Activity-based funding: Clinical costing — The efficiency nexus

Abstract

Clinical costing as a tool for decision-making is a relatively new approach for Australian public health institutions. This paper looks briefly at why that is only a recent development, gives examples of the data that clinical costing systems can produce, looks at some of the pitfalls in using the data and also the decision-making that can then flow from it. Owing to the relatively recent nature of using clinical costing in public health, the paper is focused on those considering creating such a system or those only just beginning to use such a system. The paper is intended only as an overview of the use of clinical costing and does not explore the details of how to create such a costing system. It focuses on the relationship between activity-based funding (ABF) and clinical costing, and as various funding bodies apply ABF differently, the paper does not discuss the mechanics of ABF, but explores the disconnect between ABF and costs.