Mr James Downie, CEO, presented on the topic 'Independent Hospital Pricing Authority Update' at the HBN/CHASAN Steering Committee, hosted by Catholic Negotiating Alliance on 15 May 2017.

1. Independent Hospital Pricing Authority
UPDATE
James Downie
Chief Executive Officer

2. PRICING FOR SAFETY AND
QUALITY
• COAG April 2016 first ministers agreed to introduce safety and quality
measures into NEP
• Three areas of focus:
‒ Sentinel Events
‒ Hospital Acquired Complications
‒ Avoidable readmissions
• IHPA to provide options to health ministers for implementation
2 www.ihpa.gov.au

3. PRICING FOR SAFETY AND
QUALITY
• Australian and international costing studies estimate that adverse events explain
between 12.0% and 16.5% of total costs
• Measurement is foundational to improving patient safety
• 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
3

4. SENTINEL EVENTS
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
4 www.ihpa.gov.au

5. SENTINEL EVENTS
• ~100 reported per annum
• Proposed zero payment
• ~$5 million impact
• Not directly measurable in ICD-10-AM data
5 www.ihpa.gov.au

6. HOSPITAL ACQUIRED
COMPLICATIONS
• Developed by clinician group
• Selection criteria:
‒ Preventability
‒ Patient impact
‒ Cost impact
‒ Clinical priority
• Rely on Condition Onset Flag
• ~110,000 episodes per annum
6 www.ihpa.gov.au

7. 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
7 www.ihpa.gov.au

8. RATES BY HOSPITAL TYPE
8 www.ihpa.gov.au

9. RATES IN PRINCIPAL REFERRAL
HOSPITALS
9 www.ihpa.gov.au
0
2
4
6
8
10
12
14
frequency
Raw HAC rate per 100 episodes

10. RISK ADJUSTED BY AGE
10 www.ihpa.gov.au
0
2
4
6
8
10
12
14
16
18
20
frequency
risk adjusted rate (observed/expected)

11. RATES BY AGE
11 www.ihpa.gov.au

12. HOSPITAL ACQUIRED
COMPLICATIONS
• Three broad options:
‒ Ignore HACs in DRG assignment
‒ Impacts around 20% of episodes, $180M reduction in funding
‒ Compare hospital HAC rates (risk adjusted)
‒ Funding reduction for worse performing hospitals
‒ Reduce funding for every HAC in every hospital (risk adjusted)
‒ Strong price signal to clinicans
12 www.ihpa.gov.au

13. 13 www.ihpa.gov.au

14. RISK FACTORS TO
CONSIDER
14
www.ihpa.gov.au
• Liver Disease
• Heart Failure
• Myocardial
infarction
• Stroke with
immobility
•
Cardiovascular
disease
• Malignancy
• Mechanical
Ventilation
• Parkinson
disease
• Dementia
• Dystocia
ACSQHC
• MDC
• DRG Type
• ICU Status
• Length of Stay
• Presence of
another HAC
• Indigenous
status
• SEIFA
• Transfer
Status
• Chronic
Disease Count
• Highly
Specialised
Procedures
Literature &
Jurisdictions
• Patient Age
Previous

15. CODING IS CRITICAL
• Increasing awareness of importance of coding with
clinicians:
‒ Short video
‒ Coding app
• Increased role for coding audit
‒ COF
‒ Public reporting
15 www.ihpa.gov.au

16. BENCHMARKING
PORTAL

17. 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!

18. 18 www.ihpa.gov.au

19. 19 www.ihpa.gov.au

20. 20 www.ihpa.gov.au

21. BUNDLED
PRICING

22. BUNDLED PRICING
• Some limited bundles for chronic disease exist
• Exploring bundling maternity care:
‒ Antenatal outpatients
‒ Admission for birth
‒ Post-natal care
• Non-admitted utilisation appears reasonably
consistent regardless of birth complexity
• Aim to reduce variation in service delivery and
promote innovative models of care
22 www.ihpa.gov.au

23. WWW.IHPA.GOV.AU