Chris O’Gorman – Health Consultant and Costing/ABF consultant to the Health Roundtable

� Background in Finance & Business.

� Worked in Victorian Treasury, Premier and Cabinet, Department of Health - 1980’s & early 90’s – Improving State Budget process, Organisational Performance measurement & Improvement, Regional management.

� Director Finance & Administration, St Vincent’s Hospital Melbourne - early 90’s, commencement of Casemix/Activity Based Funding in Victoria.

� Executive Director & senior manager, Austin Health - mid 90’s to 2008. Focus on Clinical Costing, Performance Improvement using Information Management tools and benchmarking.

� Managed Health Consultancy – major focus with Health Roundtable since 2008; Lead Costing Group of 40 - 50 Facilities.

� Main interest: Improving performance through benchmarking; Clinical Costing/Activity Based Funding as an effective resource management tool.

� Non-profit membership group

� Honour Code

� 78 Health Services

� 130 Facilities

� Share problems

� Share solutions

� Provides informal network

� Non-political

HealthRoundtable

� Are our results different?

� Why are we different?

� Who can we learn from?

� How do they do it?

� How can we make it happen here?

Inpatient Episodes

• Length of Stay• Complications• Readmissions• Mortality

Emergency Presentations

• Time to be Seen• Time to Disposition

OptionalData Collections

• Clinical Costing• Allied Health Activity• Imaging Activity• Community Mental

Health• NZ Chapter• Victorian Chapter

Optional Inpatient Extracts

• Maternity• Safety Indicators• Nursing

Sensitive• Paediatric

Hospital KPIs• Emergency • Cancellations• Clinical Care• Workforce• Casemix

OR

� Activity Based Funding - Introduction◦ National Weighted Activity Unit (NWAU)

◦ National Efficient Price (NEP)

◦ Pricing & Cost Model

� Clinical Costing – Introduction◦ Costing principles & the role of clinicians

◦ Comparing cost and revenue

◦ Cost and Quality

� Using Data to reduce cost ◦ Cost and Length of stay

◦ Cost and Quality

� Organisational Issues

� Skilling up for Clinical Costing

� Getting Traction with Clinicians

� ABF Training Model

AGENDA – USING ACTIVITY BASED FUNDING DATA

1.30pm – 1.45pm Background and Introduction

1.45pm – 2.30pm Activity Based Funding

2.30pm – 3pm Clinical Costing & Using data

3.00pm – 3.30pm Afternoon tea

3.30 – 4.00pm Clinical Costing & Using Data (cont’d)

4.00pm – 5pm Using Cost and Revenue data

5pm Finish

Health Sector

TechnologyExplosion

Ageing Population

Financial Constraints

Workforce Shortages

Source: AIHW Hospital Statistics, Table 2.3

Source:www.aihw.gov.au/publication-detail/?id=10737421633&tab=2

Gamma Knife Example at Macquarie University Hospital$50,000 per treatment

Activity Based Funding (ABF)

“Place the quality and safety of patient care above all other aims for the NHS. (This, by the

way, is your safest and best route to lower cost.)”

First of four Guiding principles for senior Government officials and senior executives in the NHS from Don Berwick (Chair)

A promise to learn– a commitment to act:

Improving the Safety of Patients in England

National Advisory Group on the Safety of Patients in England

August 2013

March 2013 through to July 2013 study of the various available accounts of Mid Staffordshire, as well as the recommendations of Robert Francis and others, to distil for Government and the NHS the lessons learned, and to

specify the changes that are needed.

� Funding based on defined activities/outputs/ or services using agreed standards of counting and classification.

� This requires an ability to define, classify, count, cost and fund activity in a consistent manner.

� The ‘building blocks’ of ABF include three key elements:

� coding/Documentation/Classification;

� counting; and

� costing.

Activity Based Funding - What is it?

In order to understand the workings of Activity Based Funding we need to understand some basic terminology (and acronyms!) and how they work:

� ABF – Activity Based Funding

� NWAU 14 – National Weighted Activity Unit (2014/15)

� NEP – National Efficient Price

� AR-DRG – Australian Refined Diagnosis Related groups

� URG/UDG – Urgency Related/Disposition groups

� AN-SNAP – Australian National sub-acute and non-acute patient classification

What activity in Hospitals will be eligible for Commonwealth funding under ABF ?

