Activity Based Funding and Management in Western Australia and the National Health Reform

improving care – managing resources – delivering quality

Beress Brooks, Director, ABF/M

Slide 2

Today’s presentation

Principles of the WA ABF Model

National Health Reform - ABF with the State as System Manager

Funding Model for Service Level Agreements in 2012/13

WAUs – where to from here

Slide 3

Activity Based Funding and Management in WA Learning from past experience

Attempt to introduce casemix in 1990s – but lack of broad buy in

Introduced in July 2010 with clear purpose: “to improve safety and quality of care at an efficient price”

Recruited diverse program team: Policy and Strategy Systems and processes Operating model Performance Management Change Management and Communications

Slide 4

Vision for WA ABF/ABM

ABF is the management tool that supports ABM to enhance public accountability and drive technical efficiency in the delivery of health services by: Capturing consistent information on activity and cost of delivery; Creating an explicit relationship between funds allocated and services provided; Strengthening management’s focus on outputs, outcomes, quality and safety; Managing variation in costs and practices to improve efficiency and effectiveness; and Providing mechanisms to reward good practice and support quality and safety initiatives.

Slide 5

Focus on Safety and QualityThe principal aim of ABF / ABM is to deliver safe care of the highest quality in a timely manner, to citizens and patients who need it, at an agreed price.

Maintain / improve

S&Q under ABF/ABM

• Reduce variation• Facilitate improvement• Learn from mistakes• Reward success• Provide incentives /

disincentives• Remove perverse

incentives• Enable long term planning

and investments by health services and AHS

• Avoid gaming and cost shifting

1. Reduce harm

2. Improve technical and allocative efficiency

3. Maximise value

HEALTH CONSUMERS

COUNCIL BOARD

CHAIRS OF CONSUMER ADVISORY COUNCILS

CLINICAL CODING

COORDINATORS, HEALTH

INFORMATION MANAGERSAND WARD CLERKS

HEALTH NETWORKS

ALLIED HEALTH COUNCIL CHAIRS

STATE EXECUTIVE

DIRECTORS OF NURSING

MEDICAL DIRECTORS

FORUM

ABF/ABM CLINICAL COSTING

NETWORK

ABF/ABM CLINICAL

ADVISORY GROUP

NATIONAL HEALTH REFORM

IMPLEMENTATION STEERING GROUP

STATE HEALTH EXECUTIVE

FORUM

OPERATIONS REVIEW

COMMITTEE

MODEL OF CARE IMPLEMENTATION

REVIEW COMMITTEE

FINANCE AND PERFORMANCE

WORKING GROUP

INSTITUTE FOR HEALTH

LEADERSHIP

AREA HEALTH EXECUTIVE

COMMITTEES

HOSPITAL/SITE EXECUTIVE COMMITTEE

ABF/ABM IMPLEMENTATION STAKEHOLDERS

DEPARTMENT OF HEALTH

DIVISIONS

PERFORMANCE, ACTIVITY AND

QUALITY

WORKFORCE

HEALTH INFORMATION

NETWORK

HEALTH CORPORATE

NETWORK

INNOVATION AND HEALTH SYSTEM

REFORM

RESOURCE, STRATEGY AND

INFRASTRUCTURE

STATE HEALTH INFRASTRUCTURE

PLAN

SAFETY AND QUALITY

EXECUTIVE ADVISORY

COMMITTEE

CSO

NETWORK

improving care I managing resources I delivering quality

ABF/ABM BUSINESS

IMPROVEMENT PROJECT CONTROL

GROUP

Broad engagement of corporate and clinical stakeholders from outset of program

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Performance Management Framework (PMF)

The PMF 2012-13 establishes: Performance reporting, monitoring, evaluation, management and

intervention The role of Outcome Measures as Key Performance Indicators The role of Health Service Measures as supporting information

It includes: 23 Key Performance Indicators, targets and thresholds 34 Health Service Measures and targets

It aligns with: The new National Health Performance Authority, Performance and

Accountability Framework The Australian Government MyHosptials website The ACSQHC national core hospital-level outcome indicators

Slide 8

ABF/ABM Management Framework

Integrated management approach to plan, manage, deliver and control services,

activity and financial resources to ensure delivery of safe high quality health services to the

WA community.

Models of Care

(Best practice health care and services across entire continuum)

Safe High Quality and Efficient Health Services across WA

14

Clinical Services Planning

(WA Health Clinical Services Framework 2010-2020)

2

Funding and Costing

(Output based methodology)

3

ABF/ABM framework effectively integrates the key components of health service planning and delivery

Slide 9

National ABF Independent Hospital Pricing Authority (IHPA)

Recommends scope of services Develops national classifications for ABF Develops activity weights and funding model Sets the National Efficient Price (NEP) Uses hospital based costing information (NHCDC)

Phased introduction over 2012/13 & 2013/14 Commonwealth funding a mix of block funding

and ABF

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The National Efficient Price (NEP)

The NEP has two main roles Determining Commonwealth funding to States

and Territories for Public Hospital Services Adjusted to reflect other revenue to States and

Territories e.g. Health funds, Commonwealth funding streams

Providing a price signal about the cost of providing public hospital services and promotes transparency

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National Health Reform will affect:

How information is gathered and categorised Nationally agreed standards and performance

indicators. What information about WA’s public health

services is made available to the public How hospitals and primary care work together in

WA

Commonwealth funding for Public Hospital Services will become more explicit

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National ABF and Western Australia

Builds on the WA implementation of ABF/M for public hospital services

Improve consistency and transparency of national classification and costing

Increased Commonwealth funding for efficient growth in services from 2014/15

State as manager of WA public hospital services

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State is the Health “System Manager”

System wide direction and policy Performance management Setting activity levels and pricing Dominant funder of public hospital services Incorporate national ABF in State Policy

e.g. nWAUs, technical modeling, activity collections, reporting, national classifications, NHCDC and more.

