Nhcdc round 19 Independent Financial Review

A.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 19 IFR and improvements for future NHCDC rounds.
Hospital 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 19 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 19 Independent Financial Review (IFR), including 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.

A.5.Summary of findings

In Round 19, jurisdictions continued 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. An increased number of costed separations in Round 19 and a number of improvements across jurisdictions demonstrated this. 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.

In recognition of the ongoing development of Activity Based Funding (ABF) and the move to greater Activity Based Management practices within the health services, 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.

A.6.Developments in Round 19

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 19:

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  Improved governance over the costing output – Victoria is in the process of formalising a sign-off process for health services submitting data to the Victorian Cost Data Collection (VCDC). South Australia (SA) is reviewing the sign-off process at the jurisdictional level for the final NHCDC submission. New South Wales (NSW) has implemented costing conferences with Chief Executive Officers of the Local Health Districts (LHD) to discuss final cost outputs and the LHDs Internal Audit team reviewed the LHDs submission process for the first time in Round 19. The Australian Capital Territory (ACT) also developed a costing framework and established a costing working group. ACT also increased its engagement with hospitals and facilities in relation to the use of the costing data.
  

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  Improved linking of activity and feeder data – NSW reviewed linking rules with each LHD during 2015 to seek greater precision in linking of encounter and feeder data.
  

Improved reconciliation processes – Victoria formalised the internal reconciliation process from health service submission to VCDC and NHCDC data sets in Round 19. Likewise, Queensland undertook an end-to-end reconciliation process from the General ledger to the final NHCDC submission.

Submission of non-admitted cost data – SA submitted non-admitted patient level data (including both activity and costs) for the first time in Round 19.

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

Tasmania improved allocation of ward segments to patients. Previously, costs were allocated based on minutes on the ward. For Round 19, a weighted minute was allocated based on the number and level of nurses rostered on the ward in which the patient was located.

Queensland improved the allocation of overheads. In prior years, where costs were excluded for Transition II sites, all relevant overhead costs were mapped to goods and services. The revised process for Round 19 sees the total cost of these overheads allocated to cost records based on an allocation statistic relevant for each overhead cost area.

Northern Territory (NT) improved its overhead allocation statistics to be in line with the preferences listed in the Australian Hospital Patient Costing Standards (AHPCS) Version 3.1. NT also increased its education to hospitals in relation to the available feeders for costing. This improved the allocation of blood products and ambulance costs.

NSW reported that the cost allocation for organ donor episodes was considerably refined and improved. Costs that are held in up to four separate general ledgers, were consolidated and appropriately eliminated to ensure the full cost of organ retrievals were reported.

Western Australia Country Health Service sites moved away from cost modelling and increased the use of feeder and clinical costing systems.