New South Wales report, April 2013

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In this report:

This report includes the following tables:

This report is issued by the Administrator of the National Health Funding Pool under section 240 of the National Health Reform Act 2011.

This report is prepared on a cash basis. It shows monthly and year-to-date (YTD) National Health Reform (NHR) funding and payments for New South Wales for April 2013 as part of the National Health Reform Agreement.

Participation in the National Health Funding Pool – New South Wales, April 2013

In signing the National Health Reform Agreement (the Agreement), it was the intention of all states and territories that they would have the necessary legislation in place to enable them to participate in the National Health Funding Pool from 1 July 2012.

New South Wales has participated in the National Health Funding Pool since 1 July 2012.

Local hospital networks and National Health Reform

A local hospital network (LHN) is an organisation that provides public hospital services in accordance with the Agreement. A local hospital network can contain one or more hospitals, and is usually defined as a business group, geographical area or community. Every Australian public hospital is part of a local hospital network.

Note: The term ‘local hospital network’ is a national term. Some states and territories use their own terminology to describe these networks, such as local health districts, health organisations, and hospital and health services.

Under the Agreement, local hospital networks receive funding for the following public hospital services:

  • All admitted and non-admitted services
  • All emergency department services provided by a recognised emergency department
  • Other outpatient, mental health, sub-acute services and other services that could reasonably be considered a public hospital service.

Note: Local hospital networks also receive funding from other sources, including the Commonwealth, states and territories, and third parties for the provision of other specific functions and services outside the scope of the Agreement, for example dental services, primary care, home and community care, residential aged care and pharmaceuticals. For further information on total funding to a particular local hospital network, contact the NSW Ministry of Health to view the service agreement for that local hospital network.

Basis for National Health Reform payments – New South Wales, April 2013

For the basis of the Commonwealth contribution to NHR funding, see Basis of Commonwealth NHR funding, 2012-13.

The basis used to determine NHR payments to local hospital networks (LHNs) in New South Wales for April 2013 was advised by the NSW Ministry of Health to be as follows:

Basis used to determine NHR payments to local hospital networks (LHNs) – New South Wales

The process for determining 2012-13 NHR payments to local hospital networks encompassed three distinct elements of preparation for the individual LHN Service Agreements, including development of annual activity estimates, discussion/negotiation of activity levels with individual local hospital networks, and total state-wide activity across each activity type.

Annual activity estimates for inpatient and emergency department services were developed from actual historical activity levels over the previous five years and forecast 2011-12 actual.

Generally, a linear extrapolation model was used to produce a provisional activity estimate for 2012-13 for each local hospital network. The provisional results were then reviewed to take into account volume variations considered excessive (for example, unusually high peaks or troughs in any given year), known capacity enhancements or limitations to physical capacity, population growth projections, current year activity relative to targets.

The resulting activity estimates were provided for the basis of discussion and negotiation with individual local hospital networks to determine agreed 2012-13 activity targets. Activity weights used in these calculations were NSW cost weighted separations – for acute admitted/inpatient services and cost weighted attendances (UDAG) – for emergency department services.

The projections for the acute admitted activity were further split between public, private and compensable weighted patient activity, based on the historic trends at each facility. This allowed for differential funding mechanisms to be applied to the respective service groups to reflect the variation in funding sources available to an individual local hospital network.

Provisional activity estimates for each activity-based funding (ABF) service type were provided to individual local hospital networks for each facility in-scope for ABF funding. The provisional estimates and historical activity measures provided the basis for discussions with individual local hospital networks. Following feedback from local hospital networks, the resultant weighted activity volumes were then incorporated within the Service Agreements issued to all local hospital networks in June 2012.

It is important to note that the activity volume information was subsequently converted into the National Weighted Activity Unit (NWAU) to be multiplied by the state price or average cost. The result led to the development of a Service Agreement for each local hospital network. Also included in the LHN Service Agreement, which is available on each local hospital network website, was activity information in both ‘activity currencies’ those being the standard NSW cost weights, and the new National Weighted Activity Unit (NWAUs).

Due to the lack of available national systems for counting, coding and classification for mental health, subacute, and teaching, training and research services, the amounts presented for these services under block funding are based on an extrapolation from the 2009-10 National Health Cost Data Collection. These cash amounts are estimations for the amounts spent by local hospital networks in 2012-13 and do not necessarily relate directly to numbers of services provided. NSW Health is working with national bodies and other jurisdictions to progress standardised costing methodology for these services.