� - All admitted programs including Hospital in the Home programs – includes emergency, acute, mental health and sub-acute inpatient programs

� - All emergency department services

� - All Non admitted services (that meet the criteria for inclusion)

� Admitted patient services – Australian Refined Diagnosis Related groups Version 7 from 1 July 2014

� Specialist mental health patient services – AR-DRG Version 7 with modifications from 1 July 2014

� Sub-acute service – Australian National Sub-acute and Non-acute Patient Classification (AN-SNAP) Version 3, and Care Type where SNAP unavailable

� Emergency department services – Urgency Related Groups (URGs) & Urgency Disposition Groups (UDGs)

� Non-admitted services – Tier 2 Outpatient Clinic Definitions

� National Weighted Activity Unit (NWAU) is the counting unit for the national pricing model. NWAU14 is the version in 2014-15.

� All episodes of care that qualify for Commonwealth funding need to be classified and translated to NWAUs for funding purposes.

The price that the Commonwealth sets for each Weighted Activity Unit (NWAU).

NEP is a benchmark for efficiency, not the price at which public hospital services can be provided most cheaply or the lowest price.

NEP is the price that allows for services at a quality level consistent with national standards.

NEP will move in responses to changes in care delivery.

For 2013/14 the price paid for 1 NWAU = $4,993

For 2014/15 the price paid for 1 NWAU = $5,007

National Weighted Activity Unit (NWAU)

� Reference price for 1 NWAU is based on inpatient costs

� The same price is paid by the Commonwealth for emergency, sub-acute and non-admitted services but the NWAU calculation is scaled relative to inpatients.

� Each of Inpatients, Emergency, Sub-acute and Non admitted uses its own relativity scales for NWAU calculations that express the relative cost weights of each of the services.

http://www.publichospitalfunding.gov.au/publications/annual-reports/2012-13/national-funding-payments

National Weighted Activity Units (NWAU) by State

Clinical Treatment Classification System NWAU Calculation Payment @ $4,993

per NWAU

1 ED attendance for a triage

1presentation - Injury

Urgency Related

Groups (URG)

0.3978 NWAUs $1,986

1 Inpatient episode for a Hip

Replacement – DRG I03B

ARDRG6.X 4.1742 NWAUs $20,842

1 Overnight Rehabilitation,

Orthopaedic Fracture, 3-227

(14 day stay)

AN-SNAP v3.0 2.2437 NWAUs(Episode + inlier per diem)

$11,203

1 Outpatient attendance at an

Orthopaedic Clinic – 20.29

Authorised Tier 2 Clinic

Code

0.0461 NWAUs $230

Clinical Treatment

Classification System

NWAU Calculation Payment @ $4,993 per NWAU

1 Inpatient for a Hip ReplacementDRG – I03B

ARDRG6.X 4.1742 NWAUs $20,842

1 Inpatient for a Hip ReplacementDRG – I03A

ARDRG6.X 5.5377 NWAUs $27,649

� Admitted patient Service(acute, mental health, sub-acute)

•Admitted from ED,

•Transferred from other facility,

•Transfer in from GP

•etc

Clinical Services

•Clinical Treatment (Ward)

•Short Stay unit Treatment

•Hospital in the Home Treatment

•Theatre/Day Surgery

•ICU

•Pathology

•Radiology

•Drugs

Assessment and treatment DischargeAdmission

Transfer to Sub-acute

Transfer to Rehab.

Discharge Home

Transfer to another Facility

Support Services

•Cleaning

•Linen

•Food

•Supplies

•Transport

•Engineering

•Corporate

Costs of these services are covered by NWAU Price

� Emergency Department Service

•Walk in,

•Ambulance,

•Transferred from other facility,

•etc

Clinical Services

•Triage

•Treatment

•Pathology

•Radiology

•Drugs

•Specialist Assessment

Assessment and treatment DischargePresentation

Operating Room

Short Stay Unit- SOU, EMU, SSU

Inpatient Ward

Hospital in the Home

Home

Transfer to another Facility

Support Services

•Cleaning

•Linen

•Food

•Supplies

•Transport

•Engineering

•Corporate

Costs of these services are covered by NWAU Price

� Non-Admitted/Outpatient Service

•Present to Booked Clinic appointment

Clinical Services

•Assessment by Clinician

•Review of Diagnostic tests

•Review of medications

•Participation in Program

•Referral to other services

Assessment and treatment DischargeAttendance

Discharge from treatment

Referral to GP or other services

Support Services

•Cleaning

•Linen

•Supplies

•Transport

•Engineering

•Corporate

Costs of these services are covered by NWAU Price

Price also adjusted according to five age groups..

