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Performance Activity and Quality Division
Activity Based
Funding and
Management
Training and Education manual
improving care managing resources delivering quality
Version 2.0
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To request permission to reproduce these materials, please contact the
Performance Activity and Quality Division at [email protected]
These materials are regularly updated. For the latest version go to the ABF/ABM
intranet site at http://activity or the internet site at www.health.wa.gov.au/activity
© Department of Health, State of Western Australia (2011).
Copyright to this material produced by the Western Australian Department of Health
belongs to the State of Western Australia, under the provisions of the Copyright
Act 1968 (Commonwealth Australia). Apart from any fair dealing for personal,
academic, research or non-commercial use, no part may be reproduced without
written permission of the Performance Activity and Quality Division, Department of
Health Western Australia. The Department of Health is under no obligation to grant
this permission. Please acknowledge the Department of Health Western Australia
when reproducing or quoting material from this source.
Important Disclaimer:
All information and content in this Material is provided in good faith by the
Department of Health Western Australia, and is based on sources believed to be
reliable and accurate at the time of development. The State of Western Australia,
the Department of Health Western Australia, and their respective officers,
employees and agents, do not accept legal liability or responsibility for the Material,
or any consequences arising from its use.
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Activity Based Funding and Management
Contents
How to use this manual
2
Foreword
3
Introduction
5
What is Activity Based Funding and Management?
Learning objectives
National Health Reform 7
8
19
How WA Health is Funded
Learning objectives
31
32
Activity Based Funding Operating Model
Learning objectives Calculating payments
Funding for long stay patients
41
42
56
67
Monitoring and Managing Performance
Learning objectives
73
74
Improving Care by Delivering Quality
Learning objectives
91
92
Next steps for you
Learning objectives
99
100
Other ABF/ABM documents which are available
104
1
How to use this manual
This manual has been produced by the Performance Activity and Quality Division
to support the education and professional development for all health care staff
involved in Activity Based Funding and Management.
It can be read on its own or used to deliver training to staff. Notes are provided
as a guide only. An electronic copy of all materials is available on the ABF/ABM
intranet site at http://activity or by contacting [email protected]
2
Activity Based Funding and Management
Foreword
The introduction of Activity Based Funding and Management (ABF/ABM) in Western
Australia is one of the biggest reforms to the health system in decades. Changing
the way the health system is funded may seem fairly technical and straightforward.
However alongside the introduction of Activity Based Management, this reform
program goes to the heart of what everyone working in the health system cares
passionately about.
The ABF operating model gives us the opportunity to promote improvements in the
safety and quality of patient care:
**
funding on the basis of documented clinical activity promotes improvements
in the accuracy and quality of clinical documentation meaning better
communication between health professionals;
**
funding on the basis of the Clinical Services Framework enables services to be
provided where and how they are most needed by the WA community; and
**
a focus on reducing the numbers of patients who stay a long time in hospitals
promotes better discharge planning and the development of alternative care
options for patients.
Activity Based Management, with its focus on a comprehensive range of key
performance indicators, brings a new focus on the outcomes we deliver for patients
and the community in return for the budget we are allocated by the WA Government.
Since its introduction in July 2010, considerable work has taken place across
WA Health to better understand what we do (through improvements in clinical
documentation), how much it costs (through improvements in clinical costing) and
what results we deliver (through the introduction of the Performance Management
Framework).
These training and education materials have been developed to give all staff
in the health system an opportunity to understand Activity Based Funding and
Management, why it is important in WA, and what each of us can do to do our job
effectively.
3
4
Activity Based Funding and Management
Activity Based Funding and Management (ABF/ABM) is the way that the health
system in Western Australia is funded and managed.
These materials provide an introduction and overview of some of the main concepts
of Activity Based Funding and Management in Western Australia.
**
They have been prepared for anyone who works in any part of the WA Health
system. That includes anyone who makes any decisions about how to spend
public money, or who decides how staff will allocate their time.
In particular the information has been developed for:
** clinical and corporate managers who are responsible for managing clinical service
delivery, people or budget
** finance, business and performance staff within Area Health Services and
hospitals/site.
This slide pack outlines:
** How the new ways of funding and managing health services will help you improve
services
** How Activity Based Funding and Management will impact on clinical service
delivery
** How corporate and clinical staff can work together to improve how health services
are delivered
5
Further information about ABF/ABM can be found in Health Activity Purchasing
Intentions 2011-12 (known as HAPI 2) at:
http://activity/post/2011/07/05/Health-Activity-Purchasing-Intentions-2011-2012(HAPI-2).aspx
The latest information about the Activity Based Funding and Management program
is available on the Activity intranet site at http://activity
6
Activity Based Funding and Management
The implementation of Activity Based Funding and Management is a wide reaching
reform which will take place over a number of years. The first phase of the ABF/ABM
implementation program is scheduled to run for three financial years, from 2010-2011
to 2012-2013.
