Hospitals are under pressure — but what if part of the problem is how we think they’re funded?

The National Efficient Price (NEP) has become widely perceived as reflective of the true cost of hospital care. It’s not. It’s a stripped-down figure shaped by exclusions and funding rules — designed for Commonwealth budgeting, not actual service delivery. 

Is the true cost of hospital services masked by the excessive focus on the mechanics of Commonwealth funding and is it a leading contributer to the current financial stresses within the public health systems?

After 14 years of Activity Based Funding, I’ve taken a closer look at how costing has shifted, why equipment underinvestment is a hidden crisis, and how this perception gap is driving financial stress across the system and posed the question - Did we set up a system destined to fail?

Opinion Author 

Neville Onley recently retired from NSW Health, where he served as Executive Director of Activity Based Management. With over two decades in the health sector, Neville has held senior leadership roles, including Director of Finance and Corporate Services for the former South East Sydney and Illawarra Area Health Service. He later led the NSW Health Taskforce responsible for implementing Activity Based Funding under the National Health Reform Agreement. Prior to his work in health, Neville gained extensive experience in management and system reform projects across Australia.

Neville is currently a partner in 3C’s Plus consultancy providing assistance and advice on costing and funding, specialising in Health related services