National Efficient Price for Private Hospitals: Why Reform Is Years Away — and What Hospitals Can Do Now
A National Efficient Price for private hospitals could bring greater transparency to hospital funding.
But it is not a near-term solution to today’s pressure on health fund negotiations.
For private hospital CEOs, CFOs and commercial leaders, the practical question is not whether a future national pricing mechanism would be useful. It is whether hospitals can afford to wait for one before improving their contracting position.
The short answer: probably not.
Current reform discussions show momentum toward greater pricing transparency, but the foundations are still being built. Data collection, policy design, industry agreement and legislative reform all take time. In the meantime, hospitals still need to negotiate with private health insurers using the evidence available today.
What is the National Efficient Price?
The National Efficient Price, or NEP, is used in Australia’s public hospital funding system. It is set by the Independent Health and Aged Care Pricing Authority and represents the efficient cost of delivering a unit of public hospital activity under activity-based funding.
For 2026–27, IHACPA has set the NEP at $7,418 per National Weighted Activity Unit.
In simple terms, the NEP gives the public hospital system a national benchmark for efficient hospital activity.
Private hospitals do not currently have an equivalent national pricing mechanism.
Instead, private hospitals and health insurers negotiate individual contracts, often with limited shared visibility over what constitutes efficient, sustainable or benchmark-aligned funding.
That is why a private hospital equivalent of the NEP has become part of the broader reform conversation.
Why private hospitals are calling for clearer pricing benchmarks
Private hospitals operate in a contracting environment where funding levels are negotiated fund by fund, contract by contract.
For hospital leaders, this creates a visibility problem.
Internal reports can show what a hospital was paid. They do not always show whether that funding is aligned to national or state benchmarks, how it compares across peers, or where contract terms may be creating a material funding gap.
That lack of independent benchmarking matters.
When health funds negotiate with broader market visibility and hospitals rely mainly on internal history, leverage can shift toward the fund. This is the commercial problem EHA’s new positioning is designed to own: private hospitals need evidence-led negotiation power, not just more reporting.
Why a private hospital NEP is still years away
A private hospital National Efficient Price may be conceptually attractive, but the pathway to implementation is not simple.
Three barriers stand out.
1. The data foundations are still developing
A reliable national pricing mechanism needs reliable national data.
The Department of Health’s Private Hospital Financial Data Collection Framework consultation paper highlights the current data challenge. It notes that the department is developing a framework to better understand private hospital viability and financial pressures, building on a previous health check of the sector.
The same consultation paper identifies a need to address information gaps and proposes routine financial data collection from private hospital operators. It also refers to the use of existing datasets, including Hospital Casemix Protocol data, Private Hospital Data Bureau data and Medicare Benefits Schedule data.
Importantly, the framework was still dealing with the question of whether routine financial data collection should be mandatory or voluntary. The paper explicitly asks stakeholders whether routine collection should be mandated or continue on a voluntary basis.
That matters because a national pricing benchmark requires more than partial participation. It needs consistent, comprehensive and trusted data across the sector.
Without that foundation, any private hospital NEP would be difficult to design, defend and apply.
2. The policy position is not settled
The federal reform process is still exploratory.
The Department of Health’s Private Health Reform Options consultation described the reform ideas as draft proposals, not endorsed government policy.
The consultation paper also indicated that longer-term reforms would examine potential approaches for an independently determined national private price for services delivered by private hospitals.
That language is important. It signals that a national private price is being considered, but it does not mean an implementation model, timeline or legislative pathway has been confirmed.
For hospital executives, that means reform is relevant — but it is not something to rely on for the next contract cycle.
3. Sector agreement will take time
A private hospital pricing mechanism would affect hospitals, insurers, patients, premiums and government policy.
That makes consensus difficult.
Some private hospital groups have publicly supported the concept. Catholic Health Australia reported that a group representing 63 not-for-profit hospitals had backed a Private National Efficient Price, describing it as a reform that could restore fairness, transparency and stability to private hospital funding.
Calvary Health Care has also called for debate on a national private pricing mechanism to support accessible and sustainable healthcare.
But support for the concept does not remove the complexity of implementation.