Lots of work has taken place during 2010-11 to lay strong foundations for the ongoing
implementation of Activity Based Funding and Management.
7
8
Activity Based Funding and Management
Activity Based Funding means that health services are funded on the basis of their
expected activity.
Activity is everything that WA Health does for, with and to patients, residents, clients
and their families and carers and the community. Previously, the funding that a health
service received was generally decided by looking at the funds they received in the
previous year, and adding a certain level of additional funding to cover growth in
costs.
In the first year of implementing ABF/ABM, there have been a number of
improvements across WA Health. These include:
** improved communication: hundreds of people have attended education
sessions about Activity Based Funding and Management, including clinicians,
managers and consumers.
** improvements in clinical documentation: clinical coding rates have improved
across the system meaning we now have much better information about the care
we provide to patients.
** new clinical costing system: we have procured a new statewide clinical costing
system which is being rolled out in 2011-12.
** “journey of care” clinical pilot projects: the first projects are in the areas of
fractured hip, stroke and palliative care.
9
Strategic intent 2010-2015
WA Health’s Strategic Intent outlines our vision, mission, values and priorities for the
years ahead through to 2015.
One of the four pillars is “Making the best use of funds and resources” which includes
the introduction of Activity Based Funding and Management. The intention is to
provide a clearer link between the dollars we spend and the services we provide
to patients and the community.
You can access the Strategic Intent on the Department of Health’s website at
http://www.health.wa.gov.au/about/strategicintent.cfm
10
Activity Based Funding and Management
In WA, Activity Based Funding and Management is about:
** improving care – using accurate and timely information to identify and deliver
improvements in services we provide to patients and their families
** managing resources – making best use of the public funds we receive.
Ensuring we get maximum value from each dollar we spend, as well as
ensuring we allocate resources in ways which will deliver health services where
and how they are needed
** delivering quality – continuing to focus on delivering safe high quality care
Activity Based Funding and Management is not a technical financial reform.
It impacts on every aspect of the services we provide across WA Health.
11
WA Health delivers a high standard of care across a wide range of services.
However, with increasing demand for public health services it is important that
we make every effort to get maximum value for every taxpayer dollar we spend.
This will require us to have a detailed understanding of the care we provide and
the costs of those services.
To do that, we need to be more consistent and improve what information we gather
about the care we provide. We also need a much more detailed understanding of
the costs of care we provide.
This information will enable WA Health, Government and the community to make
better informed decisions about how to allocate public funding for health services.
12
Activity Based Funding and Management
13
Activity Based Funding and Activity Based Management (ABF/ABM) is a way of
funding and managing the health system which can deliver the maximum value for
the community for the public funds we receive.
**
Technical efficiency is how efficient we are at what we do.
**
Allocative efficiency is how well we decide what to do and where to allocate our
resources.
14
Activity Based Funding and Management
The ABF/ABM reforms in WA build on previous reforms.
**
Models of care – Over 50 models of care have been developed by WA clinicians
and consumers outlining best practice healthcare across the entire continuum. See
them online at www.healthnetworks.health.wa.gov.au/modelsofcare
**
Models of care have informed the Clinical Services Framework – 2010-2020.
See the document online at http://www.health.wa.gov.au/publications/documents/
CLINICAL_SERVICES_FRAMEWORK_WEB.pdf
**
Recent improvements in funding and costing methodologies include the
development of the resource allocation model which is based on outputs, rather
than just inputs.
15
Health Activity Purchasing Intentions 2011-12 can be downloaded from the ABF/ABM
intranet site at http://activity/post/2011/07/05/Health-Activity-Purchasing-Intentions2011-2012-(HAPI-2).aspx
16
Activity Based Funding and Management
Activity Based Funding will eventually apply to everything we do with, to and for
patients and their families.
17
This diagram shows the work that is taking place to implement ABF/ABM across
WA Health.
The initial phase of work will focus on improving our systems and processes
and communication between different groups of staff.
As that work develops, everyone across WA Health will be able to make better
informed decisions about how and where we deliver care to the community.
18
Activity Based Funding and Management
The WA implementation of Activity Based Funding is aligned with the work across
Australia to move to a national Activity Based Funding approach for public health
services.
19
In 2008, the Council of Australian Governments (made up of the governments of the
jurisdictions and the Commonwealth Government) signed the National Partnership
Agreement in which it was agreed to move to a national Activity Based Funding
approach for public hospital services.
