The case for separation

Monday, 22 May, 2023

The case for separation

The way specialists run their surgical operating lists is due for an overhaul and the peak body for the day hospitals sector, Day Hospitals Australia, believes the entire health system would benefit from specialists using day and short-stay hospitals for a higher proportion of their same-day procedures. Jane Griffiths, CEO, Day Hospitals Australia, explains why.

Separating same-day procedures out from surgical lists, where appropriate, may require more planning from specialists and their teams, and changes to current practices, but will have significant benefits for the whole healthcare system — it would create the cost saving required to keep the public/private health system afloat.

For patients suitable for same day care, and where medically appropriate, these procedures should be provided in the day hospital sector at significantly lower cost, rather than slotting same-day procedures in between major surgery at overnight hospitals.

For any given procedure, each private hospital is paid a different amount by private health insurers (PHIs) and other payers for providing the venue, staff and equipment. In general, for the same procedure, overnight hospitals receive a higher benefit than day hospitals, on average 40% more, partly because their higher rates compensate for their substantial overhead costs, including in some cases, intensive care and emergency departments.

This price differential means that PHIs are paying more for many procedures than necessary when their members are admitted to a large/24-hour hospital for a same-day procedure. A larger 24-hour hospital is appropriate for patients who, due to their medical condition, need the backup services that such a hospital provides, or who, due to their location, have limited access to private healthcare facilities nearby.

Recent analysis undertaken by Day Hospitals Australia (DHA) has indicated possible overall savings of up to $508m a year with the top 32 DRGs performed on a same-day basis being provided in the day hospital sector. The data used in this analysis was the publicly available Hospital Case mix Protocol (HCP) and Private Hospital Data Bureau (PHDB) data. DHA’s core suggestion is to cooperatively stream patients into the most cost-effective venue of care appropriate to each individual patient’s needs.

A day hospital is a licensed and accredited free-standing facility, physically separated from and not integrated with an overnight hospital, that admits patients for surgical and/or medical treatment which is conducted in no more than a 23-hour period.

Given that most specialists practising in the private sector are credentialled at several private hospitals, they have some degree of choice in where to admit their patients. Specialists who choose to practise at day facilities, instead of larger overnight hospitals, do so because of the availability of theatres and regular list times, high standards of care, no risk of their procedures being bumped, experienced staff and the ease of access for specialists to decision-makers at the hospital.

One argument specialists or overnight hospital operators may have against using day hospitals is the relative lack of in-house facilities. Recent industry data demonstrates that admission to an overnight hospital following same-day treatment in a day hospital is extremely rare, and the percentage of unplanned or emergency patient transfers from a day hospital to an overnight hospital remains low at 0.07% of total admissions (QPS data August 2021).

The significant savings demonstrated by the analytical work undertaken by DHA need to be recognised by all stakeholders, in encouraging the use of day hospitals wherever it is clinically appropriate to do so. Specialists are encouraged to consider a day hospital that provides for quality, safe, efficient and cost-effective care for their patients when this is clinically appropriate.

The ‘Improving the viability of the Australian healthcare system: the Day Hospitals Contribution’ can be made available to specialists seeking further information on this topic by emailing

Image caption: Jane Griffiths, CEO, Day Hospitals Australia.

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