Inlier boundaries reduced significantly

National Efficient Price (NEP)

1. One of the major determinants of the level of Commonwealth funding for hospital services - the other being volume.

2. Provides a price signal benchmark about the efficient cost of providing public hospital services. Price is an important driver of change:

� Allows states & territories to determine their funding contribution;

� Encourages LHNs to benchmark their costs against the NEP

� Promotes transparency

� National Hospital Cost Data Collection Round 16 (2011/12) has been used to establish the 2014/15 NEP.

� This annual data collection draws information from Clinical Costing systems in public Hospitals across Australia.

� Australian Hospital Patient Costing Standards provide the cost allocation rules to be adopted by hospitals within their Clinical Costing systems.

� The NEP is based on the projected average cost per episode (after deducting specified Commonwealth funded programs).

� Specialist paediatric service adjustment

� Specialist psychiatric age adjustment

� Patient remoteness area adjustment

� Indigenous patients adjustment

� Radiotherapy adjustment (new for 2014/15)

� ICU adjustment

� Private patient service adjustment

� Private patient accommodation adjustment

These adjustments will be applied in the order listed and will affect the NWAU value for specific episodes

Pricing and Cost Modelling across the Inpatient episode

Source: National Pricing Model Technical Specification 2012-2013

Source: National Pricing Model Technical Specification 2012-2013

Source: National Pricing Model Technical Specification 2012-2013

Source: National Pricing Model Technical Specification 2012-2013

Source: National Pricing Model Technical Specification 2012-2013

Source: National Pricing Model Technical Specification 2012-2013

� Run your hospitals casemix data through the NWAU cost weights

� Run a report to aggregate “Unfunded Days” by DRG/DRG Family

� Compare ALOS with peers

� Develop improvement strategies to reduce both length of stay and unfunded days.

Source: National Pricing Model Technical Specification 2012-2013

INSERT VIDEO

“Rocket Science”

Clinical Costing

Costing 101

MODELS

VARIATIONS DIFFERENT COMBINATIONS OF:COLOURS, ENGINE SIZES, EXTRAS, TYRES, TOW BARS, PACK RACKS, ETC

COMPONENT PARTS

DOORS, WINDOWS, SEATS, ENGINES, AIR BAGS, BRAKES, MUFFLERS, ELECTRONICS, WHEELS. LIGHTS. CARPETS,

INPUTS LABOUR, SUPPLIES, OVERHEADS, EQUIPMENT

� Toyota needs to know the cost of every input and component of every model and variation of every car in order to know the total cost of each finished car.

� Toyota uses the total cost as one of the inputs into determining the price of each car to the consumer.

MODELS

VARIATIONS ORTHOPAEDIC, CARDIAC, NEUROSURGICAL, PALLIATIVE, SPINAL, GASTROENTEROLOGY, TRANSPLANT, GERIATRIC EVALUATION & MANAGEMENT

COMPONENT PARTS

PATHOLOGY, IMAGING, WARDS, PHARMACY, THEATRE, ICU, EMERGENCY DEPT, ALLIED HEALTH, CLEANING, FOOD, LINEN, HEAT, LIGHT, POWER, WATER ETC.

MEDICAL, SURGICAL, REHABILITATION, SUB-ACUTE, OUTPATIENTS, MENTAL HEALTH, ETC

INPUTS SALARIES & WAGES, CONSUMABLES, OVERHEADS

� Hospitals need to know the inputs and component costs attributable to every single patient treated in order to know the full cost of each patient over the course of their episode of care.

� Clinical Costing Systems provide a systematic means of collecting, identifying and applying all costs to all types of treated patients.

� The cost of each episode can be compared to the price paid by the Provider (NEP).

Patient comes to hospital and is treated

When the patient leaves hospital she is classified to DRG 1234

Doctor goes to payment machine and money flows into the hospital

The Doctor selects/buys a range of services from Departments on behalf of the patient

At journey’s end the cost of the basket of services is tallied - $10,000

The payment for DRG 1234 comes to $8,000

The hospital has lost $2,000 on this episode.

The Doctor escorts the patient past a long line of vending machines -Departments

A truckload of medical supplies is backing up to the Pathology Department

The inputs to the Pathology vending machine (Department) are:

Labour

Supplies

Overheads

Equipment/Depreciation

The outputs of the Pathology Department are the products that the doctor orders/buys on behalf of the patient –

tests etc

The cost/price of pathology products are determined by the pathology department

The doctor controls how much is purchased, but not the price of the services.

