Nhcdc round 19 Independent Financial Review

New South Wales

1. Jurisdictional overview

   1. Management of NHCDC process

New South Wales (NSW) has fifteen Local Health Districts (LHDs) (eight covering metropolitan areas and seven in rural areas) with three Speciality Health Networks (SHNs) which focus on children’s and paediatric services, forensic mental health, justice health and the public hospital services provided by the St Vincent’s Health Network. Published financial statements are reported at the LHD/SHN level.

Since the inception of Activity Based Funding (ABF), the NSW Ministry of Health (NSW Health) has invested heavily in patient level costing to inform its Activity Based Management (ABM) functions at both state and national levels. Each of the LHDs/SHNs are required to operate and maintain patient level costing systems as part of their conditions of subsidy with NSW Health.

The ABF Taskforce at NSW Health includes a costing team and data acquisition team, which provide support to the LHD/SHN who prepare, process and submit the District and Network Return (DNR) – the NSW patient level cost submission. This support includes:

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  Cost Accounting Guidelines (CAG) – which specifies costing standards, costing guidelines and technical specifications for the DNR. NSW Health advised that the Australian Hospital Costing Standards Version 3.1 are embedded within the CAG and the CAG is reviewed each year.
  
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  Extractor – a tool to extract the inpatient and emergency activity files for costing from the LHD/SHN Health Information Exchange (HIE) in a standard format.
  
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  Non Admitted Patient (NAP) Datamart – which provides costing views to non-admitted activity in a standard format.
  
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  Feeder data – a number of tools have been developed to assist with the standard formatting of feeder data such as operating theatre and imaging.
  
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  A collaborative space – which provides access to the extractor, the general ledger (GL) a, documentation and a range of tools.
  

Universal access to standard queries and reporting tools has been provided to all LHD/SHN staff to ensure that there is a consistent approach to costing and reporting. This is in recognition of the fact that there is various levels of experience and costing skills within the sector. A NSW Costing Standards User Group is convened and meets on a regular basis. All matters related to costing are considered and determined with the members. The ABF Taskforce also supports the Costing Standards User Group by undertaking a series of workshops and training sessions each year for LHD/SHN costing staff.

NSW Health utilises a standard build of Power Health Performance Manager (PPM) across all LHDs/SHNs. Patient level costing at all LHDs/SHNs is conducted on a bi-annual basis with six monthly data required in April to test preliminary costing results. This also informs a range of data quality issues that may affect the final annual submission. Annual costing is then undertaken by reloading the GL, activity and feeder data for a full twelve months.

Reloading optimises all revisions in both the financial and activity data. A draft DNR submission is supplied by LHDs and SHNs to NSW Health in October and following further revisions, a final DNR is signed off, reconciled and submitted in November. The DNR submission is made using a secure file transfer environment.

Upon submission, data is treated as draft and over sixty patient-level data quality tests are performed on the cost data and reported back to LHD/SHNs through the RQ application the following business day. The quality of the cost data is scored and a graphical summary of the cost data against previous collections is provided. During the draft submission period, LHD/SHNs may submit repeatedly to correct cost allocation issues.

Once finalised, the LHD/SHN Chief Executive submits a signed letter and reconciliation schedule that demonstrates reconciliation to the published financial statements to formally advise of the finalisation of the DNR submission. The ABF Taskforce does not alter cost data submissions received from LHDs/SHNs.

The data reported through the DNR will inform a range of State and National data reporting obligations, including the NHCDC (based on a policy of single submission for multiple uses). The ABF Taskforce is responsible for the collation, formatting, consolidating, review and submission of the LHD/SHN patient level costed data for the NHCDC.

Only patient level data for ABF facilities is submitted to the NHCDC. The ABF Taskforce adjusts for Work In Progress (WIP) patient records from prior years. Records that fail the IHPA validation checks are excluded from the submission. Once the NHCDC submission is finalised, a data quality statement is provided and published in the cost report.

NSW nominated three LHDs to participate in the review for Round 19, Central Coast LHD, Far West LHD, and Sydney LHD.

Key initiatives since Round 18 NHCDC

The following initiatives have been implemented since the Round 18 NHCDC submission:

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  NSW Health (via the ABF Taskforce) has instituted DNR teleconferences with the Chief Executive of each LHD/SHN to discuss cost data results during the draft submission period prior to final DNR submission.
  
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  A refinement of the inclusions and exclusions definitions for Teaching, Training and Research (TTR) products was undertaken for the 2014-15 DNR submission. This culminated in a teleconference with LHD/SHN stakeholders during the draft submission period to review the draft TTR costs to assess the reasonableness across LHD/SHNs.
  

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  LHD/SHN Internal Audit teams conducted a mandatory DNR Audit on the 2014-15 DNR Submission. Attestation Certificates were received from all LHD/SHN Chief Executives indicating that ‘effective systems of internal control exist to ensure that the DNR information is true and fair in all material respects’. This audit is now one of the Conditions of Subsidy.
  
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  The cost allocation for organ donor episodes was considerably refined and improved. Costs that are held in up to four separate GLs, were consolidated and appropriately eliminated to ensure the full cost of organ retrievals were reported.
  
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  Linking rule analysis was undertaken to review linking rules with each LHD/SHN during 2015 to seek greater precision in linking of encounter and feeder data.
  

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