Nhcdc round 19 Independent Financial Review

National Hospital Cost Data Collection, Independent Financial Review

Round 20 (Financial year 2015-16)

Independent Hospital Pricing Authority

Final Report – January 2018

ADVISORY
This report has been prepared as outlined in the Overview and scope Section. The services provided in connection with this engagement comprise an advisory engagement which is not subject to Australian Auditing Standards or Australian Standards on Review or Assurance Engagements, and consequently no opinions or conclusions intended to convey assurance have been expressed.

No warranty of completeness, accuracy or reliability is given in relation to the statements and representations made by, and the information and documentation provided by, Independent Hospital Pricing Authority’s management and stakeholders consulted as part of the process.

KPMG have indicated within this report the sources of the information provided. We have not sought to independently verify those sources unless otherwise noted within the report.

The findings in this report have been formed on the above basis.

This report has been prepared at the request of Independent Hospital Pricing Authority in accordance with the terms of KPMG’s contract dated 13 January 2017. Other than our responsibility to Independent Hospital Pricing Authority, neither KPMG nor any member or employee of KPMG undertakes responsibility arising in any way from reliance placed by a third party on this report. Any reliance placed is that party’s sole responsibility.

Contents

Executive summary 4

Acronyms/Abbreviations 12

Introduction 16

1.Overview and scope 17

2.Participating hospitals 18

3.Review Methodology 22

4.Structure of the report 26

Findings of the review 27

5.Summary of findings 28

6.Developments in Round 20 29

7.Observations from the Round 20 IFR 31

8.Recommendations 36

Australian Capital Territory 39

1.Jurisdictional overview 40

2.The Canberra Hospital 41

3.Application of AHPCS Version 3.1 52

4.Conclusion 54

2.New South Wales 55

1.Jurisdictional overview 56

2.Hunter New England Local Health District 59

3.Conclusion 75

Northern Territory 76

4.Jurisdictional overview 77

5.The Royal Darwin Hospital 78

6.Application of AHPCS Version 3.1 89

7.Conclusion 91

3.Queensland 92

1.Jurisdictional overview 93

2.North West Hospital and Health Service 95

3.Townsville Hospital and Health Service 109

4.Central Queensland Hospital and Health Service 123

5.Application of AHPCS Version 3.1 136

6.Conclusion 138

4.South Australia 140

1.Jurisdictional overview 141

2.Women’s and Children’s Hospital 142

3.Mount Gambier and Districts Health Service 155

4.Application of AHPCS Version 3.1 166

5.Conclusion 168

Tasmania 170

6.Jurisdictional overview 171

9.Royal Hobart Hospital 173

10.Application of AHPCS Version 3.1 185

11.Conclusion 187

5.Victoria 188

1.Jurisdictional overview 189

2.The Royal Women’s Hospital 192

3.Austin Health 205

4.Swan Hill District Health 219

5.Application of AHPCS Version 3.1 231

6.Conclusion 234

6.Western Australia 235

1.Jurisdictional overview 236

2.Royal Perth Hospital 237

3.Hedland Health Campus 247

4.Application of AHPCS Version 3.1 259

5.Conclusion 261

Peer Review 262

12.The peer review process 263

13.Summary of feedback on the peer review process 264

14.Recommendation for future rounds of the IFR 265

IHPA Process 266

15.Overview 267

16.IHPA NHCDC data submission process 268

2.: : The NHCDC and patient level costing 273

12.: AHPCS Version 3.1 in scope 278

14.: Site visit attendees 281

Executive summary

The National Hospital Cost Data Collection

The National Hospital Cost Data Collection (NHCDC) is the primary data collection that the Independent Hospital Pricing Authority (IHPA) relies on to calculate the National Efficient Price (NEP) used for the funding of public hospital services. To ensure that the quality of NHCDC data is robust and fit-for-purpose, IHPA commissions an independent financial review to assess whether all participating hospitals have included appropriate costs and patient activity.

KPMG was engaged to undertake the Round 20 independent financial review (IFR). KPMG also undertook the Round 18 and 19 IFRs. The Round 20 IFR included a review of the reconciliation of costs and activity data from hospital/Local Hospital Network (LHN) through to IHPA and covered all feeder activity for the sampled hospitals/LHNs. This was done to provide IHPA and its stakeholders with a greater level of confidence over the accuracy and completeness of the NHCDC data.

The cost data submitted to the NHCDC is at the patient level. That is, each admitted acute, emergency presentation, non-admitted service event and other patient group is submitted with a cost identifying the resources consumed over their stay, appointment or transaction with a hospital or health service.

Where possible, hospitals apply a cost methodology according to the Australian Hospital Patient Costing Standards (AHPCS). These standards provide a guide to costing for NHCDC purposes, as well as providing consistency in interpreting results. For example, they prescribe: the products in scope for costing; how to define and select a preferred methodology for deriving overhead and direct care costs; how to research costs; and how to reconcile to source data.