Review of costing data – Phase 1
NSW Ministry of Health
Duration: May – June 2017
The NSW Ministry of Health had identified some financial performance issues within one of their Local Health Districts, which had not been explained by their standard review processes and some initial investigations. Additional investigations were required to identify any trends or patterns of cost, staffing and activity, or to find unexplained changes in reporting that could explain the financial performance issues.
The source of information for the analysis undertaken by AHSRI was the District and Network Return (DNR) which is a mandatory state-wide costing process involving costing data which is undertaken twice annually. The DNR process is governed by both NSW and national standard methodologies and supported by standard information systems and costing tools. This routine data collection includes patient or client level activity across all care streams (acute inpatient, sub and non-acute, mental health, emergency, non-admitted and primary and community care) as well as reporting streams for teaching, training and research and non-health related expenses.
What we did
An examination of three years of DNR data was undertaken using statistical techniques to identify changes in expense activity over that time that were not sufficiently explained by changes in activity which is measured using National Weighted Activity Units. The detailed expense analysis was limited to a review of general fund recurrent expenses and excluded non-operating costs as well as costs that are fully recovered.
The review focused on factors relating to the reported financial performance issues only for the Local Health District, with all care streams in-scope but targeting the non-Activity Based Funding stream given the results of the earlier analysis work that had been undertaken by the Ministry of Health.
A three year data period of DNR data was provided by the Ministry of Health for analysis, which included Inpatient, Non-Admitted Patient & Emergency department activity tables, FTE data by facility, expenses and revenue. A systematic top-down approach was used for the analysis, with areas of highest expense growth over the three years prioritised for investigation. Analysis at the subprogram level was found to be the most valuable as the major inconsistencies were identified at this data level.