Perspectives on casemix-based funding in Victoria

Interstate comparisons of public hospital outputs using DRGs: are they fair?

OBJECTIVE

To assess whether there is variation among Australian States in the reporting and coding of important and relevant secondary diagnoses in public hospital data. Such variation is a potentially important problem because it may invalidate interstate (and other) comparisons of hospital outputs based on Diagnosis Related Groups (DRGs).

METHODS

Our outcome measure was the percentage of separations in the lowest-resource split for adjacent DRGs. To reduce potential bias due to interstate differences in the complexity of cases treated in public hospitals, we directly standardised by adjacent-DRG and analysed two subgroups of adjacent-DRGs where there is less discretion about the threshold for admission: obstetrics and major medical conditions.

RESULTS

There was important interstate variation in the percentage of separations in the lowest-resource split. The statistically significant differences represent a large number of medical records that might have been documented or coded differently if the separation had occurred in another State. For example, if Queensland had the same standardised percentage as South Australia, then an extra 10,100 separations in Queensland would have been allocated to a DRG with a higher cost weight.

CONCLUSIONS

The task of perfecting a national database is never complete and it makes sense to superimpose a permanent cycle of monitoring, followed by more detailed audits. The methods used in this paper could be routinely used to screen administrative hospital data to identify where detailed audits with feedback might be implemented with best effect. Unless interstate variation in the reporting and coding of important additional diagnoses is reduced, measuring public hospital outputs using DRGs will be of limited value at a national level.

Cost and quality: The challenge for physiotherapists in a casemix funded environment

Inpatient health care in Australia is currently undergoing major change, moving from historically derived budgets to systems requiring much greater accountability to revenue providers. It is crucial for clinical staff, as well as administrators, to understand these changes as clinicians will be required to provide accurate and appropriate information regarding costs incurred and health benefits achieved to justify the services they provide. This article reviews three major initiatives in health care; casemix classification, outcomes evaluation and benchmarking, and analyses the role these processes play in achieving better and more efficient health care. The impact of these processes and the opportunities they provide for the physiotherapy profession are discussed.

The surgeon and casemix

Casemix funding has markedly increased surgeons' awareness of the economies of the activities they undertake. Surgery has become a major focus at all large public hospitals, because of its high earning potential, and this pressure to maximise funding could influence surgical practice. Casemix funding's emphasis on length of hospital stay has encouraged forward planning for earlier discharge after surgical procedures. Patients are now assessed in pre-admission clinics, educated about their condition and their hospital stay, and a plan formulated for their discharge and rehabilitation. Funding for major surgical procedures of long duration in patients with complex conditions should reflect the higher level of resource utilisation. Tertiary referral centres, because of their commitment to training and research and their more severely ill patient population, are less cost-effective and require funding to ensure their viability. The improved information that casemix generates should be used to evaluate outcomes and improve patient care; efficiency must not take precedence over quality of care and compassion.

Teaching and research in a casemix funding environment

Teaching and research are not funded directly under a casemix funding system, and individual Australian State and Territory governments have provided teaching and research grants to teaching hospitals to defray these costs. Biomedical research funding in Australia lags far behind that of other countries. The declining per capita expenditure on the health system generally, as well as on universities, is jeopardising teaching and research activities, which are not seen as "core" hospital services. Studies in the United States have shown that healthcare services associated with teaching and research are more costly but result in better patient outcomes. It may be time to promote outcome-based funding of teaching and research in the Australian healthcare system.