2012-13 Administrator National Health Funding Pool Annual Report

LEGISLATIVE REQUIREMENT

The Administrator of the National Health Funding Pool is required to prepare an annual report of operations and present it to Commonwealth and State/Territory Health Ministers. This report is required under sections 241 and 242 of the Commonwealth National Health Reform Act 2011 and under the following national health reform state and territory legislation:

  • New South Wales – Health Services Act 1997
  • Queensland – Hospital and Health Boards Act 2011
  • South Australia – National Health Funding Pool Administration (South Australia) Act 2012
  • Western Australia – National Health Funding Pool Act 2012
  • Tasmania – National Health Funding Administration Act 2012
  • Australian Capital Territory – Health (National Health Funding Pool and Administration) Act 2013
  • Northern Territory – National Health Funding Pool and Administration (National Uniform Legislation) Act 2012

The Victorian Health (Commonwealth State Funding Arrangements) Act 2012 also requires the Administrator to prepare an annual report, but as at 30 June 2013 Victoria had not appointed an Administrator.

The primary purpose of this report is to detail the operations of the National Health Funding Pool during its first year of operation from 1 July 2012 to 30 June 2013.

FURTHER INFORMATION

If you require further information or have any queries in relation to this Annual Report, please contact:

Administrator
National Health Funding Pool

PO Box 3139, Manuka ACT 2603
Phone: 1300 930 522
Media: 02 6289 7425
Email: nhfa.administrator@nhfa.gov.au

In line with government policies on efficiency and waste management, an accessible copy of this Annual Report is also available online at the Publications - Annual Reports page of the National Health Reform Public Hospital Funding website.

LETTER OF TRANSMITTAL

NHFB logo

Office of the Administrator

PO Box 3139 Manuka ACT 2603

Telephone: 1300 930 522

Email: nhfa.administrator@nhfa.gov.au

31 October 2013

The Hon Peter Dutton MP,
Commonwealth Minister for Health

The Hon David Davis MP,
Victorian Minister for Health

The Hon Kim Hames MLA,
Western Australian Minister for Health

The Hon Michelle O'Byrne MHA,
Tasmanian Minister for Health

The Hon Robyn Lambley MLA,
Northern Territory Minister for Health

The Hon Jillian Skinner MP,
NSW Minister for Health

The Hon Lawrence Springborg MP,
Queensland Minister for Health

The Hon Jack Snelling MP,
South Australian Minister for Health and Aging

The Hon Katy Gallagher MLA,
Australian Capital Territory Minister for Health

Dear Ministers,

Administrator of the National Health Funding Pool Annual Report 2012-13

I am pleased to submit to you, for tabling in your respective Parliaments, my inaugural Annual Report for the year ended 30 June 2013.

This report has been prepared in accordance with the requirements of sections 241 to 243 of the Commonwealth National Health Reform Act 2011 (the Act) and corresponding state and territory national health reform legislation.

The report includes a combined Financial Statement for the National Health Funding Pool, and a Financial Statement for each state and territory State Pool Account audited by the respective Auditor-General. The report also includes the reporting required under section 241(2) of the Act on national health reform funding and payments, on a national level and for each state and teritory.

Yours sincerely,

Administrator's signature

RJ Sendt
Administrator
National Health Funding Pool

Administrator: Providing transparency of Australian health system funding

The role and responsibility of the Administrator, who is independent of Commonwealth and states and territories, is of significant importance in ensuring that the calculation of the Commonwealth contribution to states and territories and local hospital networks, through the National Health Funding Pool, is accurate and impartial. This includes the proper and efficient management and administration of the Pool.

The core of the Administrator's reporting obligations is to ensure the transparency of Australian hospital system funding, provided to the general public and jurisdictions via www.publichospitalfunding.gov.au, together with the comprehensive information contained in this Annual Report.

These obligations of the Administrator help ensure that 'the new [national health reform] funding approach delivers tangible improvements to the health and hospital system for all Australians, delivering the funding public hospitals need.'1

1 Explanatory Memorandum to the Federal Financial Relations Amendment (National Health Reform) Bill 2012 (chapter 1.6) (external link, opens in a new window) [http://www.austlii.edu.au/au/legis/cth/bill_em/ffrahrb2012514/memo_0.html]

MESSAGE FROM THE ADMINISTRATOR

I am pleased to present the inaugural Annual Report of the Administrator of the National Health Funding Pool (the Administrator) for the year ended 30 June 2013.

The National Health Funding Pool (the Pool) and the position of Administrator were established following the signing of the National Health Reform Agreement (the Agreement) by all Australian governments in August 2011. A key focus of the Agreement was to provide more sustainable and transparent funding arrangements for Australia's health system.

The Pool commenced operations on 1 July 2012, following passage of the Commonwealth National Health Reform Act 2011 and the progressive passing of related national health reform legislation in all state and territory parliaments.

In the first twelve months of operation, the position of the Administrator, the Pool, and the National Health Funding Body (Funding Body) in its role assisting the Administrator, have begun delivering and contributing to the key national health reform funding objectives of transparency and sustainability in the funding of Australia's health and hospital system.

