Mr James Downie, CEO, presented on the topic 'IHPA 2017 and beyond' at the Enhancing Performance & Efficiency in Paediatric Care - CHA Annual Benchmarking Forum, hosted by Children's Healthcare Australasia on 25 May 2017.

1. IHPA 2017 and beyond
CHA Meeting
James Downie
CEO
Independent Hospital Pricing Authority

2. Strategic intent of ABF
• Transparency
• Value for money
• Independence
• National comparability
• Technical Efficiency
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3. About IHPA
• Independent of all governments
‒Can not be directed on pricing
• Governed by a 9 member board
• 28 member clinical advisory committee
‒Senior medical, nursing and allied health
• 40 staff
‒Data management, statistical, classification, policy
and comms
• Strong consultation and transparency agenda
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4. IHPA’s functions
•Set the National Efficient Price
•Classification systems
•Data standards
•Cross border and cost shifting disputes
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5. Progress so far
• ABF
‒Admitted Acute
‒Subacute
‒Emergency
‒Non-admitted
• Block Funding
‒Community Mental Health
‒Teaching, training and
research
‒Small rural and remote
hospitals
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6. Significant slowdown in costs
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3664
3809
4023
4312
4400
4548 4549
4588
2006-7 2007-8 2008-9 2009-10 2010-11 2011-12 2012-13 2013-14
Cost per NWAU
Growth Rate: 4.2%
Growth Rate: 1.1%

7. Benchmarking portal
•ABF generates masses of data
‒ Cost data collection >1,000,000,000
records
•Used properly this data can help improve
the efficiency of hospitals by reducing
variation
•Have to make it accessible at the
hospital level!

8. 8www.ihpa.gov.au

9. 9www.ihpa.gov.au

11. 11www.ihpa.gov.au

12. Child and Adolescent Mental Health
• Admitted services in-scope
• Community services remain out of scope
‒Much lower rates of admission/presentation to
hospital
‒Less compelling evidence on relationships between
services and hospitals
• Would require new evidence from jurisdictions to
reopen

13. Best Practice Pricing
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14. Best Practice Pricing for Hip Fracture
• Good evidence that following clinical guidelines for hip
fracture reduces mortality
• Australia has a new Hip Fracture Clinical Registry
• Collects process variables
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15. Process measures
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• Working with clinicians agreed 5 measures to be met:
‒ Surgery occurred on the same day or the day following
presentation for patients who had surgery
‒ An orthogeriatric model of care was used for patients aged over
65 years, and over 50 years for Indigenous patients
‒ Remobilisation occurred on the day after surgery (for surgical
patients)
‒ An abbreviated mental state test was conducted for all patients;
pre-operatively for surgical patients
‒ A falls and bone health assessment was conducted before the
patient was discharged.

16. Limitations
• Time consuming to design
• Requires registry data
• How much to pay?
• Doesn’t address outcomes
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17. Next Steps
• Wider roll out of registry (underway)
• Sourcing and linking registry data
• Determination of bonus quantum
• Consultation and implementation
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18. Bundled Pricing
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19. Bundled pricing
• IHPA prices public hospital
services on an ‘activity
based funding’ (ABF) basis
wherever practicable.
• ABF separately prices
discrete episodes of care.
• Public hospitals may receive
multiple ABF payments for a single
patient in the course of their care.
• In contrast, a bundled pricing approach
involves a single price per patient which
reflects the average cost of care
across multiple episodes and settings.
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20. Intention of bundled pricing
• The intention of a bundled pricing approach:
‒ for resources and funding to be easier for
hospitals to manage
‒ to allow financial flexibility to experiment with
new models of care
‒ to provide transparency on the total cost of
maternity care
‒ to drive a long-term view of good practice.
• IHPA does not intend for bundled pricing to:
‒ prescribe a clinical care pathway
‒ reduce clinically necessary maternity care
‒ impact on care which is unrelated to the maternity episode
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Activity based funding
Bundled pricing
$
$
$
$
$
$
$
$
$
How can each service be
delivered more efficiently?
What is the most effective
way to deliver care to
the patient?