In 2010, WA was not a signatory to the National Health and Hospitals Network
Agreement.
In August 2011, all states and territories, and the Commonwealth Government signed
the National Health Reform Agreement.
20
Activity Based Funding and Management
All Australian States and Territories have agreed to sign the National Health Reform
Agreement 2011.
The National Health Reform Agreement is a nationwide agreement which will improve
the transparency, governance and financing of Australia’s health care system.
It provides for improvements in
** Transparency – increasing the information that is publicly available about public
hospital services and their performance
** Accountability – there will be national performance standards which all public
hospital services must adhere
** Efficiency – applying activity based funding to as many hospital services as
possible will enable us to ensure we are delivering value for money
21
National Health Funding Pool
A single National Health Funding Pool (NHFP) is also being established to
receive and pay out all Commonwealth and state/territory activity based funding
and Commonwealth block hospital funding. The NHFP will be overseen by an
Administrator supported by the National Health Funding Body.
The Administrator will calculate and advise the Commonwealth Treasurer of the
Commonwealth’s contribution to the NHFP, oversee payment of Commonwealth
funding, reconcile estimated and actual volume of service delivery and publicly report
on its activities and the NHFP’s accounts.
The Administrator will not be responsible for health system policy, planning or
purchasing. The Administrator will operate under the direction of the State in relation
to the State’s account.
Payments will be made from the National Health Funding Pool to local Hospital
Networks using an activity based funding approach wherever practicable.
The NHFP will be operational by 1 July 2012.
22
Activity Based Funding and Management
Over the period 2014/15 to 2019/20 the Commonwealth has agreed to increase
its funding for public hospital services by $16.4bn.
Western Australia’s share is estimated at $1.7 billion.
National Partnership Agreement on Improving Public Hospitals
The Commonwealth is also providing $3.4 billion for the National Partnership
Agreement on Improving Public Hospitals, of which Western Australia’s share is
$351.6m. This is to fund additional elective surgery, improvements in emergency
departments and an expansion of sub-acute care.
Increased funding for efficient growth in services
From 2014/15 the Commonwealth will fund 45% of the efficient growth in public
hospital services, increasing to 50% from 2017/18.
This funding will be on an activity basis – building on the successful introduction
of activity based funding in WA Health in 2010/11.
“Efficient growth” will be determined by a new body – the Independent Hospitals
Pricing Authority. This Authority (IHPA) will also coordinate the way hospital services
are classified, counted and costed nationally.
23
A key requirement will be a move to nationally-established “efficient prices” whilst
ensuring WA priorities are delivered. Therefore it is essential we understand WA’s
costs and what drives those as we negotiate with the Commonwealth Government.
24
Activity Based Funding and Management
National Performance and Accountability Framework
The Performance and Accountability Framework will include a range of national
performance indicators already agreed by COAG, as well as reference to national
clinical quality and safety standards developed by the Australian Commission on
Safety and Quality in Health Care.
WA’s performance management approach
WA Health introduced the ABF/ABM Performance Management Framework (PMF)
in 2010. The WA PMF 2011-2012 contains 31 statewide Key Performance Indicators,
which all WA public health services report against.
National Health Performance Authority
The National Health Performance Authority (NHPA) will report quarterly on the
performance of public and private hospitals and Medicare Locals through Hospital
Performance Reports and Healthy Communities Reports.
WA currently publishes real time data on a range of hospital services. We also
produce a diverse range of reports on our health services for consumers and the
public.
Australian Commission on Safety and Quality in Health Care
The Commission has been established to recommend nationally agreed standards
for safety and quality improvement, report publicly on performance against those
standards, and develop policy to lead and coordinate improvements in safety and
quality.
25
Independent Hospital Pricing Authority
The IHPA is being established to determine the national efficient price for services
provided in public hospitals, develop national classifications for use in public hospitals
for activity based funding (ABF), resolve disputes on cross-border issues between
the states and territories and provide advice and reporting to Australian governments
and the public as required.
Activity based approach wherever practicable
The overall policy objective of the National Health Reform Agreement is to fund
services “on an activity basis wherever practicable”. In WA Health we are building on
the successful introduction of Activity Based Funding in 2010-11.
Some services will continue to be block funded
To ensure rural and regional communities continue to have access to vital public
hospital services, small rural and regional hospitals will continue to be block funded.
Teaching and training functions funded by states and territories undertaken in public
hospitals (or other organisations) and research funded by states and territories
undertaken in public hospitals will also be funded on a block funding basis. This will
be reviewed by June 2018.
