New South Wales report, November 2017

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In this report

This report includes the following tables:

This report is issued by the Administrator of the National Health Funding Pool under section 240 of the National Health Reform Act 2011.

This report is prepared on a cash basis. It shows monthly and year-to-date (YTD) National Health Reform (NHR) funding and payments for New South Wales for November 2017 as part of the National Health Reform Agreement.

Local hospital networks and National Health Reform

A local hospital network (LHN) is an organisation that provides public hospital services in accordance with the Agreement. An LHN can contain one or more hospitals, and is usually defined as a business group, geographical area or community. Every Australian public hospital is part of an LHN.

Note: The term ‘local hospital network’ is a national term. Some states and territories use their own terminology to describe these networks, such as local health districts, health organisations, and hospital and health services.

Under the Agreement, LHNs receive funding for the following public hospital services:

  • All admitted and non-admitted services
  • All emergency department services provided by a recognised emergency department
  • Other outpatient, mental health, sub-acute services and other services that could reasonably be considered a public hospital service.

Note: LHNs also receive funding from other sources, including the Commonwealth, states and territories, and third parties for the provision of other specific functions and services outside the scope of the Agreement, for example dental services, primary care, home and community care, residential aged care and pharmaceuticals. For further information on total funding to a particular LHN, contact the NSW Ministry of Health to view the service agreement for that LHN.

Basis for National Health Reform payments – New South Wales, November 2017

For the basis of the Commonwealth contribution to NHR funding, see Basis of Commonwealth NHR funding, 2017-18.

The basis for NHR payments to local hospital networks (LHNs) in New South Wales was advised by the NSW Ministry of Health to be as follows:

Basis used to determine NHR payments to Local Health Networks (LHNs) – New South Wales

The process for determining 2017/18 NHR payments to LHNs encompassed three distinct elements of preparation for the individual LHN Service Agreements, including development of annual activity estimates, discussion/negotiation of activity levels with individual LHNs, and total state-wide activity across each activity type.

Consistent with last year’s methodology and pursuant with the National Health Reform Agreement (NHRA), the Ministry of Health has adopted the National Weighted Activity Unit (NWAU) as the currency for Activity Based Funding with the applicable version being NWAU17, which is different from the previous year.

The Independent Hospital Pricing Authority (IHPA) has issued the National Efficient Cost (NEC17) funding model that applies to small regional and remote hospitals. However, NSW has introduced a better methodology to better account the significant challenges faced by small hospitals in rural settings and better integrate care between small regional and remote hospitals and ABF hospitals. The mechanics of the NSW funding model is used to determine the aggregate funding allocation to LHNs for these small hospitals within the NSW funding model parameters.

Ensuring access to health services for local populations is a key objective of NSW health policy. The Health Services Act 1997 stipulates that in determining LHN budgets, the Minister have regard to the size and health needs of the local population and provision of services to residents outside the local area. Accordingly, targets are adjusted considering factors appropriate to each LHN and service type, rather than simple extrapolation from historical activity data. The factors considered are reviewed on an annual basis.

In 2017/18, a series of elements will be applied to each in-scope service stream to ensure that activity targets are tailored to the requirements and patterns of each LHD/SHN. Activity targets are developed by the Ministry and LHDs/SHNs based on analysis of activity level drivers. This analysis was informed for 2017/18 by the following factors:

  • Weighted population change: providing an indication of expected 'natural' growth
  • Recent trends in activity growth for each LHD/SHN
  • Relative Utilisation Rate adjusted for relevant demographic factors
  • Inter-district and cross-border flows (where relevant)
  • Current year activity relative to targets (for adjustment of baseline volumes, where relevant)
  • Known service changes and developments, including planned capacity increases.

Price weight adjustments which are being applied in 2017/18 include:

  • Paediatric Adjustment;
  • Specialist Psychiatric Age Adjustment;
  • Patient Remoteness Area Adjustment;
  • Indigenous Adjustment;
  • Radiotherapy Adjustment;
  • Dialysis Adjustment;
  • Intensive Care Unit (ICU) Adjustment for eligible facilities;
  • Private Patient Service Adjustment;
  • Private Patient Accommodation Adjustment;
  • Multidisciplinary Clinic Adjustment
  • Emergency Care Age Adjustment.

