Transcript People Net Promoter Score

pwc.com.au
Changes in Funding
in the Health System
For Moir Group Event
By Carrie Schulman & Julia Smith
Today’s presentation
1.
Drive for funding reform
2.
National Health Reform Agreement
3.
Funding component of health reform - Commonwealth funding at ‘efficient’ levels
4.
Activity Based Funding
5.
National Efficient Price
6.
Hospital costing and cost management under ABF
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Driver of funding reform in Australia
Australian Government expenditure on health in 2012-13 was $98.2
•
billion representing
19.4% of total government expenditure
•
This represents 6.46% of GDP
•
Over the past decade health expenditure rose by over $40
billion (74%) in real terms.
This was driven by an increase in the volume of services consumed – “people of any age saw doctors more
often, had more tests and operations and took more prescription drugs.”
•
Source: Grattan Institute Budget pressures on Australian governments, April 2013
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Driver of funding reform in Australia
Thousand (seps)
• Simply, if health expenditure is = (cost or price) x volume, the cost curve is unsustainable and the volume
figures has a large population soon to hit
8000
$8,000
7000
$7,000
6000
$6,000
5000
$5,000
4000
$4,000
3000
$3,000
2000
$2,000
1000
$1,000
0
$0
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 20010-11
Cost per casemix adj sep
2011-12
2012-13
2013-14
2014-15
2015-16
Separations
Source: AIHW statistics and average trend growth projects
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National Health Reform Agreement (NHRA)1 objectives
1. improve patient access to services and public hospital efficiency through the use of activity based funding (ABF)
based on a national efficient price (NEP)
2. ensure the sustainability of funding for public hospitals by increasing the Commonwealth’s share of public
hospital funding through an increased contribution to the costs of growth
3. improve the transparency of public hospital funding through a National Health Funding Pool and a nationally
consistent approach to ABF
4. improve standards of clinical care through the Australian Commission on Safety and Quality in Health
Care (ACSQHC)
5. improve performance reporting through the establishment of the National Health Performance Authority
(NHPA)
6. improve accountability through the Performance and Accountability Framework
7. improve local accountability and responsiveness to the needs of communities through the establishment of Local
Hospital Networks and Medicare Locals
8. improve the provision of GP and primary health care services through the development of an integrated primary
health care system and the establishment of Medicare Locals
9. improve aged care and disability services by clarifying responsibility for client groups
1Signed
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by all First Ministers in August 2011.
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Health Reform Agreement journey
Performance Management
evidenced based with transparent
benchmarks, activity and cost
data, quality indicators, patient
experience and sustainability
C’wealth share of
‘efficient growth’
to 50%
FY17
FY16
Funding of most
hospitals on ABF,
national efficient
price basis
Annual cycle of classification
refinements and target setting.
Devolution of budgets to LHNs
based on ABF targets (variable by
State)
States and C’wealth refine data
gathering and define compliance
feedback loops
C’wealth, IHPA, NHPA drive the
system design
FY15
FY14
FY13
C’wealth share
of ‘efficient
growth’ to 45%
FY12
1 July 2012
National funding
pool
FY11
1 July 2012
National system of
ABF introduced;
LHN and Medicare
Locals established
2011 NHRA: IHPA
and NHPA, ACSQHC
established
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National Health Reform - funding
A key feature of the reform is Activity Based Funding (ABF).
Commonwealth funding for hospitals from 1 July 2012.
•
•
1 July 2012 – 30 June 2014 is a transition period, with capped Commonwealth funding;
•
2014-15 , Commonwealth will contribute 45% of efficient growth;
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2016-17 + , Commonwealth will contribute 50% of efficient growth.
•
This new funding model based on principles of:
 Transparency
 Value for money
 National comparability
 Efficiency
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Commonwealth funds ‘efficient’ growth from FY14/15
Under the National Health Reform Agreement, the Commonwealth has guaranteed an additional
$16.4 billion in payments to states and territories from 2014-15 to 2019-20.
Public Hospitals $14.9 billion in 2013-14, $871 million more than in 2012-13.
Activity based funding growth of Commonwealth portion will be uncapped from 2014-15.
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The National Health Reform Agreement (NHRA)
• The NHRA provides a mechanism for
the Commonwealth’s share of the
(efficient) growth in public hospital
expenditure to increase.
However this outcome assumes
that a State / Territory’s hospital
costs grow at the “efficient” rate.
•
no State will be worse off in the short or long term, because they will
continue to receive at least the amount of funding they would have
received under the former National Healthcare SPP and their share of
the $3.4 billion in funding
•
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the Commonwealth guarantees that it will provide at least $16.4
billion in additional funding over the 2014-15 to 2019-20 period
Commonwealth's Share
of Hospital Funding
Increases
State (and other) Share
of Hospital Funding
Decreases
State (majority) & Other
Commonwealth
Sources:
1. AIHW Australian Hospital Statistics 2010/11
2. Treasury: Mid Year Economic and Fiscal Outlook, 2012/13
Projections are based on extrapolations of these data sources.
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At a State level, the consequences of not managing cost growth to
National Efficient Price growth are …….
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The State’s share of hospital
funding continues to grow,
placing pressure on State
budgets.
•
So it is important to understand how
hospital costs compare to an Efficient
Price benchmark.
