New South Wales report, March 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 March 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, March 2015

For the basis of the Commonwealth contribution to NHR funding, see Basis of Commonwealth NHR funding, 2014-15.

The basis used to determine NHR payments to LHNs in New South Wales for March 2015 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 2014/15 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 NWAU14, which is different from the previous year (NWAU13).

The Independent Hospital Pricing Authority (IHPA) has issued the second National Efficient Cost (NEC14) funding model that applies to small regional and remote hospitals. NSW has adopted the mechanics of this funding model expressed in the NEC14 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 2014/15 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 2014/15 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 (RUR) and Health Need Index (HNI)
  • 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 2014/15 include:

  • Specialist paediatric hospitals
  • Specialist psychiatric age adjustment
  • Aboriginal patients
  • Patients from outer regional, remote or very remote locations
  • Private patients (service and accommodation adjustments).
  • Radiotherapy
  • Intensive Care Unit applicable to a selected list of hospitals

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 2014/15 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 2014/15 for all “out of scope” services not subject to the National Health Reform Agreement arrangements as required under their 2014/15 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 2014/15, July 2014, September 2014, December 2014 and March 2015 each have five Tuesdays. June 2015 also has 5 Tuesdays however the week 52 payment (final payment) occurs on 23 June. All other months have 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 2014/15 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.

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 2014/15 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, March 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 March 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
330,367,595 330,367,595 330,367,595
Commonwealth
Block funding
62,339,317 62,339,317 62,339,317
Commonwealth
Other funding
9,059,252 9,059,252 9,059,252
Total C'wealth
funding
401,766,164 330,367,595 62,339,317 9,059,252 401,766,164
NSW
funding
594,496,862 587,073,653 133,931 7,289,279 594,496,862
Other state/territory funding 1,338,551 0 1,338,551 1,338,551
Total 997,601,576 917,441,248 62,339,317 10,531,733 7,289,279 997,601,576

See definitions and explanatory notes following table 1b.

Table 1b – State pool account transactions YTD – New South Wales, March 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 March 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
3,017,157,982 3,017,157,982 3,017,157,982
Commonwealth
Block funding
550,452,111 550,452,111 550,452,111
Commonwealth
Other funding
81,310,388 81,310,388 81,310,388
Total C'wealth
funding
3,648,920,480 3,017,157,982 550,452,111 81,310,388 3,648,920,480
NSW
funding
4,093,149,503 4,026,011,692 1,534,303 65,603,509 4,093,149,503
Other state/territory funding 12,046,955 0 12,046,955 12,046,955
Total 7,754,116,939 7,043,169,673 550,452,111 94,891,646 65,603,509 7,754,116,939

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, March 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 March 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 62,339,317 62,339,317
State/territory Block funding 59,210,173 59,210,173
Total 121,549,490 121,518,882 30,608 121,549,490

See explanatory notes following table 2b.

Table 2b – State managed fund transactions YTD – New South Wales, March 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 March 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 550,452,111 550,452,111
State/territory Block funding 808,822,319 808,822,319
Total 1,359,274,430 1,288,450,646 70,823,784 1,359,274,430

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, March 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 March 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 529,139,604 529,139,604 4,107,634,735 4,107,634,735
Admitted mental health 61,112,219 61,112,219 473,504,705 473,504,705
Sub-acute 50,750,974 50,750,974 395,860,330 395,860,330
Emergency department 109,005,381 109,005,381 837,482,040 837,482,040
Non-admitted 167,433,071 167,433,071 1,228,687,864 1,228,687,864
Total ABF (Pool) 917,441,248 917,441,248 7,043,169,673 7,043,169,673
Block
Small rural hospitals 64,758,274 64,758,274 798,377,987 798,377,987
Teaching, training & research 20,569,381 20,569,381 206,547,511 206,547,511
Non-admitted mental health 26,660,046 26,660,046 274,826,112 274,826,112
Other non-admitted services 9,561,789 9,561,789 79,522,820 79,522,820
Total Block (SMF) 121,549,490 121,549,490 1,359,274,430 1,359,274,430
Other
Public health funding 9,059,252 9,059,252 81,310,388 81,310,388
Overdeposit 0 0 0 0
Cross-border 8,627,829 8,627,829 77,650,464 77,650,464
Interest 133,931 133,931 1,534,303 1,534,303
Total Other (Pool) 17,821,012 17,821,012 160,495,155 160,495,155
Grand Total 1,056,811,749 1,056,811,749 8,562,939,258 8,562,939,258