21. Starting with Maternity care
• In response to the 2016-17 and 2017-18 Consultation Papers, IHPA received stakeholder support for bundled
pricing for other conditions.
• Maternity care was identified as a good starting point given stakeholder support, its materiality to the public
hospital system and as it has a relatively predictable service delivery pathway with clear start and end points
to care.
• In early 2016, IHPA
convened the Bundled
Pricing Advisory Group
to oversee investigatory
work on bundled pricing
for maternity care.
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22. Scope of the maternity bundle
Stages of maternity care:
• The Advisory Group has considered what stages of care should be included in the bundled pricing
approach.
• The Advisory Group considers that including
all stages of care appears to offer the greatest
opportunity for service redesign.`
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Antenatal Birth Postnatal
• Opportunity to address
variance in the number
and type of antenatal visits
• Limited value on its own as the price
will continue to reflect DRG pricing.
• Its inclusion provides transparency
on the total cost of patient care and
allows for long-term hospital planning.
• Opportunity to address
underservicing in
postnatal care.

23. How would it look?
• Single payment, risk adjusted by DRG, plus other
factors:
‒Diabetes
‒Anaemia
‒Multiple births
• Single patient identifier critical
• Requires good patient level non-admitted data
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25. Pricing for Safety
and Quality
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26. Premise
• Australian and international costing studies estimate that adverse
events explain between 12.0% and 16.5% of total costs
• ICD-10-AM data is a rich source of safety and quality data,
currently underutilised
• Literature review
‒ Good evidence that the provision of timely clinical information to
clinicians & managers leads to improvements in patient
outcomes
• Pricing signals:
‒ Provide clear sign that government values safety and quality
‒ Promote discussion of safety and quality systems amongst
clinicians AND managers
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27. Approach
• Three areas of focus:
‒Sentinel Events
‒Hospital Acquired Complications
‒Avoidable readmissions
• Data provision to clinicians and managers a critical
component of work
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28. Sentinel Events
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1. Procedures involving the wrong patient or body part resulting in death or major
permanent loss of function
2. Suicide of a patient in an inpatient unit
3. Retained instruments or other material after surgery requiring re-operation or
further surgical procedure
4. Intravascular gas embolism resulting in death or neurological damage
5. Haemolytic blood transfusion reaction resulting from ABO incompatibility
6. Medication error leading to the death of a patient reasonably believed to be due
to incorrect administration of drugs
7. Maternal death associated with pregnancy, birth and the puerperium
8. Infant discharged to the wrong family

29. Sentinel Events
• From 1 July 2017 no funding for episodes of care with
a sentinel event
• ~100 events per annum (public hospitals)
• Funding impact ~$5 million per annum
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30. Hospital Acquired Complications
• Coded data differentiates between conditions present on
admission, and those arising during admission
• Measured using CHADx system:
‒ Too much noise
‒ No measure of preventability
• Hospital Acquired Complication:
‒ Developed by clinicians
• Clear criteria:
‒ Preventability
‒ Patient Impact
‒ Cost Impact
‒ Clinical priority
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Pressure injury Gastrointestinal bleeding
Falls resulting in fracture and intracranial
injury
Medication complications
Healthcare associated infection Delirium
Surgical complications requiring
unplanned return to theatre
Persistent incontinence
Unplanned Intensive Care Unit
admission
Malnutrition
Respiratory complications Cardiac complications
Venous thromboembolism Third and fourth degree perineal
laceration during delivery
Renal failure Birth trauma
Hospital Acquired Complications

32. HACs add cost
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HAC
Incremental
cost
All HACs 8.6%
Pressure injury 13.8%
Falls resulting in fracture or other intracranial injury 1.7%
Healthcare associated infection 8.8%
Surgical complications requiring unplanned return to theatre 10.9%
Unplanned intensive care unit admission
Respiratory complications 15.9%
Venous thromboembolism 12.4%
Renal failure 21.7%
Gastrointestinal bleeding 10.0%
Medication complications 8.2%
Delirium 9.8%
Persistent incontinence 2.3%
Malnutrition 7.4%
Cardiac complications 11.3%
Perineal laceration 23.2%
Neonatal birth trauma 10.8%

33. Rates vary
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34. Principle referral hospitals
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0
2
4
6
8
10
12
14
frequency
Raw HAC rate per 100 episodes

35. Age is a driver
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36. Risk Adjustment Critical
• Patient risk factors:
‒Age
‒DRG
‒Charlson Complexity Score (predicts the one year
mortality for a patient with a range of specific
comorbidities)
‒ICU admission
‒Emergency admission
• Can calculate risk score for every patient
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40. Preventable Readmissions
• All admissions are currently paid for
• Some evidence of preventable readmissions in system
• Currently no nationally agreed, clinically acceptable list
of readmission causes
• List currently being developed – clinically led, data
driven project
• Possible inclusions:
‒Preventable hospitalisations
‒Readmission for HACs
‒Constipation
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41. 41 www.ihpa.gov.au

42. www.ihpa.gov.au
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