CSIRO Publishing blank image blank image blank image blank imageBooksblank image blank image blank image blank imageJournalsblank image blank image blank image blank imageAbout Usblank image blank image blank image blank imageShopping Cartblank image blank image blank image You are here: Journals > Australian Health Review   
Australian Health Review
  Journal of the Australian Healthcare & Hospitals Association
blank image Search
blank image blank image
blank image
  Advanced Search

Journal Home
About the Journal
Editorial Structure
For Advertisers
Online Early
Current Issue
Just Accepted
All Issues
Research Fronts
Sample Issue
For Authors
General Information
Author Instructions
Submit Article
Open Access
For Referees
Referee Guidelines
Review an Article
Annual Referee Index
Call for Reviewers
For Subscribers
Subscription Prices
Customer Service
Print Publication Dates

blue arrow e-Alerts
blank image
Subscribe to our Email Alert or RSS feeds for the latest journal papers.

red arrow Connect with AHR
blank image

red arrow Connect with AHHA
blank image
facebook TwitterIcon

red arrow Connect with CP
blank image
facebook twitter LinkedIn


Open Access Article << Previous     |     Next >>   Contents Vol 37(1)

Differences in the cost of admitted patient care for Indigenous people and people from remote locations

Rosalyn Malyon A C, Yuejen Zhao A and Brett Oates B

A Health Gains Planning Branch, Northern Territory Department of Health, PO Box 40596, Casuarina, NT 0811, Australia.
B Acute Care Division, Northern Territory Department of Health, PO Box 40596, Casuarina, NT 0811, Australia.
C Corresponding author. Email: rosalyn.malyon@nt.gov.au

Australian Health Review 37(1) 26-31 http://dx.doi.org/10.1071/AH11115
Submitted: 21 November 2011  Accepted: 13 May 2012   Published: 19 November 2012

 Full Text
 PDF (186 KB)
 Export Citation

The introduction of activity-based funding (ABF) means that Australian Refined Diagnosis Related Groups and their relative costs will become the basis for reimbursing public hospitals for admitted patient services. This study sought to investigate the variation in admitted patient costs for Indigenous people and people from remote areas that cannot be explained by variation in the clinical mix of cases, and to interpret this variation within an ABF framework. The study used a dataset of discharges from public hospitals of Northern Territory residents between July 2007 and June 2009. Multivariate regression analysis was used to estimate the variation in average costs, using the logarithm of patient cost as the dependent variable and Major Diagnostic Categories (MDCs), hospitals and population subgroups (Indigenous v. non-Indigenous; urban v. remote) as independent variables. Although much of the additional cost of Indigenous and remote patients was found to be due to differences in severity and complexity between MDCs, there were extra costs for remote Indigenous patients that were not captured by the classification system. Hospitals servicing larger than average proportions of these patients could be systematically underfunded within an ABF framework unless a price adjustment is applied.

What is known about the topic? Indigenous people and people living in remote locations have a greater burden of disease and injury and are high users of hospital services. Past studies have quantified the relative cost of providing admitted patient services to these groups using survey data or the average length of stay as a proxy for cost.

What does this paper add? This study provides estimates of the additional costs of providing admitted patient services to Indigenous people and people from remote areas and interprets these within an activity-based funding framework.

What are the implications for practitioners? This paper provides information on the importance of recognising high cost populations in payment systems for public hospitals.

Additional keywords: DRGs, hospitals, Indigenous population, multivariate analysis, rural population.


[1]  Council of Australian Governments (COAG). National Health Reform Agreement. Available at http://www.yourhealth.gov.au/internet/yourhealth/publishing.nsf/Content/nhra-agreement [Verified 6 September 2012].

[2]  Fisher D, Murray J, Cleary M, Brewerton R. The Aboriginal and Torres Strait Islander casemix study. Med J Aust 1998; 169: S11–6.
| PubMed |

[3]  Fisher D, Ruben A. Funding of Northern Territory public hospitals. Aust Health Rev 2002; 25: 189–205.
CrossRef | PubMed |

[4]  Ruben A, Fisher D. The case-mix system of hospital funding can further disadvantage Aboriginal children. Med J Aust 1998; 169: s6–10.
| PubMed |

[5]  Beaver C, Zhao Y, McDermid S, Hindle D. Casemix-based funding of Northern Territory public hospitals: Adjusting for severity and socio-economic variations. Health Econ 1998; 7: 53–61.
CrossRef | CAS | PubMed |

[6]  You J, Hoy W, Zhao Y, Beaver C, Eagar K. End-stage renal disease in the Northern Territory: current and future treatment costs. Med J Aust 2002; 176: 461–5.
| PubMed |

[7]  Russell-Weisz D, Hindle D. High length-of-stay outliers under casemix funding of a remote rural community with a high proportion of Aboriginal patients. Aust Health Rev 2000; 23: 47–61.
CrossRef | CAS | PubMed |

[8]  Ishak M. Hospitalisation patterns of Australia’s Aboriginal population and their implications. Aborig Isl Health Work J 2001; 25: 20–5.

