AMA submission on Independent Hospital Pricing Authority Work Program 2012-13

2 Aug 2012

IHPA 2012-13 Work Program - General Comments

The AMA welcomes this opportunity to provide comments on the IHPA work program for 2012-13.  

The AMA acknowledges that the introduction of the new hospital pricing framework and the National Efficient Price comprise a significant body of work, representing an equally significant change in the funding arrangements for public hospital services.  

The IHPA work program includes a range of tasks and activities associated with the ongoing implementation of these new arrangements.  This represents an ambitious agenda, reflecting the scope and importance of this work to the operation of our public hospital system.  While the AMA has both broader general comments and specific comments on some elements, it acknowledges that the work program overall is comprehensive and systematic.   

The AMA’s principal concerns with the new funding arrangements relate to the potential for adverse impacts in key areas, including:

  • a real reduction in the number of services provided – because the funding amount does not cover the cost of providing timely and effective care;
  • a change in the types of services provided – with a focus on the more ‘lucrative’ activities;
  • a reduction in the quality of care; and
  • a diminution in the number of training places, and the quality of the training experience for junior doctors – with a focus on higher throughput in order to attract more funding for activity.

While the work program includes activity addressing some of these areas, the AMA has concerns that the scope, timing and process of work may not enable their timely resolution. 

While the work program includes activity addressing some of these areas, the AMA has concerns that the scope, timing and process of work may not enable their timely resolution. 

In relation to changing service numbers and profiles, it is critical that these and other potential adverse impacts are identified, monitored and action taken to correct them contemporaneously.  It is unclear from the work program what specific mechanisms are in place or will be put in place to identify and monitor the incidence and effects of these and other changes, including unpredictable impacts that will inevitably occur as participants adjust and experiment with the new system at the ‘coalface’, so that action can be taken to ensure patients continue to receive clinically appropriate and timely treatment in public hospitals. 

While the ABF monitoring and evaluation strategy may partly address this area (at least from the narrow perspective of the cost impact of ABF), there is also a need to identify and evaluate the broader impacts of the new arrangements, including any changes to clinical care, hospital capacity and sustainability issues.  The AMA would like to see the work program include activity in this area, at a minimum starting with the need to identify the scope of this work and to include relevant key agencies and stakeholders in the work.

The proposed IHPA work program in the area of teaching, training and research does not suggest these matters will be resolved in 2012-13.  These are critical areas for the overall performance and sustainability of the Australian hospital system.  Any further delay affecting their incorporation into the new funding arrangements creates a significant risk that teaching, training and research will not be sufficiently recognised and built in to ongoing arrangements, in both the short and longer terms (given the difficulty of retro-fitting new elements as the arrangements are bedding down).  

This work is urgent and must be undertaken with the clear objective of guaranteeing the provision of education, training and research opportunities. This capacity is absolutely critical to the ongoing performance of our hospital system and training the future generation of medical practitioners. 

Similarly, the AMA believes that while the proposed work in the area of quality (pricing high quality care) is welcome, it is unlikely to deliver results quickly. The AMA is concerned that the low price for services under the new arrangements (itself based on cost data from the under-performing hospital system of 2009-10), together with the over-riding focus on efficiency, will impact on the quality of hospital care.  This impact is likely to increase the longer it takes to properly address quality as part of the pricing framework. While the AMA supports the proposed joint work with the Australian Commission on Safety and Quality in Health Care, the AMA believes that this important work requires a strong clinical and medical organisation perspective, including a direct perspective from the AMA. 

The AMA notes that the IHPA work program is currently framed in a context of ‘efficient price’, but strongly believes and has argued consistently that the focus for funding arrangements should actually be the effective price of hospital services, in which quality of care is an important element.

The AMA considers that the proposed 2012-13 activity for both training and quality does not give confidence that they will be resolved in a timeframe matched to their significance, and suggests they be re-planned to achieve an earlier completion date.  The process to undertake this work should include close collaboration with professional organisations including the AMA.  This should augment the current proposal to draw on members of the IHPA Clinical Advisory Committee (when it is formed) in the proposed joint working party with ACSQHC.

Effective resolution of each of the above matters, as well as a number of other items on the IHPA work program, will depend on effective engagement with professional organisations such as the AMA.  Through its substantial and distributed membership base, the AMA has a direct stake in hospital arrangements as well as a long-term involvement and engagement in the operation and performance of the public hospital system, at all levels.  As such, the AMA would be happy to assist through ongoing engagement and advice in the resolution of these issues.