26
Activity Based Funding and Management
Implementation principles
The implementation principles which underpin National Health Reform include that
“governments should continue to support diversity and innovation in the health
system as a crucial mechanism to achieve better outcomes.
The Agreement also allows for exploration and trial of new and innovative
approaches to public hospital funding to improve efficiency and health outcomes.
Western Australian experience
In year 2 of ABF/ABM in WA, we introduced the WA Health Quality Incentive
Program (QuIP). QuIP aims to improve the safety and quality of care that is provided
across WA Health and to provide more community based services and minimise
unnecessary hospital admissions. Hundreds of applications were received from
across the system of innovative and novel ways to improve the care we provide to
patients who normally stay in hospital much longer than average.
27
This slide shows the current (as of October 2011) governance structure for the
National Health Reform Program in WA.
28
Activity Based Funding and Management
29
These timelines outline what services shall be funded on an ABF basis by the
Commonwealth.
30
Activity Based Funding and Management
The implementation of Activity Based Funding and Management is a wide reaching
reform which will take place over a number of years. The first phase of the ABF/ABM
implementation program is scheduled to run for three financial years, from 2010-2011
to 2012-2013.
Lots of work has taken place during 2010-11 to lay strong foundations for the
implementation of Activity Based Funding and Management.
31
32
Activity Based Funding and Management
There are three stages to the process:
1.How the Government allocates funds to WA Health
2.How WA Health prepares the budget bid
3.How WA Health allocates the budget it receives from Government
33
34
Activity Based Funding and Management
35
36
Activity Based Funding and Management
37
38
Activity Based Funding and Management
39
40
Activity Based Funding and Management
41
42
Activity Based Funding and Management
ABF Operating Model
The Operating model is the technical process used to allocate the WA Health budget
to health services.
It allocates a weight to each procedure based on the complexity of the procedure.
In Western Australia, we call these weights “Weighted Activity Units” or WAUs.
Weighted Activity Units are developed for each category of services which are funded
on an activity basis. In 2011-2012, these include inpatients (iWAU), emergency
department activity (eWAU) and outpatient services (oWAU).
43
An average price is based on information about activity and costs. At its most basic it
involves dividing the costs of services by the volume of services provided.
An efficient price encourages a more efficient delivery of health services. For
example, in 2011-12, the funding allocation to Area Health Services includes an
efficient price which encourages Area Health Services to manage long stay patients
and non-acute patients more efficiently.
See page 25 of Health Activity Purchasing Intentions 2011-12 for more information.
44
Activity Based Funding and Management
Activity levels
These are informed by the Clinical Services Framework process which estimates the
expected demand for services at a hospital catchment area level and overlays this
information against the capacity, location and role delineation of our hospitals.
How prices are determined
These are based on the costs of providing health services. In addition, in 2011,
we have introduced the first WA “efficient” price. This is based on the cost of those
patients who stay in hospital much longer than average for patients with that
condition.
Efficient price
The efficient price encourages health services to consider how they can ensure that
patients only stay in hospital as long as they need to.
45
The different types of activities to be funded under the ABF Operating Model need to
be identified and counted in a standardised manner. Establishing national standards
for activity based data collection and analysis is a significant piece of work that is
now underway.
The table shows the classification systems which are being used currently to allocate
the funding for each activity group. The classification systems used are:
** Australian-Refined Diagnosis Related Group (AR-DRG)
** Urgency Related Group (URG)
** National Hospital Cost Data Collection (NHCDC) Tier 2 clinics
** Australian National Sub-Acute and Non-Acute Patient (AN-SNAP)
The following slides will explain further about the activity groups (inpatient,
emergency and outpatient) and demonstrate the use of the classification systems.
46
Activity Based Funding and Management
These are some of the key concepts in the Activity Based Funding operating model.
The following slides will explain how these are used in the model to allocate funding
to health services for inpatient services.
47
Calculating the iWAU (Inpatient Weighted Activity Unit)
This graph shows that there is a direct link between the length of a patient’s stay in
hospital and the costs to WA Health for providing that care.
**
**
**
**
A reduction in the length of stay for central episodes improves the efficiency of a
hospital.
The funding model for core or central activity has built in incentives to encourage
early discharge where appropriate.
If a patient is discharged before the average length of stay the health service
keeps the credit for the full episode payment.
Episodes with above average length of stay will tend to be more costly than the
average patient within that DRG.
The next slide demonstrates this graph with real data.
48
Activity Based Funding and Management
Cost signature
This takes the graph from the previous slide and overlays it onto real data about
patients who received “Major small and large bowel procedures with catastrophic
complications”.
Each dot on the graph is a patient. As you can see, the majority of patients stay for
considerably less time than the high boundary point.
