Statistical Inference to Develop Budgets From Activity-Based Funding Costing Data

Activity-based funding (ABF) is a way of funding hospitals whereby they get paid for the number and mix of patients they treat. In order for governments to fund hospitals using ABF, hospitals use costing to inform the development of classification systems which provide valuable information for pricing purposes. Hospital patient costing is essential for understanding the total costs involved in treating a patient including the services or products used. This chapter outlines a methodology using simple statistics to prepare a budget for an inpatient ward using costing data. This method can be extended to other clinical areas (e.g., residential aged care or non-admitted).