Revenue - the missing link MARCH 2014

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Clinical Costing 2

CLINICAL DATA

PRICING DATA

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Simple Presentation 3

DEFINE THE PROBLEM

OUTLINE THE REASON

A SIMPLE SOLUTION

Not matching revenue with expenditure – the problems

u  Understating expenditure for medical costs

u  Allocating expenditure to the wrong patient groups

u  Attributing expenditure for non-patient care purposes to patient care

u  Not conceding that revenue does not come free

u  Very poor pricing regimes, specifically differentiating public and private patients

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Take a data set of $2B in Health Services 5

Revenue for the Same $2B 6

GL Revenue for Inpatients 7

What is all the income for? 8

Programs  and  Fixed  Revenue  -­‐  How  do  we  match  expenses?Development programsTrainingResearchPilot ProgramsNon-Direct Care Public Health Matters

Q. Why are there profits in Special Purpose Funds?A. Because the matching expense is still in the Operating Fund.

11 ways for Medical Appointments and recognising Private Patient Fees

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Medical/Surgical/Anaes/Intensivists

Private  FeesRecovered Shared SPF's Off  -­‐  Books

Full time Sometimes Sometimes Often Occasionally 4 Fractional No No Sometimes Often 2 Sessional Sometimes Sometimes Often Often 4 FFS No No No Always 1

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Private Patients – If I cannot see the fees, how can I know the cost?

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Private  FeesRecovered Shared SPF's Off  -­‐  Books

Prosthesis Mostly Occasionally

Diagnostic  ServicesPrivate  Fees

Operating SPF's Off  -­‐  BooksPathology - Outsourced FFS Public FFS no AlwaysImaging - Outsourced FFS Public FFS no AlwaysPathology - In House Public FFS PrivateImaging - In-house Public FFS Private

Costing hates a vacuum 11

Orthopeadics  FFS/Sessional/Fractional

Cost  Bucket Public   Private RevenueMedical Y no revenue = no expenseWards Y YAllied Health Y YMedical Support Y YPathology Y no revenue = no expenseRadiology Y no revenue = no expensePharmacy Y YICU Y YTheatre Y YSpecialist Y no revenue = no expenseProsthesis Y no revenue = no expenseED Y YHotel Y YOheads Y Y

Solution – Revenue Buckets and Standards for Allocation

u  A reconciliation of revenue as well as expenditure when submitting costing data.

u  A matching of revenue and expenditure at episode level

u  A concession that all revenue has a cost and it is not necessarily a patient cost.

u  For private patients a “NO REVENUE = NO COST” Policy

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Complete the process. It’s timely and relatively easy

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Solution

u  Revenue Buckets

u  Revenue matching – it is a handy tool when analyzing expenditure

u  Revenue allocation processes

u  A completed process using the other 50% of the available data.

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Benefits

u Better expenditure matching

u Better pricing

u Better Accountability for funders and providers

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