Costing Mental Health Services
South East Sydney Local Health District
Duration: November – December 2015
In the review of costing undertaken for South East Sydney Local Health District (SESLHD) in early 2015, the NCCC noted that the method for determining campus overheads charged to the Mental Health (MH) Program was not agreed between MH and the hospital sites, nor did it reflect the use of hospital campus infrastructure by MH. The NCCC was engaged to undertake a more detailed review of campus overheads and develop a methodology for determining an appropriate charge to the MH Program.
A smaller separate project involved the review of a new SESLHD MH initiative - The Recovery College Model – and the development recommendations for appropriate funding.
What we did
The project approach for the development of the campus overhead charging methodology was an iterative process. Proposals from each hospital regarding the types of overhead services that should be included in the charge and the preferred cost allocation method were reviewed. The MH Program also developed a set of proposals regarding their use of campus overheads and provided suggestions for appropriate allocation methods at each hospital site.
Issues and questions that arose from the review of proposals were addressed at the subsequent face to face meetings with each of the hospitals and MH. The issues discussed included;
- The suitability of overhead allocation statistics currently in use.
- Consistency in the use of overhead allocation statistics between hospitals.
- Financial data management issues that affect overhead allocations.
- The capacity to collect more utilisation data for overhead services.
- Charging on a user pays (invoice) basis versus regular monthly charges based on anticipated utilisation.
- The provision of corporate support services to off-site MH services.
The recommended methodology and guidelines for the application of the methodology were developed and submitted for comment and acceptance.
The Recovery College Model was reviewed with regard to the key classification and pricing elements of activity based funding (ABF). Further information was sought regarding the nature and volume of Recovery College activities. The funding under ABF was modelled for the 2015 and compared to cost.
1. A more meaningful allocation of hospital campus overheads may be achieved by refining the cost data and using improved allocation statistics.
2. The Recovery College Model would not be financially sustainable under ABF and should be included in a block funded allocation until suitable classification and counting systems are developed.