� The treating clinician / patient advocate is accountable for - how much is purchased on behalf of the patient (Utilisation)

� The departmental head (who may be a clinician) is responsible for the cost of all the products produced by that department. These may be drugs, tests, bed days, time in operating theatre etc.

� Benchmarking can be used to compare: The price of outputs (Products / Services) – Clinical Costs.The utilisation of services for a particular patient or group of patients.

� Operating Theatre

� Specialist procedures

� Anaesthetics

� Prostheses

� High Dependency/CCU/ICU

� Medical & Surgical Services

� Ward Services

� Allied Health

� Pathology

� Imaging

� Pharmacy/Drugs

� Blood products

� Other services

Total Patient episode cost

Service B

ucketsF

eed

er S

yste

ms

� PMI� Coded patient

record

� Operating Theatre system

� Prostheses system

� Patient/Nurse dependencySystem

� Allied Health system

� Pathology system

� Imaging system

� Pharmacy system

� Blood products system

� Other services systems

General Ledger Cost Data

Source: Health Roundtable 2011/12 Cost Data

Source: Health Roundtable 2011/12 Cost Data

Source: Health Roundtable Acute Inpatient Cost Data 2012/13

Source: Health Roundtable Acute Inpatient Cost Data 2012/13

Your Costing Data System is the most comprehensive repository of patient information in your Health Service.

It brings together, and costs, all of the services and resources that have been used by each inpatient/outpatient/ED attendee, viz:

� - all radiology and pathology tests

� - all types of drugs allocated

� - theatre and ICU time and resources including prostheses

� - Allied health interventions

� - All ward resources

� - All medical and surgical time and costs

� - A share of indirect and overhead costs

It is an extremely useful tool for management to assess relative resource usage and variation.

• Costing is a very valuable Management Tool for decision making

• Costing is a subset of Management Accounting

• The Cost of an activity = The money, time, and resources associated with

an activity.

• Cost information must be designed for management decision making

• The staff who handle the cost accounting information generate added value

by providing good information to managers who are making decisions.

• The better the decisions, the better the performance of the organisation

There is no such thing as The Cost

For a specific decision, with specific

assumptions there will be A Cost

Average Daily Cost of staffed Bed = $600 per day.

Daily Cost of first staffed Bed in Ward = $1100 p.d.

Daily Cost of last staffed Bed in Ward = $2 p.d.

Cost for a staffed bed between 1am-2am in 40 bed ward on week day=$0.70 per hour

Cost for a staffed bed between 2pm-3pm in 20 bed ward on Public Holiday=$42.00 per hour

Cost of a Staffed bed

• Standard costing allows Variance Analysis, a powerful management

tool

• A variance can be either a price variance or a volume variance.

• Other variances are possible

• A price variance arises when the cost to purchase an item differs

from its standard price. (i.e.$100 Price Variance for a bed day)

• A Volume (quantity) variance occurs when the number of units

actually required differs from the amount specified in the standard

costing system. (50 Bed Days )

• Total Variance = Price Variance + Volume Variance

• To undertake variance analysis ,one needs to be able to measure

Volume and Price

Standard Cost Variance Analysis..

• Costing Information can be used to provide powerful

insights via Benchmarking

• Benchmarking can be either Internal or external

• Standard Costing is a form of benchmarking and vice versa

Benchmarking

An Example

Episodes Beddays Total Bed

Day Cost

Cost per

bed day

Episodes Standard

Bed Days

Total bed

day Cost

Standard

Cost per

bedday

Total Cost

Variation

Price Variation Volume Variation

1 2 3 4 5 6 7 8 9 10 11

3/2 6*8 3-7 2*(4-8) 8*(2-6)

DRG1 100 700 $280,000 $400 100 500 $150,000 $300 $130,000 700(400-300)=$70000 300(700-500)=$60,000

DRG2 40 240 $224,000 $933 40 400 $100,000 $250 $124,000 240(933.3-250)=$163992 250(240-400)=-$40,000

Total 140 940 $504,000 $536 140 900 $250,000 $278 $254,000 940(536.17-277.8)=$242,867 277.8(940-900)=$11,112

Actual Costs Standard Costs Variances

Standard Cost Variance Analysis..

Source: Health Roundtable 2011/12 Cost Data

� Dr. John Oretveit reports

� 'there is strong evidence of a considerable volume of adverse events and poor quality, which includes failure to provide effective treatments. This represents potential savings to a health service or a health system. There is less evidence of their costs. There is little evidence of the rates of poor quality or resultant costs outside of hospitals, or due to poor quality transfers between services.

