New South Wales report, April 2014

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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 2014 as part of the National Health Reform Agreement.

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. An LHN 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 an LHN.

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, LHNs 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: LHNs 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 LHN, contact the NSW Ministry of Health to view the service agreement for that LHN.

Basis for National Health Reform payments – New South Wales, April 2014

For the basis of the Commonwealth contribution to NHR funding, see Basis of Commonwealth NHR funding, 2013-14.

The basis used to determine NHR payments to local hospital networks (LHNs) in New South Wales for April 2014 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 2013-14 NHR payments to LHNs 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 LHNs, and total state-wide activity across each activity type.

Consistent with last year’s methodology and pursuant with the National Health Reform Agreement (NHRA), the Ministry of Health has adopted the National Weighted Activity Unit (NWAU) as the currency for Activity Based Funding with the applicable version being NWAU13, which is different from the previous year (NWAU12). In addition, the scope of services under the NHRA from 1 July 2013 has now been expanded to include Mental Health services (Admitted only) and Sub and non acute services (Admitted and Non Admitted), as such a greater number of facilities are now in scope for ABF.

The Independent Hospital Pricing Authority (IHPA) has also introduced a National Efficient Cost funding model that applies to small regional and remote hospitals. NSW has adopted the mechanics of this funding model expressed in a matrix to determine the funding allocation to LHNs for these small hospitals.

Ensuring access to health services for local populations is a key objective of NSW health policy. The Health Services Act 1997 stipulates that in determining LHN budgets, the Minister have regard to the size and health needs of the local population and provision of services to residents outside the local area. Accordingly, targets are adjusted considering factors appropriate to each LHN and service type, rather than simple extrapolation from historical activity data. The factors considered are reviewed on an annual basis.

In 2013-14 a series of elements were applied to each in scope service stream to ensure that activity targets are tailored to the requirements and patterns of each LHN. Activity targets are developed by the Ministry and LHNs based on analysis of activity levels over four years to 2011-12 plus forecast 2012-13 activity. This analysis was further informed in 2013/14 by the following factors:

  • Weighted population change: providing an indication of expected ‘natural’ growth
  • Rate of unplanned re-admissions within 28 days, to offset growth
  • Potentially preventable hospitalisation (PPH), to offset growth
  • Relative Utilisation Rate (RUR) and Health Need Index (HNI)
  • Inter-district and cross-border flows (where relevant)
  • Current year activity relative to targets
  • Known service changes and developments, including planned capacity increases.

Price weight adjustments which are being applied in 2013-14 include:

  • Specialist paediatric hospitals
  • Aboriginal patients
  • Patients from outer regional, remote or very remote locations
  • Private patients (service and accommodation adjustments).

Provisional activity estimates are generally created at a facility level to provide the basis for discussion and negotiation with individual health services to determine agreed LHN level activity targets, with the activity volumes measured using the weights for each Service Category. Additionally, where applicable, activity estimation is split by financial class to allow differential funding mechanisms to be applied to the respective service groups to reflect the variation in funding source. These financial classes include Public, Private and Compensable (DVA, MVA, Workers Compensation, Other Compensable).

Provisional estimates and historical activity measures provide the basis for discussions with individual Health Services and subsequent negotiations for approval or adjustment.

The negotiation process allows for relevant local LHN service issues and activity impact to be communicated with the NSW Ministry of Health (Ministry) to assess the potential impact on future year activity volumes and the relevance of related service strategies to address these. It is important that negotiation processes recognise that funding and purchasing are undertaken in the environment of a capped State / Commonwealth funding pool for 2013/14 and recognition that NSW contributes the larger portion of these funds as well as being responsible for management of the system as a whole. When negotiations have concluded, the Ministry incorporates the final activity targets in each LHN’s annual Service Agreement. Where an LHN achieves delivery of selected services through Affiliated Health Organisations or contracted services with a private provider these arrangements are to be specified in agreements between the LHN and the respective provider. Both the funding (and subsidy) and associated activity pertaining to such providers are included in the budget and the activity estimates appearing in the LHN’s annual Service Agreement.