Cash payments processed within the National Health Funding Pool (NHFP) Payments System and included within the Administrator’s monthly reports are based on the accrued budget for both ABF and in-scope block funding derived from the LHN Service Agreements after deducting an allowance to recognise own sourced revenue earned, and retained by the local hospital networks and liabilities for superannuation and long service leave which are accepted by the Crown.

The resultant cash value is processed through the state pool account (ABF) or the state managed fund (in-scope block). Although a consistent methodology has been applied, variations in cash prices between local hospital networks reflect the differing mix of the above components (own sourced revenue and Crown accepted liabilities) of each local hospital network’s accrued cost.

In addition to receiving weekly cash payments from the state pool account and the state managed fund, local hospital networks also receive direct State Government funding for new initiatives implemented in 2012-13, including start-up funding for new services, such as new intensive care beds and increasing the number of new nurses within local hospital networks to support a reasonable nursing workload. In addition, further cash payments for all “out of scope” services not subject to the National Health Reform Agreement arrangements are also provided to local hospital networks as required under their 2012-13 Service Agreements.

Monthly reports – Basis on which payments were made

For NSW, all dollar values included in the tables issued by the Administrator are cash payments from either the NSW state pool account to local hospital networks or cash payments from the state managed fund to local hospital networks, and one exception that requires a quarterly cash payment to the Victorian Department of Health for NSW contribution for the Albury-Wodonga inter-jurisdictional agreement.

The weekly cash payment to a local hospital network reflects the estimated cost of patient related services anticipated to be delivered during the monthly cash payment period. The estimated monthly activity and the weekly cash payments are determined based on the annual LHN Service Agreements.

Cash payments from the NSW state pool account and from the state managed fund to local hospital networks are processed each Tuesday. Reporting by the Administrator is based on cash payments made during a given month and is therefore dependent on the number of Tuesdays in a particular month. During 2012-13, July 2012, October 2012, January 2013 and April 2013 each have five Tuesdays, with all other months having four Tuesdays. If accrual accounting principles were being applied within the NHFA Payments System, the value of the reported cash payments would recognise only the number of calendar days in a particular month, not the 35 days (five weeks paid) or 28 days (four weeks paid), as reported by the Administrator.

Cash payments to local hospital networks from both the NSW state pool account and state managed fund are generally calculated based on equal weekly instalments to health services unless otherwise negotiated.

Other payments will occur in 2012-13 that are outside the regular weekly (Tuesday) payment cycle. Such payments include the full year insurance premium, quarterly payments to the Australian Red Cross Blood Service, quarterly payments to Victoria Health for the Albury-Wodonga inter-jurisdictional agreement, and payments to other states and territories for NSW residents treated in their public hospitals. Payments to local hospital networks may also vary where their cash entitlement alters during the financial year.

Monthly comparison of cash payments from the NSW state pool and state managed fund can vary month to month predominately due to these planned payments.

In March 2013 total funding deposited into the NSW state pool account exceeded the amount paid to Local Health Networks. This was due to Easter which required NSW to deposit funds into the pool account on 28 March 2013 in advance of a scheduled payment on 2 April 2013.

The cash payments from the NSW state pool account or state managed fund do not reflect the full budgeted funding available to health services in NSW. Other sources of funds available to local hospital networks include separate payments from the Crown (for example, defined superannuation scheme and long service leave cash recovery) as well as own source revenues earned and retained by each local hospital network.

For more information on budget allocations, see the 2012-13 LHN Service Agreements which are available on each NSW local hospital network website.

Reference information

The financial information outlined in the following report is categorised as:

  • NHR funding – when the Commonwealth or state or territory government pays NHR funding into a state pool account or state managed fund.
  • NHR payments – when NHR funding deposited into a state pool account or state managed fund is paid out of the state pool account by the Administrator, or is paid out of the state managed fund by the state or territory.

State pool account transactions

Table 1a – State pool account transactions – New South Wales, April 2013

This table shows funding paid into the New South Wales state pool account by the Commonwealth and New South Wales, and payments out of the state pool account to local hospital networks, the state managed fund, and the NSW Ministry of Health for April 2013.