49
Case study
Both these stories relate to the same patient – Mr S. The example on the left gives
the clinical perspective. The example on the right gives the funding perspective.
Mr Smith is treated for Chronic Obstructive Airways Disease with Catastrophic
Complications or Co-morbidities. This is a medical case.
The key issue in this example is that the hospital is unlikely to be fully reimbursed for
the cost of Mr Smith’s care by the Department of Health. Had Mr Smith not developed
a urinary tract infection, he may not have had to stay in hospital for such a long time.
50
Activity Based Funding and Management
As this graph shows, the health service receives the same payment for Mr Smith’s
care whether he stays for 4, 8 or 15 nights. However, the increasing line shows that
the costs associated with Mr Smith’s care increase as his length of stay increases.
This makes it important for health services to consider how they can ensure patients
only stay in hospital for as long as they need to.
The WA Health Quality Incentive Program encourages health services to look at
reducing adverse events (which can lead to patients having to stay in hospital
longer than they otherwise would). Health services are also encouraged to consider
developing alternative ways of providing care to patients including working with
community organisations and the primary care sector.
51
This is another example of a patient who has a hip replacement without catastrophic
complications or co-morbidities.
Mrs Brown is admitted for a hip replacement. She doesn’t experience any
complications, or have any co-morbidities.
The main point from this example is that she has an uncomplicated episode of care.
However, as this is a surgical case there are up front costs which mean this DRG
attracts a higher cost weight than Mr Smith’s Chronic Obstructive Airways Disease.
52
Activity Based Funding and Management
Similarly to the graph showing the costs and iWAU for Mr Smith’s care, this shows
that the hospital receives the same payment whether Mrs Brown stays for 3, 8 or 12
nights.
The central episode weight however is higher given the costs associated with the
surgical component of the care.
53
The PICsum model is based on procedures, investigations and consultations (PIC)
and was developed by Peter Sprivulis in Western Australia.
The key point is that more complex cases are given a heavier weight, and therefore
attract a higher payment.
54
Activity Based Funding and Management
Outpatient weighted activity unit (oWAU)
In 2011-2012, oWAUs have been developed for the first time.
In metropolitan areas, oWAUs are based on Tier 2 NHCDC categories (such as Pain
Management, Hydrotherapy and Diabetes).
In WACHS oWAUs are based on Tier 1 NHCDC categories.
There is still considerable work to be done to ensure consistent and accurate data on
outpatients services is collected. For this reason, Area Health Services continue to
receive a block payment for outpatient services, in addition to the payment which is
calculated based on activity levels.
55
The next few slides provide an overview of how payments to health services are
calculated.
More detailed technical information on this process is available from the ABF/ABM
intranet site http://activity – search for “technical support”.
56
Activity Based Funding and Management
Note: Other Country Hospitals are not funded on an activity basis. These continue to
be block funded.
57
These are the base rates for inpatient episodes in each of the peer groups in the
Metropolitan Area.
For a metropolitan hospital, the amount of funding is calculated by multiplying the
cost weight (iWAU) by the peer group base rate. Examples follow.
58
Activity Based Funding and Management
These are the base rates for inpatient episodes in each of the peer groups in WA
Country Health Service.
For a country hospital, the amount of funding is calculated by multiplying the cost
weight (iWAU) by the peer group base rate and the rural cost disability (explained
later). Examples follow.
59
These are the base rates for Emergency Department Services in both Metropolitan
hospitals and WACHS.
60
Activity Based Funding and Management
61
The Rural Cost Disability Index is calculated based on actual costing information from
within WA Country Health Service. The index is applied to account for the varying
costs in delivering services across the WACHS regions.
62
Activity Based Funding and Management
It is important that all staff understand the pattern of care in their area to ensure we
are delivering the best care possible.
The ABF/ABM model means it is everyone’s business to understand what care
we are providing and how that care compares to other hospitals both in WA and
nationally.
In particular, it is important that all staff understand what impacts on whether
a patient stays longer than necessary in hospital. This could be due to them
experiencing an adverse event which could have been prevented. Or it might be due
to limited alternative care options in the community.
The Quality Incentive Program supports initiatives which targets these two areas –
improving the safety and quality of care we provide; and improving the range of care
options in our community.
For more information contact your Area Health Service Finance Director or Safety,
Quality and Performance Director.
63
Example
This graph shows the difference in lengths of stay for patients receiving a hip
replacement at the three adult tertiary hospitals in WA.
By day 7, hospitals B and C have discharged over 70% of their patients in this
category. Hospital C has discharged less than 50% of their patients.
