Is capital investment in Australian hospitals effectively funding patient access to efficient public hospital care?

Abstract Objective This study asks ‘Is capital investment in Australian public hospitals effectively funding patient access to efficient hospital care?’ Methods The study drew information from semistructured interviews with senior health infrastructure officials, literature reviews and World Health Organization (WHO) reports. To identify which systems most effectively fund patient access to efficient hospitals, capital allocation systems for 17 Organisation for Economic Cooperation and Development (OECD) countries were assessed. Results Australian government objectives (equitable access to clinically appropriate, efficient, sustainable, innovative, patient-based) for acute health services are not directly addressed within Australian capital allocation systems for hospitals. Instead, Australia retains a prioritised hospital investment system for institutionally based asset replacement and capital planning, aligned with budgetary and political priorities. Australian systems of capital allocation for public hospitals were found not to match health system objectives for allocative, productive and dynamic efficiency. Australia scored below average in funding patient access to efficient hospitals. The OECD countries most effectively funding patient access to efficient hospital care have transitioned to diagnosis-related group (DRG) aligned capital funding. Measures of effective capital allocation for hospitals, patient access and efficiency found mixed government–private–public partnerships performed poorly with inferior access to capital than DRG-aligned systems, with the worst performing systems based on private finance. Conclusion Australian capital allocation systems for hospitals do not meet Australian government standards for the health system. Transition to a diagnosis-based system of capital allocation would align capital allocation with government standards and has been found to improve patient access to efficient hospital care. What is known about the topic? Very little is known about the effectiveness of Australian capital allocation for public hospitals. In Australia, capital is rarely discussed in the context of efficiency, although poor built capital and inappropriate technologies are acknowledged as limitations to improving efficiency. Capital allocated for public hospitals by state and territory is no longer reported by Australian Institute of Health and Welfare due to problems with data reliability. International comparative reviews of capital funding for hospitals have not included Australia. Most comparative efficiency reviews for health