A national mechanism would need to account for different hospital types, service mixes, cost structures, patient complexity, insurer settings and the potential impact on premiums. It would also require a data model that all major stakeholders trust.
That is not a quick reform.
A realistic view: useful reform, but not immediate relief
A private hospital National Efficient Price could help create a more transparent and consistent funding environment.
But it is unlikely to solve the immediate negotiation challenge facing private hospitals.
Even if policy momentum continues, a credible national pricing mechanism would still require:
more complete private hospital data collection
agreement on methodology
stakeholder consultation
government decision-making
legislative or regulatory change
implementation planning
acceptance by hospitals and insurers
That points to a multi-year horizon.
So the strategic risk for hospitals is clear: waiting for a national pricing mechanism may leave several contract cycles exposed.
What hospitals can do now
Hospitals do not need to wait for a future NEP to improve their negotiation evidence.
They can already start building a stronger commercial position through independent benchmarking.
The same principles that would underpin a future pricing mechanism — validated data, relevant comparison points and evidence-based funding analysis — can be applied now at hospital level.
This is where ROADS, EHA’s benchmarking and analytics platform, becomes relevant.
ROADS helps private hospitals use existing hospital, contract and financial data to understand where funding sits against benchmark, where gaps may exist, and what improved contract outcomes could be worth. This aligns with EHA’s broader role as a revenue performance partner for private hospitals, combining independent benchmarking with advisory support for stronger insurer negotiations.
From internal reporting to negotiation-ready evidence
Internal reporting has value. But it usually looks backwards.
It shows what was billed, paid or recovered.
Benchmarking adds a different layer.
It helps leadership teams understand whether funding is aligned to relevant comparison points, where variance is concentrated, and whether the commercial opportunity is material enough to act on.
That is the shift private hospitals need before entering insurer negotiations.
Not more data for its own sake.
Better evidence for better commercial decisions.
Why this matters for the next negotiation cycle
A future private hospital NEP may eventually improve pricing transparency across the sector.
But hospital leaders are making decisions now.
Contracts are being renewed now. Funding pressure is being felt now. Boards are asking sustainability questions now.
The practical priority is to understand the hospital’s current position before the next insurer negotiation.
That means asking:
Are current health fund contracts aligned to benchmark?
Where may funding gaps be concentrated?
What could improved contract outcomes be worth?
What evidence does the leadership team need before entering discussions?
Is there a material revenue opportunity that justifies deeper analysis?
These are questions hospitals can answer before national reform is complete.
The takeaway
A National Efficient Price for private hospitals could be an important reform for the sector.
But it is not a short-term solution to today’s contracting pressure.
The data, policy and legislative foundations are still developing. Even with momentum, a private hospital NEP remains a multi-year prospect.
In the meantime, hospitals need to strengthen their own evidence base.
Independent benchmarking gives private hospital leaders a practical way to understand their current position, quantify potential revenue opportunity and enter insurer negotiations with greater confidence.
Hospitals do not need to wait for a national pricing mechanism to negotiate from evidence.
They can start now.
See your revenue opportunity
EHA helps private hospitals identify funding gaps, quantify revenue opportunity and 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 the National Efficient Price?
The National Efficient Price is a benchmark used in Australia’s public hospital funding system. It represents the efficient cost of delivering a unit of hospital activity under activity-based funding.
Is there a National Efficient Price for private hospitals?
No. Private hospitals do not currently have an equivalent National Efficient Price. Private hospital funding is generally negotiated through individual agreements between hospitals and private health insurers.
Why would a private hospital National Efficient Price matter?
A private hospital National Efficient Price could create a clearer benchmark for funding, improve pricing transparency and support more consistent discussions between hospitals, insurers and government.
When could a private hospital National Efficient Price be introduced?
There is no confirmed implementation date. Current government consultation has considered potential approaches to a national private price, but data collection, policy design, stakeholder agreement and legislative steps would still be required.
What can private hospitals do while waiting for reform?
Private hospitals can use independent benchmarking to assess whether current funding aligns with relevant benchmarks, identify potential funding gaps and prepare stronger evidence for insurer negotiations.
