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Regulator takes issue with rural hospital funding claims

I am writing in response to an article featured in the Rural Health section of the August issue of Australian Medicine. The article, “Unadulterated city-centric madness”, by David Rivett, comments on some key elements of the Independent Hospital Pricing Authority’s (IHPA) role in determining a national efficient price for public hospital services.

30 Sep 2012

I am writing in response to an article featured in the Rural Health section of the August issue of Australian Medicine.

The article, “Unadulterated city-centric madness”, by David Rivett, comments on some key elements of the Independent Hospital Pricing Authority’s (IHPA) role in determining a national efficient price for public hospital services.

The article makes a number of comments that are incorrect that I would like to rectify. Specifically, the comments relating to rural hospitals being denied block funding.

IHPA’s role, as set out in the National Health Reform Agreement, is to define fair funding for hospitals across the country through the determination of the National Efficient Price (NEP) for public hospital services, and the efficient cost of block funding services in regional hospitals.

IHPA has proposed block funding criteria that will identify which services are eligible for block funding only, and which services are eligible for a mix of activity based funding and block funding. The proposed criteria include block funding for the vast majority of small rural hospitals in Australia.

In regards to the comments in the article about adjustments to the NEP, Dr Rivett is correct in stating that a 5 per cent loading was specified in the national efficient price for 2012-13 for Indigenous patients, however, it is also important to note other loading apply. These include loadings for remote residence of 15.3 per cent, and very remote residence of 19.4 per cent. Therefore, an Indigenous patient in a very remote area would have a 24.4 per cent loading applied to the case payment to whichever hospital they are admitted.

IHPA has classified areas of residence for patients based on the Australian Geographic Classification. It is understood that their classification is under review. IHPA will consider alternative systems for residence of patients when they become available.

IHPA is currently seeking comment on its Pricing Framework for Australian Public Hospitals 2013-14, and encourages interested parties to make a submission to submissions.ihpa@ihpa.gov.au

Yours sincerely

Dr Tony Sherbon

Acting Chief Executive Officer

Independent Hospital Pricing Authority


Published: 30 Sep 2012