Nhcdc round 19 Independent Financial Review

A.8.Recommendations

Noting the changes and developments implemented for Round 18 by jurisdictions and IHPA, the review team sought to identify potential areas where NHCDC processes could be improved to further enhance the value of NHCDC data and better streamline the submission process going forward. Five key recommendations are made to improve data and processes for future NHCDC rounds.

11. Unmatched/unlinked and out-of-scope activity

The review found that financial reconciliation processes are robust for all jurisdictions and occur at the hospital/LHN level and also at the jurisdictional level. Hospitals/LHNs and jurisdictions made a number of adjustments to the financial data, including for unlinked/unmatched and out-of-scope activity. While the basis of these exclusions appears reasonable, it is important that the reasons for this unlinked/unmatched and out-of-scope activity are continually investigated and addressed if necessary. This will ensure appropriate treatment in future rounds.

12. The Independent Financial Review

As jurisdictions and hospitals are continuously improving their reconciliation processes, linking of feeders and the utilisation of cost data for decision making purposes, it is important the IFR also continues to evolve. IHPA may wish to consider revisiting the scope of the IFR to include focus areas for each round. Examples of focus areas are summarised below:

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  Specific testing of expenditure and exclusion items for example, out of scope expenditure, non-ABF and unlinked activity.
  
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  Further testing of source activity used for costing purposes. It was noted in the review that some jurisdictions will cost using the PAS as the source whilst others will use reconciled activity. Further thought may be given to testing source activity records across all jurisdictions in future reviews to ensure all LHN source records are accounted for.
  
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  Analysis of improvements between NHCDC rounds which would involve sampling a hospital from the previous round to test whether changes implemented have had an impact on the cost data submitted to the NHCDC.
  
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  Understanding costing methodologies for specific expenditure items for example ward costs and other items that may impact upon funding such as chemotherapy or high cost procedures etc.
  
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  Review the use of cost data as a management/decision-making tool. Based on the review discussions held during Round 19, the use of cost data throughout the year continues to vary across hospitals and jurisdictions. Where cost data is utilised as a management/decision-making tool, health services and jurisdictions will have a greater focus on investment in the costing function and improvement of costing methodologies. Thereby improving the robustness of the patient level costing submitted to the NHCDC. Including this discussion as part of the IFR consultations will provide greater insight to IHPA, peer reviewers and the review team into the use of cost data at the hospital and jurisdiction level.
  

It is important that the IFR still includes a review of the reconciliation of financial data and compliance with the AHPCS, however, to streamline the review process the following recommendations are made for incorporation into each hospital/LHN’s submission to the NHCDC. The following recommendations have been carried over from the Round 18 IFR.

Reconciliation templates

It is important that the submission of cost and activity data can be followed from the hospital GL, to the jurisdiction for adjustments and finally to IHPA for storage in the NHCDC national dataset. To facilitate this process, it is recommended that financial reconciliation templates form part of the NHCDC submission process for each hospital/LHN. Reconciliations of cost and activity data to source data is considered best practice and is already included in SCP 3G.001 – Matching Production and Cost – Reconciliation to Source Data of AHPCS Version 3.1. The requirement to submit an end-to-end reconciliation template as part of NHCDC submission should also be included in the AHPCS.

Application of the AHPCS

A signed jurisdiction declaration in relation to the application of the AHPCS should be included in the NHCDC submission (similar to the directors’ declaration required for financial statements³). It was observed during the Round 19 IFR that the sign-off process continued to vary across jurisdictions at both hospital and jurisdictional level. The consistency of application of the AHPCS is important for ensuring the NHCDC is comparable across a range of factors such as jurisdictions, DRGs, and hospital settings etc. A signed declaration should require jurisdictions to confirm that they have applied the AHPCS, or identify where the standards were not applied and reasons therefore.

13. IHPA Process

IHPA undertakes a number of processes on the submitted NHCDC data before it is considered fit-for-purpose as the NHCDC dataset. The processes are conducted by discrete functions being the Electronic Data Warehouse (EDW), IHPA – Data Acquisition and IHPA – Costing. Each of these functions has flow charts and documents describing the separate processes. However, there is no documentation detailing the end-to-end IHPA process from NHCDC submission by hospitals/jurisdictions to the finalisation of the NHCDC dataset.

The NHCDC is an important cost data collection used as the main data set to inform the NEP. It also provides valuable cost data information to enable benchmarking across the sector, such as the newly developed cost benchmarking portal. A consistent theme stated by many hospital/LHN costing staff during the engagement process is that there is disconnect between hospital/LHN staff and IHPA in the use and application of the NHCDC. The provision of end-to-end documentation will provide further transparency to hospital/LHN costing staff when using the portal and importantly in understanding how costs from their hospital/LHN may differ to those in reported in the portal. It is noted that IHPA is re-developing the collection portal to increase transparency, which will include the development of end-to-end NHCDC process documentation.

It is recommended that end-to-end NHCDC process documentation be developed to enhance transparency of the IHPA process, maintain efficiency of process during staff absence and to ensure organisational knowledge is not lost when key staff members depart the organisation. The end-to-end process documentation will provide each stakeholder (including IHPA employees) with an understanding of IHPA’s NHCDC processes.