� The highest costs for which there is evidence are for overuse of certain treatments and underuse of others, leading to higher cost care later, and for hospital-acquired infections, adverse drug events, complications in surgery, and hospital ‘failure to rescue’ before arrest or respiratory failure. There is probably a high cost of poor quality as a result of misdiagnosis and poor coordination and communication.‘

�

Ovretveit J (2009) Does improving quality save money? A review of evidence of which improvements to quality reduce costs to health service providers. London. the Health Foundation.p. 25

Adverse Drug Events (ADEs, ADRs)

Iatrogenic infections

- Post operative deep wound infections

- Urinary tract infections (UTI)

- Lower respiratory infections (pneumonia or bronchitis

Pressure injuries

Mechanical device failures

Complications of central and peripheral venous lines

Deep venous thrombosis (DVT), pulmonary embolism (PE)

Patient falls injuries & restraints

Blood Product transfusion

Patient transitions

CHADx

4500 codes

17 Groups

Copyright/use and reproduction

The Australian Commission on Safety and Quality in Health Care encourages the not-for-profit reproduction of its documents — and those of the former Council —that are available on its website, but requires acknowledgment of ownership. You may download, display, print and reproduce this material in unaltered form only(retaining this notice, and any headers and footers) for your personal, non-commercial use or use within your organisation. You may distribute any copies of downloaded material in unaltered, complete form only (retaining this notice, and any headers and footers). All other rights are reserved.

Detailed listing ofICD 10 Codes in Each Chapter

Complex Rules to allocate codes to chaptersRules for CHADx Chapter 6 (Respiratory Complications)

1. Do not include the codes in CHADx 6, if they are sequenced between codes in the ranges T80-88 and Y60-84. These codes should be counted in CHADx 1 Post-procedural complications.

2. Do not include the codes in CHADx 6, if they are sequenced between an 'EOC' code and Y60-84. These codes should be counted in CHADx 1 Post-procedural complications

3. Codes must be counted if only satisfying the 2nd criteria i.e. followed by Y60-84 but not following T80-88 or an EOC code

4. Do not include the codes in CHADx 6, if they are followed immediately by V00-Y59. These codes should be counted in CHADx 2 Adverse drug events or CHADx 3 Accidental Injuries.

5. These codes to be included in CHADx 6, even if immediately followed by W83 & W84

6. Where a code for infection or infective process is followed by a sepsis code in Class 4.1, count the infection in the relevant class in CHADx 6

Introduction of “Onset Flag” for every diagnosis codehas made the CHADx classification possible

Example – Cranial Procedures at ABC Hospital

Source: Health Roundtable Acute Public Inpatient Cost Data 2012/13

Source: Health Roundtable Acute Public Inpatient Cost Data 2012/13

DRG Family

ChadXEpisodes

CHADx Episode Percent

Extra Days per CHADx Episode

Total Extra Days

A06 4783 75% 11.4 54,577

E62 4887 14% 5.7 28,016

U61 1035 9% 22.4 23,195

B70 3156 19% 7.3 23,183

G02 3280 45% 6.1 19,964

F62 3068 16% 5.4 16,543

I08 3968 45% 4.0 15,829

R60 1068 16% 14.5 15,459

U63 799 10% 19.0 15,148

L63 2380 8% 6.1 14,469

B82 664 22% 20.6 13,684

I68 1729 6% 7.7 13,329

R61 1607 8% 7.9 12,650

G70 2080 5% 5.9 12,301

T60 1912 25% 6.4 12,246

B02 2584 41% 4.7 12,165

801 970 30% 11.6 11,253

L60 1546 19% 7.2 11,115

E65 2779 11% 3.8 10,678

Total 335,804

CHADx suggests 300,000 extra bed days linked to the top 20 DRGs amongst 77 hospitals in 2011/2012

ICD10Code Episodes Description

I959 1219 Hypotension, unspecified

D649 951 Anaemia, unspecified

N179 753 Acute kidney failure, unspecified

E876 710 Hypokalaemia

J958 675 Other postprocedural respiratory disorders

I48 643 Atrial fibrillation and flutter

R13 604 Dysphagia

N390 568 Urinary tract infection, site not specified

J189 562 Pneumonia, unspecified

J969 535 Respiratory failure, unspecified

Top 10 CHADx codes occurring during hospital treatment for patients receiving a Tracheostomy (A06)

Cranial Procedure DRG

� Section 7.5 of IHPA Draft Framework

– Adjusting for Quality

“The softest form of payment impact is simply to exclude hospital acquired complications from consideration in DRG assignment.”