All three hospitals receive the same payment for patients in the central episode
(between one third and three times the average length of stay). It is likely that
hospital C will be incurring significantly more costs than the others for the same
services.
64
Activity Based Funding and Management
As this table shows, complex care is reimbursed at a higher rate to reflect the higher
costs which are incurred in delivering that care.
Complexity of care is captured through clinical coding. Clinical coders use the
information in the medical record and the discharge summary to determine which
Diagnosis Related Group (DRG) is assigned to the episode.
Accurate and timely clinical documentation is vital for this process.
Further information about the importance of clinical documentation is contained in the
Clinical Casemix Handbook 2011-2012 which is available on the ABF/ABM intranet
site (http://activity – search for Clinical Casemix Handbook)
65
The coding impact
It is important that we have an accurate picture of the services provided by WA.
Clinical coding staff and clinical staff need to work together to ensure timely and
accurate clinically coded information is available. This information is important for:
**
Safety and quality – a comprehensive (but concise) discharge summary is vital
for ensuring continuity of care between health professionals
**
Determining appropriate funding – ensuring that health services are funded for
the services they provide
**
Clinical planning and demand modelling – coded records are used to inform
future planning of services. It’s important we fully understand the complexity of the
care we provide.
**
Model of care development – Health Networks use WA data to develop evidence
based models of care
**
Disease prevalence – accurate information about the health of WA consumers
helps WA Health to negotiate future resource needs with the state and Federal
Governments
**
Research and development – researchers use WA data to inform medical
research.
66
Activity Based Funding and Management
In 2011-2012 the model has been refined to encourage health services to more
actively manage patients who stay longer than three times the average nights of stay.
67
Quality Incentive Program
As outlined earlier, the funding model in 2011-12 encourages Area Health Services
and sites to focus on how they can reduce the numbers of patients who stay in
hospital significantly longer than average.
The funding for the Program has been calculated based on the numbers of patients
who are projected to stay longer than three times the average length of stay.
All of the funding will be returned to Area Health Services in two ways:
1. SQuIRe Plus which aims to improve the safety and quality of care that is provided
across WA Health (funding provided to Area Health Services at the start of the
financial year)
2. Clinical Integration and Innovation Program which aims to provide more
community based services and minimise unnecessary hospital admissions
(funding pool available for applications).
Further information follows in this presentation.
68
Activity Based Funding and Management
**
SQuiRe - Safety and Quality Investment for Reform
**
CPI - Clinical Practice Improvement Program
69
1. SQuIRe Plus
**
Evidence based inpatient care in the existing eight WA Clinical Practice
Improvement Initiatives
**
State and national safety and quality programs
**
All funds allocated to AHS in their base funding allocation for delivering evidence
based care in the eight WA Clinical Practice Improvement Initiatives
“every patient | every time | everywhere”
2. Clinical Integration and Innovation Program
a) Models of Care Premium Payments
b) Grants to reduce hospital admissions and improve chronic disease management
70
Activity Based Funding and Management
In 2011-12 75% of the QuIP funds will be provided to Area Health Services at the
start of the financial year with the rest of their base allocation.
Specifically, this money will be used by Area Health Services to drive the
implementation of the eight mandated Clinical Practice Improvements (CPI) in WA
public hospitals for all relevant patients.
The eight evidence based CPIs are:
1. Acute Myocardial Infarction prevention
2. Pressure ulcers prevention
3. Falls prevention
4. Central venous line catheter infection prevention
5. Surgical site infections prevention
6. Hand hygiene
7. Venous Thromboembolism prevention
8. Medication Reconciliation
These programs have incontrovertible international evidence that proves if they are
in place they save lives. More information about the SQuIRe program is online at
http://www.safetyandquality.health.wa.gov.au/squire/clin_prac_impr_prog.cfm
Further information is available on the ABF/ABM intranet site (http://activity)
71
The second category of QuIP funds will be allocated for the purpose of accelerating
uptake and spread of innovative ABF/ABM reforms within WA Health and the broader
community.
In particular, innovations that are based around patient needs and service models
that are community based will be encouraged.
A number of models of care have been identified by the ABF/ABM team and Health
Networks as being likely to have the most impact on reducing the numbers of
patients who often stay in hospital much longer than average:
** Cancer (including Palliative Care)
** Chronic Kidney Disease
** Chronic Obstructive Pulmonary Disease
** Diabetes
** Heart Failure
** Orthogeriatric (i.e. Fractured Neck of Femur)
** Stroke
The scope of QuIP will be reviewed each year as the WA Activity Based Funding and
Management Program (ABF/ABM) is expanded.
