The Hidden Bias in Day Hospital Price Benchmarking
Benchmarking only works when the comparison is relevant.
For day hospitals, that sounds simple. But in practice, the dataset used for comparison can materially change the story.
A benchmark based on broad private hospital activity may show one result. A benchmark based only on privately insured admitted activity may show another.
For hospital CEOs, CFOs and commercial leaders, that difference matters before entering health fund negotiations.
Because the wrong benchmark can create false confidence, weaken the commercial case or obscure the real funding position.
PHDB and HCP: two datasets, two different views
The Private Hospital Data Bureau, or PHDB, is often used as a convenient national dataset for private hospital analysis. It is broad, structured and publicly available through annual Department reporting.
But PHDB and HCP data are not the same.
PHDB data is submitted directly by private hospitals. It includes admitted hospital treatment in private hospitals and covers treatments paid for by individuals and private health insurers. It also includes hospital charges for all patients in private hospitals.
Hospital Casemix Protocol, or HCP, data is submitted by hospitals to private health insurers, who then submit it to the Department. HCP data covers admitted hospital treatment where health insurers have paid a benefit and includes de-identified clinical, demographic and financial information.
That distinction is central.
PHDB gives a broader view of private hospital admitted activity.
HCP gives a more insurer-aligned view of privately insured admitted activity.
Both are useful.
But they do not answer the same commercial question.
Why PHDB can distort day hospital comparisons
Day hospitals are often exposed to a more mixed payer environment than many executives realise.
Depending on the specialty and facility, activity may include privately insured episodes, self-funded procedures, cosmetic or elective non-insured activity, compensable cases or other funding arrangements.
When those episodes are bundled into the same average, the benchmark can move.
That is not necessarily a data error.
It is a data scope issue.
PHDB’s strength is that it captures a broad picture of private hospital activity. But when the commercial question is specifically about private health insurer negotiations, that breadth can become a problem.
A broad average may include activity that sits outside the insured market the hospital is actually negotiating in.
The negotiation risk
The risk is not just technical.
It is commercial.
A day hospital may benchmark its insured pricing against PHDB averages and believe its position is below market. But if the PHDB average includes activity that is not directly comparable to insurer-funded episodes, the hospital may be benchmarking against a distorted reference point.
That can create two problems.
First, the hospital may enter a negotiation with overconfidence, assuming its insured pricing is materially below market when the insurer-aligned comparison tells a different story.
Second, the hospital may miss a stronger leverage point because it cannot clearly separate insured-market performance from broader activity.
Either way, the issue is the same.
The hospital is not comparing like with like.
Why HCP can give a clearer view for insurer negotiations
For private health insurer negotiations, HCP is often the more relevant starting point because it reflects admitted hospital treatment where private health insurers have paid a benefit.
That makes it better aligned to the commercial question hospitals are usually asking before a fund negotiation:
How does our insured activity compare against the relevant insured-market benchmark?
For day hospitals, this can help leadership teams:
separate insured activity from broader payer activity
compare pricing on a more like-for-like basis
reduce distortion from non-insured case mix
understand where funding may sit below benchmark
prepare evidence that is more relevant to health fund discussions
PHDB may still be useful. But it is not always the right benchmark for every negotiation question.
PHDB still has value
This is not an argument against PHDB.
PHDB can be valuable for understanding broader private hospital activity, analysing private hospital charges across payer types, and reviewing non-insured or self-funded activity. The Department notes that PHDB includes treatments paid for by individuals as well as private health insurers.
That makes it useful when the question is:
What is happening across private hospital admitted activity more broadly?
But if the question is:
How does our private health insurer-funded activity compare before a fund negotiation?
then HCP-aligned benchmarking may provide the cleaner commercial view.
The latest data update
The Department released the preliminary 2024–25 HCP and PHDB annual reports on 20 February 2026. The majority of tables now cover 2020–21 to 2024–25.