� Applying financial penalties to hospitals based on reported complications of care may encourage people to omit complications

� Ignoring complications in the average pricing of care may reduce the incentive to identify all the complications that occur

� Maintaining the current financial incentive to code complications, combined with quality initiatives to reduce their occurrence may be the most pragmatic approach

� Little Management imperative to review patient costs

� Costing is predominantly undertaken annually, with results available 3- 6 months after the end of the financial year.

� Current primary purpose of costing in most health services is for Commonwealth/State cost weights studies

� Shortage of Costing skills in Health

� Lack of understanding of Costing capabilities

Costing is most effectively used and valued in the Not-For-Profit sector.

Differentiating features may be:

� Multiple Health funds purchase different mixes of clinical services at more micro levels than Government – hence need to know details.

� Imperative to know the actual costs of services compared with revenue received.

� Need to model different service mixes and cost/revenue scenarios – vital for business modelling and activity and capacity planning.

� Imperative to know cost vs. revenue monthly.

� Service is seen as vital to effective financial management.

� Service is an essential element of the Finance function.

� Effective and timely product costing is an essential element of the business.

Costing the Patient Journey

Acute Post AcuteED Home

Acute

GEM

Rehab

Maintenance

PsychoGer

Patient 1

Patient 2

Patient 3

Acute Rehab Maintenance

Acute Rehab

Acute Rehab Acute Palliative

Acute

GEM

Rehab

Maintenance

PsychoGer

Patient 1

Patient 2

Patient 3

Acute Rehab Maintenance

Acute Rehab

Acute Rehab Acute Palliative

Organisational Issues

� Unbundling the Business - services, activity, finance, expenditure, quality

� From Management of Inputs to Management of Outputs/Outcomes

� Activity measurement, monitoring and analysis

� Documentation & Coding to maximise funded units

� Funding – every activity needs a clearly identified fund source

� Responsibility accounting – throughout the organisation

� A standards based approach to quality and efficiency

� New Reporting focus to ALL constituents including new LHNs

� Need to plan and monitor activity across the whole organisation

� Funder provides an overall inpatient activity target in Weighted Units and Dollars

� Executive works with clinical leaders to develop a weighted activity plan which:◦ Meets the target

◦ Reflects likely demand growth

◦ Matches skills available

� Executive works with clinical leaders to develop bed-day and staffing plans plans which◦ Fit within target funding

◦ Fit within expected physical bed capacity

� Do you have an audit program in place?

� Have you analysed and disseminated your casemixdata within your health service?

� Are you happy with the accuracy of your cost distribution between Emergency, Inpatients (Acute, Mental Health, Sub-acute), and Outpatients?

� Have you looked at your casemix in terms of profit/loss/efficiency/length of stay etc and identified contributing factors such as road blocks?

� Do you have a suitable structure in place to monitor, discuss and influence outcomes, such as a casemix committee?

� Funding by outputs requires measurement & monitoring of outputs

� Identify, record and count ALL activity�inpatients, outpatients, emergency attendances, bed

days, diagnostic tests, ambulatory episodes, occasions of care etc.

� translate to funded units quickly & efficiently

� link funded units back to patients

� reconcile funded activity with State Authority monthly

ONE SOURCE OF TRUTH FOR ALL ACTIVITY

Health Information Services Dept. is now the Revenue Centre!

Move it out of the Basement!!

◦ Good documentation and coding maximises revenue

- NWAU13, URGs, UDGs, Outpatient Clinic codes, SNAP codes etc.

◦ Coding must be timely to enable accurate monthly reporting of revenue to Executive and Network Board – 80% coded by end of current month.

◦ Successful clinical engagement is essential to this process

- HIS coders attending Clinical Unit meetings to review documentation and link NWAUs back to patients is vital to clinical engagement

Skilling up for Clinical Costing

� Do Nothing – no money, just cope....!

� Identify relevant, current services and review -identify gaps and recruit, re-train, up-skill- HIS, Costing, Finance, IT, Redesign, Quality etc

� Identify linked/related/complimentary services and Badge appropriately – “Decision Support”, “Casemix Unit”, “ABF Unit” and re-structure within single Executive Portfolio

� Unit needs to report to an Executive Director -advocate in Leadership team

Internal Drivers� An Accountable Organisation utilising effective resource management

tools

� Strong and Supportive Leadership- within the organisation – CEO & Executive- within the team

� Nominated Executive Director to be accountable and responsible for costing function.

