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Chair’s welcome

I am pleased to present the Independent Hospital ​​​

Photo of Shane Solomon, Chair, Pricing Authority

Pricing Authority’s Annual Report for 2019–​​20.

As Chair of the Pricing Authority, it was a pleasure to lead IHPA to deliver another full work program last year. The COVID-19 pandemic also presented us with unique challenges.

New Addendum to the Health Reform Agreement 2020–25

In May 2020, all Australian governments signed an Addendum to the National Health Reform Agreement. This Addendum reaffirms all parties’ commitment to improving health outcomes for Australians and reducing the demand for avoidable public hospital services. To these ends, it maintains the commitment to activity based funding, and focuses further on reforms for improved safety and quality, health innovation and coordinated care.

The decision to maintain the existing funding arrangement into 2020–25 shows confidence in activity based funding, with an emphasis on efficient pricing.

Still, there is much work to do. I believe the key changes in the new agreement—including pricing of private patients in public hospitals, pricing adjustments for avoidable hospital readmissions, nationally cohesive new health technology assessment, and innovative funding models—will help shape strategies that will improve health outcomes for all Australians.

Response to COVID-19

The National Partnership on COVID-19 Response was signed in March 2020, ensuring additional health service funding to cover the national response to the outbreak. It enabled the Commonwealth, states and territories to respond rapidly to COVID-19 and control the spread of the virus.

In order to implement the measures under the Agreement, IHPA updated the national activity based funding classifications and data reporting requirements, and published rules for coding and costing COVID-19 episodes of care.

Stable and sustainable rate of growth

IHPA published its ninth National Efficient Price Determination and eighth National Efficient Cost Determination for public hospital services in 2020–21, which involved extensive consultation with jurisdictions and stakeholders. The Determinations are critical in deciding the Commonwealth funding contribution to public hospital services. They also provide a benchmark for the efficient cost of providing these services, and enable a stable and sustainable rate of growth in public hospital costs. (See Cost per National Weighted Activity Unit (NWAU) and National Efficient Price 2012–2020)

Delivering safe, high-quality and efficient health care

Working with the Australian Commission on Safety and Quality in Health Care and other stakeholders, IHPA continues to incorporate safety and quality into the pricing and funding of public hospital services, to improve health outcomes, and decrease avoidable demand for public hospital services. IHPA started a two-year shadow period in 2019–20 to assess funding options to reduce avoidable hospital readmissions.

Valuable stakeholder partnerships and collaboration

IHPA continues to build many strategic and trusted partnerships we share with all Australian governments, peak bodies and associations. Engaging with and listening to our key stakeholders is a vital part of meeting our priorities.

I would also like to highlight the contributions made by our Clinical Advisory Committee. Their advice is essential to the decisions we make.


This year the Pricing Authority said farewell to Dr Michael Walsh, who was an inaugural Authority member. I want to thank Michael for supporting the Pricing Authority with his invaluable contributions and expert knowledge. I congratulate Ms Jennifer Williams on her appointment as Deputy Chair of the Authority—a testament to her abilities and commitment to the Authority. I also welcome Ms Jenny Richter, who brings many years of health administration and nursing expertise to the Pricing Authority. Thank you to all Pricing Authority members who provided professional vision and guidance throughout 2019–20.

On behalf of the Pricing Authority, I would like to commend James Downie, Chief Executive Officer, for his steady and insightful leadership. I also acknowledge the IHPA staff for their constant commitment to deliver a successful program of work in a timely manner especially in this challenging situation.

Looking ahead

In an evolving environment, I am confident that we continue to build a solid foundation to undertake IHPA’s purpose and functions. We remain committed to the highest standards of transparency and accountability, grounded in an open and consultative approach in working with Australian governments and other stakeholders.

In the year ahead, the Pricing Authority looks forward to contributing further to deliver sustainable, efficient and quality public hospital services for all Australians.

Signature of Shane Solomon, Chair, Pricing Authority

Shane Solomon
Chair, Pricing Authority
2 October 2020