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Addressing avoidable costs in public hospitals and what this means for privately insured healthcare
www.pwc.com.au
Stuart Babbage(@stubabbage)
July 2014
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PwC
Wouldn’t it be nice….
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PwC
A system under pressure:Do we spend too much on healthcare?
3
July 2014
Source: K. Davis, K. Stremikis, C. Schoen, and D. Squires, Mirror, Mirror on the Wall, 2014 Update: How the U.S. Health Care System Compares Internationally, The Commonwealth Fund, June 2014
Addressing avoidable costs in public hospitals and what this means for privately insured healthcare
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PwC
A system under pressure:Does an older population lead to more spending?
4
July 2014
Source: Jeffrey Richardson, Can we sustain health spending?, MJA, 2014
Health spending matched to older population for selected countries
Total health spending2011 (%GDP)
Population aged 65+*2011 (% total)
Australia 9.5%** 13.7%
France 11.6% 17.1%
Canada 11.2% 14.7%
Japan 9.6% 23.3%
Sweden 9.5% 19.3%
Netherlands 11.9% 15.9%
United Kingdom 9.4% 16.2%
United Sales 17.7% 13.2%
OECD 9.3% 15.4%
Addressing avoidable costs in public hospitals and what this means for privately insured healthcare
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PwC
A system under pressure:Do Australians not pay their own way?
5
July 2014
Source: Australian Institute of Health and Welfare, Australia’s health 2014.
Addressing avoidable costs in public hospitals and what this means for privately insured healthcare
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PwC
A system under pressure:Do Australians not pay their own way?
6
July 2014
Source: OECD (2013), Health at a Glance 2013: OECD Indicators
Addressing avoidable costs in public hospitals and what this means for privately insured healthcare
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PwC
Infrastructure of Activity Based Funding
7
July 2014
Pricing Framework: National Efficient Price (NEP) released annually ;applies rules, eg inlier, outlier, loadings
National Hospital Cost Data Collection (NHCDC): Patient level costing captures direct costs via feeder systems, allocation of indirect costs, costing according to Australian Hospital Patient Costing Standards (AHPCS)
Reporting of activity levels / Service level agreements (SLAs): Activity is counted by product and subject to estimated activity levels and demand management.
Hospital products: ED stays (URG/UDG), admitted separations (ARDRG), non-admitted (Tier2), Subacute (ANSNAP), Mental Health (TBD), Teaching/Training/Research (TBD)
Improving source data: coding of medical record information (diagnoses, procedures); capture of costs by patient
Counting
Classification of activity by product
Activity Based Costing
Funding methodologies
Medical record & data management
Governance & management
Addressing avoidable costs in public hospitals and what this means for privately insured healthcare
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PwC
What is the evidence of ABF driving efficiency inside the hospital walls?
8
July 2014
Addressing clinical
variation
Analysis ofcosts by episodes
Integratedcare
Addressing avoidable costs in public hospitals and what this means for privately insured healthcare
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PwC
Case-based payment has been adopted by more than 20 countries, or 70% of the OECD
9
July 2014
0
10
20
30
40
50
60
70
80
6
6.5
7
7.5
8
8.5
1997 1998 1999 2000 2001 2002 2003 2004
% O
EC
D w
ith
AB
F
Av
gL
oS
(da
ys
)
Comparison of OECD countries with ABF models and average length of stay
Countries with ABF LOS
Source: PwC 2008 – You Get What You Pay For (2007)
Addressing avoidable costs in public hospitals and what this means for privately insured healthcare
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PwC
The challenges with ABF: Avoidable costs
10
July 2014
Source: Duckett, S.J., Breadon, P., Weidmann, B. and Nicola, I., 2014, Controlling costly care: a billion dollar hospital opportunity, Grattan Institute, Melbourne
Addressing avoidable costs in public hospitals and what this means for privately insured healthcare
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PwC
The challenges with ABF: Linking service to outcomes
11
July 2014
Source: ICHOM: Localized Prostate Cancer. www.ichom.org
Addressing avoidable costs in public hospitals and what this means for privately insured healthcare
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PwC
The challenges with ABF: Multiple funders
12
July 2014
Source: Australian Institute of Health and Welfare, Australia’s health 2014
Addressing avoidable costs in public hospitals and what this means for privately insured healthcare
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PwC
We need to talk about health reform:Not just tax reform or the state of the federation
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Stuart Babbage
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