Provisional activity estimates are created at a LHD level to provide the basis for discussion and negotiation with individual health services to determine agreed LHD level activity targets, with the activity volumes measured using the NWAU for each Service Category. Additionally, where applicable, activity estimation is split by financial class to allow differential funding mechanisms to be applied to the respective service groups to reflect the variation in funding source.

Provisional estimates and historical activity measures provide the basis for discussions with individual LHDs and subsequent negotiations for approval or adjustment.

The negotiation process allows for relevant local LHN service issues and activity impacts to be communicated with the NSW Ministry of Health (Ministry) to assess the potential impact on future year activity volumes and the relevance of related service strategies to address these.

It is important that negotiation processes recognise that funding and purchasing are undertaken in the environment of a capped State / Commonwealth funding pool for 2017/18 and recognition that NSW contributes the larger portion of these funds as well as being responsible for management of the system as a whole. When negotiations have concluded, the Ministry incorporates the final activity targets in each LHN’s annual Service Agreement. Where an LHN achieves delivery of selected services through Affiliated Health Organisations or contracted services with a private provider these arrangements are to be specified in agreements between the LHN and the respective provider. Both the funding (and subsidy) and associated activity pertaining to such providers are included in the budget and the activity estimates appearing in the LHN’s annual Service Agreement.

Cash payments processed within the National Health Funding Pool (NHFP) Payments System and included within the Administrator’s monthly reports are based on the accrued budget for both ABF and in-scope block funding derived from the LHN Service Agreements after deducting an allowance to recognise own sourced revenue earned, and liabilities for superannuation and long service leave which are accepted by the Crown.

Based on the fact that not all cash related funding for in-scope services is flowed through the state pool account (ABF) or the state managed fund (in-scope block) and that those funds are retained by the LHD to contribute to the cost of service delivery, the Administrator’s reported level of commonwealth vs state cash paid through the pool does not truly reflect the full cash component funded by the State.

Further, although a consistent methodology has been applied, variations in cash prices between LHNs will also reflect the differing mix of the above components (own sourced revenue and Crown accepted liabilities) of each local hospital network’s accrued cost.

In addition to receiving weekly cash payments from the state pool account and the state managed fund, LHNs also receive direct State Government funding for 2017/18 for all “out of scope” services not subject to the National Health Reform Agreement arrangements as required under their 2017/18 Service Agreements.

Monthly reports – Basis on which payments were made

For NSW, all dollar values included in the tables issued by the Administrator are cash payments from either the NSW state pool account to LHNs and or cash payments from the state managed fund to LHNs. This includes cash payment to the Victorian Department of Health for Albury-Wodonga inter-jurisdictional agreement.

The tables provided do not include the level of additional state funding derived from own source revenues and retained by LHN’s and acceptance of crown liabilities (eg LSL & Superannuation) that are also available to LHN’s monthly to meet the cost of services.

The weekly cash payment to an LHN reflects the estimated cost of patient related services anticipated to be delivered during the monthly cash payment period. The estimated monthly activity and the weekly cash payments are determined based on the annual LHN Service Agreements.

Cash payments from the NSW state pool account and from the state managed fund to LHNs are processed each Tuesday. Reporting by the Administrator is based on cash payments made during a given month and is therefore dependent on the number of Tuesdays in a particular month.

During 2017/18, August 2017, October 2016, January 2018 and May 2018 each have five Tuesdays. If accrual accounting principles were being applied within the NHFA Payments System, the value of the reported cash payments would recognise only the number of calendar days in a particular month, not the 35 days (five weeks paid) or 28 days (four weeks paid), as reported by the Administrator.

There currently remains a carry over balance in the pool account of some $31.2M from 2016/17. This will be a source of funds in 2017/18 to cover the liability to the NHFB for final reconciled 2015/16 activity.

In 2017/18 cash payments to LHNs from the NSW state pool account are generally calculated based on equal weekly instalments to health services unless otherwise negotiated.

State Managed Fund cash payments occur as cash is required and dependent on the LHD bank balance in accordance with NSW Treasury Circular TC15-01 Cash Management – expanding the Scope of the Treasury Banking System.

