New South Wales report, December 2015

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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 December 2015 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, December 2015

For the basis of the Commonwealth contribution to NHR funding, see Basis of Commonwealth NHR funding, 2015-16.

The basis for NHR payments to local hospital networks (LHNs) in New South Wales 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 2015/16 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 NWAU15, which is different from the previous year (NWAU14).

The Independent Hospital Pricing Authority (IHPA) has issued the second National Efficient Cost (NEC15) funding model that applies to small regional and remote hospitals. NSW has adopted the mechanics of this funding model expressed in the NEC15 matrix to determine the aggregate 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 2015/16 a series of elements will be applied to each in-scope service stream to ensure that activity targets are tailored to the requirements and patterns of each LHD/SHN. Activity targets are developed by the Ministry and LHDs/SHNs based on analysis of activity level drivers. This analysis was informed for 2015/16 by the following factors:

  • Weighted population change: providing an indication of expected 'natural' growth
  • Recent trends in activity growth for each LHD/SHN
  • Rate of unplanned re-admissions within 28 days
  • Potentially preventable hospitalisations (PPH)
  • Relative Utilisation Rate adjusted for relevant demographic factors
  • Service quality and appropriateness performance in selected key area
  • Inter-district and cross-border flows (where relevant)
  • Current year activity relative to targets (for adjustment of baseline volumes, where relevant)
  • Known service changes and developments, including planned capacity increases.

Price weight adjustments which are being applied in 2015/16 include:

  • Paediatric Adjustment;
  • Specialist Psychiatric Age Adjustment;
  • Patient Remoteness Area Adjustment;
  • Indigenous Adjustment;
  • Radiotherapy Adjustment;
  • Dialysis Adjustment;
  • Intensive Care Unit (ICU) Adjustment for eligible facilities;
  • Private Patient Service Adjustment;
  • Private Patient Accommodation Adjustment;
  • Multidisciplinary Clinic Adjustment.

Provisional activity estimates are created at a LHD level to provide the basis for discussion and negotiation with individual health services to determine agreed LHD level activity targets, with the activity volumes measured using the NWAU 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.

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

The negotiation process allows for relevant local LHN service issues and activity impacts 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 2015/16 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 2015/16 for all “out of scope” services not subject to the National Health Reform Agreement arrangements as required under their 2015/16 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 2015/16, September 2015, December 2015, March 2016 and May 2016 each have five 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.

In 2015/16 cash payments to LHNs from the NSW state pool account are generally calculated based on equal weekly instalments to health services unless otherwise negotiated. State Managed Fund cash payments occur as cash is required and dependent on the LHD bank balance in accordance with NSW Treasury Circular TC15-01 Cash Management – expanding the Scope of the Treasury Banking System.

Other payments will occur in 2015/16 that are outside the regular weekly (Tuesday) payment cycle including 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.

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.

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 2015/16 LHN Service Agreements which are available on each NSW LHN website as the Chief Executive and Board of the LHN's provide sign-off.

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, December 2015

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 December 2015.

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
375,957,766 375,957,766 375,957,766
Commonwealth
Block funding
51,539,741 51,539,741 51,539,741
Commonwealth
Other funding
9,484,929 9,484,929 9,484,929
Total C'wealth
funding
436,982,436 375,957,766 51,539,741 9,484,929 436,982,436
NSW
funding
555,419,837 529,703,369 316,468 25,400,000 555,419,837
Other state/territory funding 11,600,000 0 11,600,000 11,600,000
Total 1,004,002,273 905,661,135 51,539,741 21,401,396 25,400,000 1,004,002,273

See definitions and explanatory notes following table 1b.

Table 1b – State pool account transactions YTD – New South Wales, December 2015

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 December 2015.

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
2,332,430,591 2,332,430,591 2,332,430,591
Commonwealth
Block funding
309,238,447 309,238,447 309,238,447
Commonwealth
Other funding
56,909,572 56,909,572 56,909,572
Total C'wealth
funding
2,698,578,611 2,332,430,591 309,238,447 56,909,572 2,698,578,611
NSW
funding
2,893,159,477 2,818,630,572 1,328,905 73,200,000 2,893,159,477
Other state/territory funding 27,000,000 0 27,000,000 27,000,000
Total 5,618,738,088 5,151,061,163 309,238,447 85,238,477 73,200,000 5,618,738,088

Commonwealth ABF funding represents Acute admitted, Non-admitted, 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 cells that are not applicable for a particular 'paid out' column. For example, Commonwealth block funding is only paid to state managed funds and not to 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, December 2015

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 December 2015.

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 51,539,741 51,539,741
State/territory Block funding 40,162,507 40,162,508
Total 91,702,248 91,702,249 0 91,702,249

See explanatory notes following table 2b.

Table 2b – State managed fund transactions YTD – New South Wales, December 2015

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 December 2015.

