Pricing and funding for safety and quality

James Downie

Chief Executive Officer

Independent Hospital Pricing Authority

Safety and Quality

• IHPA canvassed including safety and quality measures

in the National Efficient Price from inception.

• Worked with Australian Commission on Safety and

Quality in Heath Care to consider:

‒Evidence base

‒Better use of routine data sets to measure safety and

quality

‒Role of best practice pricing

2 www.ihpa.gov.au

Commonwealth directions to IHPA

3 www.ihpa.gov.au

COAG 1 April 2016

All jurisdictions agreed to take action to improve the quality of care in hospitals

and reduce the number of avoidable admissions, by:

• improving hospital pricing mechanisms to reflect the safety and quality of

hospital services by reducing funding for unnecessary or unsafe care –

reducing hospital-acquired complications will improve patient safety; and

• reducing the number of avoidable hospital readmissions.

Sentinel events

www.ihpa.gov.au4

Sentinel Events

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1. Procedures involving the wrong patient or body part resulting in death or major

permanent loss of function

2. Suicide of a patient in an inpatient unit

3. Retained instruments or other material after surgery requiring re-operation or

further surgical procedure

4. Intravascular gas embolism resulting in death or neurological damage

5. Haemolytic blood transfusion reaction resulting from ABO incompatibility

6. Medication error leading to the death of a patient reasonably believed to be due

to incorrect administration of drugs

7. Maternal death associated with pregnancy, birth and the puerperium

8. Infant discharged to the wrong family

www.ihpa.gov.au

Sentinel Events

• From 1 July 2017 no funding for episodes of care with

a sentinel event

• ~100 events per annum (public hospitals)

• Funding impact ~$5 million per annum

6 www.ihpa.gov.au

www.ihpa.gov.au7

Hospital acquired complications

Australian and international studies estimate that

adverse events explain between 12.0% and 16.5% of

total cost of care in the hospital setting

8 www.ihpa.gov.au

Premise

• ICD-10-AM data is a rich source of safety and quality data, currently

under-utilised at a national level

• Literature review

‒Good evidence that the provision of timely clinical information to

clinicians & managers leads to improvements in patient outcomes

• Pricing signals

‒Provide clear sign that government values safety and quality

‒Promote discussion of safety and quality systems amongst

clinicians and hospital managers

9 www.ihpa.gov.au

Development of list of hospital acquired complications

10 www.ihpa.gov.au

Independent Hospital

Pricing Authority

(IHPA)

Implements national Activity

Based Funding (ABF) for

Australian public hospitals

Australian Commission on

Safety and Quality in Health

Care

(ACSQHC)

Leads and coordinates national

improvements in safety and

quality in health care

Formation of Joint Working Party

(JWP)

List of HACs

preventability cost impact

clinical prioritypatient impact

List of hospital acquired complications

1. Pressure injury

2. Falls resulting in fracture or other intracranial

injury

3. Healthcare associated infection

4. Surgical complications requiring unplanned

return to theatre

5. Unplanned intensive care unit admission

6. Respiratory complications

7. Venous thromboembolism

8. Renal failure

9. Gastrointestinal bleeding

10. Medication complications

11. Delirium

12. Persistent incontinence

13. Malnutrition

14. Cardiac complications

15. Third and fourth degree perineal

laceration during delivery

16. Neonatal birth trauma

11 www.ihpa.gov.au

HAC statistics 2014-15

~100,000 acute admitted episodes

with at least one HAC

2.91 HACs per 100 episodes

12 www.ihpa.gov.au

HAC statistics 2014-15

13 www.ihpa.gov.au

Rates vary

14 www.ihpa.gov.au

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HAC Incremental

cost

All HACs 8.6%

Pressure injury 13.8%

Falls resulting in fracture or other intracranial injury 1.7%

Healthcare associated infection 8.8%

Surgical complications requiring unplanned return to theatre 10.9%

Unplanned intensive care unit admission

Respiratory complications 15.9%

Venous thromboembolism 12.4%

Renal failure 21.7%

Gastrointestinal bleeding 10.0%

Medication complications 8.2%

Delirium 9.8%

Persistent incontinence 2.3%

Malnutrition 7.4%

Cardiac complications 11.3%

Perineal laceration 23.2%

Neonatal birth trauma 10.8%

www.ihpa.gov.au

www.ihpa.gov.au16

Risk Adjustment

Pricing and funding approaches should

balance the likelihood that some patients

will be at higher risk of experiencing

an adverse event while recognising that

all hospitals have scope to improve safety

and quality

17 www.ihpa.gov.au

Complexity Model

18www.ihpa.gov.au

Risk Factors 01. P

ressu

re in

jury

02. F

all

s r

es

ult

ing

in

fra

ctu

re o

r o

the

r in

tra

cra

nia

l in

jury

03. H

ealt

hca

re a

ss

oc

iate

d

infe

cti

on

04. S

urg

ica

l c

om

pli

cati

on

s

req

uir

ing

un

pla

nn

ed

re

turn

to

th

ea

tre

06. R

esp

ira

tory

co

mp

lic

ati

on

s

07. V

en

ou

s t

hro

mb

oe

mb

oli

sm

08. R

en

al fa

ilu

re

09. G

astr

oin

testi

nal b

lee

din

g

10. M

ed

icati

on

co

mp

lic

ati

on

s

11. D

eli

riu

m

12. P

ers

iste

nt

inco

nti

nen

ce

13. M

aln

utr

itio

n

14. C

ard

iac

co

mp

lic

ati

on

s

Admission Status

Patient Age

MDC

ICU Status

DRG Type

Charlson Score

Gender

Transfer Status

19 www.ihpa.gov.au

Final adjustments

• HAC Group 10: Medical Complications

• Incremental Cost of a HAC10 = 8.1%

20 www.ihpa.gov.au

Complexity

Group

Final Adjustment

Low 1.00 x 8.1% = 8.1%

Moderate 0.46 x 8.1% = 3.7%

High 0.27 x 8.1% = 2.2%

21 www.ihpa.gov.au

Funding impact

• Agreement specifies the funding adjustment will be

back-cast.

• As a result no cut to Commonwealth funding.

• Not yet clear how states and territories will implement.

22 www.ihpa.gov.au

Funding impact

23 www.ihpa.gov.au

Incidence of HACs between years LHN funding impact

stable minimal (slight decrease)

increases decreases

decreases increases

Benchmarking

www.ihpa.gov.au24

National benchmarking portal

• Launched late 2016

• Cost, activity and HAC data

• Available to all public hospital staff

• Access controlled by states and

territories

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All HACs – Rate/100 separations

www.ihpa.gov.au

Clinical engagement is key

• Pricing signal important to start conversation

• Providing data back to clinicians and managers will

drive improvement

• IHPA benchmarking portal provides HAC rates at

hospital and DRG level

• Allows comparison across like hospitals

• Accessible by all public hospital staff (access

controlled by states and territories)

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HAI – Rate/100 separations

www.ihpa.gov.au

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HAI – Rate/100 separations

www.ihpa.gov.au

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HAI –COPD – Rate/100 separations

www.ihpa.gov.au

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