Organizational Governance and Performance Management

Running head: ORGANIZATIONAL GOVERNANCE AND PERFORMANCE
MANAGEMENT 1
Organizational Governance and Performance Management
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ORGANIZATIONAL GOVERNANCE AND PERFORMANCE MANAGEMENT 2
Introduction
This paper provides a thorough review of the quality and safety practices in the health
care system for funding and pricing arrangements in Australia undertaken by the commission
and IHPA. In this analysis, we shall look at the pricing framework which will inform the national
efficient determination used in activity-based funding implementation in Australian public
hospitals. Further, we shall see how the National Efficient Price system might provide the
Australian population with incentives to improve their health status.
Funding models
There are four funding methods that Australian public hospitals use and are identified in
the IHPA and commission literature review. They are; best practice pricing, quality structure
pricing methods, normative pricing and payment for safety or performance and quality pricing.
First, best practice pricing model can be defined as a funding model that uses care pathways
based on widely accepted evidence where the best solution would be for the hospital to treat a
particular health condition before the set fee is paid (Tompkins, Altman, & Eilat, 2016).
Implementation price for this funding model, based on the clinical evidence available, is
determined and then the additional incentive is paid to the hospital. Best pricing program started
in four areas; cataract pathway, acute stroke care, cholecystectomy, and fragility hip fracture
care. As this scheme represents money value, evaluating the literature on the efficacy of this
funding model is still limited. The British health care system had “Best Practice Tariffs” scheme
implemented, though the conclusive evidence was limited except for the UK’s National Hip
Fracture Database findings (Eagar, 2014). As per the Independent Hospital Pricing Authority

ORGANIZATIONAL GOVERNANCE AND PERFORMANCE MANAGEMENT 3
review, the best practice pricing funding model gains more with methodological inadequacies
due to the implementation of care pathways based on the best evidence in limited conditions.
The other funding model is quality structure pricing which is linked to the participation in
the activities of safety improvement, clinical benchmarking, and meeting of standards of
accreditation and quality registries by the health care providers. And though the initial cost might
be high, the aim of this model is to increase savings (Levaggi, 2015). This model might be high
for the hospitals that are accredited than in the ones that are non-accredited, but according to the
available evidence, this funding model leads to safety and quality improvement. The third
funding model is normative pricing where delivery outcomes of care are influenced by prices.
An example where outcomes are influenced by the prices are; patients seeking residential care,
incentivizing day surgeries, and the need for more nurses at home in the cases of certain
disabilities or illness (Black et.al, 2011).
However, there was an improvement that was noted by implementing the funding model
in the radiology area. Also, due to the uncertainties of determining the implementation cost of
this model, there is no conclusive evidence on its use. The last funding model is the payment for
performance which involves pushing the care providers to behave in a certain manner thereby
improving safety and quality. This model uses disincentives for poor services or financial
incentives for positive outcomes. It also encourages the givers to improve quality by rewarding
them or penalizing them if they fail (Martin & Guvatt, 2013). And even though there is no
evidence of any beneficial outcomes of this model, Britain undertook an advancing quality
initiative that showed improvements results through quality scores and the short-term in-hospital
immortality reduction.