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 309,238,447 309,238,447
State/territory Block funding 190,799,504 190,799,505
Total 500,037,952 450,617,609 49,420,343 500,037,952

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, December 2015

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 December 2015. 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 525,507,006 525,507,006 2,991,897,720 2,991,897,720
Admitted mental health 58,553,634 58,553,634 330,381,850 330,381,850
Sub-acute 47,383,559 47,383,559 268,609,651 268,609,651
Emergency department 110,982,437 110,982,437 632,631,159 632,631,160
Non-admitted 163,234,499 163,234,499 927,540,783 927,540,783
Total ABF (Pool) 905,661,135 905,661,135 5,151,061,163 5,151,061,163
Block
Small rural hospitals 48,148,277 48,148,277 289,420,395 289,420,395
Teaching, training & research 21,051,270 21,051,270 98,342,555 98,342,555
Non-admitted mental health 22,502,701 22,502,702 112,275,002 112,275,002
Other non-admitted services 0 0 0 0
Total Block (SMF) 91,702,248 91,702,249 500,037,952 500,037,952
Other
Public health funding 9,484,929 9,484,929 56,909,572 56,909,572
Overdeposit 0 0 0 0
Cross-border 37,000,000 37,000,000 100,200,000 100,200,000
Interest 316,468 316,468 1,328,905 1,328,905
Total Other (Pool) 46,801,396 46,801,396 158,438,477 158,438,477
Grand Total 1,044,164,780 1,044,164,781 5,809,537,592 5,809,537,592

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 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, December 2015

This table shows NHR contributions (from state, territory and Commonwealth sources) made to each LHN in New South Wales during December 2015.

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 43,684,413 2,816,155 46,500,568
Contracted Services 745,671 745,671
Far West Local Health District 6,263,426 1,381,187 7,644,613
Hunter New England Local Health District 107,829,586 17,012,984 124,842,570
Illawarra Shoalhaven Local Health District 39,734,016 9,039,198 48,773,214
Justice Health & Forensic Mental Health Network 0 1,216,409 1,216,409
Mid North Coast Local Health District 26,862,818 3,119,086 29,981,904
Murrumbidgee Local Health District 20,866,839 8,474,019 29,340,858
Nepean Blue Mountains Local Health District 41,508,839 3,956,185 45,465,024
Northern NSW Local Health District 36,995,583 3,647,734 40,643,317
Northern Sydney Local Health District 77,677,086 10,016,262 87,693,348
South Eastern Sydney Local Health District 91,542,851 2,926,590 94,469,441
South Western Sydney Local Health District 105,859,694 5,068,145 110,927,839
Southern NSW Local Health District 20,872,728 3,317,005 24,189,733
St Vincent's Health Network 25,589,850 2,616,000 28,205,850
Sydney Children's Hospitals Network 31,221,563 2,345,206 33,566,769
Sydney Local Health District 86,771,794 10,238,785 97,010,579
Western NSW Local Health District 41,544,328 3,088,121 44,632,449
Western Sydney Local Health District 100,090,052 1,423,178 101,513,230
Total 905,661,135 91,702,249 997,363,384

See explanatory notes below table 4b.

Table 4b – NHR contributions by local hospital network YTD – New South Wales, December 2015

This table shows YTD NHR contributions (from state, territory and Commonwealth sources) made to each LHN in New South Wales as at December 2015.

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 245,100,461 12,462,816 257,563,277
Contracted Services 4,473,976 4,473,976
Far West Local Health District 30,044,376 6,629,707 36,674,083
Hunter New England Local Health District 597,377,182 83,393,016 680,770,198
Illawarra Shoalhaven Local Health District 253,780,969 25,850,067 279,631,036
Justice Health & Forensic Mental Health Network 0 27,716,409 27,716,409
Mid North Coast Local Health District 167,709,009 14,249,591 181,958,600
Murrumbidgee Local Health District 115,596,750 34,328,759 149,925,509
Nepean Blue Mountains Local Health District 275,005,668 17,515,679 292,521,347
Northern NSW Local Health District 225,392,665 16,966,452 242,359,117
Northern Sydney Local Health District 435,364,228 36,875,205 472,239,433
South Eastern Sydney Local Health District 518,386,759 14,047,632 532,434,391
South Western Sydney Local Health District 570,280,828 19,288,738 589,569,566
Southern NSW Local Health District 116,224,734 12,609,897 128,834,631
St Vincent's Health Network 123,167,551 12,553,000 135,720,551
Sydney Children's Hospitals Network 203,959,176 12,770,129 216,729,305
Sydney Local Health District 478,274,418 49,146,168 527,420,586
Western NSW Local Health District 231,342,725 47,299,703 278,642,428
Western Sydney Local Health District 559,579,688 6,914,641 566,494,329
Total 5,151,061,163 450,617,609 5,601,678,772

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, December 2015

This table shows estimated state or territory hospital activity for activity-based funding services expressed as NWAU for December 2015, 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 2015-16
Central Coast Local Health District 9,667 58,002 116,003
Contracted Services 359 2,153 4,299
Far West Local Health District 867 5,203 10,416
Hunter New England Local Health District 23,812 142,871 285,735
Illawarra Shoalhaven Local Health District 10,897 65,383 130,773
Mid North Coast Local Health District 7,451 44,706 89,409
Murrumbidgee Local Health District 4,930 29,579 59,151
Nepean Blue Mountains Local Health District 10,037 60,223 120,456
Northern NSW Local Health District 9,272 55,632 111,268
Northern Sydney Local Health District 16,142 96,852 193,707
South Eastern Sydney Local Health District 22,285 133,709 267,407
South Western Sydney Local Health District 22,847 137,083 274,173
Southern NSW Local Health District 4,415 26,490 52,984
St Vincent's Health Network 6,284 37,704 75,410
Sydney Children's Hospitals Network 8,250 49,500 98,995
Sydney Local Health District 19,614 117,684 235,367
Western NSW Local Health District 8,096 48,575 97,144
Western Sydney Local Health District 22,063 132,377 264,749
Total 207,288 1,243,727 2,487,446

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.