Every day, decisions are made in hospitals, or by governments, that influence how efficiently hospitals run. In 2013–14, the running costs of public hospitals ($44 billion) continued to represent the largest proportion of the $154.6 billion that was spent on health by all governments, insurers and consumers.

This report examines Australia’s largest public hospitals and the amount of money each of those hospitals spent in 2013–14 to provide a notional ‘average’ hospital service to their acute admitted patients – the group that accounts for the largest proportion of hospital costs nationally. This group includes patients who are admitted for the management of childbirth, surgery, or other diagnostic and therapeutic procedures. These results were calculated by comparing a hospital’s running costs to a measure of output known as a National Weighted Activity Unit (NWAU).

The report finds:

• In 2013–14, the cost of providing an average service could be almost twice as high at one major metropolitan hospital ($6,100) compared to another ($3,100)
• From 2011–12 to 2013–14, eight major metropolitan public hospitals decreased their cost for providing a notional ‘average’ service by at least 5%, indicating improved efficiency. Both Western Hospital in Footscray in Vic and Westmead Hospital in NSW decreased their cost by 9% over this period
• Six major metropolitan public hospitals increased their costs per notional ‘average’ service by at least 10%, indicating decreased efficiency. Hornsby Ku-ring-gai Hospital in NSW had the largest increase at 17%, followed by John Hunter Hospital at 15%.