New South Wales report, May 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 May 2013 as part of the National Health Reform Agreement.

Participation in the National Health Funding Pool – New South Wales, May 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, May 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 May 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.

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, May 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 May 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
225,224,690 225,224,690 225,224,690
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
339,064,788 225,224,690 105,655,010 8,185,088 339,064,788
Total state/territory
funding
339,939,773 339,827,886 111,887 339,939,773
Grand Total 679,004,561 565,052,576 105,655,010 8,296,975 679,004,561

See definitions and explanatory notes following table 1b.

Table 1b – State pool account transactions YTD – New South Wales, May 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 May 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
2,541,533,622 2,541,533,622 2,541,533,622
Commonwealth
Block funding
1,192,534,044 1,192,534,044 1,192,534,044
Commonwealth
Other funding
91,534,504 91,534,504 91,534,504
Total C'wealth
funding
3,825,602,169 2,541,533,622 1,192,534,044 91,534,504 3,825,602,169
Total state/territory
funding
4,275,482,803 4,273,687,230 1,795,573 4,275,482,803
Grand Total 8,101,084,972 6,815,220,852 1,192,534,044 93,330,076 8,101,084,972

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, May 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 May 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 90,328,205 90,328,205
Total 195,983,216 195,744,174 239,042 195,983,216

See explanatory notes following table 2b.

Table 2b – State managed fund transactions YTD – New South Wales, May 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 May 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 1,192,534,044 1,192,534,044
State/territory Block funding 1,945,830,625 1,945,830,625
Total 3,138,364,668 3,062,625,626 75,739,042 3,138,364,668

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, May 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 May 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 349,099,077 349,099,077 4,211,685,188 4,211,685,188
Acute admitted - private 48,127,791 48,127,791 579,650,289 579,650,289
Non-admitted 94,258,957 94,258,957 1,137,360,293 1,137,360,293
Emergency department 73,566,751 73,566,751 886,525,083 886,525,083
Total ABF (Pool) 565,052,576 565,052,576 6,815,220,852 6,815,220,852
Block
Mental health 59,072,083 59,072,083 916,782,575 916,782,575
Small rural and metro hospitals 41,533,359 41,533,359 646,517,600 646,517,600
Sub-acute 39,375,549 39,375,549 624,297,283 624,297,283
Teaching, training and research 23,520,639 23,520,639 375,752,829 375,752,829
Other 32,481,586 32,481,586 575,014,381 575,014,381
Total Block (SMF) 195,983,216 195,983,216 3,138,364,668 3,138,364,668
Other
Public health funding 8,185,088 8,185,088 91,534,504 91,534,504
Overdeposit 0 0 0 0
Cross-border 0 0 0 0
Interest 111,887 111,887 1,795,573 1,795,573
Total Other (Pool) 8,296,975 8,296,975 93,330,076 93,330,076
Grand Total 769,332,767 769,332,767 10,046,915,597 10,046,915,597

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, May 2013

This table shows NHR payments (from state, territory and Commonwealth sources) made to each local hospital network (LHN) in New South Wales during May 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 25,510,342 7,901,062 33,411,404
Far West Local Health District 3,013,681 800,762 3,814,443
Hunter New England Local Health District 62,991,982 39,892,997 102,884,979
Illawarra Shoalhaven Local Health District 29,871,415 9,388,791 39,260,206
Justice Health & Forensic Mental Health Network 0 3,272,000 3,272,000
Mid North Coast Local Health District 20,338,668 5,686,344 26,025,012
Murrumbidgee Local Health District 12,670,288 9,295,756 21,966,044
Nepean Blue Mountains Local Health District 25,185,840 7,619,375 32,805,215
Northern NSW Local Health District 25,183,031 8,175,447 33,358,478
Northern Sydney Local Health District 45,733,056 13,853,424 59,586,480
South Eastern Sydney Local Health District 59,687,768 14,781,452 74,469,220
South Western Sydney Local Health District 63,912,320 13,192,264 77,104,584
Southern NSW Local Health District 9,387,284 6,197,613 15,584,897
St Vincent's Health Network 18,213,008 3,951,555 22,164,563
Sydney Children's Hospitals Network 28,408,548 3,639,050 32,047,598
Sydney Local Health District 55,370,664 18,740,311 74,110,975
Western NSW Local Health District 18,283,104 15,202,911 33,486,015
Western Sydney Local Health District 61,291,577 14,153,061 75,444,638
Total 565,052,576 195,744,174 760,796,750

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, May 2013

This table shows estimated state or territory hospital activity for activity-based funding services expressed as NWAU for May 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 6,525 78,264 84,725
Far West Local Health District 798 9,456 10,232
Hunter New England Local Health District 16,117 192,982 208,303
Illawarra Shoalhaven Local Health District 6,467 77,606 84,073
Mid North Coast Local Health District 4,624 55,478 60,088
Murrumbidgee Local Health District 2,706 32,453 35,131
Nepean Blue Mountains Local Health District 5,401 64,084 69,316
Northern NSW Local Health District 5,789 69,333 74,947
Northern Sydney Local Health District 11,011 131,411 141,176
South Eastern Sydney Local Health District 13,893 166,689 180,524
South Western Sydney Local Health District 16,236 205,357 217,983
Southern NSW Local Health District 2,079 24,952 27,031
St Vincent's Health Network 4,031 48,345 52,334
Sydney Children's Hospitals Network 6,368 76,254 82,362
Sydney Local Health District 14,246 174,890 180,897
Western NSW Local Health District 4,565 54,157 57,898
Western Sydney Local Health District 13,098 155,167 164,543
Total 133,953 1,616,878 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.