In respect to Albury Wodonga, the Victorian Department of Health has direct budget responsible for provision of services at Albury/Wodonga Health and the current and proposed IGA for Albury Wodonga, requires NSW to Pay the Victorian Department of Health.

The payment that NSW makes to Victoria Health includes ABF, Block and a share of Public/Population Health funds received under NHR plus the NSW funded component.

On this basis NSW makes a single total payment to Victorian Department of Health each month however for transparency of Commonwealth monies under the NHRA, NSW established an ABF virtual entity for the Albury component of the Commonwealth.

Other payments will occur in 2017/18 that are outside the regular weekly (Tuesday) payment cycle for payments to other States/Territories for NSW residents treated in their public hospitals. Payments to LHNs may also vary where their cash entitlement alters during the financial year.

Monthly comparison of cash payments from the NSW state pool and state managed fund can vary month to month predominately due to these planned payments and cash requirements of an LHN.

The cash payments from the NSW state pool account or state managed fund do not reflect the full budgeted funding available to health services in NSW. Other sources of funds available to LHNs include separate payments from the Crown (for example, defined superannuation scheme and long service leave cash recovery) as well as own sourced revenues earned and retained by each LHN.

For more information on budget allocations, see the 2017/18 LHN Service Agreements which are available on each NSW LHN website as the Chief Executive and Board of the LHN’s provide sign off.

Reference information

The financial information outlined in the following report is categorised as:

  • NHR funding – when the Commonwealth or state or territory government pays NHR funding into a state pool account or state managed fund.
  • NHR payments – when NHR funding that has been deposited into a state pool account or state managed fund is paid out of the state pool account by the Administrator, or is paid out of the state managed fund by the state or territory.

State pool account transactions

Table 1a – State pool account transactions – New South Wales, November 2017

This table shows funding paid into the New South Wales state pool account by the Commonwealth, New South Wales or other states/territories, and payments out of the state pool account to LHNs, the state managed fund, the NSW Ministry of Health or the state pool accounts of other states/territories for November 2017.

NHR funding by source Paid into state pool account Paid out of state pool account
To Local hospital networks To State
Managed Fund
To state
health department
To state pool (other State) Total paid out
($) ($) ($) ($) ($) ($)
Commonwealth
ABF funding
431,600,353 431,600,353 431,600,353
Commonwealth
Block funding
59,704,661 59,704,661 59,704,661
Commonwealth
Other funding
10,329,342 10,329,342 10,329,342
Total C'wealth
funding
501,634,356 431,600,353 59,704,661 10,329,342 501,634,356
NSW
funding
459,367,621 441,901,863 115,758 17,350,000 459,367,621
Other state/territory funding 5,500,000 0 5,500,000 5,500,000
Total 966,501,977 873,502,216 59,704,661 15,945,100 17,350,000 966,501,977

See definitions and explanatory notes following table 1b.

Table 1b – State pool account transactions YTD – New South Wales, November 2017

Following on from table 1a, this table shows year-to-date (YTD) funding paid into the New South Wales state pool account by the Commonwealth, New South Wales or other states/territories, and payments out of the state pool account to LHNs, the state managed fund, the NSW Ministry of Health or the state pool accounts of other states/territories as at November 2017.

NHR funding by source Paid into state
pool account
Paid out of state pool account
To Local hospital
networks
YTD
To State
Managed Fund
YTD
To state health
department
YTD
To state pool (other State)
YTD
Total paid out
YTD
($) ($) ($) ($) ($) ($)
Commonwealth
ABF funding
2,158,001,768 2,158,001,768 2,158,001,768
Commonwealth
Block funding
298,523,304 298,523,304 298,523,304
Commonwealth
Other funding
51,646,711 51,646,711 51,646,711
Total C'wealth
funding
2,508,171,782 2,158,001,768 298,523,304 51,646,711 2,508,171,782
NSW
funding
2,760,074,786 2,672,410,072 914,714 86,750,000 2,760,074,786
Other state/territory funding 27,500,000 0 27,500,000 27,500,000
Total 5,295,746,568 4,830,411,840 298,523,304 80,061,425 86,750,000 5,295,746,568

Commonwealth ABF funding represents Acute admitted, Non-admitted, Emergency department, Sub-acute, and Admitted mental health service categories, which are funded by the Commonwealth through the state pool account and subsequently paid to LHNs.