NHR funding by source Paid into state pool account Paid out of state pool account
To local hospital networks To state
managed
fund
To state
health department
Total paid out
($) ($) ($) ($) ($)
Commonwealth
ABF funding
225,224,690 367,207,891 367,207,891
Commonwealth
Block funding
105,655,010 105,655,010 105,655,010
Commonwealth
Other funding
8,185,088 8,185,088 8,185,088
Total C'wealth
funding
339,064,788 367,207,891 105,655,010 8,185,088 481,047,989
Total state/territory
funding
342,952,837 342,699,310 253,527 342,952,837
Grand Total 682,017,625 709,907,201 105,655,010 8,438,615 824,000,826

See definitions and explanatory notes following table 1b.

Table 1b – State pool account transactions YTD – New South Wales, April 2013

Following on from table 1a, this table shows year-to-date (YTD) funding paid into the New South Wales state pool account by the Commonwealth and New South Wales, and YTD payments out of the state pool account to local hospital networks, the state managed fund, and the NSW Ministry of Health as at April 2013.

NHR funding by source Paid into state
pool account
YTD
Paid out of state pool account YTD
To local hospital
networks
YTD
To state
managed fund
YTD
To state health
department
YTD
Total paid out
YTD
($) ($) ($) ($) ($)
Commonwealth
ABF funding
2,316,308,932 2,316,308,932 2,316,308,932
Commonwealth
Block funding
1,086,879,033 1,086,879,033 1,086,879,033
Commonwealth
Other funding
83,349,416 83,349,416 83,349,416
Total C'wealth
funding
3,486,537,381 2,316,308,932 1,086,879,033 83,349,416 3,486,537,381
Total state/territory
funding
3,935,543,030 3,933,859,344 1,683,686 3,935,543,030
Grand Total 7,422,080,411 6,250,168,276 1,086,879,033 85,033,101 7,422,080,411

Commonwealth ABF funding represents Acute admitted public, Acute admitted private, Non-admitted, and Emergency department service categories, which are funded by the Commonwealth through the state pool account and subsequently paid to local hospital networks.

Commonwealth Block funding represents Mental health, Small rural and metropolitan hospitals, Sub-acute, Teaching, training and research, and Other categories, which are funded by the Commonwealth and paid to the state managed fund.

Commonwealth Other funding represents other amounts funded by the Commonwealth, transacted through the state pool account and subsequently paid to state or territory health departments. This currently represents the Commonwealth contribution to public health.

State/territory funding represents funding contributions paid by New South Wales into its own state pool account, and subsequently paid to local hospital networks within the state and/or to state or territory health departments.

Note: The grey shaded areas in these tables reflect that these amounts are not applicable for a particular 'paid out' column. For example, Commonwealth block funding is only paid to state managed funds and is not applicable for local hospital networks or state or territory health departments.

NHR funding and payments shown in these tables include GST where applicable.

For more information, see National Health Reform funding and payments.

State managed fund transactions

Table 2a – State managed fund transactions – New South Wales, April 2013

This table shows funding paid into the New South Wales state managed fund by the Commonwealth and New South Wales, and payments out of the state managed fund to local hospital networks and other provider organisations for April 2013.

NHR funding by source Paid into state managed fund Paid out of state managed fund
To local hospital networks To Other Total paid out
($) ($) ($) ($)
Commonwealth Block funding 105,655,010 105,655,010
State/territory Block funding 212,212,467 212,212,467
Total 317,867,478 300,867,478 17,000,000 317,867,478

See explanatory notes following table 2b.

Table 2b – State managed fund transactions YTD – New South Wales, April 2013

Following on from table 2a, this table shows year-to-date (YTD) funding paid into the New South Wales state managed fund by the Commonwealth and New South Wales, and YTD payments out of the state managed fund to local hospital networks and other provider organisations as at April 2013.

NHR funding by source Paid into state
managed fund
YTD
Paid out of state managed fund YTD
To local hospital
networks
YTD
To Other
YTD
Total paid out
YTD
($) ($) ($) ($)
Commonwealth Block funding 1,086,879,033 1,086,879,033
State/territory Block funding 1,855,502,419 1,855,502,419
Total 2,942,381,453 2,866,881,453 75,500,000 2,942,381,453

Block funding represents Mental health, Small rural and metropolitan hospitals, Sub-acute, Teaching, training and research, and Other categories.

