HFMA– November 2017

Neville Onley, Executive Director ABM

Susan Dunn, ABM Manager, Stakeholder Engagement

NSW - Our New Approach

taking the next steps in

engaging clinicians

Activity Based

Management

drives evidence-based decisions. It utilises patient level costing data to inform clinical, operational and strategic objectives. This contributes to maximising value for patient care.

Evolution from ABF

Susan Dunn2

The building blocks : ABC | ABF | ABM | VBM

Alfa D'Amato3

VBM

ABM

ABF

ABC

“For patients, this means safe, appropriate, and

effective care with enduring results, at reasonable cost.

For us, it means employing evidence-based medicine

and proven treatments and techniques that take into

account the patients' wishes and preferences. A critical

component of understanding value is measurement..’ #Darthmouth-Hitchcock

Transformation Journey

Susan Dunn4

Transparency

Responsiveness

Engagement

Applicability

Influencing

Simplicity

Patient Complexity

Transparency: NSW health funding model

Alfa D'Amato5

$0M

$2,000M

$4,000M

$6,000M

$8,000M

$10,000M

$12,000M

$14,000M

$16,000M

$18,000M

Historical Block Budgets NSW New Funding Model

Acute vol* price

ED vol* price

NA vol* price

Sub-acute vol* price

MH vol* price

Other block

Teaching, training & research

State only block

District & Network 2017/18 Initial GF Budget

Growth & Escalations

9%

13%

4%

8%

5%

3%

14%

45%

Funded by ABF

Block funding -applies where it is not practical

to implement ABF

Non-admitted includes Community Health

OutpatientsHome Visits

Applicability/Influencing: Costing Data

Susan Dunn6

PPM 2 Cost per encounter

Health information exchange

Allied Health

General ledger

Pharmacy

Operating theatre

Imaging

Pathology

Inpatient activity from

PAS

Emergency Care activity

7

What is a NWAU?(National Weighted Activity Unit)?

The NWAU is the ‘currency’ used to express the price weights for all services funded on an activity basis

Tier 2: 20.22 Cardiology = 0.0520 NWAU

DRG A10Z Insertion of Ventricular Assist Device (VAD) = 65.1977 NWAU

Ave = 1 NWAU

Relative cost of hospital services

Susan Dunn

Complexity:

Price Purchasing

-$40M

+$62M

^+$2M

+$460M

-$65M

+$11M

Levers over last two years

Susan Dunn

Balance:

NSW Health Funding Model

Design and Principles

Susan Dunn10

Transition GrantsIncentives

Rural Districts

Recognised

Structural CostPrice Setters

Transparency:

Transition Grants 2017/18

11

Transition Grants (TG) - If a LHD/SHN is operating above the State Price, they receive transition grants. TG is the difference between the State Price and the LHD/SHN Projected Average Cost (PAC) to keep the system safe and operating, with expectation that TG will be removed eventually.

Acknowledging that rural LHDs face challenges in achieving economies of scale, RSC was introduced not to penalise regional LHDs.

$40M $43M$57M

$18M $7M$36M

$201M

$140M

$53M

$27M

$13M

$13M

$30M

$35M

$26M

$35M

$30M

$29M

$23M

0

50

100

150

200

250

2012/13 2013/14 2014/15 2015/16 2016/17 2017/18Financial Year

NSW Health Acute/ED Transition Grants

Transition Grants (Regional) Transition Grants (Metro) RSC Growth Funded

$311M

Susan Dunn

Value Generation:

Schedule C

Neville Onley12

Service Agreement,

Schedule C & Budget Notes

Neville Onley14

Transparency/Influencing:

NSW Health Funding Model

Neville Onley15

The NSW health funding model is built on the following components:

Activity Based Funding (ABF) [Base Activity (x) PAC] (+) [Growth Activity (x) State Price]

Small Hospitals Funding Small Hospital's Funding Model

Block Funded Services Historical Allocations for Teaching, Training and Research, Population Health & other State-Only funded services

Simplicity:

Neville Onley16

Transparency Continuum Schedule C

ABF Funding

Block & State Only

Block Funding

Provisions, Adjustments &

Restricted Assess

Transition Grants &

Recognised Structural Cost

Neville Onley18

Engagement/ Responsiveness Approach to Block

Funded Services

Public hospitals or public hospital services not in scope for ABF

will be block funded on the basis of NSW Small Hospital Model.

These historical allocations apply to; NSW Direct Teaching, Training and Research (TTR)

Standalone Specialist Hospitals (psychiatric hospitals & standalone major city hospitals providing specialist services)

Population health and Aboriginal Health

Aged care related services

Small Hospitals

(Funding Model)

Neville Onley19

The formula for calculating State Price is

(Variable Cost x State Weight Activity) + Fixed cost.

This formula allows for variable cost to be pegged

to the State Price for purchasing additional activity.

NSW Health Small Hospitals Funding Model 2017/18 is based on a linear regression

between escalated cost and State Weight to produce State Price.