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 LHNs 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 LHNs 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, LHNs also receive direct State Government funding for 2013-14 for all “out of scope” services not subject to the National Health Reform Agreement arrangements as required under their 2013-14 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 LHNs or cash payments from the state managed fund to LHNs, 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 an LHN 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 LHNs 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 2013-14, July 2013, October 2013, December 2013 and April 2014 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 LHNs 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 2013-14 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/Territories for NSW residents treated in their public hospitals. Payments to LHNs may also vary where their cash entitlement alters during the financial year.

Cross border payments between NSW and ACT have commenced in March 2014 and will continue monthly.

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. For instance, April payments are higher due to the five payment days instead of the usual four.

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 LHNs include separate payments from the Crown (for example, defined superannuation scheme and long service leave cash recovery) as well as own sourced revenues earned and retained by each LHN.

For more information on budget allocations, see the 2013-14 LHN Service Agreements which are available on each NSW LHN website from 1 September 2013.

In March 2014, the Commonwealth provided New South Wales with additional public hospital funding of $19,061,906.98 under the 2013-14 Mid-Year Economic and Fiscal Outlook (MYEFO) funding measure: Public Hospital System - additional funding. This funding was provided to offset the downward adjustment to 2013-14 NHR funding applied at the MYEFO due to the application of updated NHR funding indexation parameters. A requirement of the provision of this funding was that the funding be provided to LHNs through the National Health Funding Pool and / or State Managed Fund.

The Administrator has been advised by New South Wales that the New South Wales contributions to LHNs through the Pool between March and June 2014 will include this additional funding from the Commonwealth.

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 that has been 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 2014

This table shows funding paid into the New South Wales state pool account by the Commonwealth, New South Wales or other states/territories, and payments out of the state pool account to LHNs, the state managed fund, the NSW Ministry of Health or the state pool accounts of other states/territories for April 2014.

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
To state pool (other State) Total paid out
($) ($) ($) ($) ($) ($)
Commonwealth
ABF funding
290,298,242 290,298,242 290,298,242
Commonwealth
Block funding
58,919,865 58,919,865 58,919,865
Commonwealth
Other funding
8,624,802 8,624,802 8,624,802
Total C'wealth
funding
357,842,909 290,298,242 58,919,865 8,624,802 357,842,909
NSW
funding
612,207,637 605,439,677 207,576 6,560,385 612,207,637
Other state/territory funding 1,191,913 0 1,191,913 1,191,913
Total 971,242,459 895,737,918 58,919,865 10,024,290 6,560,385 971,242,459

See definitions and explanatory notes following table 1b.

Table 1b – State pool account transactions YTD – New South Wales, April 2014

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, New South Wales or other states/territories, and payments out of the state pool account to LHNs, the state managed fund, the NSW Ministry of Health or the state pool accounts of other states/territories as at April 2014.

NHR funding by source Paid Into state
pool account
Paid Out of state pool account
To Local hospital
networks
YTD
To State
Managed Fund
YTD
To state health
department
YTD
To state pool (other State)
YTD
Total paid out
YTD
($) ($) ($) ($) ($) ($)
Commonwealth
ABF funding
2,992,993,226 2,992,993,226 2,992,993,226
Commonwealth
Block funding
571,753,706 571,753,706 571,753,706
Commonwealth
Other funding
86,603,364 86,603,364 86,603,364
Total C'wealth
funding
3,651,350,296 2,992,993,226 571,753,706 86,603,364 3,651,350,296
NSW
funding
4,623,147,979 4,562,408,043 1,696,474 59,043,462 4,623,147,979
Other state/territory funding 10,727,214 0 10,727,214 10,727,214
Total 8,285,225,488 7,555,401,270 571,753,706 99,027,051 59,043,462 8,285,225,488

Commonwealth ABF funding represents Acute admitted public, Acute admitted private, Non-admitted, and Emergency department, Sub-acute, and Admitted mental health service categories, which are funded by the Commonwealth through the state pool account and subsequently paid to LHNs.

Commonwealth Block funding represents Non-admitted mental health, Small rural hospitals, Teaching, training & research, and Other non-admitted 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.

