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The public sector’s take on the Productivity Commission’s hospital report

The Productivity Commission yesterday released its draft discussion paper on the relative performance of public and private hospitals. Croakey has previously complained that the inquiry’s terms of reference seemed a tad narrow and made a submission to the Commission to this effect.

Well, the Australian Healthcare & Hospitals Association has had a read and gives the draft paper a generally positive review, and argues that its findings should be seen as an endorsement of the performance of public hospitals.

Which puts an interesting slant on the timing of the AMA release of its public hospital report card, which resulted in plenty of damning headlines around the place.

The AHHA’s executive director, Prue Power, writes:

“Australians should be reassured that their public hospital system is performing efficiently and delivering good value to the community.

The Productivity Commission draft discussion paper on public and private hospitals, released yesterday, found that on the basis of available data, the costs of providing care in the public and private systems were almost the same.

In its own words “The Commission’s experimental cost estimates suggest that, at a national level, public and private hospitals had a broadly similar cost per casemix-adjusted separation in 2007-08″

The Commission acknowledges the difficulties involved in comparing the two sectors, given their very different patient populations and mix of services provided.

It has done a good job in accounting for these differences, although admits that it is almost impossible to adjust for many factors, such as the lower socio-economic status of patients in public hospitals. Other differences, such as the fact that about half of admissions to a public hospitals occur through emergency departments whereas private hospital admissions are almost all planned, are noted but their impact on overall costs is not assessed.

Given this, it is likely that the cost of public hospital treatment is even lower than that of private hospitals, when all the differences in patient populations are taken into account.

Where there are cost differences identified between the two sectors, the Commission has found that these are probably accounted for by their different roles or are due to inconsistencies in data collection.  For example, general hospital costs were found to be about 30% higher in the public hospital system due to the higher expenditure on ward nursing. This would be expected given the higher rates of complex and critical conditions treated in public hospitals.

Similarly, the higher medical and diagnostic costs in private hospitals are attributed to higher fees being charged by doctors in the private system as well as possible data gaps in the public system where some medical and diagnostics costs may be recorded elsewhere in the system (for example included in operating theatre costs, where they occur in the context of a surgical procedure).

The two major areas where the Commission found that costs cannot be meaningfully compared between the two sectors are medicines and capital costs where funding and data collection practices differ so widely (and in some cases are internally inconsistent) as to make comparisons pointless.

In relation to safety and quality indicators, the Report includes an important discussion about why comparisons between sectors (and also between individual hospitals) are so difficult. For example, in relation to hospital-acquired infection rates it is important to adjust for the relative risk of patients.  In practice, this can be extremely difficult as patient risk is dependent on a wide range of factors, often not recorded in hospital data.

However, the Commission makes some useful recommendation to move towards a more robust and nationally-consistent data collection on hospital-acquired infections, such as including private hospitals in national reporting arrangements.

Overall, the report gives an honest account of the limitations of comparing public and private hospital sectors and does a creditable job of meeting its terms or reference with the limited data available.

It might not contain any surprises for those working in the public and private hospital sectors, but it should reassure governments and the community that public hospitals deliver excellent value for money.”

Comments 1

  1. Trevor Kerr says:

    The PC’s draft paper landed on my doorstep today. I’m looking for comparative data on body mass at admission, by private and public. There’s plenty on ‘cost weights’ but no evidence that the simplest parameter has been analysed. Doesn’t wound infection risk increase by the kilogram? Those infection rates in Table 6.1 ought to be diced by body mass. Is that too hard?
    Maybe efficiencies (management practices) do not account for any of the better outcomes in private, at all.
    If I was a proceduralist with a financial interest in a specialist hospital, and on the staff of a public hospital, I wouldn’t mind if different sets of eyes were making calls on post-op wound infections.
    Wouldn’t it be so easy to photograph all wounds at day two and submit them all to an independent auditor?

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