Health Finance Management Report: Funding and Casemix Analysis

This report provides an overview of health finance management, focusing on the Australian healthcare system. It begins by defining revenue and expenditure within the healthcare context, highlighting various funding mechanisms like social insurance, employer contributions, and government transfers. The report then examines the flow of funds in Australia, emphasizing the collaborative roles of federal, state, territory, and local governments. It also explains the Casemix classification system, which categorizes patients based on treatment and associated costs, and the Australian Diagnosis Related Group (DRG) system, used for classifying patients with acute diseases. The report includes references to support the information presented, offering a comprehensive analysis of the financial aspects of healthcare.

Running head: HEALTH FINANCE MANAGEMENT
Health Finance Management
Name of the Student
Name of the University
Author Note

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Table of Contents
Revenue and Expenditure in the health system...........................................................................2
Flow of Funds..............................................................................................................................2
Casemix and Australian DRG System.........................................................................................3
References....................................................................................................................................4
References....................................................................................................................................6

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Revenue and Expenditure in the health system
An increase in the funds available to a healthcare organisation through a variety of
contribution mechanisms like social insurance contributions and pension and disability funds,
employer health contributions for unemployment benefits and transfers made from state budget
funds for the employee contributions and payments for subsidised distribution of medicines is
known as the revenue of the healthcare system. This also includes the in-kind transfers received
by it. An in-kind transfer is one where there is no buying or selling is involved and the funds are
just transferred to the healthcare system for its use. Expenditure in the healthcare system
includes the amount incurred to provide various healthcare services like medicines, care,
vaccination and equipment necessary for maintaining the health of patients. It also includes the
costs spent on the labour working in the system and the expenditures incurred in the maintenance
of the hospitals (Hepburn et al., 2015).
Flow of Funds
In Australia, the healthcare is considered to be one of the best and is run on a joint
collaboration between the federal, state, territory and local governments. The flow of funding
primarily occurs through the federal government that provides funds to other governments from
the taxes collected by it. Apart from these, a part of state and local territory taxes are also spent
on the healthcare of individuals. In the year 2016-17, the federal and local governments
contributed around 68% of the funding required for the healthcare system. Other funds received
by the NSW health system include the contributions made by individuals, private health insurers
and non-government organisations. These funds are received by the state government which then
allocates them to the local authorities for the usage of their respective populations. The

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respective local authorities are required to maintain a record of the amount spent by them and the
respective purposes (Penno, Gauld & Audas, 2013).
Casemix and Australian DRG System
Casemix is a method of classification of patients on the basis of the type of patients, the
treatment required by them and the costs incurred in the treatment of those particular patients. In
simpler terms, Casemix identifies a hospital or a healthcare facility through the mix of patients
and treatments provided by it. The main purpose of Casemix is to identify the relationship
between healthcare activity and costs associated with it. The AR-DRG system is a sub-system of
the Casemix classification that is used to identify patients that have been admitted for the
treatment of an acute disease. This is to identify a relation the number of patients that have been
admitted with an acute disease and the costs and procedures incurred to treat their disease
(Pongpirul & Robinson, 2013).

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References
Hepburn, C. M., Cohen, E., Bhawra, J., Weiser, N., Hayeems, R. Z., & Guttmann, A. (2015).
Health system strategies supporting transition to adult care. Archives of disease in
childhood, 100(6), 559-564.
Penno, E., Gauld, R., & Audas, R. (2013). How are population-based funding formulae for
healthcare composed? A comparative analysis of seven models. BMC health services
research, 13(1), 470.
Pongpirul, K., & Robinson, C. (2013). Hospital manipulations in the DRG system: a systematic
scoping review. Asian Biomedicine, 7(3), 301-310.

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