Commonwealth Block funding represents Commonwealth block funding contributions paid into the state managed fund from the state pool account, and block payments out of the state managed fund to local hospital networks and other provider organisations.

State/territory Block funding represents New South Wales block funding contributions into the state managed fund, and block payments out of the state managed fund to local hospital networks and other provider organisations.

Note: The grey shaded areas in these tables reflect that these block payments cannot at this stage be identified by source of funding (state, territory or Commonwealth contribution).

NHR funding and payments shown in these tables include GST where applicable.

For more, see National Health Reform funding and payments.

NHR funding and payments by service category

Table 3 – NHR funding and payments by service category – New South Wales, April 2013

This table shows NHR funding and payments by service category on both a monthly and year-to-date (YTD) basis for New South Wales for April 2013. NHR funding and payments are separated into the following service categories – activity-based funding (ABF), block funding, and other funding.

Service category NHR funding NHR payments NHR funding
YTD
NHR payments
YTD
($) ($) ($) ($)
ABF
Acute admitted - public 350,883,272 438,605,464 3,862,586,111 3,862,586,111
Acute admitted - private 48,463,096 60,579,111 531,522,498 531,522,498
Non-admitted 94,778,651 118,473,705 1,043,101,336 1,043,101,336
Emergency department 73,798,981 92,248,920 812,958,331 812,958,331
Total ABF (Pool) 567,924,000 709,907,201 6,250,168,276 6,250,168,276
Block
Mental health 88,312,717 88,312,717 857,710,492 857,710,492
Small rural and metro hospitals 68,279,860 68,279,860 604,984,241 604,984,241
Sub-acute 60,405,230 60,405,230 584,921,734 584,921,734
Teaching, training and research 34,773,520 34,773,520 352,232,190 352,232,190
Other 66,096,151 66,096,151 542,532,795 542,532,795
Total Block (SMF) 317,867,478 317,867,478 2,942,381,453 2,942,381,453
Other
Public health funding 8,185,088 8,185,088 83,349,416 83,349,416
Overdeposit 0 0 0 0
Cross-border 0 0 0 0
Interest 253,527 253,527 1,683,686 1,683,686
Total Other (Pool) 8,438,615 8,438,615 85,033,101 85,033,101
Grand Total 894,230,092 1,036,213,293 9,277,582,830 9,277,582,830

Total ABF (Pool) is an aggregate of both Commonwealth and state or territory NHR funding and payments for activity-based funding (ABF) which is transacted through the state pool account.

Total Block (SMF) is an aggregate of both Commonwealth and state or territory NHR funding and payments for block funding which is transacted through the state managed fund (SMF).

Total Other (Pool) represents other funding and payments, which are transacted through the state pool account, including public health funding, overdeposits, cross-border funding and payments, and interest. State and territory cross-border payments can either be:

  • Paid to the relevant state or territory's local hospital networks - included within ABF and/or block payments in the above table, or
  • Reimbursed to the relevant state or territory where the state or territory's local hospital networks are already being funded for the cost of treating cross-border patients - shown in the Cross-border row under Other in the above table.

Cross-border funding arrangements between states and territories are yet to be put in place for state and territory contributions.

NHR funding and payments shown in these tables include GST where applicable.

For more information, see National Health Reform funding and payments.

NHR payment distribution by local hospital network

Table 4 – NHR payment distribution by local hospital network – New South Wales, April 2013

This table shows NHR payments (from state, territory and Commonwealth sources) made to each local hospital network (LHN) in New South Wales during April 2013.

NHR payments distributed to local hospital networks (LHNs) are separated into an activity-based funding (ABF) component and a block component.

