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Program 2.2: Veterans’ Hospital Services


Program 2.2 provides access to hospital services for entitled beneficiaries through arrangements with hospitals in both the private and public sectors.


In 2012–13, the Department continued to ensure beneficiaries had access to a comprehensive range of quality inpatient and outpatient services available through the Australian hospital network. During the year, DVA renegotiated agreements with all state and territory public health departments, and contracts hat cover 240 private hospitals and 224 day procedure centres.

Expenditure and the use of services are demand-driven, depending on the health care needs of entitled beneficiaries. In line with previous years, in 2012-13 there was a drop in the total number of hospital stays and total occupied bed days, while the average length of stay remained consistent.

The total administered expenditure for public and private hospitals decreased slightly, reflecting the decline in the treatment population.


Administered and Departmental expenses
  2012–13 PBS1 ($ million) Estimated actual2 2012–13 ($ million) Outcome 2012–13 ($ million)
Administered 1688.9 1696.0 1667.2
Departmental 15.4 12.2 11.4
Total resources 1704.3 1708.2 1678.6

1 PBS in performance reporting tables means Portfolio Budget Statements.

2Estimated actual means the estimated expense or total for 2012–13 provided in the 2013–14 Portfolio Budget Statements. As the Budget is released in May each year but the financial year does not close off until 30 June, the current year numbers in the Budget can only be estimates.


Treatment population
  2012–13 PBS Estimated actual 2012–13 Outcome 2012–13
Treatment population 221 700 222 500 223 181

Key performance indicators

Unit cost per cardholder
  2012–13 PBS Estimated actual 2012–13 Outcome 2012–13
Price: Unit cost per cardholder $64 $50 $47

Report on performance

The number of beneficiaries accessing hospital services fell during 2012–13 compared to 2011–12. In total, 79 458 beneficiaries accessed private hospital services (all services) with a total of 207 000 separations. In the public hospital sector, an estimated 42 000 accessed services (admissions only), with a total of approximately 106 000 separations.

In 2012–13, the total administered expenditure for public and private hospitals was $1.667 billion. This represented a decrease of six per cent compared to $1.768 billion spent in 2011–12.


The unit cost per cardholder is reported as the program staff and administration expenses (Program Support costs) per treatment population cardholder.

In 2012–13, the unit cost per cardholder was $47, which is less than the unit cost of $61 in 2011–12.

Private and public hospital separations

Table 23 shows the number of public and private hospital separations over the past five years.

Table 23: Number of private and public hospital separations 2008-09 to 2012-13
  2008–09 2009–10 2010–11 2011–12 2012–13
Private 222 404 221 214 218 345 209 697 207 000
Public 121 315 116 193 114 365 109 535 106 000

Reconciliation of public hospital data is usually completed 12 months in arrears for most states and territories. Private hospital data is considered complete three months in arrears. Therefore, the number of hospital separations for 2012–13 is an estimate only, and earlier years’ separations have been updated from the numbers provided in previous annual reports.

Average cost per public and private hospital separation

The estimated average cost per combined public and private hospital separation in 2012–13 was $5107, compared with $4943 in 2011–12. The variation was due to a negotiated fee increase for both the public and private sectors, the increased cost of medical technology and the increased length of stay for admissions related to an older and more frail treatment population.

Administered expenditure is an aggregate of payments made in the year rather than payments for services provided in the year. Therefore, it has not been used to determine average cost per separation. Public hospital expenditure includes payment for non-inpatient services and is an estimate because payments to state health departments for 2012-13 public hospital services have not yet been finalised.

Percentage of treatment population using private and public hospital services

During the year, 35.7 per cent of the treatment population used private hospital services and an estimated 19 per cent of the treatment population used public hospital services (ad missions only), as reflected in current data.

Table 24 shows the proportion of the treatment population using private and public hospital services over the past five years. Please note that the measure records the percentage of the treatment population using private and public hospitals, not the percentage of total hospital separations.

Table 24: Percentage of treatment population using private and public hospitals 2008-09 to 2012-13
  2008–09 2009–10 2010–11 2011–12 2012–13
Private hospitals 35.6% 35.8% 36.1% 35.9% 35.7%
Public hospitals 19.1% 18.9% 19.8% 19.7% 19.0%

Business activity

The 2012–13 financial year marked the commencement of new pricing and contract arrangements with public and private hospitals, as well as mental health facilities. DVA negotiated a two-year agreement with both hospital sectors to 30 June 2014. Contracts with the private sector were extended until 2016. DVA also negotiated a one-year extension with mental health facilities until 30 June 2014. The contracts with day procedure centres are in place until 30 June 2015.

National health reforms

New contracts were negotiated within the context of a changing hospital landscape, driven by the National health reforms and with a focus on improving the safety and quality of patient care. Most notably, the extension of the public hospital arrangements allowed DVA to assess the current terms and conditions in light of these reforms.

Another major reform initiative is the national accreditation framework implemented by the Australian Another major reform initiative is the national accreditation framework implemented by the Australian Standards came into effect in January 2013 and as part of their contract extension with DVA, all public hospitals were required to comply with these standards.

DVA also worked closely with the private hospital sector to raise awareness about the new service standards and prepare the sector to respond to any required changes in accreditation under future contracts.

Better Discharge Planning Program

The Department assessed the first full year of services under the revised Better Discharge Planning (BDP) Program, which provides high level support to patients when they are discharged from hospital, with the aim of preventing unplanned readmissions. Participating hospitals cited a positive influence on veterans from post-discharge follow-up as well as timely support from services such as community nursing, allied health and Veterans’ Home Care. The eligibility criteria now include consideration of the capabilities of a spouse/carer to help the client on their discharge home.

Achieving high standards of care

To ensure that private hospitals are meeting their contractual obligations and providing the highest standards of care, the Department further refined its Pay for Performance program. The initiative was designed to reward hospitals who meet quality care thresholds in the areas of surgical practice, chronic medical conditions, patient satisfaction and patient safety. It gives hospital providers the incentive to refine and improve their practices, particularly for those clients with chronic and multiple morbidities, through a one-off financial payment each financial year upon reaching pre-determined measures.

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