Prepared by Alfa D’Amato MIPA, MIFA, MPA, MHSM, MPASR

Deputy-Director, ABF Taskforce – NSW Health August 2015

Activity Based Management in NSW

Data Quality

Context NSW Health budget > 25% of NSW’s budget • 3% over budget = DPC budget

1

225 public hospitals (98 ABF) around 106,000 FTE • 5,600 people are admitted to a public

hospital daily • 200 – babies are born

2

National Health Reform Agreement • applicable until 2017 • Commonwealth contributes 45% of

efficient growth • C’th share Uncapped

3

Appropriation 2015/16 $19.6bn Health

“To give the same kind of care to the same kind of patient, some hospitals cost two or three times more than others in the same state.”

“Today, the price paid…includes costs that can and should be avoided.” “Setting the right price is crucial, but it won’t work on its own. Hospitals need to know a lot more about where they stand. They need detailed information about where their avoidable costs are and how they compare to their peers.”

“Activity-based funding is a good pricing system, but cost data can help us improve it.”

Evidence-informed policy-making

“Policy decisions do not wait for excellent information to become available; decisions will be taken even where ‘evidence’ is fragmentary and uncertain”

Brian W. Head (2013) Evidence-Based Policymaking – Speaking Truth to Power? - Australian Journal of Public Administration, vol. 00, no. 0, pp. 1–7

Evidence-informed policy-making

‘evidence [..] can be improved if appropriate standards of transparency and accountability are followed in the process of gathering, analysing, interpreting, and presenting evidence for policy.

Brian W. Head (2013) Evidence-Based Policymaking – Speaking Truth to Power? - Australian Journal of Public Administration, vol. 00, no. 0, pp. 1–7

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Clear linkages between dimensions, KPIs, Quality, outcome, patient journey

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Business Modelling, forecasting, system optimisation, clinical and financial information

Purchasing, reusable information, utilisation data

Data in context, easily retrievable data, benchmarking

Organised data, standard platform, consistency, business rules , PPM2

Disorganised Data, no timely retrieval, no reconciliation - financial

Ladder of Business Intelligence (LOBI)

ABF

ABM

START

NOW 2012

2015

Foundations – clinical costing data

Clinical Engagement Education

The Journey to ABM Outcomes

FIRST STEPS…(Baby steps)

ORGANISED DISORGANISED

FACT DATA

NSW Health Silos

Clinical Costing • Finance doesn’t help • Adjustments off GL • No accountability • Processing issues • Rules open to

interpretations

Finance • Input focus • Statutory accounts • Bottom line (>50K CC) • Limited awareness of

potential of Clinical Costing • It doesn’t reconcile

It’s in the P&L

Where?

DNR PROCESS

LHD process costing and run Quality Check in PPM2

LHD run PPM2 DNR Module

LHD Review Fatal and Warning Validation Report

Require change

Load DNR File to MoH

Secure File Transfer and Submit to ABF Taskforce

Casemix server Picks up and validate the DNR files

SAS Picks up Activity IP, ED, NAP and Expense - Process Encounter level

quality checks - Generate Quality

report and scores

RQ App Display - Reasonableness report - SAS QA report

DRAFT SUBMISSION FINAL DNR

LHD agree on final submission

LHD Complete Reconciliation

Schedule

CE Signoff Letter Completed

Costing Team review

Reconciliation

LHD review flagged issue

Casemix server Generate aggregate Reasonableness Report

State Price

ABM Portal

PHEC

NHCDC

HEX

ROGS

MHE NMDS

DNR DATA FLOW

PHEC – Public Hospital Establishment Collection NHCDC – National Hospital Cost Data Collection MHE NMDS – Mental Health Establishments National Minimum Dataset HEX – Health Expenditure ROGS – Report on Government Spending

One submission

multiple use

Preliminary results – ↑Reliability

• Increase consistency and reliability of costing results – Finance requirements – Reconciliation to Audited Annual Return

