What has driven acute public hospital expenditure growth in South Australia? An analysis of the relative importance of major expenditure drivers between 2006–07 and 2017–18.

Objective The aim of this study was to investigate whether increasing costs of delivering care have driven real growth in acute public hospital expenditure in South Australia (SA) and what has contributed to these real cost increases. Methods Using published time-series data, we decomposed inflation-adjusted growth in per capita total acute public hospital recurrent expenditure into its major utilisation and cost components to evaluate their relative contribution over the 12 years to 2017-18. Results Real per capita total acute public hospital recurrent expenditure grew by AU$667 (45.2%) over the 12-year period; of this, 86.0% was from real growth in input costs per weighted activity unit, with real growth in the average salaries of hospital staff accounting for AU$247 or 37.0%. Hospital utilisation rates contributed a minor 14.0%. Conclusion Over the 12 years to 2017-18, real growth in average clinical salaries was a more important driver of real growth in per capita total acute public hospital expenditure than rates of hospital utilisation. This would be facilitated by improvements in the scope, accuracy, quality and consistency of published national hospital data. What is known about the topic? Public hospital expenditure is one of the largest and fastest growing areas of government expenditure in Australia. Policy narratives often centre around demand pressures from an increasingly older, overweight, and chronically ill population. Comparatively little attention has been paid to the influence of increases in real input costs within the Australian context. What does this paper add? Real salary growth has been a major driver of acute public hospital recurrent expenditure growth in SA, whereas hospital utilisation rates have played a minor role. What are the implications for practitioners? A clearer understanding of the main drivers of acute public hospital expenditure growth and the resulting benefits to population health is needed to guide the efficient and sustainable use of scarce healthcare resources.

Corrigendum to: What has driven acute public hospital expenditure growth in South Australia? An analysis of the relative importance of major expenditure drivers between 2006–07 and 2017–18.

Objective The aim of this study was to investigate whether increasing costs of delivering care have driven real growth in acute public hospital expenditure in South Australia (SA) and what has contributed to these real cost increases. Methods Using published time-series data, we decomposed inflation-adjusted growth in per capita total acute public hospital recurrent expenditure into its major utilisation and cost components to evaluate their relative contribution over the 12 years to 2017-18. Results Real per capita total acute public hospital recurrent expenditure grew by AU$667 (45.2%) over the 12-year period; of this, 86.0% was from real growth in input costs per weighted activity unit, with real growth in the average salaries of hospital staff accounting for AU$247 or 37.0%. Hospital utilisation rates contributed a minor 14.0%. Conclusion Over the 12 years to 2017-18, real growth in average clinical salaries was a more important driver of real growth in per capita total acute public hospital expenditure than rates of hospital utilisation. This would be facilitated by improvements in the scope, accuracy, quality and consistency of published national hospital data. What is known about the topic? Public hospital expenditure is one of the largest and fastest growing areas of government expenditure in Australia. Policy narratives often centre around demand pressures from an increasingly older, overweight, and chronically ill population. Comparatively little attention has been paid to the influence of increases in real input costs within the Australian context. What does this paper add? Real salary growth has been a major driver of acute public hospital recurrent expenditure growth in SA, whereas hospital utilisation rates have played a minor role. What are the implications for practitioners? A clearer understanding of the main drivers of acute public hospital expenditure growth and the resulting benefits to population health is needed to guide the efficient and sustainable use of scarce healthcare resources.

Relative contribution of overweight and obesity to rising public hospital in-patient expenditure in South Australia.

Objective Arguments to fund obesity prevention have often focused on the growing hospital costs of associated diseases. However, the relative contribution of overweight and obesity to public hospital expenditure growth is not well understood. This paper examines the effect of overweight and obesity on acute public hospital in-patient expenditure in South Australia over time compared with other expenditure drivers. Methods Annual inflation-adjusted acute public admitted expenditure attributable to a high body mass index was estimated for 2007-08 and 2011-12 and compared with other expenditure drivers. Results Expenditure attributable to overweight and obesity increased by A$45million, from 4.7% to 5.4% of total acute public in-patient expenditure. This increase accounted for 7.8% of the A$583million total expenditure growth, whereas the largest component of total growth (62.4%) was a real increase in the average cost per separation. Conclusions The relatively minor contribution of overweight and obesity to expenditure growth over the time period examined invites reflection on arguments to boost preventive spending that centre upon reducing hospital costs. These arguments may inadvertently detract attention from the considerable health and social burdens of overweight and obesity and from unrelated sources of expenditure growth that reduce opportunities for state governments to fund obesity prevention programs despite their comparative benefits to population health. What is known about the topic? Stand-alone estimates suggest that overweight and obesity are placing a considerable financial burden on the Australian public healthcare system. What does this paper add? Our findings challenge common perceptions about the relative importance of overweight and obesity in the context of rising public in-patient expenditure in Australia. What are the implications for practitioners? Consistent serial estimates of overweight- and obesity-attributable expenditure enable its tracking and comparison with other potentially controllable expenditure drivers that may also warrant attention. Explicit consideration of population health trade-offs in expenditure-related decisions, including in enterprise bargaining, would enhance transparency in priority setting.

Cost-of-illness studies: a guide to critical evaluation.

Cost-of-illness (COI) studies aim to assess the economic burden of health problems on the population overall, and they are conducted for an ever widening range of health conditions and geographical settings. While they attract much interest from public health advocates and healthcare policy makers, inconsistencies in the way in which they are conducted and a lack of transparency in reporting have made interpretation difficult, and have ostensibly limited their usefulness. Yet there is surprisingly little in the literature to assist the non-expert in critically evaluating these studies. This article aims to provide non-expert readers with a straightforward guide to understanding and evaluating traditional COI studies. The intention is to equip a general audience with an understanding of the most important issues that influence the validity of a COI study, and the ability to recognize the most common limitations in such work.