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Funding model falls short

Monday, 8th April, 2013

The new funding model will not meet the cost of keeping country hospitals running, says the Far West Local Health District. The new funding model will not meet the cost of keeping country hospitals running, says the Far West Local Health District.

By Andrew Robertson

The BH Hospital will continue to need some level of block funding in order to function in the future, according to the Far West Local Health District.

As part of the Federal Government's health care reforms the State's hospitals are moving from the current block funding model to activity- based funding (ABF).

Local health districts will receive both forms of funding until a two-year transition period ends in 2014, when the Commonwealth will increase its funding to hospitals.

The move to ABF is expected to result in greater efficiency and transparency, as funding is linked to individual procedures and services that a hospital performs.

But the model is unsuitable for rural and remote hospitals such as the BH Hospital which "experiences a range of costs" associated with its location, according to Director of Finance and Corporate Services, John Leehane.

"The characteristics of the Broken Hill Hospital mean that ABF revenue is unlikely to be the sole source of funding for the service," Mr Leehane said.

"The size of the facility also affects the extent to which activity levels in different parts of the service offered are associated with costs."

He said that apart from revenue raised by ABF and a "substantial level" of block funding from the NSW Ministry of Health, the Far West LHD also receives transition grants.

Mr Leehane said the transition to ABF had not led to a reduction in staff levels at the hospital, saying they had in fact increased since its introduction on July 1 2012.

"The opening of the Mental Health Sub-Acute Unit in February has provided additional services and new staff positions," he said.

"The Rehabilitation Sub- Acute Unit is under construction and is expected to commence services in May 2013. Again this will provide new employment within the hospital."

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