• All cost must be allocated – Documented applicable standards

• Cost Accounting Guidelines addressed peculiar issues pertaining NSW Accounting standards (Funding for Affiliate Health Organisations)

SECOND STEP

BENCHMARKING ORGANISED

DATA information

• Costing Standards User Group (CSUG)

• Cost Accounting Guidelines (CAG)

• Clinical Review

– NSW Workgroups

• CE Sign off of DNR – letter template

Governance

DNR GOVERNANCE

LHD/SHN

Chief Executive

Local Structure

Costing Officer

NSW Health

Director ABF Taskforce

Costing Team

CSUG

CAG

IHPA

JAC

NHCDC AC

AHPCS

CSUG – Costing Standards User Group CAG – Cost Accounting Guidelines IHPA – Independent Hospital Pricing Authority JAC – Jurisdiction Advisory Committee NHCDC AC – National Hospital Cost Data Collection Advisory Committee AHPCS – Australian Hospital Patient Costing Standards

DNR Timeline

The ABM Portal

DESCRIPTION An online patient and activity data interrogation application to compare and benchmark hospital performance and examine real patient journeys across facilities and over time.

PURPOSE To assist clinicians and managers in managing unwarranted cost and clinical variation, evaluating models of care and identifying the impact of funding on patient care delivery.

CURRENT STATUS Available to nominated users in all NSW Local Health Districts (LHDs), Specialty Health Networks (SHNs) and MoH.

The ABM Portal

• Benchmarking hospitals/LHD cost and ALOS performance

• Following a single patient journey • Drill down to individual cost buckets

for a patient/procedure

• Find diagnoses with highest o Ave cost per NWAU o Number of NWAUs o ALOS o Encounter volume

Benchmark

Compares LHDs/SHNs’ or facilities’ costs, number of encounters, average length of stay, and NWAU volume in one financial

year

DRG C16Z Lens Procedures

LHD 1– Cost per NWAU above

State Price

LHD 1 – 425 NWAU

Clinical Variation Major Hospitals Peer Group Facilities

Identifies models of care that need to be addressed

DRG E65B Chronic Obstructive Airways Disease

Is there variation in

average cost per encounter

between facilities?

How does ALOS

compare?

Does any ‘cost bucket’ stand out?

THIRD STEP (Make the most out of it)

USABLE Benchmarking

information knowledge

ENSURING DATA QUALITY

• Standardisation

• QA Reports

• DNR Module and SQL Validations

• Draft Submission

• Reasonableness and Quality (RQ) Application

Ensuring Data Quality

• SQL for PPM2 queries developed centrally and distributed to Costing Teams

• PPM2 Standard QA reports

• Aligned with National QA

• Reviewed yearly

• Other aspects in Reconciliation and sign off

Quality Assurance Reports

Using metrics to score the quality of costing data

NSW Health ABF data processes include a newly developed step which focuses on data quality and issue a scoring system

The Reasonableness and Quality Application allows all LHDs to review how their scored against the metric for patient level costing data before formally submitting the results to the Ministry

The described process has been designed as part of the continuous improvement cycle around patient level costing

Built and published for the use of staff involved in the preparation and review of the District & Network Return (DNR)

A consolidation of the Reasonableness tests and the Data Quality Checks encounter (which are generated in SAS) and distributed via our RQ App.

Only Used in the Draft submission periods to identify encounters that have outlier cost results which may or may not require remediation – Draft DNR submissions made prior to 3.30 pm are included

in the RQ app which is refreshed by 9 am the next business day

The RQ App is…

The RQ App

The Reasonableness section is a series of reports that look at the

average cost results at an aggregate level and will identify

any significant anomalies.

The Quality section is a series of patient level data quality

checks that are run for ABF facilities only.

Data quality checks are assigned a score to provide an indication of the data quality. Quality checks

are either a pass (1) or fail (0) or a score between 0 and 3 depending

on the number of errors.

