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Benchmarking Efficiency at Northern Adelaide Local Health Network

Client:  SA Health

Project: Northern Adelaide Local Health Network (NALHN) Efficiency Review Project - Neonates

Background

An efficiency review project was conducted at Northern Adelaide Local Health Network (NALHN) for the purposes of identifying how well the clinical and corporate services were operating against the National Efficient Price (NEP) and investigating the drivers that led to services being delivered above or below the NEP. The project also aimed to identify opportunities for improvement.

The four-phase project used the network’s 2016-17 interim costing data for its primary data source. For the purpose of the review an applied NEP price was derived from the Diagnostic Related Grouping (DRG) National Weighted Activity Unit (NWAU) and the Independent Hospital Pricing Authority (IHPA) 2016-17 NEP price of $4883.

Phase 1 involved a high-level analysis of the NALHN using the costing data to determine how well the network was operating within the NEP. The results showed that although NALHN performed well against the NEP (with 54% (36,452) of the network’s care delivered within the NEP), 46% (30,980) of the networks episodes of care cost more than the NEP to deliver.

  • A review of the networks’ Top 10 performing DRG’s (8.5% of the networks total episodes of care), were delivered well under the NEP, operating at a profit of $10.7M.
  • The networks’ Top 10 nonperforming DRG’s (9.3% of the networks episodes of care), represented a significant cost pressure operating at a loss of $8.6M.

P68D Review

From the Top 10 non-performing DRG’s it was agreed that DRG P68D ‘Neonate, admission weight >=2500g without significant operating room procedure or ventilation >=96hrs, >=37 completed weeks gestation with minor complications’ should be investigated as the efficiency review results were inconsistent with the level of patient complexity reported by the staff in the neonatal unit and aligned to budget pressures reported by the divisions’ Business Consultant.

Several meetings were held, with collaborative representation from the Divisions Executive Medical & Nursing team, and medical and nursing representation from the Neonatal Unit. Representatives from the networks’ Quality & Safety Unit, Casemix Unit, Costing Consultant, Financial Business Advisory Support, Coding Unit and Patient Administration and Information Unit were also present.  

Key Actions

An action plan was developed to include the following actions:

  • Conducted complexity Analysis on the P68 family, including cost bucket review and benchmark of performance with Flinders Medical Centre (FMC) & Women’s & Children’s Health Network (WCHN)
  • Reviewed costing methodology, including ward mappings and Product Fractions (PRACS) to better align costs to correct areas
  • Initially Audited 10% of P68D (low complexity cases) which had a higher ALOS and cost than P68A (high complexity cases), which identified missed revenue of $40K.  Subsequent combined (Clinician & Coder) P68 Complexity Audit using length of stay variation increased revenue $116K. This audit will now be undertaken quarterly as part of the coding audit program.

Outcomes

Learnings from the coding audits, along with an education session on the 3M Code Finder Tool used by the Clinical Coders (including mock care scenarios) have enabled the development of educational tools to improve clinical documentation and assist clinic coding for the Paediatric Unit.

The review identified the impact of Child Protection babies on resource usage, which is not adequately recognised through the current DRG funding model. This has been escalated to WCHA & IHPA for consideration.

A comparison of the Funding vs Cost Analysis 2017/18 Dec YTD with 2016/17 for P68 Neonates revealed the following results:

  • 2017/18 now $278K or 14% favourable for six months (approximately $552K when projected for full year), compared to $508K or 15% unfavourable in 2016/17. This translates to a $1.1M turnaround.
  • Complexity (average NWAU) increased by 9% with improved coding. Average Cost has been reduced by 25%, despite an increase in complexity and funding.