Nhcdc round 19 Independent Financial Review

Round 19 Independent Financial Review of the National Hospital Cost Data Collection

Independent Hospital Pricing Authority

Final Report – February 2017

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 1 July 2015. 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 11

Introduction 14

A.1.Overview and scope 15

A.2.Participating hospitals 16

A.3.Review Methodology 18

A.4.Structure of the report 21

Findings of the review 22

A.5.Summary of findings 23

A.6.Developments in Round 19 24

A.7.Observations from the Round 19 IFR 25

A.8.Recommendations 30

Australian Capital Territory 32

1.Jurisdictional overview 33

2.The Canberra Hospital 34

3.Application of AHPCS Version 3.1 43

4.Conclusion 45

2.New South Wales 46

1.Jurisdictional overview 47

2.Central Coast Local Health District 49

3.Far West Local Health District 62

4.Sydney Local Health District 72

5.Application of AHPCS Version 3.1 86

6.Conclusion 89

3.Northern Territory 90

1.Jurisdictional overview 91

2.Alice Springs Hospital 93

3.Application of AHPCS Version 3.1 103

4.Conclusion 105

4.Queensland 106

1.Jurisdictional overview 107

2.Gold Coast University Hospital 109

3.Toowoomba Base Hospital 124

4.Logan Hospital 135

5.Application of AHPCS Version 3.1 146

6.Conclusion 148

5.South Australia 149

1.Jurisdictional overview 150

2.Royal Adelaide Hospital 151

3.The Queen Elizabeth Hospital 165

4.Application of AHPCS Version 3.1 178

5.Conclusion 180

6.Tasmania 182

1.Jurisdictional overview 183

2.North West Regional Hospital 185

3.Mersey Community Hospital 195

4.Application of AHPCS Version 3.1 205

5.Conclusion 207

7.Victoria 208

1.Jurisdictional overview 209

2.Ballarat Health Service 211

3.Eastern Health 223

4.Latrobe Regional Hospital 236

5.Application of AHPCS Version 3.1 247

6.Conclusion 250

8.Western Australia 251

1.Jurisdictional overview 252

2.Armadale Kelmscott Memorial Hospital 253

3.Kununurra Hospital 263

4.Sir Charles Gairdner Hospital 272

5.Application of AHPCS Version 3.1 283

6.Conclusion 285

Peer Review 287

A.9.The peer review process 288

A.10.Summary of feedback on the peer review process 289

IHPA Process 290

A.11.Overview 291

A.12.IHPA NHCDC data submission process 292

Appendix B: The NHCDC and patient level costing 297

Appendix I: AHPCS Version 3.1 in scope 302

Appendix K: Site visit attendees 305

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 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 19 independent financial review (IFR). KPMG also undertook the Round 18 IFR. The Round 19 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 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.