Health Financial Management: NSW Health Funding and Caremix

This assignment delves into health financial management, analyzing the difference between revenue and expenditure within the healthcare system. It explores the flow of federal and state funding through the NSW Health system, detailing how funds are allocated and managed. Furthermore, the assignment examines the Caremix classification system and the Australian Diagnosis Related Group (DRG) system, highlighting their roles in patient classification, cost allocation, and hospital performance measurement. The content provides a comprehensive overview of financial aspects within healthcare, including funding mechanisms, expenditure, and classification systems, and their implications for healthcare delivery and efficiency. The assignment is supported by references to relevant literature and resources, offering a well-rounded understanding of the subject matter.

Running Head: HEALTH FINANCIAL MANAGEMENT
HEALTH FINANCIAL MANAGEMENT
Name of the Student
Name of the University
Author Note

1HEALTH FINANCIAL MANAGEMENT
Table of Contents
Answer 1....................................................................................................................................2
Difference between Revenue and Expenditure in the Health System....................................2
Answer 2....................................................................................................................................2
Flow of Federal and State Funding through the NSW Health System..................................2
Answer 3....................................................................................................................................3
Caremix and Australian DRG System of the Classification..................................................3
Reference....................................................................................................................................4

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Answer 1
Difference between Revenue and Expenditure in the Health System
Revenue is known to be the increase in the health care funds by the particular
mechanisms of contributions. The classification categories are the specific transaction types
by which schemes of financing helps in obtaining their revenues. Revenue, in the system of
healthcare is considered as taxes, combined private pays as well as co pays, which are larger
than the expenditure in actual. For the federal government, sometimes it costs more in
collection, administering and spending one dollar than what it does for the patients. However,
in the health care system, expenditure occurs in the goods and services of health, which
includes investments in equipments as well as facilities. The important part of the raising
policy of the revenue is for ensuring the stable as well as transparent flow of the funds to the
health purchasing agencies as well as service providers. The expenditure amount is the most
important development indicators (Mcintyre, Meheus & Røttingen, 2017).
Answer 2
Flow of Federal and State Funding through the NSW Health System
The funding of NSW is considered to be the commission contribution according to the
agreement of funding in between the heath department of state or the commonwealth
territory. There is division for the responsibility for the funding that is consists of all
government as well as non government organizational level, which held privately the insurers
and the individuals, who generally pays for services from own pocket (Chalmers et al., 2016).
Further, funding and administering role is done at the different government levels, which
consists of state and federal and it is supported by private health insurance arrangements. In
addition, NSW health works to ensure that NGO funding realign with strategic health

3HEALTH FINANCIAL MANAGEMENT
priorities as well as helps in addressing local conditions and demonstrating money value as
well as its effectiveness (health.nsw.gov.au. 2019).
Answer 3
Caremix and Australian DRG System of the Classification
Caremix is the classification system that provides healthcare industry with consistent
method for the classification types of the patients as well as their treatments and the cost
associated. It is the method by which the funds are being allocated based on activities, which
hospital performs as well as on number and types of the treated patients. This system helps in
measuring the performances of the hospitals and aims towards rewarding the initiative; which
ultimately increases efficiency in the hospitals. However, on the other hand, diagnosis related
group that is abbreviated as DRG is the classification system of patient, which helps in
standardizing the prospective payments to the hospitals and it encourages the initiatives of
cost containment. Generally, the payment of DRG covers all the charges that are associated
with the inpatient stay, right from the admission time to the time of discharge. The ways have
been searched out by the policymakers for controlling the costs of health as well as
improving the quality. Hence, DRG are the most important tool for cost control as well as
improvement of quality, which the government as well as private payers implements (Wiley,
2014).

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Reference
Chalmers, J., Ritter, A., Berends, L., & Lancaster, K. (2016). Following the money: Mapping
the sources and funding flows of alcohol and other drug treatment in A ustralia. Drug
and alcohol review, 35(3), 255-262.
health.nsw.gov.au (2019). Retrieved 19 August 2019, from
https://www.health.nsw.gov.au/annualreport/Publications/annual-report-2016.pdf
Mcintyre, D., Meheus, F., & Røttingen, J. A. (2017). What level of domestic government
health expenditure should we aspire to for universal health coverage?. Health
Economics, Policy and Law, 12(2), 125-137.
Wiley, M. M. (2014). Diagnosis related groups (DRGs): Measuring hospital case mix. Wiley
StatsRef: Statistics Reference Online.