Slide 14

System Manager - Setting Activity Levels

The Clinical Services Framework (CSF) and the underlying demand modelling information is the WA Health blueprint for service delivery

The CSF is influenced by

Area Health Service clinical planning

Infrastructure development

Demand modelling

Models of Care and service delivery options e.g. community based services

Demographic information

Slide 15

State as System Manager ABF Application of Service Delivery

The CSF is the service delivery plan that WA Health takes to Government in its budget request

Subject to the outcome of the budget negotiations the activity and associated funding is allocated to Health Services by the ABF operating model

Slide 16

State as System ManagerSafety and Quality under ABF/ABM

Two main areas of focus

Improving care by reducing adverse events

Improving care by reducing unwanted variation

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Adverse EventsAdverse events can result in an increase in the level of care, prolonged hospitalisation and/or disability at the time of discharge from medical care

The impact of adverse events:

It is estimated that at least 50% of adverse events are preventable*

Local modelling suggests that the cost attributable to adverse events was more than $100M in 2008-09**

On average adverse events increase length of stay by seven to eight days and cost approximately $8000 extra per admission^

Preventable

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Cost $

Low BoundaryThreshold

CE Avg High BoundaryThreshold

NOS

Adverse Event Cost Signature

Cost signature of typical (non-AE) episode

Poor quality and unsafe care often results in adverse events (AEs). In addition to the unnecessary harm to patients, carers and families, AEs impart considerable burden on health care resources.

Source: Office of Safety and Quality in Healthcare, PAQ, WA Health

The Quality Incentive Program (QuIP) provides funds to improve the system performance on long stay patients and adverse events.

Slide 19

Funding Model for 2012/13WA State Price in a National ABF Model

Developing State Price IHPA will determine

National ‘efficient’ price for Commonwealth contribution to Health Services (LHN’s)

DoH WA will determine State prices based on National Model to develop Service Agreement with Health Services

Service Agreement

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National ABF Inpatient Model Features

LOS boundary points (L3;H3)

Short Stay outliers, Inlier, Long Stay Outlier

ICU adjustment Indigenous Patient Loading Outer Regional/Remote

Patient Loading Specialised Paediatric Site

Loading

Similar to WA ABF model in 11/12

Similar concept to WA some method differences

In WA ABF model No direct loading in WA

model WA has regional cost

loadings Included in WA ABF

11/12 – peer groups

Slide 21

Health Services – Service Level Agreement

Activity level Service Agreement Inpatient (WAUs)

Emergency Department (WAUs)

Outpatient Clinics (WAUs) Block Grants

TT&R Small Rural & Remote Hospitals Non admitted mental health Non admitted community based

services Other non activity based services

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WAUs - where to from here

Slide 23

Local Hospital Networks

In WA the terminology will be Heath Services (HS)

•Child and Adolescent HS

•North Metropolitan HS

•South Metropolitan HS

•Northern and Remote Country HS

•Southern Country HS

Slide 24

Does One Size Fit All?

WA recognises the following in data that is not in the proposed national ABF model for 2012/13

•Rural cost differences – distinct by region

•Differences in the cost of providing public hospital services for patients 100KM from Perth compared to 2,000 KM

•Equity for Health Services – five Health Services in WA with population ranging from 225,000 to 950,000

•Peer groups

Slide 25

WA View of Priority National Developments

Classification Sub Acute Mental Health Emergency Department Non Admitted – hospital clinics and community

Costing Standards Teaching, Training and Research Medical Costs

Funding Model Patient attributes to provide equity to States and LHNs

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Focus of ABF/M development work in WA

Develop/enhance processes, people or tools so we:

CollectCountCodeClassifyCost

Understand our business

Fund services appropriately

Improve service efficiency

Improve safety and quality

Make more informed decisions

Negotiate for Commonwealth Funds

Slide 27

WA ABF Infrastructure Development

Non Admitted Services – focus on consistency and comprehensive collection of activity

Sub Acute – significant work program to collect relevant information for sub acute classifications in designated units

Policies and procedures – Admissions, Readmissions, Discharges and Transfers

Clinical Documentation – Clinical Casemix Handbook for clinical staff

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Clinical Costing Development in WA

Trendstar Clinical Costing system being replaced by a statewide implementation of PowerHealth Solutions PPM2

ABM Business Improvement Program

Slide 29

ABF/M Business Improvement Program

Compliance with National Standards Audit of quality and consistency of patient

costing information Review of utilisation of patient costing

information in managing the business Change management focus on clinical and

business staff Focus on round 16 (2011/12) NHCDC costing

collection

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Resources & supports available

http://www.health.wa.gov.au/activity/home