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Program 2.2: Veterans' Hospital Services


Provide access to hospital services for DVA clients through arrangements with hospitals in both the private and public sectors.


  • Ensure access to hospital services for DVA clients through arrangements in both the private and public sectors.
  • Ensure a comprehensive range of hospital services are made available to DVA clients in order to meet healthcare needs.
  • Facilitate effective payment of hospital providers under the Department of Veterans' Affairs arrangements.

Veterans' Hospital Services

In 2016–17 an estimated 97,285 DVA clients accessed hospital services, compared to 104,540 in 2015–16. This comprised 64,319 clients accessing private hospitals, compared to 67,900 in 2015–16, and an estimated 32,966 clients accessing public hospitals, compared to 36,640 in 2015–16.

The total expenditure for public and private hospitals in 2016–17 was $1.421 billion. This represented a decrease of 7 per cent compared to $1.528 billion spent in 2015–16.

Private and public hospital separations

In 2016–17, the number of public hospital separations continued to decrease; however, there was an increase in private hospital separations. The use of rehabilitation services by DVA clients continues to increase, and it is now one of the largest categories of care provided to DVA clients in private hospitals.

In 2016–17, a comprehensive review was undertaken of the purchasing arrangements for inpatient and outpatient rehabilitation services. This review included assessing all rehabilitation providers' day programs against the new Guidelines for Recognition of Private Hospital-Based Rehabilitation Services. The intent was to implement a consistent approach to the purchasing of rehabilitation services in private hospitals, and better define and count the treatment provided. This has resulted in services previously provided on an ad hoc outpatient basis now being delivered to DVA clients by specialist multidisciplinary teams on an admitted basis.

Table 20 shows the number of private and public hospital separations over the past five years.

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Table 20—Number of private and public hospital separations 2012–13 to 2016–17
  2012–13 2013–14 2014–15 2015–16 2016–17
Private hospitals 200,937 195,298 187,617 177,285 190,149
Public hospitals 103,326 96,461 91,001 83,769 78,920

Note: Reconciliation of public hospital data is usually completed 12 months in arrears. Private hospital data is considered complete three months in arrears. Therefore, the number of hospital separations for 2016–17 is an estimate only, and earlier years' separations have been updated.

Average cost per private and public hospital separation

The estimated average cost per separation for combined private and public hospital separations was $5,128 in 2016–17, compared to the estimate of $5,807 in 2015–16. The decrease was due to a number of factors, including the new private hospital purchasing model that commenced 1 July 2016, which resulted in some cost efficiencies, as well as the increased count of admitted services, particularly in the private rehabilitation sector.

Public hospital activity is expected to continue to decrease in average cost due to efficiencies achieved as a result of adopting the National Efficient Price, which is calculated by the Independent Hospital Pricing Authority, for funding to the states and territories for public hospital services for DVA clients. States and territories are in the process of providing 2016–17 data to DVA; therefore, the public hospital portion of the estimates in 2016–17 is based almost entirely on previous years' data.

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Percentage of treatment population using private and public hospital services

The proportion of the treatment population using public and private hospital services has remained relatively constant, indicating that while there has been an increase in the number of private hospital separations, this has been driven by repeat admissions, rather than an increase in the number of distinct clients accessing private hospital services.

Table 21 shows the proportion of the treatment population using private and public hospital services over the past five years. The measure records the percentage of the treatment population using private and public hospitals, not the percentage of total hospital separations.

Table 21—Proportion of treatment population using private and public hospitals 2012–13 to 2016–17 (%)
  2012–13 2013–14 2014–15 2015–16 2016–17
Private hospitals 36.0 35.0 34.6 34.3 33.2
Public hospitals 19.5 18.9 18.6 17.9 17.0

Note: Figures for 2015–16 have been updated to reflect latest available claims data.

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Business activity

DVA continued to undertake significant contracting and negotiation activities during the year, to ensure clients continue to have access to quality health care through Australia's hospital network.

Private hospitals

Following the successful implementation of new arrangements for private hospital services from 1 July 2016, there was a significant reduction in administrative requirements for both DVA and providers. The changes were received well by the industry. The new arrangements included changes to DVA's purchasing model and contracting procedures, which resulted in a more efficient and streamlined process for engaging providers.

In 2016–17 DVA also finalised work on aligning its purchasing arrangements for private day procedure centres. An Invitation to Provide Day Procedure Services was released in April 2017 with new arrangements to commence on 1 October 2017. The new arrangements mirror closely the changes that were implemented to private hospital arrangements.

Public hospitals

Significant progress was made in 2016–17 towards implementing new arrangements for public hospital services with state and territory health departments. Five jurisdictions have signed new five-year agreements with DVA. Negotiations with the remaining three are expected to be concluded early in 2017–18. The changes are resulting in a reduction in administration for both DVA and the jurisdictions.

In addition, in 2016–17 work continued on the implementation of enhanced IT system capabilities for secure receipt of public hospital data and management for payments.

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