Nhcdc round 19 Independent Financial Review

Application of AHPCS Version 3.1

The following section summarises Queensland Health’s application of selected standards from Version 3.1 of the AHPCS (outlined in Appendix I) to the Round 19 NHCDC submission.

1. SCP 1.004 – Hospital Products in Scope

Queensland Health representatives completed templates for this review for hospitals and demonstrated through the templates and interview process that costs are reported against admitted acute, emergency care and non-admitted products.

It was noted that costs are also created for non-patient products (such as unlinked records).

2. SCP 2.003 – Product Costs in Scope

During the interview process, Queensland Health and HHS representatives stated that all products are costed, which includes costs assigned to products in scope for the NHCDC, unlinked activity, and costs assigned to virtual patients. Unlinked activity and virtual patients are not submitted to the NHCDC.

It was noted in the interview process that costs are applied using the same standards and principles to patients regardless of their financial classification.

3. SCP 2B.002 - Research Costs

Queensland HHS’s manage research expenditure by mapping costs to dedicated cost centres. These costs are excluded from final patient costing as per the AHPCS Version 3.1.

4. 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 various hospital costing systems outlining the derived accounts.

5. 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.

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

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

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

Based on discussions with Queensland Health and hospital representatives during the review, commercial business entity expenditure was excluded in accordance with the standard.

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

There was no offsetting of costs with revenue with the exception of salaries and wages recoups from internal and external clients.

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

Based on discussions during the review, Queensland Health completes a final reconciliation of its costing system to source documentation.

10. GL 2.004 - Account Code Mapping to Line Items

Queensland Health representatives indicated that total costs were mapped to the standard specified line items; this was reflected in the hospital templates submitted.

11. GL 4A.002 – Critical Care Definition

The three hospitals reviewed had dedicated ICUs in their facilities. The direct costs associated with ICU are allocated to discrete cost centres and those costs are only applied to patients who used the ICU. There were no examples of close observation units of High Dependency Units at any of the hospitals reviewed.

12. 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.

The majority of medical officers at each of the hospitals reviewed are paid an allowance in lieu of private practice and all of these costs are captured in the General Ledger. It should be noted that some Logan Hospital payments are made to medical specialists directly from the Private Practice Trust Fund and are excluded from the costing process.

13. 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. A processing error occurred at Logan Hospital which resulted in the deletion of these WIP costs from prior years for Round 19. This amount could not be quantified.

No escalation factors were applied to these costs for Round 19 or any previous round of the NHCDC.

6. Conclusion

The findings of the Queensland Round 19 IFR are summarised below:

• 
  Queensland Health has improved its NHCDC reconciliation processes since Round 18, by implementing an end-to-end reconciliation process from GL data through to final submission.
  
• 
  The financial reconciliation demonstrates the transformation of cost data from the original GL extract through to the final NHCDC submission for the respective hospitals. Major exclusions from the original GL data include the removal of other hospitals and services in the respective HHS and the removal of dead ended cost centres. There were variances between the audited statements and final GL amount entered into the respective costing system.
  
• 
  The basis of the adjustments appears reasonable, with the exception of:
  
• 
  Gold Coast Hospital excluded bad and doubtful debts expenditure. The AHPCS is silent on the specific inclusion or exclusion of bad and doubtful debts. Bad and doubtful debts expenditure related to the provision for debts that are unrecoverable from patients/clients. It does not have an impact on the cost of patient services provided by the hospital.
  
• 
  It is recommended that Queensland Health investigates the reasons for the unlinked and unmatched records to ensure appropriate treatment in future rounds.
  
• 
  Research and Organ and Tissue donation were excluded as part of the Virtual Patient feeder at Toowoomba Hospital. It is recommended that these costs be investigated in future rounds to ensure they are treated in accordance with the AHPCS.
  
• 
  Minor variances were noted in the financial reconciliations for each Queensland hospital. These variances were less than 0.001 percent of the relevant expenditure. Minor variances were also noted between the costed products submitted to IHPA and the costed products received by IHPA.
  
• 
  Total activity data submitted by the Queensland hospitals reviewed was adjusted by Queensland Health to reflect WIP adjustments, adjustments for out of scope activity and data validation issues. IHPA reduced activity by the IHPA UQB adjustment.
  
• 
  The hospitals reviewed have a strong focus on cleansing activity and ensuring episodes link appropriately. At hospital level, the number of records linked from source to product was significant with all feeders having a 100 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 with the exception of Logan Hospital, where WIP from prior years was excluded due to a processing error. This cost could not be quantified. Queensland Health did not apply any escalation factors to the costs associated with WIP for prior years as part of the Round 19 submission to the NHCDC.
  
• 
  The five sample patients selected for review for Gold Coast University Hospital, Toowoomba Hospital and Logan Hospital reconciled to IHPA records.
  

Based on discussions held during the site visits, and a review of the financial reconciliations provided, Queensland Health has robust reconciliation processes in place. As such, nothing was identified to suggest that the financial data is not fit for NHCDC submission. Furthermore, the data flow from the jurisdiction to IHPA demonstrated no unexplained variances.

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