NSW funding represents funding contributions paid by New South Wales into its own state pool account, and subsequently paid to LHNs within the state, to the New South Wales health department and/or to other state pool accounts.

Other state/territory funding represents contributions paid to New South Wales by other states and territories for cross-border activity.

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 2014

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 LHNs and other provider organisations for April 2014.

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 58,919,865 58,919,865
State/territory Block funding 186,022,747 186,022,747
Total 244,942,612 220,513,000 24,429,612 244,942,612

See explanatory notes following table 2b.

Table 2b – State managed fund transactions YTD – New South Wales, April 2014

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 LHNs and other provider organisations as at April 2014.

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 571,753,706 571,753,706
State/territory Block funding 1,139,533,703 1,139,533,703
Total 1,711,287,408 1,591,927,058 119,360,351 1,711,287,408

Block funding represents Non-admitted mental health, Small rural hospitals, Teaching, training & research, and Other non-admitted 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 LHNs 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 LHNs 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 2014

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 2014. 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 YTD NHR
funding
YTD NHR
payments
($) ($) ($) ($)
ABF
Acute admitted - public 466,173,291 466,173,291 3,935,657,701 3,935,657,701
Acute admitted - private 73,097,037 73,097,037 614,672,147 614,672,147
Non-admitted 148,725,498 148,725,498 1,247,627,224 1,247,627,224
Emergency department 104,691,819 104,691,819 883,040,563 883,040,563
Admitted mental health 54,846,559 54,846,559 464,469,463 464,469,463
Sub-acute 48,203,715 48,203,715 409,934,171 409,934,171
Total ABF (Pool) 895,737,918 895,737,918 7,555,401,270 7,555,401,270
Block
Non-admitted mental health 45,618,082 45,618,082 332,660,254 332,660,254
Small rural hospitals 115,656,834 115,656,834 802,651,833 802,651,833
Teaching, training & research 40,701,653 40,701,653 267,537,439 267,537,439
Other non-admitted services 42,966,043 42,966,043 308,437,883 308,437,883
Total Block (SMF) 244,942,612 244,942,612 1,711,287,408 1,711,287,408
Other
Public health funding 8,624,802 8,624,802 86,603,364 86,603,364
Overdeposit 0 0 0 0
Cross-border 7,752,297 7,752,297 69,770,675 69,770,675
Interest 207,576 207,576 1,696,474 1,696,474
Total Other (Pool) 16,584,675 16,584,675 158,070,513 158,070,513
Grand Total 1,157,265,205 1,157,265,205 9,424,759,191 9,424,759,191

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 LHNs - 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 LHNs are already being funded for the cost of treating cross-border patients - shown in the Cross-border row under Other in the above table.

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

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

NHR contributions by local hospital network

Table 4a – NHR contributions by local hospital network – New South Wales, April 2014

This table shows NHR contributions (from state, territory and Commonwealth sources) made to each LHN in New South Wales during April 2014.

NHR contributions to 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 payment
(ex GST)
($) ($) ($)
Central Coast Local Health District 43,776,957 7,630,000 51,406,957
Far West Local Health District 4,272,988 1,693,000 5,965,988
Hunter New England Local Health District 87,936,422 29,903,000 117,839,422
Illawarra Shoalhaven Local Health District 54,947,735 8,623,000 63,570,735
Justice Health & Forensic Mental Health Network 0 22,165,000 22,165,000
Mid North Coast Local Health District 32,036,003 6,025,000 38,061,003
Murrumbidgee Local Health District 19,864,572 25,039,000 44,903,572
Nepean Blue Mountains Local Health District 47,969,711 14,102,000 62,071,711
Northern NSW Local Health District 42,790,836 6,272,000 49,062,836
Northern Sydney Local Health District 77,722,858 30,809,000 108,531,858
South Eastern Sydney Local Health District 95,650,865 14,250,041 109,900,905
South Western Sydney Local Health District 97,391,256 6,429,000 103,820,256
Southern NSW Local Health District 16,864,806 5,131,000 21,995,806
St Vincent's Health Network 22,242,888 1,838,000 24,080,888
Sydney Children's Hospitals Network 47,878,772 6,276,959 54,155,731
Sydney Local Health District 85,118,884 8,083,000 93,201,884
Western NSW Local Health District 33,477,826 14,215,000 47,692,826
Western Sydney Local Health District 85,794,539 12,029,000 97,823,539
Total 895,737,918 220,513,000 1,116,250,918

See explanatory notes below table 4b.

