Nepean Blue Mountains Local Health District - Accounting and Finance Assignment Help

Assignment Task:

OVERVIEW 

NSW State Price for 2017/18 is $4,691. This has been informed by the 2015/16 clinical costing (District and Network Returns – DNR) results provided by all Districts, which have been subject to the annual internal clinical costing audit, and expressed in NWAU17. As last year’s price was based on NWAU16 a direct comparison between last year’s price and this year’s price is not possible. 

The State price for 2017/18 has also been informed by the cost of all service streams, including Non-Admitted services, which in the past were excluded in setting the State Price. Inclusion of the Non-Admitted stream has been possible since the Non-Admitted services data coverage has improved significantly and is now considered robust enough for informing the State Price. This change will ensure that NSW State Price better harmonise services delivered from the admitted and the non-admitted service. Further technical information will be available in the NSW Activity Based Management (ABM) and Activity Based Funding (ABF) Compendium 2017/18. 

The following notes relate to the specific elements of the Schedule C tables: 

SCHEDULE C - PART 1 

ROW SECTIONS A AND B – ABF EXPENDITURE ALLOCATION 

Activity targets for Acute, Emergency Department, Non-Admitted and Sub-Acute are used to set the ABF budget for these service streams. The value of the NWAU is multiplied against the lower of either the Districts Projected Average Cost (PAC) or the State Price to calculate the expense budget for each category. Growth funding has been provided at State Price for all Districts. For Districts where the PAC does not exceed the State Price, the expense budget for each category represents the sum of multiplying the forecast activity (Column I) by the PAC and the growth activity (Column A less Column I) by the State Price. Therefore, more efficient Districts have been funded for the activity growth at a rate higher than the cost of providing this activity. 

Projected Average Cost Calculation - The PAC (reflected in column D of Schedule C Part 1) has been calculated for all streams, including Non-Admitted Patient. Consistent with the prior year, Mental Health Sub Acute and non-grouped Sub-Acute activity have been excluded from the PAC calculation as there are no price weights for these services. Further information on the elements of the PAC can be found in the ABM Portal. 

Privately referred Non-Admitted services do not have activity targets and therefore are not included in the ABF allocation. A block allocation for these services has been included in the State Only Block section and has been set using the cost reported in the most recent full year clinical costing studies. 

ROW SECTION C – MENTAL HEALTH SERVICES 

This section reflects the budget allocation for Mental Health Services whether funded on an ABF basis or through specific block funding. The principles for funding the ABF component are consistent with those described above for all other ABF services. A small number of standalone psychiatric hospitals have continued to be block funded while the new Australian Mental Health Care Classification is being implemented. 

For 2017/18, Mental Health Non-Admitted services will continue to be shadow funded, which does not adversely impact any District overall Mental Health funding for this stream, using NSW Mental Health Non-Admitted Interim classification. For 2017/18, Districts are shadow funded at their Mental Health Non-Admitted PAC calculated using this interim classification. 

The implementation of the Australian Mental Health Care Classification (AMHCC) occurred over 2016/17 in NSW. This has had an impact on the activity targets reflected in Schedule C which required a temporary funding adjustment to accommodate for the impact of the AMHCC on costing processes. 

As in previous years, a separate transition grant has been identified for Mental Health Admitted stream to maintain the visibility of Government funding commitments for these services. Any Mental Health Transition grant in this section has been calculated in accordance with the principles described below (refer to Row Section F). 

It is important to note that some Mental Health resources are also included in row section D which contains Mental Health services resources allocated to Block Funded Hospitals (Small Hospitals) and Teaching, Training and Research, row section E which contains Mental Health services resources deemed to be out of scope for the National Health Reform Agreement (NHRA), such as some child and adolescent services and row section G gross- up as NWAU values have been discounted for the relative contributions sourced from other funding streams such as private health insurance. 

ROW SECTION D – BLOCK FUNDING ALLOCATION 

Block Funded Hospitals (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. 

Block Funded Services “In Scope” is defined by NSW Cost Accounting Guidelines and has been set on the basis of the most recent full year clinical costing data submitted by Districts accordingly. 

ROW SECTION E-STATE ONLY BLOCK FUNDED SERVICES 

These include state-based services that are not subject to Commonwealth funding contribution under the NHRA. They include a number of population, aboriginal health, community-based services and amounts related to costs associated with the provision of privately referred non-inpatient activity. 

ROW SECTION F – TRANSITION GRANT 

Transition Grants Transition Grants are provided to Districts that reported a projected average cost greater than the State Price in 2017/18. 

In keeping with the methodology for reducing transition grants, Districts with transition grants in Acute and Emergency Department (ED) service streams will continue to fund an element of growth from their transition grant. Consistent with the current procedure, funding of growth from the Non-Admitted stream Transition Grants will not be applied to funding growth until 2019/20 to enable Districts time to address the issues underpinning this component of the Transition Grant. Districts are encouraged to use the data available in the ABM Portal to identify the key cost drivers affecting their overall cost performance. 

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