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Stuart Babbage delivered the presentation at the 2014 Health Insurance Summit. The 2014 Health Insurance Summit focused on how legislative changes affect the future of health insurance in funding, membership and services. For more information about the event, please visit: http://bit.ly/HISummit14
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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
PwC
Wouldn’t it be nice….
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
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
PwC
A system under pressure:Do Australians not pay their own way?
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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
PwC
A system under pressure:Do Australians not pay their own way?
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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
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
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
PwC
Case-based payment has been adopted by more than 20 countries, or 70% of the OECD
9
July 2014
0
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7.5
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1997 1998 1999 2000 2001 2002 2003 2004
% O
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ith
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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
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
PwC
The challenges with ABF: Linking service to outcomes
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July 2014
Source: ICHOM: Localized Prostate Cancer. www.ichom.org
Addressing avoidable costs in public hospitals and what this means for privately insured healthcare
PwC
The challenges with ABF: Multiple funders
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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
PwC
We need to talk about health reform:Not just tax reform or the state of the federation
For more…
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Stuart Babbage
(02) 6271 3021
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