RESULTS

As the inaugural Administrator, I am proud to recognise the significant achievements in the Pool's first year of operation, including the commencement of a number of major initiatives designed to enable a sustainable financial basis.

During 2012–13 we have seen increased transparency in the funding and payment reporting under the national health reform arrangements, as intended under the Agreement, by successfully delivering the legislated monthly reports via my www.publichospitalfunding.gov.au website. These reports provide detailed information on $36 billion of national health reform funding and payments at the national, state and territory and individual local hospital network levels, in 2012–13.

Importantly, the reporting of this information will:

  • Enable the general public to access and understand national health reform funding mechanisms and arrangements.
  • Improve the ability of all stakeholders over time, including the general public, to make informed comparisons within and between local hospital networks across all states and territories about services provided and how they are funded.

During 2012–13, one of my main responsibilities was to calculate the Commonwealth Government's $13.1 billion funding contribution into the Pool. The independent calculation of these funds for each state and territory — in discrete funding streams — assists states and territories (as the system managers of public hospital services) to develop incentives for efficiency in local hospital networks and increases transparency in the delivery of public hospital services across Australia.

To ensure the robustness of national health reform funding arrangements, I directly managed and administered approximately $30 billion of transactions in 2012–13 within the Pool, and oversaw the payment of $26.3 billion Commonwealth, state and territory public hospital activity based funding from the Pool directly to local hospital networks and other parties. This Annual Report includes an audited special purpose financial statement for each Pool account, and a combined financial statement that brings together all the individual Pool accounts.

In the second half of 2012–13, preparation of my 'Three Year Data Plan 2013–2016', which sets out my data requirements for the following three years, was completed and subsequently approved without amendment by the Standing Council on Health on 26 July 2013.

In addition, during the year the following strategic documents were developed in consultation with relevant stakeholders and are now in full operation:

  • Four 'Administrator Determinations' covering:
    • 01: Provision of monthly data by states and territories as the basis of monthly reporting.
    • 02: Adjustments to Commonwealth funding under the Agreement.
    • 03: Provision of actual 2012–13 hospital services data for reconciliation with estimated services.
    • 04: Notional contracted services.
  • 2012–13 Reconciliation Framework — which specifies the approach to adjusting Commonwealth funding to individual local hospital networks to reflect the actual level of hospital services they provided, once the data becomes available.
  • Business Rules volume 1 (July to December 2012) — which outlines the business rules for determining those 2012–13 activity based funded hospital services that are eligible for national health reform Commonwealth funding.

OUTLOOK

While encouraged by the positive results achieved during 2012–13, I recognise that further developments are required in the following key areas. Supported by the Funding Body and all relevant stakeholders, I will work to achieve the most effective, equitable and accurate solutions in each area.

RECONCILIATION AND DATA MATCHING

A key feature of the Agreement is the introduction of Commonwealth funding for activity based funded services. Initially, Commonwealth payments are based on the estimated quantum of these services delivered by local hospital networks. As Administrator, I am then required to conduct reconciliations between estimated and actual service volume data to ensure that all local hospital networks receive Commonwealth funding based on their actual activity. This process also includes determining whether any of these services should be excluded from funding on the basis that they are paid for by the Commonwealth via other funding streams.

Both the reconciliation and data matching approaches will need to be accurate and robust for Commonwealth funding contribution purposes.

GROWTH AND FUNDING GUARANTEE DETERMINATION

A significant component of national health reform funding arrangements is the determination and allocation of the Commonwealth's additional $16.4 billion efficient growth and funding guarantees between 2014–15 and 2019–20. Over the coming years this will support the transition to the Commonwealth providing 50 per cent of the efficient price of the growth in hospital services.

DATA PLAN HARMONISATION

Harmonising the data requirements of the different national health reform agencies established under the Agreement is essential to ensure that the concept of 'single provision, multiple use' under clause B86(d) of the Agreement is met.

This will allow the relevant bodies to share information and work towards aligning data policies. In particular, those related to timing, privacy / legal matters, information management, communication and engagement with jurisdictions.

ACKNOWLEDGEMENTS

I am fortunate that my role involves working in partnership with a wide range of stakeholders across the Commonwealth, states, territories and other national health reform agencies, towards improving health outcomes for all Australians. The success of the Pool depends on the involvement of these stakeholders.

I acknowledge the contribution of the Commonwealth, and states and territories, who in partnership with me, strive to deliver a more transparent, sustainable and efficient health system.

I would like to thank the Funding Body for assisting me to discharge my statutory functions across all jurisdictions over the last twelve months. The enthusiasm and efforts of this small but dynamic and energetic team of professionals has ensured an outstanding result in the establishment and ongoing operation of the Pool and national health reform funding arrangements. I look forward to a continued collaborative relationship into the future.

I also recognise the leadership and expertise of Mr Lynton Norris, the Funding Body Chief Executive Officer for his guidance during the Pool's inaugural year, and the ongoing operations of the Funding Body.

Image of Bob Sendt, the Administrator of the NHFB

Administrator's signature

RJ Sendt
Administrator
National Health Funding Pool