Costing overview

Hospital costing focuses on the cost and mix of resources used to deliver patient care. Costing plays a vital role in activity based funding. Costing informs the development of the classification system and provides valuable information for pricing purposes. Hospital patient costing is essential for understanding the total costs involved in treating a patient including the services or products used. 

A key output of the Independent Health and Aged Care Pricing Authority (IHACPA) is the collection, validation, analysis and reporting of the National Hospital Cost Data Collection (NHCDC). This process is performed with the states and territories and private hospitals, who submit cost data to the NHCDC on an annual basis.

How much does patient activity cost in Australia’s public hospitals?

Source: NHCDC public hospital cost information for the 2020–21 financial year. Read the full report.

The NHCDC is a critical component of activity based funding. The AHPCS ensures the NHCDC is suitable to determine the national efficient price. The AHPCS also assists in ensuring that best practices are followed in generating high quality, reliable and comparable patient data that helps refine the classification system, set the price, and inform policy. 

The AHPCS provides direction for hospital patient costing through the development of standards for specific elements of the costing process and reporting requirements. The current version of the standards is Version 4.2.