Commonwealth Block funding represents Non-admitted mental health, Small rural hospitals, Teaching, training & research, and Other non-admitted categories, which are funded by the Commonwealth and paid to the state managed fund.

Commonwealth Other funding represents other amounts funded by the Commonwealth, transacted through the state pool account and subsequently paid to state or territory health departments. This currently represents the Commonwealth contribution to public health.

NSW funding represents funding contributions paid by New South Wales into its own state pool account, and subsequently paid to LHNs within the state, to the New South Wales health department and/or to other state pool accounts.

Other state/territory funding represents contributions paid to New South Wales by other states and territories for cross-border activity.

Note: The grey shaded areas in these tables reflect cells that are not applicable for a particular 'paid out' column. For example, Commonwealth block funding is only paid to state managed funds and not to local hospital networks or state or territory health departments.

NHR funding and payments shown in these tables include GST where applicable.

For more information, see National Health Reform funding and payments.

State managed fund transactions

Table 2a – State managed fund transactions – New South Wales, November 2017

This table shows funding paid into the New South Wales state managed fund by the Commonwealth and New South Wales, and payments out of the state managed fund to LHNs and other provider organisations for November 2017.

NHR funding by source Paid into state managed fund Paid out of state managed fund
To local hospital networks To Other Total paid out
($) ($) ($) ($)
Commonwealth Block funding 59,704,661 59,704,661
State/territory Block funding 74,732,695 74,732,695
Total 134,437,356 134,437,356 0 134,437,356

See explanatory notes following table 2b.

Table 2b – State managed fund transactions YTD – New South Wales, November 2017

Following on from table 2a, this table shows year-to-date (YTD) funding paid into the New South Wales state managed fund by the Commonwealth and New South Wales, and YTD payments out of the state managed fund to LHNs and other provider organisations as at November 2017.

NHR funding by source Paid into state
managed fund
YTD
Paid out of state managed fund YTD
To local hospital
networks
YTD
To Other
YTD
Total paid out
YTD
($) ($) ($) ($)
Commonwealth Block funding 298,523,304 298,523,304
State/territory Block funding 450,588,623 450,588,623
Total 749,111,926 749,111,926 0 749,111,926

Block funding represents Non-admitted mental health, Small rural hospitals, Teaching, training & research, and Other non-admitted categories.

Commonwealth Block funding represents Commonwealth block funding contributions paid into the state managed fund from the state pool account, and block payments out of the state managed fund to LHNs and other provider organisations.

State/territory Block funding represents New South Wales block funding contributions into the state managed fund, and block payments out of the state managed fund to LHNs and other provider organisations.

Note: The grey shaded areas in these tables reflect that these block payments cannot at this stage be identified by source of funding (state, territory or Commonwealth contribution).

NHR funding and payments shown in these tables include GST where applicable.

For more, see National Health Reform funding and payments.

NHR funding and payments by service category

Table 3 – NHR funding and payments by service category – New South Wales, November 2017

This table shows NHR funding and payments by service category on both a monthly and year-to-date (YTD) basis for New South Wales for November 2017. NHR funding and payments are separated into the following service categories – activity-based funding (ABF), block funding, and other funding.

Service category NHR
funding
NHR
payments
NHR
funding YTD
NHR
payments YTD
($) ($) ($) ($)
ABF
Acute admitted 513,727,443 513,727,443 2,842,264,088 2,842,264,088
Admitted mental health 46,855,353 46,855,353 258,505,890 258,505,890
Sub-acute 56,501,165 56,501,165 312,930,385 312,930,384
Emergency department 106,213,332 106,213,332 587,700,480 587,700,480
Non-admitted 150,204,923 150,204,923 829,010,998 829,010,998
Total ABF (Pool) 873,502,216 873,502,216 4,830,411,840 4,830,411,840
Block
Small rural hospitals 64,389,535 64,389,535 378,360,902 378,360,902
Teaching, training & research 36,196,501 36,196,501 184,319,246 184,319,246
Non-admitted mental health 33,851,320 33,851,320 186,431,778 186,431,778
Other non-admitted services 0 0 0 0
Total Block (SMF) 134,437,356 134,437,356 749,111,926 749,111,926
Other
Public health funding 10,329,342 10,329,342 51,646,711 51,646,711
Overdeposit 0 0 0 0
Cross-border 22,850,000 22,850,000 114,250,000 114,250,000
Interest 115,758 115,758 914,714 914,714
Total Other (Pool) 33,295,100 33,295,100 166,811,425 166,811,425
Grand Total 1,041,234,673 1,041,234,673 5,746,335,191 5,746,335,191

Total ABF (Pool) is an aggregate of both Commonwealth and state or territory NHR funding and payments for activity-based funding (ABF) which is transacted through the state pool account.