Further information about the Clinical Integration and Innovation Program is on the
ABF/ABM intranet site: http://activity
72
Activity Based Funding and Management
Activity Based Management (ABM) is the management approach used by WA Health
to plan, budget, allocate and manage activity and financial resources to ensure
delivery of safe high quality health services to the WA community.
A key element of ABF/ABM in WA is the Performance Management Framework
(PMF). See the document online at http://www.health.wa.gov.au/activity/docs/
performance_management_framework_2011-12.pdf
The PMF outlines the statewide key performance indicators and the processes for
ensuring these are met.
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1. Transparency:
Clear, agreed Key Performance Indicators (KPI), targets and responses to poor
performance.
2. Accountability:
Clear roles and responsibilities at Department of Health (DOH) and Service
Provider level for delivering services to agreed standards and volumes;
supporting and implementing performance improvement.
3. Recognition:
Sustained and outstanding performance is recognised and rewarded.
4. Consistency:
Responses to poor performance are appropriate to the issue being addressed.
5. Integrated:
The Performance Management Framework (PMF) is linked to clinical planning,
budget, activity and safety and quality.
6. Focus on service improvement:
The PMF enables a clear mechanism for health care improvement.
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The KPI for 2011-12 are grouped by the same domains and dimensions
as in 2010-11.
The agreed KPI are the result of extensive consultation with a broad range of
stakeholders.
Performance targets have been set for each KPI. The targets are based on one of
the following approaches:
** previous performance levels;
** peer best performance;
** system average; and
** ‘aspirational target’ linked to a policy objective.
Performance thresholds, measured against the relevant target, have also been
developed for each KPI following rigorous stress testing and consultation with data
stakeholders. These establish the criterion for whether any action needs to be taken
in relation to identifying and resolving poor performance, or acknowledging excellent
performance.
A full list of the ABF/ABM Key Performance Indicators for 2011-12 are on page
16 of the Performance Management Framework on the Activity intranet site
(http://activity – search for “Performance Management Framework”)
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Further information about the definition of each Key Performance Indicator and the
thresholds and targets is available in the ABF/ABM Performance Management – KPI
Definitions 2011-12 document on the ABF/ABM intranet site http://activity
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This slide shows an example of a scorecard report. The colours and the arrows
indicates the current status and the historic performance against each KPI.
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Details of the 31 Key Performance Indicators can be found on the ABF/ABM intranet
site at http://activity – search for “Performance Management Framework”.
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This slide shows the Key Performance Indicators in 2011-12 which relate to
population health.
Further information about the definitions of the KPI and the targets and thresholds
are available in ABF/ABM Performance Management – KPI Definitions document
which is available on the ABF/ABM intranet site http://activity
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Activity Based Funding and Management
This slide shows the Key Performance Indicators in 2011-12 which relate to safety
and quality.
Further information about the definitions of the KPI and the targets and thresholds
are available in ABF/ABM Performance Management – KPI Definitions document
which is available on the ABF/ABM intranet site http://activity
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The diagram shows the different levels of intervention when assessing performance.
Levels of intervention
1. The lowest level requires the Service Provider to account for under performance in
relation to achievement against the performance evaluation thresholds.
2. The intermediate level requires the Service Provider to undertake an in-depth
assessment and provide the Department with a detailed recovery plan and
timetable for resolution.
3. The intervention methodology applied at the highest level will be at the discretion
of the DG based on an assessment of the performance concern for the particular
Service Provider.
The PMF will be subject to annual review. The review will encompass KPI, targets
and thresholds, intervention processes and service agreements.
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The principal aim of ABF / ABM is to deliver safe care of the highest quality in a timely
manner, to citizens and patients who need it, at an agreed price.
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Activity Based Funding and Management introduces a set of levers and incentives
to encourage and recognise improvements in the safety and quality of care that is
provided.
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* Wilson R, et al. The Quality In Australia Health Care Study, Med J Aust
1995;163:458-71
** Department of Health. Identifying and costing adverse events in WA Public
Hospitals. Perth: Governments of Western Australia 2008.
^ Department of Health, Options for incorporating safety and quality interests in
the resource allocation modelling framework for WA public hospitals. Business
and Financial Modelling Directorate. Perth: Government of Western Australia,
2009Health Activity Purchasing Intentions 2010-2011, Department of Health,
Government of Western Australia.
Source: Ensuring Safety and Quality in Activity Based Funding / Activity Based
Management 2010/11-2013/14, Office of Safety and Quality in Healthcare, PAQ,
WA Health
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* Inpatient budgets and cost inflator indices provided by Business and Financial
Modelling Directorate, Performance Activity & Quality Division on 8 June 2010.
Note: multiday inpatient episodes were used to calculate budget.