This engagement should be complemented by the close involvement of local medical practitioners in the ongoing operations and performance appraisal and review of hospitals. Medical practitioners are uniquely placed to make a significant contribution to the effective and efficient management of public hospitals. Decisions on resource allocation, service provision and patient care are often made too far from the point of actual patient care.

While the management of hospitals works best when doctors are engaged in clinical and corporate governance, there is a significant risk that this involvement will diminish under the new hospital funding arrangements.

Finally, the work program must clearly ensure these new arrangements include rigorous auditing and performance reporting of hospitals and service delivery in the context of the broader health care system.  

The AMA recognises that the new hospital funding arrangements involve significant and complex change with multiple new organisations with specific roles (eg IHPA, NHPA, ACSQHC).  In this situation the AMA sees a major potential risk that no single organisation may be clearly responsible for overall performance and ensuring that all the pieces fit and work together.  A broad and integrated perspective across the system is required rather than separately modeling cost impacts or reporting selected performance indicators.  While this is not an issue for IHPA alone, some recognition of this need and initial steps towards achieving this perspective would be a welcome addition to the work program. 

2012-13 Work Program - Specific comments

1.3 Objectives

The objectives at 1.3 include ‘enhancing local access to services… and financial sustainability into the future’ – yet neither of these appears to be clearly reflected in the work program. 

There is no specific work item that appears to directly relate to enhancing local access.

While financial sustainability is presumably part of item 9 – advice to the Commonwealth, States and territories on the costs of providing health care services in the future – it appears that it is not intended to be publicly available information. 

These objectives are important both in their own right but also because they are the closest that the work program comes to considering issues related to the capacity of the hospital system.  Both access and sustainability depend on capacity. The capacity of our hospitals is critical to overall performance but appears to be substantially neglected in the range of health reform activity.  The work program could usefully include an activity focused on tracking the capacity of the hospital system, changes in access and implications for sustainability, and the impact of ABF on capacity.

Objective 2 (b) – Pricing high quality care

See general comments above

Objective 2 (c) – Block Funding Criteria

The AMA requests that the draft criteria be provided to stakeholders for comment.

Objective 3 – Quality assurance framework 

This framework and any other national data work should be informed by an overarching principle to reduce the complexity, volume and red tape associated with data collection.  AMA representatives from one jurisdiction with substantial experience in ABF/casemix funding have expressed serious concern at the volume and complexity of data required with no corresponding benefit for the jurisdiction concerned.  Such requirements are counter-productive to ongoing collaboration.

Objective 4 (f) – Teaching, training and research

See general comments above – the timeframe for this work is not commensurate with its importance.  It is critical that the level of TTR activity is monitored and any early adverse trends are promptly addressed.

Objective 9 – Provide advice to Commonwealth, States and Territories

See objective comment above – Medical practitioners, other health stakeholders and the public all have legitimate interests in the financial and other sustainability aspects of the hospital system.  For the new financing arrangements to be truly transparent, the IHPA annual report should include the advice provided to the Commonwealth, States and Territories.

Objective 10 – Collaborate with stakeholders etc

The AMA has been advised that a Clinical Advisory Committee of 27 members is/will be formed of clinicians nominated by jurisdictions etc, but will not include representatives of professional medical organisations.  

As noted above, given its expertise and membership base, the AMA would be happy to assist through ongoing engagement in an advisory capacity in the resolution of issues identified in this submission. This would add to but not replace the value of the Clinical Advisory Committee.    

Objective 11 – Monitor and evaluate the introduction of ABF

See general comments above - In addition, the AMA is directly interested in more information on this activity, including the scope of any evaluation work, the evaluation strategy and timing, who will be undertaking this work with what oversight/reference arrangements, consultation and reporting arrangements. 

In this context, the AMA notes that as part of the move to National Activity Based Funding, hospitals will be required to provide significantly more information on hospital activity, and at a significantly greater level of detail, than is currently the case.  

This additional administrative burden should not divert or distract health care providers from the treatment of patients.  The IHPA work program should include a specific element to ensure that the benefits of collecting and reporting any additional information in fact assists in developing a more accurate pricing model.  The significant direct and opportunity cost of collecting, storing and maintaining this data must be clearly justified.

1 August 2012