Nhcdc round 19 Independent Financial Review

Introduction

1.Overview and scope

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 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 annual validation process to verify that all participating hospitals have included appropriate costs and patient activity.

IHPA engaged KPMG to undertake the Round 20 independent financial review (IFR) of a sample of state and territory hospitals who supplied data to the Round 20 NHCDC (2015-16). KPMG were also engaged to undertake the Round 18 and 19 IFRs. The Round 20 IFR includes:

Assessment of the accuracy and completeness of the NHCDC participating health services reconciliations provided for Round 20, including a comparison between the financial and costing systems.

Assessment of the consistency between jurisdictions sampled of the application of Version 3.1 of the Australian Hospital Patient Costing Standards (AHPCS) in selected standards, as highlighted in 12.

Review of the data flow from the health service to the jurisdictional upload of hospital information, to the data submission portal, through to the storing of data in IHPA’s national database.

Identification of improvements implemented at the health service and/or jurisdictional level from the previous round of NHCDC and address any developments made in response to the findings in the Round 19 IFR Final Report.

As this review is not an audit, no assurance on the completeness or accuracy of the costing has been provided. Procedures performed were limited to the review of supporting schedules, agreeing to source documentation (where possible), discussions with costing teams and obtaining extracts from costing systems. The outcomes and results rely on the representations, assertions and data submissions made by the hospital or local hospital network (LHN) costing teams and jurisdiction representatives and no work has been undertaken to verify the underlying data.

2.Participating hospitals

Each of the eight jurisdictions agreed to participate in the IFR for Round 20. The sample for review was consistent with the pragmatic approach of previous rounds that recognises the need for jurisdictional support for the IFR, resource constraints and a desire to obtain a geographical spread across the jurisdictions. The selection of the sample was undertaken by each jurisdiction with consideration of the volume of patient activity, complexity and remoteness of location. Each jurisdiction was provided with a list of hospitals meeting these criteria, and were provided the following guidance:

Volume of patient activity.

Expenditure and activity for each hospital in a jurisdiction was ranked from highest to lowest based on the information submitted to the NHCDC in Round 19. One hospital was selected from the top five hospitals by volume of patient activity.

Complexity

All hospitals that submitted NHCDC data in Round 19 were ranked by complexity numbering 1 to 3. The guidance requested one hospital be selected with a ranking of 1 or 2. The complexity score is based on the following:

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  1 – A hospital has both specialised paediatrics and specialised ICU;
  
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  2 – A hospital has specialised paediatrics OR specialised ICU; and
  
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  3 – A hospital has neither specialised paediatrics nor specialised ICU.
  

Complexity factors were defined as

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  Specialised Intensive Care Units (ICU) - the eligible ICUs and Paediatric ICUs are those belonging to hospitals that report more than 24,000 ICU hours and have more than 20 percent of those hours reported with the use of mechanical ventilation.
  
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  Specialised paediatrics hospitals are dedicated children’s hospitals.
  

Remoteness

Each hospital that submitted data to the NHCDC in Round 19 was assigned a remoteness area (RA) based on the RA score of 0 to 5, which are defined below (ranked lowest to highest score):

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  0 - Major Cities of Australia;
  
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  1 - Inner Regional Australia;
  
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  2 - Outer Regional Australia;
  
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  3 - Remote Australia;
  
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  4 - Very Remote Australia; and
  
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  5 – Migratory.
  

One hospital was selected from the hospitals with the highest RA score for the jurisdiction.

In total, a sample of 14 sites, including 10 hospitals and four LHNs were selected by jurisdictions to participate in the IFR. Some jurisdictions were required to select less than three hospitals. In this case, it was recommended that the factors for consideration be applied in sequential order as detailed above (i.e. volume, complexity, remoteness).

Table – Round 20 IFR participating hospitals/LHNs

Jurisdiction	Hospital	Characteristics
Australian Capital Territory	The Canberra Hospital	Participated in Round 17 and 19 NHCDC IFRs Major urban hospital meeting the volume of patient activity and complexity sampling criteria Costing system – PPM2
New South Wales	Hunter New England Local Health District (LHD) including: John Hunter Hospital Tamworth Hospital Calvary Mater Newcastle Inverell District Hospital Moree District Hospital	LHD has previously not participated in an NHCDC IFR John Hunter Hospital participated in the Round 15 IFR and meets the volume of patient activity sampling criteria Tamworth Hospital and Calvary Mater Newcastle meet the complexity sampling criteria Inverell District Hospital and Moree District Hospital meet the remoteness sampling criteria Costing system – PPM2
Northern Territory	Royal Darwin Hospital	Participated in Round 18 NHCDC IFR Major regional hospital meeting the volume of patient activity and complexity sampling criteria Costing system – PPM2
Queensland	North West Hospital and Health Service including Mount Isa Hospital	Mount Isa Hospital participated in Round 16 NHCDC IFR Mount Isa Hospital is a large regional hospital meeting the remoteness sampling criteria Costing system – Transition II
Queensland	Townsville Hospital and Health Service including Townsville Hospital	Townsville Hospital participated in Round 17 NHCDC IFR Townsville Hospital is a major regional, tertiary hospital meeting the volume of patient activity and complexity sampling criteria Costing system – Transition II
Queensland	Central Queensland Hospital and Health Service including Rockhampton Hospital	Rockhampton Hospital participated in Round 15 NHCDC IFR Rockhampton Hospital is a major regional, referral hospital meeting the complexity sampling criteria Costing system – Transition II
South Australia	Women and Children’s Hospital	Participated in Round 15 NHCDC IFR Major urban and teaching hospital meeting the volume of patient activity and complexity sampling criteria Costing system – PPM2
South Australia	Mount Gambier and Districts Health Service	Hospital has previously not participated in an IFR Major regional hospital meeting the remoteness sampling criteria Costing system – PPM2
Tasmania	Royal Hobart Hospital	Participated in Round 18 NHCDC IFR Large regional hospital meeting the volume of patient activity and complexity sampling criteria Costing system – User Cost
Victoria	Austin Health	Participated in Round 14 NHCDC IFR Major urban, teaching and research hospital meeting the volume of patient activity and complexity sampling criteria Costing system – PPM2
Victoria	Swan Hill District Health	Hospital has previously not participated in an IFR Large regional hospital meeting the remoteness sampling criteria Costing system – Adaptive Costing
Victoria	The Royal Women’s Hospital	Participated in Round 15 NHCDC IFR Major specialist, teaching and research hospital meeting the complexity sampling criteria Costing system – PPM2
Western Australia	Royal Perth Hospital	Participated in Round 17 NHCDC IFR Major urban, teaching and research hospital meeting the volume of patient activity and complexity sampling criteria Costing system – PPM2
Western Australia	Hedland Health Campus	Hospital has previously not participated in an IFR Large regional hospital meeting the remoteness sampling criteria Costing system – PPM2

Source: KPMG