Table 4b – NHR contributions by local hospital network YTD – New South Wales, April 2014

This table shows YTD NHR contributions (from state, territory and Commonwealth sources) made to each LHN in New South Wales as at April 2014.

NHR contributions to LHNs are separated into an activity-based funding (ABF) component and a block component.

Local hospital network ABF component YTD
(ex GST)
Block component YTD
(ex GST)
Total NHR payment YTD
(ex GST)
($) ($) ($)
Central Coast Local Health District 375,773,121 48,098,193 423,871,314
Far West Local Health District 43,979,410 16,522,715 60,502,125
Hunter New England Local Health District 799,152,408 281,874,184 1,081,026,593
Illawarra Shoalhaven Local Health District 422,003,808 59,952,056 481,955,864
Justice Health & Forensic Mental Health Network 0 120,410,032 120,410,032
Mid North Coast Local Health District 244,202,713 69,820,266 314,022,979
Murrumbidgee Local Health District 166,635,396 130,471,613 297,107,009
Nepean Blue Mountains Local Health District 396,865,737 52,369,056 449,234,793
Northern NSW Local Health District 331,532,057 70,239,976 401,772,033
Northern Sydney Local Health District 655,451,006 173,003,536 828,454,541
South Eastern Sydney Local Health District 814,477,839 60,374,909 874,852,748
South Western Sydney Local Health District 887,320,374 52,972,489 940,292,864
Southern NSW Local Health District 153,716,867 50,254,859 203,971,726
St Vincent's Health Network 195,373,165 19,914,183 215,287,348
Sydney Children's Hospitals Network 339,718,597 34,455,287 374,173,883
Sydney Local Health District 742,002,142 92,774,277 834,776,419
Western NSW Local Health District 279,424,366 138,143,712 417,568,077
Western Sydney Local Health District 707,772,265 120,275,714 828,047,978
Total 7,555,401,270 1,591,927,058 9,147,328,327

NHR contributions in this table are GST exclusive to enable comparability of NHR payments in each LHN report.

Note: This table excludes GST.
The majority of government funding to LHNs 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 activity

States and territories provide service volume 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.

States and territories may also provide activity information relating to the delivery of other public hospital functions funded.

Table 5 – Estimated monthly, YTD and annual NWAU by local hospital network – New South Wales, April 2014

This table shows estimated state or territory hospital activity for activity-based funding services expressed as NWAU for April 2014, the associated cumulative year-to-date (YTD), and total estimated annual NWAU for each LHN in New South Wales.

Local hospital network (LHN) Estimated NWAU delivered in current month Estimated NWAU delivered YTD Estimated annual NWAU 2013-14
Central Coast Local Health District 7,950 79,502 95,403
Far West Local Health District 823 8,232 9,878
Hunter New England Local Health District 18,799 187,990 225,587
Illawarra Shoalhaven Local Health District 10,197 101,970 122,363
Mid North Coast Local Health District 5,506 55,057 66,068
Murrumbidgee Local Health District 3,824 38,240 45,888
Nepean Blue Mountains Local Health District 8,652 86,519 103,823
Northern NSW Local Health District 7,399 73,992 88,791
Northern Sydney Local Health District 14,878 148,780 178,536
South Eastern Sydney Local Health District 19,573 195,728 234,873
South Western Sydney Local Health District 22,257 222,567 267,081
Southern NSW Local Health District 3,317 33,169 39,802
St Vincent's Health Network 5,183 51,834 62,200
Sydney Children's Hospitals Network 8,029 80,289 96,346
Sydney Local Health District 17,252 172,517 207,020
Western NSW Local Health District 6,180 61,801 74,161
Western Sydney Local Health District 17,611 176,107 211,328
Total 177,429 1,774,291 2,129,148

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.