2017/18 Budget State Price = ($4,250 per NWAU activity x SW Activity) + $1.2M

Responsiveness to

Clinical Initiatives

Responsiveness Recognised Structural

Costs(RSCs)

Allocated to 4 rural LHDs

The five high cost outputs that have been identified for rural Districts are: Visiting Medical Officer (VMO)

Patient Transport

Imaging

Salary and Wages Administration (SWADMIN)

Domestic Supply (DOMSUPPLY)

Methodology based on PE NWAU and upper limits of an Regression model being deemed as non controllable by LHD

Neville Onley21

Recognised Structural Cost

Neville Onley21

ABM – Monthly Monitor

Neville Onley22

Providing the Tools

Providing the Tools

ABM Portal

Alfa D'Amato23

ABM Portal

Susan Dunn24

Providing the Tools

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 all NSW

Local Health Districts (LHDs), Specialty Health

Networks (SHNs) Clinicians and Managers.

Clinician Engagement

Susan Dunn25

Awareness ABM Portal, UCV

Action Understand the rules

Understanding Redesign process locally

Habit Model of care performance

Mastery Business as Usual

Business Case development

Curator Process to gain Insight

Local Health District

Hospital

Specialty

Disease process

Patient journey Appropriate

Safe

Timely intervention

Safety and Quality: ED Sepsis

Susan Dunn26

Awareness

Susan Dunn27

Start Date Class ED Diagnosis

DNR

Patient

No Representation

Avg Cost Per

NWAU(17)

IP ALOS

(Days)

ED ALOS

(Hrs)

31/08/2015 016 - Adm_T2_Circulatory system illness I20.0-Unstable angina J225-0000106166N $7,482 N/A 10.65

31/08/2015 F60B - CIRC DIS+AMI-INVA INV PR,T<5D - J225-0000106166N/A $13,120 3.00 N/A

7/09/2015 081 - Adm_T2_Urolsys illness N17.9-Acute kidney failure unspecif ied J225-0000106166N $2,764 N/A 4.15

7/09/2015 L67A - OTH KIDNY&URNRY TRCT DIS, MAJC - J225-0000106166N/A $9,198 9.00 N/A

18/09/2015 40.59 - Post Acute Care - J225-0000106166N/A $3,119 N/A N/A

3/02/2016 080 - Adm_T2_Sys infection A41.9-Sepsis unspecif ied J225-0000106166N $3,566 N/A 4.17

3/02/2016 J64A - CELLULITIS, MAJC - J225-0000106166N/A $8,842 12.00 N/A

18/02/2016 40.59 - Post Acute Care - J225-0000106166N/A $3,119 N/A N/A

21/03/2016 057 - N-A_T3_All other MDB groups L98.9-Disorder of skin and subcutaneous tissue unspecif ied J225-0000106166N $6,407 N/A 3.58

22/03/2016 019 - Adm_T3_Blood/Imm syst illness A41.9-Sepsis unspecif ied J225-0000106166Y $3,048 N/A 3.67

22/03/2016 F75B - OTHER CIRCULATORY DIS, INTC - J225-0000106166N/A $9,658 13.00 N/A

30/05/2016 116 - N-A_T5_Illness of the skin L03.9-Cellulitis unspecif ied J225-0000106166N $9,266 N/A 3.00

Safety and Quality: ED Sepsis Awareness

Nepean:

I09 Spinal Fusion

28

Understanding

to Insights

Northern NSW

Totally Hip KneeHabit to Mastery

1 :10 patients represented to ED within

21 days

110 bed daysrisks associated with hospitalisation

negatively impacts patient flow

135Kineffective use of resources

6 : 10 patients reported they were not clear

about what to expect

Case for Change: Project Objectives:

To reduce ALOS for Elective TKR and

THR to below peer average by June

2017

To reduce Ave Cost per NWAU for

Elective TKR and THR to below peer

average by June 2017

90% of patients will report that the

information they received adequately

prepared them for managing after

discharge

Redesign Process

30

Habit to Mastery

Northern NSW

Totally Hip Knee

Susan Dunn31

Habit to Mastery

ABM Portal in Action

Susan Dunn32

• SES Service Rationalisation,

• 17 projects underway,• Established Thrombosis service at Sutherland

• Ophthalmology Lens Business case decision

• Sensible Test Ordering Project –Pathology

• Specialty Reviews –Vascular, Renal, Neurology, Cardiothoracic

• LHD Variation Reviews with actionable Insights

• NBMLHD, MLHD, SESLHD Surgery

• ACI Redesign Schools• Totally Hip and Knee,

• Improving Utilisation of MH beds:

• Pathology Ordering Patterns at WNSW,

• Readmissions within Cumberland,

• Redesign of Midwifery Services, Macksville

Key Message

Susan Dunn33

• Extensive accessible data, capitalise on the ABM tools

• Understanding your hospital/specialty activity and cost to influence your

Clinicians

• Working with Clinicians, you can’t expect them to do it on their own

• Together shape the funding allocation decisions

• A transformational journey which requires you to evolve and embark

on capability building