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, March 2015

This table shows NHR contributions (from state, territory and Commonwealth sources) made to each LHN in New South Wales during March 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 43,791,923 1,855,445 45,647,368
Far West Local Health District 4,786,344 1,214,425 6,000,769
Hunter New England Local Health District 101,513,394 28,845,949 130,359,343
Illawarra Shoalhaven Local Health District 52,064,194 9,093,812 61,158,006
Justice Health & Forensic Mental Health Network 0 5,088,197 5,088,197
Mid North Coast Local Health District 35,774,138 4,637,275 40,411,413
Murrumbidgee Local Health District 21,009,058 4,422,915 25,431,973
Nepean Blue Mountains Local Health District 40,355,100 1,579,627 41,934,727
Northern NSW Local Health District 43,690,516 5,963,952 49,654,468
Northern Sydney Local Health District 75,281,669 14,504,135 89,785,804
South Eastern Sydney Local Health District 94,272,159 1,101,681 95,373,840
South Western Sydney Local Health District 95,159,912 6,114,391 101,274,303
Southern NSW Local Health District 20,341,982 3,344,805 23,686,787
St Vincent's Health Network 23,960,471 2,295,000 26,255,471
Sydney Children's Hospitals Network 42,997,785 3,525,504 46,523,289
Sydney Local Health District 84,476,742 10,586,015 95,062,757
Western NSW Local Health District 38,688,565 15,676,275 54,364,840
Western Sydney Local Health District 99,277,295 1,669,479 100,946,774
Total 917,441,248 121,518,882 1,038,960,130

See explanatory notes below table 4b.

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

This table shows YTD NHR contributions (from state, territory and Commonwealth sources) made to each LHN in New South Wales as at March 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 345,876,692 46,625,364 392,502,056
Far West Local Health District 44,465,565 12,500,209 56,965,774
Hunter New England Local Health District 793,485,336 230,832,080 1,024,317,416
Illawarra Shoalhaven Local Health District 364,109,957 73,203,925 437,313,882
Justice Health & Forensic Mental Health Network 0 40,705,586 40,705,586
Mid North Coast Local Health District 253,794,853 37,172,877 290,967,730
Murrumbidgee Local Health District 160,763,068 146,709,331 307,472,399
Nepean Blue Mountains Local Health District 361,914,812 43,022,906 404,937,718
Northern NSW Local Health District 304,794,521 71,833,827 376,628,348
Northern Sydney Local Health District 563,540,194 122,154,245 685,694,439
South Eastern Sydney Local Health District 738,709,053 34,685,249 773,394,301
South Western Sydney Local Health District 765,254,781 48,989,805 814,244,586
Southern NSW Local Health District 156,036,724 44,943,111 200,979,835
St Vincent's Health Network 191,913,677 18,360,000 210,273,677
Sydney Children's Hospitals Network 296,450,994 22,136,513 318,587,507
Sydney Local Health District 664,051,318 84,762,801 748,814,119
Western NSW Local Health District 289,438,449 155,623,754 445,062,203
Western Sydney Local Health District 748,569,679 54,189,064 802,758,742
Total 7,043,169,673 1,288,450,646 8,331,620,319

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, March 2015

This table shows estimated state or territory hospital activity for activity-based funding services expressed as NWAU for March 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 2014-15
Central Coast Local Health District 9,170 82,531 110,041
Far West Local Health District 860 7,739 10,319
Hunter New England Local Health District 21,042 189,381 252,508
Illawarra Shoalhaven Local Health District 10,218 91,962 122,616
Mid North Coast Local Health District 6,606 59,458 79,277
Murrumbidgee Local Health District 4,365 39,287 52,383
Nepean Blue Mountains Local Health District 9,169 82,517 110,022
Northern NSW Local Health District 8,078 72,701 96,934
Northern Sydney Local Health District 15,881 142,933 190,578
South Eastern Sydney Local Health District 21,228 191,048 254,730
South Western Sydney Local Health District 22,304 200,740 267,654
Southern NSW Local Health District 3,943 35,486 47,314
St Vincent's Health Network 6,021 54,185 72,247
Sydney Children's Hospitals Network 8,284 74,554 99,405
Sydney Local Health District 17,809 160,283 213,710
Western NSW Local Health District 7,154 64,385 85,847
Western Sydney Local Health District 20,211 181,896 242,528
Total 192,343 1,731,085 2,308,114

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.