The Department also notes that the updated annual reports include two versions of the AR-DRG table: one based on all separations and one based on acute separations only. This matters because sub-acute, non-acute and mental health activity can affect comparison logic.
That reinforces the central point of this article.
Benchmarking is not just about using the latest data.
It is about using the right cut of the data for the decision being made.
Why this matters for day hospital leaders
Day hospitals operate in a contracting environment where pricing visibility, payer mix and service mix all matter.
If the benchmark does not reflect the activity being negotiated, it can weaken the hospital’s commercial position.
Before relying on a benchmark, executives should ask:
Does this benchmark include only privately insured admitted activity?
Does it include self-funded or other non-insured episodes?
Are we comparing like-for-like AR-DRG activity?
Are we using all separations or acute separations only?
Is this benchmark relevant to the health fund negotiation in front of us?
These are not technical questions for analysts only.
They are commercial questions for leadership teams.
How ROADS supports clearer benchmarking
EHA’s ROADS platform helps private hospitals move from internal reporting to negotiation-ready evidence.
For day hospitals, that means using benchmark data in a way that reflects the relevant commercial question.
ROADS helps leadership teams understand where funding sits against benchmark, where potential gaps may be concentrated, and what improved contract outcomes could be worth.
The goal is not simply to produce another dashboard.
The goal is to support stronger health fund negotiations with evidence that reflects the market being negotiated.
The takeaway
PHDB and HCP are both important datasets.
But they are not interchangeable.
For broad private hospital analysis, PHDB can provide a useful view of admitted activity across payer types. For private health insurer negotiations, HCP may provide a more relevant view because it focuses on privately insured admitted episodes where health insurers have paid a benefit.
For day hospitals, that distinction can materially change the benchmark.
And when the benchmark changes, the negotiation position can change with it.
See your revenue opportunity
EHA helps private hospitals strengthen insurer negotiations through independent benchmarking, ROADS analytics and advisory support.
Start with a confidential Complimentary Benchmark Review to understand whether your health fund contracts may be aligned to benchmark.
FAQs
What is day hospital price benchmarking?
Day hospital price benchmarking compares day hospital charges, funding and activity against relevant benchmark data. It helps hospital leaders understand whether pricing and contract outcomes are aligned to the market.
What is PHDB data?
PHDB stands for Private Hospital Data Bureau. PHDB data is submitted directly by private hospitals and includes admitted private hospital treatment paid for by individuals and private health insurers.
What is HCP data?
HCP stands for Hospital Casemix Protocol. HCP data covers admitted hospital treatment for which private health insurers have paid a benefit and is submitted to the Department by private health insurers.
Why can PHDB data distort day hospital benchmarking?
PHDB data can include activities paid for by individuals and by private health insurers. For day hospitals with a mixed payer profile, this can make PHDB less directly comparable to insured-market activity used in health fund negotiations.
Is PHDB data still useful?
Yes. PHDB data can be useful for broad private hospital analysis and for understanding non-insured or self-funded activity. The issue is not whether PHDB has value, but whether it is the right benchmark for a private health insurer negotiation.
Why may HCP data be more relevant for health fund negotiations?
HCP data may be more relevant because it reflects privately insured admitted activity where health insurers have paid a benefit. That makes it more closely aligned to the activity being negotiated with private health insurers.
References
Department of Health, Disability and Ageing. HCP annual report 2024–25 – Preliminary. Published 20 February 2026.
Department of Health, Disability and Ageing. PHDB annual report 2024–25 – Preliminary. Published 20 February 2026.
Department of Health, Disability and Ageing. PHI 15/26 Release of preliminary 2024–25 HCP and PHDB Annual Reports. Published 20 February 2026.
Department of Health, Disability and Ageing. Hospital Casemix Protocol (HCP) data. Last updated 13 March 2025.
Department of Health, Disability and Ageing. Private Hospital Data Bureau (PHDB) data. Last updated 8 December 2022.
