidance about the level of contributions that meet the average cost of acute care service provision in Australian public hospitals. The price is expressed as dollars per NWAU because its determination is based on the average cost of a National Weighted Activity Unit (NWAU) projection after deducting the Commonwealth expenditure for other programs. NWAU is a unit expressed to measure health service activity. The NWAU values vary with clinical complexity, intensity and cost of hospital service activities.
Both commonwealth and state funding flow through National Health Funding Pool directly to providers within the Local Hospital Networks. In the case where ABF is not practicable, such as low volume of service, block funding can be made payable to the states of which the pricing is based on the National Efficient Cost (NEC) determined by the IPHA. Public
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