•
This scenario assumes that a
State’s cost growth is 1
percentage point higher than
National Efficient Price growth
Commonwealth's Share
of Hospital Funding
Decreases
State (and other)
Share of Hospital
Funding Increases
State (majority) & Other
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Sources:
1. AIHW Australian Hospital Statistics 2010/11
2. Treasury: Mid Year Economic and Fiscal Outlook, 2012/13
Projections are based on extrapolations of these data sources.
Commonwealth
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Case-based payment has been adopted by more than 20 countries, or 70% of
the OECD**
• There are links between changes in health system costing/funding and measures of service delivery (access,
volume, cost)
• Case based payment has been variously named Payment by Results (UK), Prospective Payment (US)
• There is a trend towards using different models and funding to outcomes – sophistication in
purchaser/provider relationships is growing
Avg LoS (days)
8.5
80
70
60
50
40
30
20
10
0
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7.5
7
6.5
6
1997
1998
1999
2000
2001
Countries with ABF
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**Source: PwC 2008 – You Get What You Pay For (2007)
2002
2003
2004
LOS
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% OECD with ABF
Comparison of OECD countries with ABF models and average length of stay
The ‘lens’ on ABF is important – variable impacts and incentives
• Commonwealth – as ‘payer’ financer
• States – as ‘system manager’ & Treasury as
financer
• Providers:
o Clinician: model of care / income
o Management: cost control / data & cost
capture
o Planners: demand management &
prediction
• Patients and broader consumers: access
• Suppliers: value for money
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Infrastructure of Activity Based Funding
•
Pricing Framework: National Efficient
Price (NEP) released annually ;applies rules,
eg inlier, outlier, loadings
•
National Hospital Cost Data Collection
(NHCDC): Patient level costing captures
direct costs via feeder systems, allocation of
indirect costs, costing according to Australian
Hospital Patient Costing Standards (AHPCS)
•
Reporting of activity levels / Service level
agreements (SLAs): Activity is counted by
product and subject to estimated activity levels
and demand management.
•
Hospital products: ED stays (URG/UDG),
admitted separations (ARDRG), non-admitted
(Tier2), Subacute (ANSNAP), Mental Health
(TBD), Teaching/Training/Research (TBD)
•
Improving source data: coding of medical
record information (diagnoses, procedures);
capture of costs by patient
Funding methodologies
Activity Based Costing
Counting
Classification of activity by product
Medical record & data management
Governance & management
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How will the funding under ABF function?
•
ABF operates through a national efficient price established for the services provided by a public
hospital:
•
It has a single unit of measure and relative weights called National Weighted Activity Unit (NWAU):.
•
Patient-based: Adjustments to the standard price should be, as far as is practicable, based on patientrelated rather than provider-related characteristics.
•
Public-private neutrality: ABF pricing should not disrupt current incentives for a person to elect to be
treated as a private or a public patient in a public hospital.
Funding methodologies
Activity Based Costing
Counting
Classification of activity by product
Medical record & data management
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Understanding
the NEP funding
formula
Unit record dataset
1.
Patient-level costs
2.
Calculate NWAU for an individual patient
3.
Calculate expected revenue = NWAU x Efficient Price
DRG
Same-day
Overnight
Short-stay
Inlier
Long-stay
ICU Adjustment
Paediatric Adjustment
Indigenous Loading
Remoteness Loadings
Specialist Psychiatric Age Loadings
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What is Patient Level Costing?
Funding methodologies
Activity Based Costing
Counting
Classification of activity by product
Patient level costing / clinical costing is:
Medical record & data management
...“identifying the resources used by a patient from the time of admission until the
time of discharge and calculating the expenditure of those resources using the actual
costs incurred by the hospital. “
Total hospital
costs
$100
Wards $50
Overheads $20
Pharmacy $15
Radiology $15
Activity data
from multiple
systems; i.e.
Patient X length
of stay 4 days for
DRG x
Cost per
episode
per DRG
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Implementation of patient level costing
A. Improve accounting
practices
B. Improve quality
of activity data
General Ledger
Information
Volume Data
Costing
System
D. Identify and
implement new
data feeds
Feed
1
Feed
2
Feed
3
C. Supporting costing
process to improve
methodologies
applied to allocate
costs
E. Design processes to produce
useful and impactful reporting
Costing
Output
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What is the National Hospital Cost Data Collection (NHCDC)?
The NHCDC is an annual costing study performed across public and private hospitals which produces a range of
detailed hospital costs mostly by Australian Refined Diagnosis Related Groups (AR-DRGs).
How is the data used?
•
The NHCDC’s primary early use was to collate information in order to determine cost weights and relativities
among (mainly) acute hospital products and was used for the refinement of the DRG classification system.
•
The output from the public sector costing study is now used by IHPA in determining the National Efficient Price
(NEP).
•
The output of the costing study can be used for benchmarking, allocating resources within the hospital and
understanding the costs of resources , inputs and cost weights.
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• There are a number of stakeholders
involved in determining how ABF
is implemented
Most addressable through clinical
decision making
Costs are mostly
allocated
Costs are mostly direct
at the patient level
Approach to cost management in ABF
Costs are mostly fixed
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Costs are mostly variable
• In the near term – their
engagement, understanding and
appreciation of information,
costing and funding processes is
critical
• In the long term – refining decision
making using evidence and
supportive processes between
clinical, operational and financial
staff will create results for patients,
providers and funders
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PwC Key
Contacts
Carrie Schulman
Engagement Partner
p: 02 8266 3170
m: 0438 201 475
e: [email protected]
Julia Smith
Director
p: 02 8266 3991
m: 0403 499 129
E: [email protected]
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Questions?