Casemix based funding for private hospitals or there are still a number of options so can we please slow down.

Australian private hospitals should ask themselves and answer four questions in relation to case mix based payment before they reach a firm decision of the merits of such funding. Firstly, does Australia in general and the private sector in particular need case mix based funding? Secondly, if we are to have case mix based funding, does it have to be based on DRGs and, in particular, the system in use in the United States--the Medicare prospective payment system? Thirdly, will the U.S. system be forced upon us? Fourthly, will sufficient time be allowed for development and phasing in of a new system? This paper addresses all these questions and argues that the case mix based system currently in use and being further developed within the private hospital sector may be a better proposition for long term private sector funding because of its relative simplicity and low administrative costs. The paper also urges less haste in the development and implementation of any radical change.