Total Block (SMF) is an aggregate of both Commonwealth and state or territory NHR funding and payments for block funding which is transacted through the state managed fund (SMF).

Total Other (Pool) represents other funding and payments transacted through the state pool account, including public health funding, overdeposits, cross-border funding and payments, and interest.

State and territory cross-border payments can either be:

  • Paid to the relevant state or territory's LHNs - included within ABF and/or block payments in the above table, or
  • Reimbursed to the relevant state or territory where the state or territory's LHNs are already being funded for the cost of treating cross-border patients - shown in the Cross-border row under Other in the above table.

NHR funding and payments shown in these tables include GST where applicable.

For more information, see National Health Reform funding and payments.

NHR contributions by local hospital network

Table 4a – NHR contributions by local hospital network – New South Wales, November 2017

This table shows NHR contributions (from state, territory and Commonwealth sources) made to each LHN in New South Wales during November 2017.

NHR contributions to LHNs are separated into an activity-based funding (ABF) component and a block component.

Local hospital network (LHN) ABF component
(ex GST)
Block component
(ex GST)
Total NHR payment
(ex GST)
($) ($) ($)
Albury NSW Local Health District 3,172,144 1,015,693 4,187,837
Central Coast Local Health District 44,276,122 2,939,580 47,215,702
Contracted Services 781,689 781,689
Far West Local Health District 4,757,173 1,540,720 6,297,893
Hunter New England Local Health District 97,221,033 20,564,316 117,785,349
Illawarra Shoalhaven Local Health District 49,118,886 5,955,000 55,073,886
Justice Health & Forensic Mental Health Network 0 3,506,287 3,506,287
Mid North Coast Local Health District 32,795,803 3,721,402 36,517,205
Murrumbidgee Local Health District 21,169,883 20,100,000 41,269,883
Nepean Blue Mountains Local Health District 41,148,756 4,508,483 45,657,239
Northern NSW Local Health District 43,463,575 3,261,006 46,724,581
Northern Sydney Local Health District 73,848,563 10,158,304 84,006,867
South Eastern Sydney Local Health District 83,637,743 9,505,079 93,142,822
South Western Sydney Local Health District 100,073,695 2,304,857 102,378,552
Southern NSW Local Health District 21,077,784 4,100,000 25,177,784
St Vincent's Health Network 21,051,624 2,348,000 23,399,624
Sydney Children's Hospitals Network 35,042,512 2,775,484 37,817,996
Sydney Local Health District 81,362,576 15,158,650 96,521,226
Western NSW Local Health District 34,329,498 11,199,527 45,529,025
Western Sydney Local Health District 85,173,160 9,774,968 94,948,128
Total 873,502,216 134,437,356 1,007,939,572

See explanatory notes below table 4b.

Table 4b – NHR contributions by local hospital network YTD – New South Wales, November 2017

This table shows YTD NHR contributions (from state, territory and Commonwealth sources) made to each LHN in New South Wales as at November 2017.

NHR contributions to LHNs are separated into an activity-based funding (ABF) component and a block component.