Source: Ensuring Safety and Quality in Activity Based Funding / Activity Based
Management 2010/11-2013/14, Office of Safety and Quality in Healthcare, PAQ, WA
Health
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Reducing unwanted variation in care
This diagram shows why we want to reduce unwanted variation in care between
patients.
Reducing the unwanted variation in the care we deliver, as well as reducing the
length of time that patients stay in hospital, will result in fewer patients experiencing
an adverse event.
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Clinical Services Redesign: Six Sigma - Process Variability
Reduction
A data driven approach to reducing and controlling the sources of variation, i.e. what
causes a process to not consistently meet target? The Four Hour Rule Program uses
this methodology.
SQuIRe: The Safety and Quality Investment for Reform
(SQuIRe) Program
The SQuIRe Program has been in place across WA Health since 2006. Staff have
experience in delivering clinical practice improvement across eight targetted areas.
Lean: Reducing Waste in Healthcare
Anything that adds cost to the product without adding value is waste (correction,
motion, overproduction, conveyance, inventory, processing, waiting). LEAN
methodology is used in conjunction with Six Sigma in Clinical Services Redesign.
Quality Incentive Program
The WA Health Quality Incentive Program (QuIP) aims to improve the safety and
quality of care provided in WA and to provide more community based services and
minimise unnecessary hospital admissions. More information about QuIP is available
on the ABF/ABM intranet site at http://activity
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The implementation of Activity Based Funding and Management is a wide reaching
reform which will take place over a number of years.
Everyone in WA Health can play their role in delivering safe high quality care as cost
effectively as possible.
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High quality care
High quality safe care is always better for the patient and usually cost less for the
taxpayer.
** Do you know what adverse events occur in your area? You can find this out from
the Safety and Quality staff at your site.
** Do you understand the length of stay for patients in your area? How does
it compare with other similar sites in WA or across Australia? Finance and
business staff can help you access the latest information at your site.
Accurate and timely information
**
Ensure everyone in your team understands the importance of legible, accurate
and timely health information and medical records. This is important for clinical
handover as well as for financial planning.
Efficiency
**
**
Do you have a culture of continuous improvement in your area? There are a wide
range of tools available to help introduce improvements, including the Clinical
Service Redesign approach, the SQuIRE materials and information on Lean
methodology from the Institute of Health Leadership. Contact us at activity@
health.wa.gov.au if you need more information.
Does everyone in your team understand the importance of ensuring the best value
for money for every taxpayer dollar they spend?
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Implementing Activity Based Funding and Management is a major shift in how we
fund and manage the health system.
However, many of the required changes are already underway in parts of WA Health.
There are considerable numbers of staff who have been trained in quality
improvement skills over the past few years – please contact us if you do not know
who can help you on your site.
We have also developed a range of materials to help – these can be accessed from
the ABF/ABM intranet site at http://activity
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More information about local ABF/ABM implementation plans are available from your
Area Health Service or site. Contact the Finance Director or the Director of Safety
and Quality for more information.
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Other ABF/ABM documents which are available on the
ABF/ABM intranet site (http://activity)
Policy documents
1. Health Activity Purchasing Intentions 2011-12 – overview of ABF/M in WA
2. Admission, Readmission, Discharge and Transfer Policy for WA Health Services
Training and Education Materials
1. ABF/ABM Consumer Factsheet
2. ABF/ABM Overview Presentation 2011-12 – general overview for all staff
3. ABF/ABM Network Session Presentation 290911 – update aimed at finance,
business and performance staff
4. Clinical Casemix Handbook 2011-12 – overview of ABF for clinicians
ABF/ABM Performance Management Framework
1. Performance Management Triennial Strategic Directions 2011-14
2. Updated Annual Performance Management Framework 2011-12
3. What’s new in the Performance Management Framework 2011-12
4. ABF/ABM Performance Management Definitions Manual 2011-12
ABF Funding Model – technical support information
1. ABF Emergency department weighted activity schedule eWAU 2011-12
2. ABF Inpatient weight activity schedule iWAU 2011-12
3. ABF Outpatient weight activity schedule oWAU 2011-12
4. Updated ABF_ABM Area health services agreement technical support
Strategic Plans and Reviews
1. Review of ABF/ABM in WA June 2011
2. Review of Incentives and Pay for Performance June 2011
3. Strategic Plan for Clinical Costing Business Improvement Program 2011-13
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This document can be made available
Produced by ABF/ ABM System Lead Change Management and Communications
© Department of Health 2011
COVER & TABS.indd 4
HP12191 NOV’11
in alternative formats on request for
a person with a disability.
3/11/11 10:05 AM