� Cost Reports to be produced and disseminated monthly within organisation with summaries to Executive & Board

� Costing team to have strong links with, and support from CFO.

� Costing team to have strong links with Redesign and Improvement teams

� Unbundle funding & Expenditure – no easy task

� Match costs with revenues to assess “profitability”

� Audit – coding, documentation, costing

� Implement appropriate costing system.

� Link all services (and costs of services) to patients - Extract and link financial data from General ledger, patient and casemix data from Patient system and activity and utilisation data from hospital systems and feed into Clinical Costing system.

� Understand standards and specifications - Benchmark

� Produce regular, (monthly) tailored, utilisation and cost reports for Network Board, Executive Management and Units with drill down capability from organisation level to individual patient level

� Service Redesign & Improvement

� Education - All Unit & Clinical managers and staff

� Benchmark costs and revenues internally and externally

� Marketing - expose the organisation to the data and information and respond to users needs

� Provide mandated costing and performance information to Department of Health & others (Commonwealth etc.)

� Get out of the Office and into the Organisation – staff and data!

� Leadership

� Management Accounting - Hospital finance, funding & costing.

� Health Information- Casemix and patient data, coding & clinical information.

� Information & Costing systems - data analysis, database management & warehousing, management reporting.

� Communications skills – ability to inform & engage managers & clinicians

� Service Redesign expertise

� Marketing skills

The skill mix required for an effective function will be derived from a variety of sources both internally and from Industry:

� Health Information Management services

� Finance

� Information Technology & Informatics

� Nursing & Allied Health

� Diagnostic services – Radiology, pathology, nuclear medicine

� Business Units

� Redesign Service

� Patient Services

� Clinical Costing

� Medical

� External – Private Hospital sector, Manufacturing, Engineering etc.

� In larger Health Services this function will generally report to an Executive Director of:

- Finance, or - Operations, or- Information & Performance, or - Planning & Support

� In small health services outsourced processing service may be best option – access to peer data through vendor/consultant.

� Ideally, will have Health Information Services within the same Directorate

� Strong formal and informal links with other key sections of the organisation (Finance, IT, HIS, Clinical Departments) essential.

� Links with peers in other health services essential – via benchmarking services (e.g. Health Roundtable) to help create consistency, improve performance and identify possible career opportunities.

The 3 keys:

Leadership!

Leadership!!

Leadership!!!

132

Chief Executive commitment & leadership is the single most important factor in successful

change management.

Effectively implementing ABF is a significant change management project in every Health

Service

133

� Do you have suitable structures in place to monitor, discuss and influence outcomes, such as a multidisciplinary casemix committee with Executive support (suggest the CEO is the chair)?

� Have you designated responsibility to an Executive Director to examine and analyse comparative data and recommend action?

� Have you analysed and disseminated your casemix data within your health service?

� Have you looked at your casemix in terms of profit/loss/efficiency/length of stay/Adjacent DRG splits etc and identified contributing factors such as road blocks?

� Have you engaged clinicians in casemix/documentation/coding/clinical costing?

� Have you benchmarked your data with peers or State data?

� The case for change must be made & justified

� The change process must be owned by the relevant clinical teams

� Improved quality of care and patient safety must be the primary objective

� Translate DRGs into real patient cohorts in real clinical units

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Making the Case for Change� Be expert in the data

� Understand and explain differences

� Know the key clinical data – complications of care, complexity codes, CHADx, DRG splits, NWAUs etc

� Find credible peers.

� Follow up and respond to all queries

�

� Involve clinicians in the analysis process

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� Start with education!

� Provide a suite of reports, summarising relevant casemixinformation (eg by Unit/Division, no. of separations and avelength of stay, Average cost weight per DRG etc; if possible provide benchmarking comparisons (eg State averages/Health Roundtable benchmarking data), and any costing reports that are available

� Establish a multidisciplinary casemix committee with clinician membership

� Launch an audit program involving every clinical unit

� Clinicians need to become engaged and involved by:

o Seeking out your hospital’s Director of Health Information Services and Clinical Costing expert.

◦ Taking responsibility for accurate and complete clinical documentation and understanding the resultant coding.

◦ Reviewing and informing Unit level clinical costing.

� Ensuring that all relevant clinical information is documented in the medical record:

◦ is crucial for safe high quality patient care.

◦ facilitates accurate coding and DRG assignment with consequent appropriate funding to the health service

� Publish a Clinical Casemix Handbook and distribute to clinicians, put on the intranet etc. (eg WA Clinical Casemix Handbook

2011-2012 can be found on the internet)

� Health Information Services Department can do presentations to Clinical Units and other Clinical (eg NUMS, Allied Health etc) meetings.

