To determine the rate of prescription of and government expenditure for domiciliary oxygen therapy (DOT) in Australia, and to identify interstate differences in rates, costs and service provision.

Retrospective observational study.

Government departments and health services (state and federal) that funded DOT in Australia in the 2004–05 financial year (including the Department of Veterans’ Affairs [DVA] and the Department of Health and Ageing [DoHA]).

Prescription rates, cost of DOT in 2004–05, and services provided in each jurisdiction.

In 2005, 20 127 patients were using DOT, giving a national prevalence of 100 prescriptions per 100 000 population. The total cost was about $31 million. State governments, the DVA and the DoHA funded 13 899 (69%), 4084 (20%) and 2144 (11%) patients, respectively. Prescription rates varied threefold between the states, ranging from 44 (Northern Territory) to 133 (Tasmania) per 100 000 population. Cost per patient per year varied fourfold between the DVA and the DoHA. All jurisdictions funded oxygen according to the clinical criteria of the Thoracic Society of Australia and New Zealand, but considerable variability in service provision was identified.

DOT prescription rates and costs vary considerably between jurisdictions. An urgently needed national DOT register would enable the current variability to be understood and allow service planning and benchmarking of clinical outcomes.