Local hospital network (LHN) ABF component
(ex GST)
Block component
(ex GST)
Total NHR payments
(ex GST)
($) ($) ($)
Central Coast Local Health District 31,887,935 13,867,538 45,755,473
Far West Local Health District 3,717,120 1,951,234 5,668,354
Hunter New England Local Health District 78,740,000 49,551,742 128,291,742
Illawarra Shoalhaven Local Health District 37,339,265 14,478,189 51,817,454
Justice Health & Forensic Mental Health Network 0 4,743,000 4,743,000
Mid North Coast Local Health District 25,423,340 9,564,746 34,988,086
Murrumbidgee Local Health District 15,837,860 15,883,851 31,721,711
Nepean Blue Mountains Local Health District 31,107,300 10,542,154 41,649,454
Northern NSW Local Health District 31,478,785 14,574,979 46,053,764
Northern Sydney Local Health District 57,166,310 23,566,550 80,732,860
South Eastern Sydney Local Health District 74,609,695 22,931,315 97,541,010
South Western Sydney Local Health District 79,890,400 23,083,728 102,974,128
Southern NSW Local Health District 11,734,109 11,738,533 23,472,642
St Vincent's Health Network 22,766,260 3,372,871 26,139,131
Sydney Children's Hospitals Network 35,510,685 5,103,801 40,614,486
Sydney Local Health District 73,304,807 23,074,254 96,379,061
Western NSW Local Health District 22,778,865 33,852,680 56,631,545
Western Sydney Local Health District 76,614,465 18,986,315 95,600,780
Total 709,907,201 300,867,478 1,010,774,679

A local hospital network (LHN) is an organisation that provides public hospital services in accordance with the National Health Reform Agreement. A local hospital network can contain one or more hospitals, and is usually defined as a business group, geographical area or community. Every Australian public hospital is part of a local hospital network.

NHR payments in this table are GST exclusive to enable comparability of NHR payments in each local hospital network report.

Note: This table excludes GST and payments to other provider organisations (non-local hospital networks).
The majority of government funding to local hospital networks is not subject to GST. However in some cases hospital funding to non-government entities does attract GST, for example, denominational hospitals, privately and commercially owned health facilities, or any other non-government third party provider of health services or related supplies.

For more information, see National Health Reform funding and payments.

Estimated monthly, YTD and annual NWAU by local hospital network

States and territories provide NHR funding amounts and service volumes as service estimates at the start of each financial year, and if required, can continue to refine these estimates during the course of the year. These estimates form the basis of monthly reporting of service volumes until actual service numbers become available. These estimates are expressed as National Weighted Activity Units (NWAU).

States and territories provide estimated annual NWAU to the Administrator as a basis for determining the Commonwealth activity-based funding. Current month NWAU estimates accumulate through the year-to-date (YTD) NWAU, to be equal to the annual NWAU at the end of the financial year.

Table 5 – Estimated monthly, YTD and annual NWAU by local hospital network – New South Wales, April 2013

This table shows estimated state or territory hospital activity for activity-based funding services expressed as NWAU for April 2013, the associated cumulative year-to-date (YTD), and total estimated annual NWAU for each local hospital network in New South Wales.

Local hospital network (LHN) Estimated NWAU delivered in current month Estimated NWAU delivered YTD Estimated annual NWAU 2012-13
Central Coast Local Health District 8,156 71,739 84,725
Far West Local Health District 984 8,658 10,232
Hunter New England Local Health District 20,147 176,865 208,303
Illawarra Shoalhaven Local Health District 8,084 71,139 84,073
Mid North Coast Local Health District 5,780 50,854 60,088
Murrumbidgee Local Health District 3,382 29,747 35,131
Nepean Blue Mountains Local Health District 6,671 58,683 69,316
Northern NSW Local Health District 7,236 63,545 74,947
Northern Sydney Local Health District 13,763 120,401 141,176
South Eastern Sydney Local Health District 17,367 152,796 180,524
South Western Sydney Local Health District 20,295 189,120 217,983
Southern NSW Local Health District 2,599 22,872 27,031
St Vincent's Health Network 5,038 44,314 52,334
Sydney Children's Hospitals Network 7,960 69,886 82,362
Sydney Local Health District 18,860 160,645 180,897
Western NSW Local Health District 5,687 49,593 57,898
Western Sydney Local Health District 16,373 142,068 164,543
Total 168,382 1,482,925 1,731,562

An NWAU is a measure of health service activity expressed as a common unit. It provides a way of comparing and valuing each public hospital service, whether they are admissions, emergency department presentations or outpatient episodes, by weighting them for their clinical complexity. The average hospital service is worth one NWAU - the most intensive and expensive activities are worth multiple NWAU, the simplest and least expensive are worth fractions of an NWAU.

Monthly NHR payments relate to the cash needs of public hospitals and do not necessarily reflect the volume of services to be delivered in the month.

For more information on the NWAU calculation, see Calculation of NWAU.