Nhcdc round 19 Independent Financial Review

4.Structure of the report

This report provides an overall summary and findings by jurisdiction and for each participating site. The report includes recommendations for IHPA and the jurisdictions to consider in future rounds of the IFR, with the aim of improving the consistency and transparency of NHCDC submissions. The remainder of the report is structured as follows:

Section	Description
Findings of the review	Provides a summary of the findings from the Round 20 IFR and improvements for future NHCDC rounds.
Jurisdiction chapters	Presents the costing and reconciliation process for each of the eight participating jurisdictions and their nominated hospitals.
Peer review	Presents a summary of the peer review process and feedback collected from the peer review nominees.
IHPA review	Presents the findings of IHPA’s processes for receiving and reviewing data, through to the storing of data in IHPA’s national database.
Appendix A	Provides an overview of patient level costing and how it applies in the NHCDC context.
Appendix B	Provides a summary of the requirements of the AHPCS Version 3.1 selected for the Round 20 IFR.
Appendix C	Contains a list of all attendees at the site visits.

Findings of the review

This section summarises the findings of the National Hospital Cost Data Collection (NHCDC) Round 20 Independent Financial Review (IFR). It includes overall observations based on the information collected in the financial review templates and through engagement with jurisdictions and costing staff during the site visits with the participating hospitals or local hospital networks (LHNs). Financial and activity data was submitted for both hospitals and LHNs depending on the jurisdiction.

5.Summary of findings

Jurisdictions continue to improve the processes and controls associated with the clinical costing process that underpins the NHCDC submission, demonstrating the recognised value of a collection such as the NHCDC to be a well-informed evidence base, and the need for it to be fit-for-purpose. This shows the growing emphasis placed on data quality, as costing data is increasingly used to inform the management and funding of public health services nationally.

As jurisdictions and hospitals are continuously improving their reconciliation processes, linking of feeders and the utilisation of cost data for decision-making purposes, it is important the IFR also continues to evolve. Feedback during the Round 20 site visits suggested that jurisdictions see the need for further evolution of the IFR, to ensure it remains valuable and meets its intended objectives. As such, recommendations are made in areas where opportunities for improvement were identified by the review team. The recommendations are discussed to facilitate improvements of future IFRs, NHCDC submission processes and IHPA processes in future rounds.

6.Developments in Round 20

Jurisdictions continue to improve their costing methodologies and reconciliation processes on an ongoing basis to improve the cost information available to hospitals and the jurisdictions.

The following key initiatives were implemented in Round 20:

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  Improved governance over the costing output – Jurisdictions made a number improvements to the governance over the costing output as summarised below:
  
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  Victoria revised the 2014-15 Victorian Cost Data Collection (VCDC) documentation to be clearer and less ambiguous for implementation including clear definitions and guidance for costing and reporting to the VCDC and also updated validation rules and QA processes.
  
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  New South Wales (NSW) rebuilt the District Network Return (DNR) module to improve the efficiency of the submission process and the testing processes for the RQ Application and the DNR module were improved. This improvement included further cost data edit checks and subsequent review of cost data.
  

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  The Australian Capital Territory (ACT) is in the process of expanding the ACT Health Costing Framework as part of ACT Health System-Wide Review. Improved linking of activity and feeder data – ACT refined linking rules and reviewed the quality of feeder systems with business areas of the hospitals. Victoria revised and updated the linking rules of the cost data to the relevant activity datasets including new rules for non-admitted and mental health patients. NSW worked with all LHDs/SHNs collaboratively to review system generated encounters and the associated linking rule analysis to improve precision in linking of encounter and feeder data.
  

Improved reconciliation processes – Victoria revised and updated the financial reconciliation templates to be more user-friendly and elaborated on the content to be provided. Likewise, Queensland has implemented the use of the IFR templates for each Hospital and Health Service’s (HHS) cost data submission.

Separation of Emergency and Inpatient episodes – Western Australia (WA) can now report Emergency Department encounters separately to the inpatient episode. In previous rounds, total costs for emergency and subsequent inpatient admissions were reported within the single inpatient episode. This change has been made possible through improved activity systems and costs can now be assigned separately to each product type.

Improved costing methodologies – Jurisdictions made a number of improvements to their costing methodologies as summarised below:

ACT reviewed its costing processes including quarantining expenditure in the single ACT Health GL to source functions, improved expenditure assignment to acute, non-admitted services and TTR functions and a review of the alignment of costing methods to the AHPCS Version 3.1.

Victoria developed and incorporated the submission of the cost data for each phase of care for palliative care patients and updated the cost bucket matrix to better reflect the types of costs to be analysed at a service cost group level.

NSW made a number of refinements to costing methodologies including:

Refinement of the inclusions and exclusions definitions for TTR based on a costing study with 2,600 participating clinicians across NSW.

Costing of Non-admitted patients better aligns with the actual resource consumption.

Emergency Department (ED) is now costed using the Relative Value Units (RVUs) developed as part of the IHPA Emergency Care Costing Study in which NSW Health took part as a pilot. As a result, the current costing methodology no longer uses RVUs associated with the triage process as the drivers for allocation, but examines a combination of factors including location of patient in the emergency department (such as cubicles or resuscitation bay) and diagnosis.

RVUs to allocate costs for oral health developed for each dental item.

The RVUs used for the cost allocation methodology for Non-Emergency Patient Transport services in metropolitan LHDs was revised to reflect the actual number of kilometres travelled.

Inpatient mental health nursing RVUs developed during IHPAs Mental Health Costing Study were updated following consultation with the NSW Mental Health Working Group.

Improved use of costing data – Tasmania implemented the Qlikview reporting tool for reporting and use of clinical costs across the hospitals. Victoria implemented cost data review forums, where comparative data is presented for the benchmarking of health services. These forums involve both costing and operational staff from the health services.