Local hospital network ABF component YTD
(ex GST)
Block component YTD
(ex GST)
Total NHR payment YTD
(ex GST)
($) ($) ($)
Albury NSW Local Health District 15,860,719 5,078,465 20,939,184
Central Coast Local Health District 240,949,374 17,218,924 258,168,298
Contracted Services 3,908,445 3,908,445
Far West Local Health District 25,763,919 8,449,312 34,213,231
Hunter New England Local Health District 528,588,414 116,204,171 644,792,585
Illawarra Shoalhaven Local Health District 267,551,863 27,304,491 294,856,354
Justice Health & Forensic Mental Health Network 0 21,326,910 21,326,910
Mid North Coast Local Health District 181,881,277 12,899,542 194,780,819
Murrumbidgee Local Health District 113,222,808 127,309,945 240,532,753
Nepean Blue Mountains Local Health District 284,097,076 25,570,977 309,668,053
Northern NSW Local Health District 236,993,596 14,225,674 251,219,270
Northern Sydney Local Health District 401,145,738 63,410,697 464,556,435
South Eastern Sydney Local Health District 453,919,961 35,004,415 488,924,376
South Western Sydney Local Health District 547,161,625 23,521,135 570,682,760
Southern NSW Local Health District 116,470,018 32,092,180 148,562,198
St Vincent's Health Network 114,260,579 10,328,000 124,588,579
Sydney Children's Hospitals Network 193,838,831 15,263,968 209,102,799
Sydney Local Health District 445,708,094 67,045,739 512,753,833
Western NSW Local Health District 187,137,933 75,022,891 262,160,824
Western Sydney Local Health District 471,951,571 51,834,490 523,786,061
Total 4,830,411,840 749,111,926 5,579,523,766

NHR contributions in this table are GST exclusive to enable comparability of NHR payments in each LHN report.

Note: This table excludes GST.
The majority of government funding to LHNs is not subject to GST. However in some cases hospital funding to non-government entities does attract GST, for example, denominational hospitals, privately and commercially owned health facilities, or any other non-government third party provider of health services or related supplies.

For more information, see National Health Reform funding and payments.

Estimated monthly, YTD and annual activity

States and territories provide service volume estimates at the start of each financial year, and if required, can continue to refine these estimates during the course of the year. These estimates form the basis of monthly reporting of service volumes until actual service numbers become available. These estimates are expressed as National Weighted Activity Units (NWAU).

States and territories provide estimated annual NWAU to the Administrator as a basis for determining the Commonwealth activity-based funding. Current month NWAU estimates accumulate through the year-to-date (YTD) NWAU, to be equal to the annual NWAU at the end of the financial year.

States and territories may also provide activity information relating to the delivery of other public hospital functions funded.

Table 5 – Estimated monthly, YTD and annual NWAU by local hospital network – New South Wales, November 2017

This table shows estimated state or territory hospital activity for activity-based funding services expressed as NWAU for November 2017, the associated cumulative year-to-date (YTD), and total estimated annual NWAU for each LHN in New South Wales.

Local hospital network (LHN) Estimated NWAU delivered in current month Estimated NWAU delivered YTD Estimated annual NWAU 2017-18
Albury NSW Local Health District 1,669 5,604 20,031
Central Coast Local Health District 10,225 51,126 122,703
Contracted Services 316 1,581 3,790
Far West Local Health District 823 4,173 9,876
Hunter New England Local Health District 25,195 125,976 302,344
Illawarra Shoalhaven Local Health District 11,791 58,955 141,493
Mid North Coast Local Health District 7,920 39,599 95,037
Murrumbidgee Local Health District 5,186 25,931 62,237
Nepean Blue Mountains Local Health District 10,943 54,714 131,313
Northern NSW Local Health District 10,542 52,710 126,505
Northern Sydney Local Health District 18,030 90,150 216,357
South Eastern Sydney Local Health District 21,814 109,073 261,773
South Western Sydney Local Health District 24,435 122,176 293,223
Southern NSW Local Health District 4,703 23,514 56,435
St Vincent's Health Network 5,766 28,945 69,197
Sydney Children's Hospitals Network 8,948 44,800 107,378
Sydney Local Health District 21,025 105,123 252,297
Western NSW Local Health District 8,250 42,228 98,996
Western Sydney Local Health District 21,258 107,002 255,098
Total 218,840 1,093,382 2,626,084

An NWAU is a measure of health service activity expressed as a common unit. It provides a way of comparing and valuing each public hospital service, whether they are admissions, emergency department presentations or outpatient episodes, by weighting them for their clinical complexity. The average hospital service is worth one NWAU - the most intensive and expensive activities are worth multiple NWAU, the simplest and least expensive are worth fractions of an NWAU.

Monthly NHR payments relate to the cash needs of public hospitals and do not necessarily reflect the volume of services to be delivered in the month.

For more information on the NWAU calculation, see Calculation of NWAU.