Projecting the Fiscal Impact of Population Ageing on the Hospital System: A Distributional Analysis

This study examines the socioeconomic status of NSW hospital patients in 1999-00 and projects likely hospital costs to 2009-10. It draws upon unique patient based datasets from NSW public and private hospitals that include hospital admissions, as well as the associated treatment costs in each of the four years to 1999-00. Using a novel method, we impute socioeconomic status to each patient, accounting for age, sex, family income, family size and the geographic area of the patient’s residence at the Census Collector District level. First, we use the 1999-00 dataset to examine whether patients of similar age had similar per patient hospital costs by socioeconomic status. Second, we study whether patients requiring similar treatment had similar per patient hospital costs, regardless of the patient’s socioeconomic status. To examine this issue we analyse the patient subgroup with coronary heart disease. Third, we examine the impact that population ageing and changes in treatment propensities are likely to have on hospital usage and costs by 2009-10, assuming that no changes occur in per unit treatment costs. Finally, we estimated the combined impact on hospital usage and costs of: population ageing; changes in treatment propensities; and a continuation of per unit hospital costs increases in line with past trends.