Funding Healthcare System in Australia

Running head: FUNDING MODELS 1
Funding Healthcare System in Australia
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FUNDING MODELS 2
Questions one. Identify which of the four funding models defined by Egar et al.
(2013) are used by the public hospitals in Australia and briefly describe its use.
The Australian public hospitals are directed and governed by the state-run healthcare
system but are financed by the government (Agarwal, Green, Agarwal & Randhawa, 2016).
According to the researches done by Robinson and Norman, the Australian healthcare system is
funded by both the territory and federal funds (Norman & Robinson, 2015). The territory funds
are used for the hospital care while the federal funds are useful for the primary care. The
Commonwealth funds the health services for the emergency department and the inpatient. The
IHPA coordinate other healthcare services such as mental health services, community programs,
outpatient clinics, and rehabilitation. The Australian government developed different
mechanisms for funding the health care systems so that to enhance the quality of the patient
outcomes reduce the complications and improve the quality of healthcare services. Some of the
best-implemented funding and pricing models include; normative pricing model, pay as per the
performance model and quality structures pricing model (Activity-based funding for Australian
public hospitals: Towards a pricing framework, 2012).
The best pricing practice considers placing practice for the best clinical practice. In the
domain of stroke myocardium infarction and in the broken Hip, the Western Australian
established the inventiveness of best practice as the user program of premium payment
(Department of Health Western Australia, 2016). The standard model of pricing was helpful for
the Independent Hospital Pricing Authority (IHPA) that affected the healthcare delivery like
pricing the particular procedure to inspire on a daily basis as an alternative of patient’s admission
(Dowine, 2017). Quality pricing structures connect the safety and quality methods by financing
the attributed hospitals more than the hospitals that are not accredited. All the government

FUNDING MODELS 3
hospitals certified the National Quality and Safety Health Standard Services (NQSHSS) to
ensure quality and safety services of the system (eager et al, 2013). A performance-based
financing scheme enables the smooth delivery of healthcare and services that are provided by the
healthcare center using positive incentives to ensure achieving of the defined goal of
ameliorating the quantity and quality of the health facilities (Bonfrer et al, 2014).
Moreover, it was recommended that the primary purpose of establishing the pay for
performance in the in all the healthcare systems around the world such as in Australia, Canada,
United Kingdom and USA is to raise the quality of the healthcare services provided to the
patients that are significant for better health outcomes (Mason, Yiu-Shing Lau & Sutton, 2016).
There are reports of sham activities as a result of Australian hospital financing incentives. The
hospitals in Victoria and NSW manipulates and reclassifies data including the patient’s number
for the patients who are in the list waiting for the elective surgery so that to avoid penalties and
enable the amounts of performance funding bonus. The effects of financial incentives and
performance-based funding scheme have both negative and positive impacts (Ashcroft, Menear,
Silveira, Dahrouge, & McKenzie, 2016).
A new basis for the funding of public hospitals was implemented on the basis of
organizing for the introduction of the case mix (Duckett,1998). The case mix funding was
established in Victoria government hospital in 1993 which received variable and fixed payments
rendering to the number of patients’ in the particular hospital, the severity of the treated cases
and the emergency department performance (Nocera, 2010). These types of payment were used
for budgeting processes by several Australian states. The Australian pricing Authority was
responsible for the determination of the effective prices of the reports from the public hospitals
around all the states (Hall, 2015).