� Costing Unit can present preliminary cost data to Clinical Units for review and refinement.

� Audit medical record documentation and discharge summaries for accuracy and completeness on a regular basis, particularly at each new intake of HMOs

� Have coders attend regular Clinical Unit meetings with coding queries being an agenda item, or set aside time specifically to answer queries and amend documentation when justified.

� Every clinical unit in your Health Service should nominate a clinician to answer queries from coders; ideally the Unit Head, a Consultant or Registrar

� Emphasise that this is will assist in ensuring the financial viability of the Health Service.

� Report audit results back to Units – (ideally both theirs and other units) eg total no. of records audited, no. of DRG changes, no. of code changes, no. of documentation changes, changes in funding (net result will usually be an increase).

� Report summary information to the Casemix Committee, ideally by Unit

� Clinicians will want to “spend” the money they perceive they have made through audit within their Unit/Department (egtablets/laptops for all, new equipment etc). These expectations will have to be managed.

� Use casemix/Costing information to support business cases for new technology, changes in clinical practice etc

Diagnosis Treatment Documentation

Interpretation & Coding

ABF

� 90% Conditions

noticed

� 90% Documented

� 90% Interpreted

� 90% Entered correctly

= only 66% accuracy

Result: Garbage in –Garbage out

� Set casemix targets and budgets for all Clinical Units.

� Monitor and Report casemix performance against targets, at Unit, Division/Portfolio and organisation level.

� Distribute costing reports to Departments and seek feedback on “reasonability”. Repeat process until all parties agree.

� Consider estimating weighted casemix for uncoded episodes (eg. average cost weight per bed day by Unit applied to uncoded discharged bed days)

� Don’t be afraid, or prejudiced by your pre-conceptions of clinician reaction and don’t underestimate the power of competition.

� Get out of the Office and test your costing and casemix data and reports on clinicians – their input is invaluable and will foster joint ownership.

� Coding, documentation and costing audits WILL result in very significant funding gains for your Health Service.

� JUST DO IT AND BE REWARDED!

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� Direct the Rider

◦ Set imaginable goals

◦ Find “bright spots”

◦ Script the moves

� Motivate the Elephant

◦ Capture feelings

◦ Shrink the change

◦ Identify with the change

� Shape the Path

◦ Make “right” easiest

◦ Use checklist triggers

◦ Display progress publicly

◦ Celebrate progress

� If key to the Project, involve the sceptics from the start

� Make them part of the solution

� Present and explain the evidence at regular clinical/operational meetings

� Allow independent conclusions to be drawn from the evidence

� Answer every question and respond to every objection.

� Garner support from the experience of other health services

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AuditorPersuaded by detail & analysis

–Precise–Logical & structured–Analytical–Detailed–Objective

ShakerPersuaded by one clear reasoned decisive message of action

–Brief–Bold–Candid–To the point–Positive

SharerPersuaded by empathy & social conscience

–Empathic–Vulnerable–People focused–Team player–Consensus seeker

CommunicatorGet them excited & involved – stories, metaphors, big picture

–Big picture–Energetic–Interactive–Passionate & witty–Anecdotal

Thinker

Feeler

Introvert

Extrovert

A Understand Your Audience

� What is your internal customer’s PAIN point

� What is the one goal / target you can both agree on?

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For Clinicians:

Describe outcomes in terms that relate to improved patient care.

e.g. Instead of:

“If we reduce ALOS by one day we will save 350 days and become an exemplar hospital in the HRT in this DRG”

153

It could become:

“Eliminating delays to timely & quality patient care will reduce ALOS and will free up 1 bed over the year enabling you to treat an extra 70 patients from the ED or off the waiting List”

154

For Finance Directors & Executives:

“Reducing ALOS will free up capacity to treat more patients which will generate extra WIES/income, reduce ED blockages and reduce waiting times for elective surgery”

Or

“Improving documentation and coding will generate more NWAUs for the same output”

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Network with comparable/peer health services

� for specific clinical services or DRGs

� For new initiatives or programs

� For peer support and advice

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� Stuff ...

Any Questions?

� IHPA 2013-14 Pricing Framework

� IHPA 2013-14 NEP Framework

� IHPA Consultation paper for Pricing Framework

� Developing Competency Packages for Clinical Costing staff - Liz Lea, Manager Funding analysis and clinical costing, Townsville hospital and Health Service