Budget Allocations

Northern NSW Local Health District Initial Budget Allocations and Activity

Northern NSW LHD remains committed to Activity Based Funding (ABF) as a corner stone of budget transparency and devolution, providing patient-focused insight for decision-making in health care.

This fifth year of NSW Health ABF budgeting reflects the maturity of the funding model as we progress with expanding its coverage and application.

The LHD Service Agreement with the MOH provides the basis on which anticipated patient volumes are notified to the Administrator of the National Health Funding Pool.

NSW State Price

The NSW State Price per National Weighted Activity Unit (NWAU17) applicable for 2017/18 is $4,691. This price is not directly comparable with last year’s State Price ($4,605 per NWAU16) as IHPA, in its annual National Efficient Price Determination, has further refined the NWAU price weight values. The 2017/18 State Price reflects year on year changes in average cost per NWAU which are influenced by productivity improvements, changes in input cost, better capture and reporting of activity and refinements in standardisation of cost allocation.

Purchasing Model Improvements

In 2017/18, the activity target-setting methodology has been further refined. Weighted population growth (adjusted for age and gender) continues to be the primary basis of activity growth.

The purchasing model includes several adjustors focused on patient outcomes. Two of these adjustors – unplanned readmissions and potentially preventable hospitalisations – have been retained with technical refinements applied to both. This includes changes to make the unplanned readmissions more sensitive to differences in hospital peer groups and the underlying casemix experienced in each District or Network.

Further outcome-related adjustors have been introduced in 2017/18. These focus on Emergency Treatment Performance (ETP), Hospital Acquired Complications (HAC), Data Quality, Emergency Representations, Telehealth, Mental Health Readmissions and Mental Health Post Discharge Community Care. ETP focuses on the time take to treat Emergency patients and HAC focuses on occurrence of hospital-acquired complications (specifically with respect to pressure injuries, deep vein thrombosis and pulmonary embolism).

Planned service changes, capacity increases and cross-border flows have also been taken into consideration when determining the activity targets. This provided additional activity, over and above the base growth figures derived from the model.

Activity Targets, Small Hospitals

A NSW Small Hospitals Funding model has been introduced in 2017/18 to support a better interface in patient care between rural ABF hospitals and small hospitals. This is particularly applicable to the rural Districts. The new model adopts a fixed and variable cost methodology and replaces the previous model based on the IHPA small hospitals model. Where additional activity in a small hospital has been negotiated the NSW State price has been applied to this activity. Under this model, the variable price for delivering additional activity from small hospitals has been pegged to the 2017/18 State Price.

 

Further technical information regarding the NSW Small Hospitals funding model is available in the NSW Activity Based Management (ABM) and Activity Based Funding (ABF) Compendium 2017/18.