Stuart Babbage - PWC - Addressing avoidable costs in public hospitals and what this means for privately insured healthcare

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Stuart Babbage delivered the presentation at the 2014 Health Insurance Summit.

The 2014 Health Insurance Summit focused on how legislative changes affect the future of health insurance in funding, membership and services.

For more information about the event, please visit: http://bit.ly/HISummit14

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Stuart Babbage - PWC - Addressing avoidable costs in public hospitals and what this means for privately insured healthcare

  1. 1. Addressing avoidable costs in public hospitals and what this means for privately insured healthcare www.pwc.com.au Stuart Babbage (@stubabbage) July 2014
  2. 2. PwC Wouldn’t it be nice….
  3. 3. PwC A system under pressure: Do we spend too much on healthcare? 3 July 2014 Source: K. Davis, K. Stremikis, C. Schoen, and D. Squires, Mirror, Mirror on the Wall, 2014 Update: How the U.S. Health Care System Compares Internationally, The Commonwealth Fund, June 2014 Addressing avoidable costs in public hospitals and what this means for privately insured healthcare
  4. 4. PwC A system under pressure: Does an older population lead to more spending? 4 July 2014 Source: Jeffrey Richardson, Can we sustain health spending?, MJA, 2014 Health spending matched to older population for selected countries Total health spending 2011 (%GDP) Population aged 65+* 2011 (% total) Australia 9.5%** 13.7% France 11.6% 17.1% Canada 11.2% 14.7% Japan 9.6% 23.3% Sweden 9.5% 19.3% Netherlands 11.9% 15.9% United Kingdom 9.4% 16.2% United Sales 17.7% 13.2% OECD 9.3% 15.4% Addressing avoidable costs in public hospitals and what this means for privately insured healthcare
  5. 5. PwC A system under pressure: Do Australians not pay their own way? 5 July 2014 Source: Australian Institute of Health and Welfare, Australia’s health 2014. Addressing avoidable costs in public hospitals and what this means for privately insured healthcare
  6. 6. PwC A system under pressure: Do Australians not pay their own way? 6 July 2014 Source: OECD (2013), Health at a Glance 2013: OECD Indicators Addressing avoidable costs in public hospitals and what this means for privately insured healthcare
  7. 7. PwC Infrastructure of Activity Based Funding 7 July 2014 Pricing Framework: National Efficient Price (NEP) released annually ;applies rules, eg inlier, outlier, loadings National Hospital Cost Data Collection (NHCDC): Patient level costing captures direct costs via feeder systems, allocation of indirect costs, costing according to Australian Hospital Patient Costing Standards (AHPCS) Reporting of activity levels / Service level agreements (SLAs): Activity is counted by product and subject to estimated activity levels and demand management. Hospital products: ED stays (URG/UDG), admitted separations (ARDRG), non-admitted (Tier2), Subacute (ANSNAP), Mental Health (TBD), Teaching/Training/Research (TBD) Improving source data: coding of medical record information (diagnoses, procedures); capture of costs by patient Counting Classification of activity by product Activity Based Costing Funding methodologies Medical record & data management Governance & management Addressing avoidable costs in public hospitals and what this means for privately insured healthcare
  8. 8. PwC What is the evidence of ABF driving efficiency inside the hospital walls? 8 July 2014 Addressing clinical variation Analysis of costs by episodes Integrated care Addressing avoidable costs in public hospitals and what this means for privately insured healthcare
  9. 9. PwC Case-based payment has been adopted by more than 20 countries, or 70% of the OECD 9 July 2014 0 10 20 30 40 50 60 70 80 6 6.5 7 7.5 8 8.5 1997 1998 1999 2000 2001 2002 2003 2004 %OECDwithABF AvgLoS(days) Comparison of OECD countries with ABF models and average length of stay Countries with ABF LOS Source: PwC 2008 – You Get What You Pay For (2007) Addressing avoidable costs in public hospitals and what this means for privately insured healthcare
  10. 10. PwC The challenges with ABF: Avoidable costs 10 July 2014 Source: Duckett, S.J., Breadon, P., Weidmann, B. and Nicola, I., 2014, Controlling costly care: a billion dollar hospital opportunity, Grattan Institute, Melbourne Addressing avoidable costs in public hospitals and what this means for privately insured healthcare
  11. 11. PwC The challenges with ABF: Linking service to outcomes 11 July 2014 Source: ICHOM: Localized Prostate Cancer. www.ichom.org Addressing avoidable costs in public hospitals and what this means for privately insured healthcare
  12. 12. PwC The challenges with ABF: Multiple funders 12 July 2014 Source: Australian Institute of Health and Welfare, Australia’s health 2014 Addressing avoidable costs in public hospitals and what this means for privately insured healthcare
  13. 13. PwC We need to talk about health reform: Not just tax reform or the state of the federation
  14. 14. For more… © 2014 PricewaterhouseCoopers. All rights reserved. PwC refers to the Australian member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. Liability limited by a scheme approved under Professional Standards Legislation Stuart Babbage (02) 6271 3021 stuart.babbage@au.pwc.com Join the conversation: #PwCHealth

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