Late in 2000 NATSEM was awarded a three-year Australian Research Council Strategic Partnership with Industry Research and Training (SPIRT) grant. Among other things, the grant involves adding an indicator of socioeconomic status to patient-based hospitals administrative datasets for New South Wales over the period 1996-97 to 1999-00, in which expenditures have been allocated to each individual patient. This technical paper documents the development of enhanced NSW hospitals micro datasets and the building of the microsimulation projection model. An approach to calibrating the model is also described.