[9]  Lee A, Codde J. Determinants of length of stay: implications on differential funding for rural and metropolitan hospitals. Aust Health Rev 2000; 23: 126–33.
| CAS | PubMed |

[10]  Harkin K. Incremental resource consumption by Aboriginal inpatients: a research project conducted at Alice Springs Hospital from 1 October 1991 to 31 May 1992. Darwin: Northern Territory Department of Health and Community Services, 1994.

[11]  Zhao Y, Condon J, Guthridge S, You J. Living longer with a greater health burden - changes in the burden of disease and injury in the Northern Territory Indigenous population between 1994–1998 and 1999–2003. Aust N Z J Public Health 2010; 34: S93–S98.
CrossRef | PubMed |

[12]  Department of Health and Ageing. National Hospital Cost Data Collection cost report round 12 (2007–2008). Canberra: Commonwealth of Australia, 2009.

[13]  Department of Health and Ageing. National Hospital Cost Data Collection cost report round 13 (2008–2009). Canberra: Commonwealth of Australia, 2010.

[14]  StataCorp. Stata release 11. Statistical software. College Station, Texas: Statacorp LP, 2009.

[15]  Australian Bureau of Statistics. 12160DO002 Australian Standard Geographical Classification (ASGC), Jul 2007. Main structure - detailed, Data cube accessed online at http://abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/1216.0Jul%202007?OpenDocument [Verified 6 September 2012].

[16]  Department of Health. Northern Territory resident population estimates by age, sex, Indigenous status and health districts (1971–2010). Unpublished data prepared by Health Gains Planning on 01 April 2011 using Australian Bureau of Statistics Estimated Resident Population.

[17]  StataCorp. Stata user’s guide release 11. College Station, Texas: Statacorp LP, 2009.

[18]  Australian Bureau of Statistics. 6401.0 Consumer Price Index, Australia, Table 12. CPI: Group, Sub-group and Expenditure Class, Percentage change from corresponding quarter of previous year by Capital City. Available at http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6401.0Dec%202011?OpenDocument [Verified 6 September 2012].

[19]  Australian Bureau of Statistics (ABS). Australian demographic statistics. September 2011. Cat. no. 3101.0. Canberra: ABS; 2012.

[20]  Vos T, Barker B, Stanley L, Lopez A. The burden of disease and injury in Aboriginal and Torres Strait Islander peoples 2003. Brisbane: School of Population Health, the University of Queensland, 2007.

[21]  Senate Standing Committee on Community Affairs. Highway to health: better access for rural, regional and remote patients. Canberra: Senate Printing Unit, Parliament House, 2007. Available at: http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=clac_ctte/completed_inquiries/2004-07/pats/report/index.htm [Verified 6 September 2012].

[22]  Steering Committee for the Review of Government Service Provision. Overcoming Indigenous disadvantage: key indicators 2011. Canberra: Productivity Commission, 2011.

[23]  Lawrence M, Dodd Z, Mohor S, Dunn S, de Crespigny C, Power C. et al. Improving the patient journey: achieving positive outcomes for remote Aboriginal cardiac patients. Darwin: Cooperative Research Centre for Aboriginal Health, 2009.

[24]  Condon J, Warman G, Arnold L, editors. The health and welfare of Territorians. Darwin: Epidemiology Branch, Territory Health Services, 2001.

[25]  Bailie R, Runcie M. Household infrastructure in Aboriginal communities and the implications for health improvement. Med J Aust 2001; 175: 363–6.
| CAS | PubMed |

[26]  Bailie R. Housing. In: Carson B, Dunbar T, Chenhall R, Bailie R, editors. Social determinants of Indigenous health. Crows Nest, NSW: Allen & Unwin, 2007.

[27]  Tew K, You J, Pircher S. Validation of patient demographic data: Northern Territory hospitals, 2008. Darwin: Northern Territory Department of Health and Families, 2008.

[28]  Garnett S, Coe K, Golebiowska K, Walsh H, Zander K, Guthridge S. et al. Attracting and keeping nursing professionals in an environment of chronic labour shortage: a study of mobility among nurses and midwives in the Northern Territory of Australia. Darwin: Charles Darwin University Press, 2008.

[29]  Zhao Y, Foley M, Eagar K. Assessing economies of scale in public hospitals. Economic Papers 2011; 30: 341–7.
CrossRef | CAS |

[30]  Council of Australian Governments. National Indigenous Reform Agreement (Closing the Gap). Canberra: Commonwealth of Australia, 2009. Available at http://www.federalfinancialrelations.gov.au/content/national_agreements.aspx [Verified 6 September 2012]


Legal & Privacy | Contact Us | Help


© CSIRO 1996-2015