The National Efficient Price: An Introduction for Private Health Insurers

The National Efficient Price (NEP) underpins activity-based funding for public hospitals in Australia. Set annually, it reflects the cost of delivering hospital care, adjusted for patient complexity and service characteristics, providing a transparent benchmark that links funding to activity rather than historical budgets.

In recent health reform discussions, the NEP has emerged as a reference point for addressing long-standing challenges in private hospital funding and private health insurance sustainability. Policymakers, insurers and providers have debated whether NEP-like principles – standardised pricing, cost benchmarking and risk adjustment – could improve transparency, reduce unwarranted variation and support sustainability in the private sector. This presentation explains how and why the NEP works in the public setting, and opens a conversation with members on how these may translate to Australia’s private hospital system.

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