Independant Pricing Authority


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21 February 2012

While the ultimate ABF model will necessarily involve the centralisation of funding, it is also imperative that its distance from the workface does not lead to unrealistic demands and unrealistic prices being imposed on our nation's public hospitals

The move to activity based funding for Australian public hospitals constitutes a complex reform agenda and all interested parties must ensure that this complexity does not have unintended and adverse consequences. The purpose of this exercise must be healthcare quality and it should be remembered that this has six components:

  • Safety;
  • Appropriateness;
  • Access and timeliness;
  • Patient centredness;
  • Efficiency; and
  • Effectiveness.

Pricing is just one factor in this reform agenda. Other factors include targets with regard to waiting times for elective surgery, and it is the interplay between these targets which could lead to unintended consequences.

The process of implementing ABF should be informed by evidence based medicine and surgery; it should not be driven by funding concerns alone.

Central to any pricing framework is the principle of comparative effectiveness. An understanding of comparative effectiveness casts light on which procedures and treatments work, which don't, and which are most cost-effective. It is about more than cost alone; other considerations must include the patient experience and other aspects of healthcare quality.