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Model put to test

Monday, 25th July, 2011

Stuart Riley Stuart Riley

The new method of funding the local hospital will be given a trial to see if it works.

In a year’s time “activity-based” funding will come in and replace the traditional approach of giving hospitals a set sum. 

The argument against it is that is does not suit hospitals in the outback: They do not have the large number of patients that city hospitals have and it costs more to do the same medical procedures because of the remote location.

The chief executive of the Far West Local Health District, Stuart Riley, said the next 12 months will tell whether it works or not.

From July 1 next year the Commonwealth requires hospitals of the size of Broken Hill’s to be funded based on the number and type of medical procedures it performs. This is called “activity-based” funding.

“This year activity-based funding will be tracked so it’s really about getting systems in place to work in an activity-based funding environment, Mr Riley said.

“Also we will be working with the department to test a lot the assumptions underpinning the application of activity-based funding in facilities like Broken Hill to identify an alternative base for operating activity-based funding.

“The question is, does a knee replacement in Broken Hill cost the same as it would in the Royal Adelaide or the Royal Prince Alfred?”

If it is found that it does not then an alternative method of funding must be found, he said.

Mr Riley described how activity-based funding would work by giving the Emergency Department as an example. Here the seriousness of an injury will be given a value.

“A sore toe might be a one, a car crash a three; you add them up to come up with number and for each one you get so many dollars,” he said.

A similar method of evaluation will apply to inpatients and other departments.

The other hospitals in the Far West - in Wilcannia, Menindee, Ivanhoe, Balranald and Wentworth - will not have to apply the new funding model. 

They will still get a set amount, known as block-based funding, which will rise with the Consumer Price Index and to cover whatever extra services they have to do.

“One of objectives of activity-based funding is to get hospitals and health services to look at whether the way they are doing things is the best way,” Mr Riley said.

For example, someone turning up with a serious infection could be given antibiotics through an intravenous drip and kept in hospital for a day or two.

But they could also be fitted with a syringe driver to administer the antibiotics. With this they could walk around, go home and come back to hospital the next morning to get the syringe changed over. 

 It was the same treatment, but the second approach saved money for the hospital because the patient was not taking up a bed, Mr Riley said.

“The outcome clinically is the same, so activity-based funding starts to make clinicians ask: ‘is the way we do it the best way.’ It can drive quite a bit of change.”


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