Analysis of Funding Models in Australian Public Hospitals: Workbook 3

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Workbook 3
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1. 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.
There are four models which are identified by the community Hospitals in Australia. These four
models are described below:
Pricing model of Best Practice: The Practice Pricing Model which is used by the public
hospitals in Australia generally involves evidence-based decisions which provide the best
practice for the purpose of management for any particular circumstance and after that using a
price to the stipulation of the best practice pathway. It has been identified that the incentive in
this model is for following the pathway which is quite different from the other models. Where
the care is delivered in accordance with the pathway, only then the payments are being made
(Eagar, et. al., 2013).
Normative Pricing: In such a model of the funding or pricing used by the public hospitals in
Australia the price is used for the purpose of influencing the prototype of the freedom of care.
There may be provided an example regarding this, which formulating the incentives for the more
hospitals or to incentivize the daylight hours surgery processes over inpatient during the night
stays where there is proof to consider that proper as well as appropriate. As the prices are used
for the purpose of influencing the delivery of the care, it also utilizes the prospectively
determined pricing. This method of pricing can also be used for the purpose of formulating the
incentives in order to provide care in the interchange settings including the hospital.
Quality Structures Pricing Models: Such model of the pricing is being used to connect the
funding to the structural methods to quality as well as safety such as connecting the pricing to the
official approval or to take the participation in the activities of benchmarking. As per this
approach, the accredited health care organizations will get the funds on high rate rather than the
non- credited health care organizations. Most of such systems generally evaluate the courses as
the proxies for the clients or the patient’s outcome as compared to evaluating the outcome of the
patients directly and then assuming that the good processes automatically provide the result in
better outcomes. The most proof regarding such looms are to provide pricing to grant permission
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to the clinical services in order to take participation in the clinical quality registries linked with
the benchmarking of the clinic.
Pay for Performance: This is the last alternative method of pricing to be used by public
hospitals in Australia. This model of pay for performance is aimed towards creating the direct
connection in the safety and quality on one side and the pricing on another side. Under such
models, the good outcomes of the patients can be satisfied and the poor outcomes of the patients
can also be penalized. The prices are adjusted in this method of pricing retrospectively which
depend on the outcomes actually attained for any particular patient. For instance, an episode of
the health services during which an unfavorable event or accident happens might get funds on
the lower rate rather than the normal episode (Tsai, et. al., 2015).
These all models are being used by the public hospitals in Australia for the purpose of funding in
an appropriate manner. Such pricing models should be used by the hospital ensuring the welfare
of most of the people and no undue advantage should be made thereby using such practices
inappropriately. The last two models are complicated inherently from the technical perspective.
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2. To what extent do you agree or disagree that the National Efficient price may provide an
incentive to improve the health status of any selected segment of the Australian population.
Remember to use relevant references to back up your arguments.
As per my point of view, the National Efficient Price may provide an incentive for the
improvement in the health status of the selected segment of Australian Population to a great
extent. The National Efficient Price is being used for the purpose of determination of the
Commonwealth contribution to the funding to a public hospital in Australia. The commonwealth
makes approximately the contribution of forty percent of the funding of the public hospital. The
actual percentage is although not known and varies by the jurisdictions as well as the proportion
of the patients in each public hospital.
The National Efficient Pricing represents the price per national weighted activity unit. It can be
argued that the national health reform agreement formulates the incentives for the purpose of
delivering the quality services of the health care for the public hospitals on the lower costs,
providing the surplus or the profit if they can outperform the National Efficient Pricing. It can be
analyzed from such arguments that the national efficient pricing is very crucial to provide the
incentive to improve the health of patients in public hospitals of Australia.
The extent to which the activity-based model will impact the decision making at the clinician
levels as well as the healthcare organizations; it will further depend on the budgets developed,
accountability as well as the key performance indicators established for the budget setting as well
as the management (Danzon, et. al., 2015).
The selected segment of the Australian population can be positively impacted regarding the
health status of the people living there because it helps in the funding to the public hospitals
where the better treatment can be provided to the patients. This will help in improving their
health status and providing them with better care on lower prices which they can also afford. The
Commonwealth funding for such public hospitals is calculated on the basis of the commonwealth
percent part of the national activity-based funding model which is based on the national efficient
pricing. This process can prove to be very beneficial for people residing in any particular
segment of Australia as there will be an improvement in their health and better health services
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will be provided to them in order to make them more healthy and efficient. It proves that the
NEP is a necessary element in the creation of an incentive for the public hospitals in Australia
(Leahy, et. al., 2017).
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References
 Danzon, P., Towse, A., & Mestre‐Ferrandiz, J. (2015). Value‐based differential pricing:
Efficient prices for drugs in a global context. Health economics, 24(3), 294-301.
 Eagar, K., Sansoni, J., Loggie, C., Elsworthy, A., McNamee, J., Cook, R., & Grootemaat,
P. (2013). A literature review on integrating quality and safety into hospital pricing
systems.
 Leahy, M. F., Hofmann, A., Towler, S., Trentino, K. M., Burrows, S. A., Swain, S. G., ...
& Farmer, S. L. (2017). Improved outcomes and reduced costs associated with a health‐
system–wide patient blood management program: a retrospective observational study in
four major adult tertiary‐care hospitals. Transfusion, 57(6), 1347-1358.
 Tsai, T. C., Jha, A. K., Gawande, A. A., Huckman, R. S., Bloom, N., & Sadun, R. (2015).
Hospital board and management practices are strongly related to hospital performance on
clinical quality metrics. Health Affairs, 34(8), 1304-1311.
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