Nhcdc round 19 Independent Financial Review

Application of AHPCS Version 3.1

The following section summarises ACT Health’s application of selected standards from Version 3.1 of the AHPCS (outlined in Appendix B) to The Canberra Hospital Round 20 NHCDC submission.

1. SCP 1.004 – Hospital Products in Scope

ACT Health representatives demonstrated that costs are reported against all products. It was noted that costs are also created for non-patient products (created occasions of services) which are not submitted to the NHCDC.

Unlinked feeder data is allocated to system-generated records to which costs are allocated. The generation of these records is specific to the feeder. These system-generated records with costs are not submitted to the NHCDC.

2. SCP 2.003 – Product Costs in Scope

ACT Health representatives demonstrated the reconciliation process for financial data used for costing purposes. Discussions indicated that all products are costed, including costs assigned to products in scope for the NHCDC, unlinked activity and costs assigned to system-generated patients where there is no activity.

3. SCP 3.001 - Matching Production and Cost

The application of this standard was demonstrated during the interview and an excel file was produced from the costing system which outlined all transfers and offsets utilised.

4. SCP 3A.001 - Matching Production and Cost – Overhead Cost Allocation

The jurisdiction was able to demonstrate that overhead costs were fully allocated to direct patient care areas via the pre allocation and post allocation data included in the templates. ACT Health representatives also noted that the overhead allocation hierarchy listed in the AHPCS version3.1 is applied for costing.

5. SCP 3B.001 - Matching Production and Cost – Costing all Products

The application of this standard was demonstrated in the template and ACT Health provided an overview of their internal reconciliation process, which demonstrated the allocation of costs to products.

6. SCP 3C.001 - Matching Production and Cost – Commercial Business Entities

ACT Health representatives indicated that these costs were excluded from the costing process.

7. SCP 3E.001 - Matching Production and Cost – Offsets and Recoveries

Revenue is not offset against any expenditure. ACT Health operates separate business units for pathology and medical imaging. The costs associated with these services are allocated to public and private patients. Costs associated with services provided to external clients are excluded from the costing process.

8. SCP 3G.001 – Matching Production and Cost – Reconciliation to Source Data

ACT Health representatives outlined the reconciliation process for financial and activity data used for costing purposes. Based on a review of the templates, the process appears robust.

9. GL 2.004 - Account Code Mapping to Line Items

The template submitted by ACT Health reflected that account codes and associated costs from the costing system were only allocated to the specific line items, in accordance with the standard.

10. GL 4A.002 – Critical Care Definition

Direct expenditure associated with the adult ICU is captured in dedicated cost centres. The neonatal ICU has a dedicated nursing cost centre. The neonatology medical salaries and wages and VMO payments are accounted for in a single cost centre. This expenditure related to intensive care and non-intensive care for babies. For costing purposes, their costs are allocated between the ICU and NICU. The Canberra Hospital does not have any dedicated close observation units.

11. COST 3A.002 – Allocation of Medical Costs for Private and Public Patients

Costs are allocated to public and private patients in the same manner. This includes costs associated with medical and nursing salaries and wages, pathology, medical imaging and prosthesis. There is no offsetting of private patient revenue against the expenditure. It should be noted that some payments are made to medical specialists directly from the Private Practice Trust Fund and are excluded from the costing process.

12. COST 5.002 - Treatment of Work-In-Progress Costs

Discussions revealed that patients are allocated costs based on their consumption of resources for that reporting period. Where costs are incurred in prior years, these are also included in the final costed data and NHCDC submission.

4. Conclusion

The findings of the ACT Round 20 IFR are summarised below:

A number of key initiatives were implemented in Round 20 including: a review of relevant operating expenses within the single ACT Health general ledger to ensure theta expenses could be identified and quarantined to source functions, improved expenditure assignment to acute and non-admitted services and improved expenditure identification to teaching, training and research functions.

The financial reconciliation demonstrates the transformation of cost data from the original GL extract through to the final NHCDC submission for The Canberra Hospital. Major exclusions from this hospital data included departmental costs not directly related to hospital services, pathology services provided to external agencies, dental services created occasions of service, sexual health patients, population health and other out of scope services. There were no unexplained variances in the financial reconciliation of the hospital’s NHCDC submission.

Non-Canberra Hospital related expenditure and activity were excluded from the costing process.

Total activity data for The Canberra Hospital was adjusted for the activity associated with excluded system-generated patients.

The number of records linked from source to product was significant with all feeders having a greater than 97 percent link or match. This suggests that there is robustness in the level of feeder activity reported back to episodes.

WIP was treated in accordance with the COST 5.002 of the AHPCS Version 3.1.

The five sample patients selected for review for The Canberra Hospital reconciled to IHPA records.

The IFR is conducted in accordance with the review methodology detailed in Section 1.3 of this report. Based on this methodology and in accordance with the limitations identified in Section 1.1, ACT Health has suitable reconciliation processes in place and the financial data is considered fit for NHCDC submission. Furthermore, the data flow from the jurisdiction to IHPA demonstrated no unexplained variances.

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