Patient-level Data Quality Checks

52 validations with a pass/fail or scaled score across all ABF workstreams

Missing data

• Episode is missing costs (eg. No recorded nurse salary and wages cost)

• Prostheses costs missing or outside national limits

• Episode of care type missing or inconsistent with class

Data inconsistent with the average

• Record has costs too high or too low compared to the average

• Record is identified as a possible outlier within the classification

Error codes used

• Record or mode of separation is given an error code (eg. DRG 960Z - Ungroupable)

Data mismatching

• Mismatch of ICU costs and ICU hours

• Mismatch of Surgical DRG recorded and Operating Theatre costs

• Mismatch of EMU and ED costs

• L61Z Haemodialysis average cost and Tier 2 10.10 Renal Dialysis at hospital average cost are within +-10%

Patient-level Data Quality Checks

52 validations with a pass/fail or scaled score across all ABF workstreams

This will inform the ABF Taskforce as to whether some or all of the records that may have a significant or material impact on the average cost, should be included or excluded in the calculation of the State Price for 2016/17.

RQ App: Summary - Reasonableness

RQ App: Top 20 Variance

RQ App: Feeder systems

DNR AUDIT PROGRAM

Current Audit Program

Audit Test DNR 2011/12

DNR 2012/13

DNR 2013/14

Financial Reconciliation Test Yes Yes Yes FMIS adjustment Test Yes Yes Yes Non Patient Product sub program Test Yes Yes Yes Facility level non admitted sub programs expense and activity alignment Test

Yes Yes Yes

Program Fraction Test (especially for T&R) No Yes Yes

Patient Product Cost Test No No Yes

New Audit Program NSW Auditor General recommendation

Annual audit (mandatory)

Consultant engaged to develop program

Rollout 20th July

This is in addition to the Independent Financial Review conducted by IHPA

Planning Current

Inputs Developing

Internal Audit Program

Developing Testing Program

Test audits Implementing roll-out

test audits by June 2015

Audit objective: DNR is fit for purpose and provides consistent and accurate data

Conducted by Internal Audit teams within each LHD/SHN

Attestation will need to be submitted to Secretary

Risk based with three lines of inquiry:

– Is patient data reliable and accurate?

– Are costing methodologies used appropriate and robust?

– Does preparation of DNR comply with NSW CAG?

New Audit Program

Following the patient journey

The ABM Portal allows users to track one patient’s care across all health workstreams – ED, acute, subacute, non-

admitted – at a single facility over the years.

How has Patient A’s treatment progressed since 2011 and what are their hospital costs?

Frequent Patients

Displays frequently admitted patients at an LHD/SHN or

facility to analyse readmission and

representation rates

Patient A: 58 ED encounters 323 days in hospital Total ED cost: $32,291

Patient A 2011-12

ABM PORTAL Single Patient Journey

Chronologically details single patient journey at a facility: treatment

received, number of encounters, cost per encounter, and length of stay.

TOTAL COST: $11,005

Patient A 2012-13

ABM PORTAL Single Patient Journey

TOTAL COST: $65,887

Chronologically details single patient journey at a facility: treatment

received, number of encounters, cost per encounter, and length of stay.

Patient A 2013-14

ABM PORTAL Single Patient Journey

Chronologically details single patient journey at a facility: treatment

received, number of encounters, cost per encounter, and length of stay…

TOTAL COST: $47,722

Patient A 2014-15 (half year)

ABM PORTAL Single Patient Journey

Chronologically details single patient journey at a facility: treatment

received, number of encounters, cost per encounter, and length of stay…

…Across years

TOTAL COST: $10,671

Focusing on measuring improvements year on year

Strengthening Internal Audit skills

Leverage more from the draft submission time

Next Steps

Is it just about the numbers?

“Businesses don’t run on numbers, they run on responses to numbers”

Bri Williams, New Truths About Numbers, In the Black