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Appendix C: Glossary

Activity based funding

A system for funding public hospital services based on the actual number of services provided to patients and the efficient cost of delivering those services. Activity based funding uses national classifications, cost weights and National Efficient Price to determine the amount of funding for each activity or service.

Australian Refined Diagnosis Related Groups

Australian Refined Diagnosis Related Groups are an Australian admitted patient classification system which provides a clinically meaningful way of relating a hospital’s casemix to the resources required by the hospital. Each Australian Refined Diagnosis Related Group represents a class of patients with similar clinical conditions requiring similar hospital services. The classification categorises acute admitted patient episodes of care into groups with similar conditions and similar usage of hospital resources, using information in the hospital morbidity record such as the diagnoses, procedures and demographic characteristics of the patient.

Avoidable hospital readmissions

An avoidable hospital readmission occurs when a patient who has been discharged from hospital (index admission) is admitted again within a certain time interval, and the readmission:

  • is clinically related to the index admission, and
  • has the potential to be avoided through improved clinical management and/or appropriate discharge planning in the index admission.

The complete list of hospital acquired complications is available on the Australian Commission for Safety and Quality in Healthcare’s website.


The process by which the effect of significant changes to the activity based funding classification systems or costing methodologies are reflected in the pricing model the year prior to implementation, for the calculation of Commonwealth Government funding for each activity based funding service category.

Block funding

A system of funding public hospital functions and services as a fixed amount based on population and previous funding.


The number and type of patients treated in a hospital.

Council of Australian Governments (COAG)

The Council of Australian Governments (COAG) is the peak intergovernmental forum in Australia.

The members include the Prime Minister, state and territory Premiers and Chief Ministers, and the President of the Australian Local Government Association. The role of COAG is to promote policy reforms that are of national significance, or which need coordinated action by all Australian governments.

Corporate Plan

The primary strategic planning document of a Commonwealth Government entity. It sets out the objectives, capabilities and intended results over a four‑year period, in accordance with the entity’s stated purposes. The Corporate Plan should provide a clear line of sight with the relevant annual performance statement, Portfolio Budget Statement and Annual Report.

Hospital acquired complication

A complication which occurs during a hospital stay such as falls, infections or pressure injuries. Clinical risk mitigation strategies may reduce (but not necessarily eliminate) the risk of that complication occurring. The complete list of hospital acquired complications is available on the Australian Commission for Safety and Quality in Healthcare’s website.

National Efficient Cost

IHPA determines a National Efficient Cost for services that are not suitable for activity based funding, such as small rural hospitals. The National Efficient Cost determines the Australian Government contribution to block funded hospitals.

National Efficient Price

A base price calculated by IHPA as a benchmark to guide governments about the level of funding that would meet the average cost of providing acute care (admitted, emergency and outpatient) services in public hospitals across Australia. The National Efficient Price is based on the projected average cost of a National Weighted Activity Unit (NWAU) after the deduction of specified Commonwealth Government funded programs.

National Health Reform Act 2011

IHPA was established under the National Health Reform Act 2011. The National Health Reform Act 2011 gave effect to the National Health Reform Agreement signed by the Australian Government and all states and territories in August 2011.

National Health Reform Agreement

The Agreement outlines the funding, governance and performance arrangements for the delivery of public hospital services in Australia.
The Agreement was entered into by the Commonwealth Government and all states and territories in August 2011.

National Weighted Activity Unit (NWAU)

An NWAU is a measure of health service activity expressed as a common unit, against which the National Efficient Price is paid. It provides a way of comparing and valuing each public hospital service (whether it is an admission, emergency department presentation or outpatient episode), by weighting it for its clinical complexity.

The average hospital service is worth one NWAU. The most intensive and expensive activities are worth multiple NWAUs, and the simplest and least expensive are worth fractions of an NWAU.

Protective Security Policy Framework

The Protective Security Policy Framework provides policy, guidance and better practice advice for governance, personnel, physical and information security. The 36 mandatory requirements assist agency heads to identify their responsibilities to manage security risks to their people, information and assets.

Public Governance, Performance and Accountability Act 2013 (PGPA ACT)

The PGPA Act establishes a coherent system of governance and accountability for public resources, with an emphasis on planning, performance and reporting. The PGPA Act applies to all Commonwealth entities and Commonwealth companies.

Sentinel event

A sentinel event is a subset of adverse events that result in death or serious harm to the patient, such as surgical procedures involving the wrong body part or medication errors leading to death.

Work program

Each year IHPA consults on and publishes a work program for the year ahead. As prescribed in s225 of the National Health Reform Act 2011, the objectives of the IHPA Work Program are to: set out IHPA’s work program for the coming year, and invite interested persons (including states and territories) to make submissions to the Pricing Authority about the work program up to 30 days after publication. IHPA Work Programs are available at www.ihpa.gov.au/publications.