Analysis And Comparison Of Casemix And Per Diem Funding Models For Healthcare Services Essay.

Description of UTS Hospital Case Study

Read the following case scenario.

Provide a response that demonstrates an understanding of the application and management of health data and refers to literature related to the identified issues and associated tasks.

In the response, apply your findings to the hospital so as to assist the executive group in decision making and planning.

UTS hospital is a well-established charitable hospital operated on a not for profit basis. It has 250 beds in an inner-city location. The population of the local community, from which it draws the majority of its patients, is ageing: 40% are over the age of 65 years. UTS hospital has an excellent reputation for innovative care, rapid uptake of new technologies, teaching and research. It gets very little support from the government for running costs, although previous governments have been generous in meeting the cost of constructing new buildings and refurbishing old ones.

The hospital is in financial difficulty. Over 90% of the funding to the hospital for acute inpatients comes from private health insurers. The remainder is from the Department of Veterans Affairs, patients who pay for their own admissions, compensable patients from motor vehicle and workplace insurance, and patients whose stay is paid from a research grant. The rate of reimbursement from private insurers is based on a negotiated rate for each AR-DRG. Every year, insurance companies negotiate with the hospital the rate it pays for each AR-DRG (i.e. a type of casemix- or activity-based funding). The fees are based on the average length of stay for each AR-DRG using the Australian cost weights.

The Chief Executive Office (CEO) has called a special meeting of the executive to discuss the issues 14/07/2017 (Spring 2017) © University of Technology Sydney Page 8 of 14 The Chief Executive Office (CEO) has called a special meeting of the executive to discuss the issues facing the hospital and to plan the action they need to take. Present at the meeting are the Health Information Manager (HIM), the Chief Financial Officer (CFO) and the Chief Information Officer (CIO).

The HIM is of the opinion that casemix-based funding using AR-DRGs are not the best method to record performance because they do not suit the type of patients treated by UTS Hospital. She states the majority of patients is older and more complex, and need to stay longer than the average length of stay for each AR-DRG. She suggests that AR-DRGs are useless for measuring the hospital’s performance when the length of stay of the patients is different to that of the average hospital. She is of the view that the hospital should go back to insurance funds and negotiate a return to the funding of patients on a fixed per diem basis.

As the HIM's assistant, you are tasked with examining UTS Hospital data, and preparing a summary for the HIM to use in the upcoming meeting.

In the hospital context, per diem refers to funding for inpatient services that provides a fixed cash amount for a patient`s day in the hospital (Turner, et al., 2012).  They add that this is regardless of the hospital`s charges or expenses incurred for caring for that given patient.

Casemix funding depicts a method of assigning funds based on the activities that hospitals execute and on the number and types of patients treated (Turner, et al., 2012).  According to them, this model has the following fundamental requirements namely: counting the number of treated patients, classifying patients treated and the costing of patients treated.

Diagrammatic representation of the casemix system considerations 

According to (O`Reilly, et al., 2012), there exist monumental differences between the two health funding models as illustrated in the table below.

According to (Vian, et al., 2012), the three most common pros and cons of the per diem funding model are as follows;

The strengths and weaknesses of casemix funding are evidently straight forward as illustrated below (Heslop, 2012).

It is meant to monitor and manage healthcare funding offered in hospitals particularly public hospitals (Curtis, et al., 2011).  The Diagnosis Related Groups (DRGs) system in the country categorizes 10,000 diseases into 700 groups (Uzkuraitis, et al., 2010).  According to them, the patients and their treatment costs (on average) are identical since the illnesses have identical resource use and cost.  They add that procedures and diagnosis are translated to codes and then entered into a computer software package that attaches a DRG to the inpatient episode.  Each inpatient episode is awarded one DRD.  The attached DRG and codes are then relayed to the Department of Health (DoH) after which the hospitals are funded accordingly (Nocera, 2010).

The aim of this analysis is to enable the HIM to provide the executive with holistic information about the two funding models to make informed decisions on the best way forward.

I have employed Microsoft excel software.  It is a software tool which permits users to analyze data in a nearly unlimited ways (Isik, et al., 2013).  It fulfills the broadest array of analytical needs.  I have used both the qualitative and quantitative data analysis techniques.

Length of stay (LoS) and age visual representation

The figure above shows that the length of stay increases with age.  The aged an individual is the greater the possibility of staying longer at the facility for treatment and care.  As such, the old, above 65 years stay longer.

Tabulation of the top most frequent AR-DRG for patients of 70 years and above

The above table shows that the U63A is more prevalent among the people who are aged 70 years and above.  This is because the aged normally face mental regression attributed to the death of some brain cells, inactivity and fatigue.

The two hospital funding models are suitable based on the needs and structure of the given hospital.  However, casemix model seems to be more appropriate universally.  This is because the payment is made based on the total activities of the hospital, the type and number of patients treated. This is model`s alluring attribute.

Conclusion and recommendation

The casemix funding model remains the most appropriate system for the UTS hospital.  However, the hospital needs to polish some of its operational areas and convincingly engage the government for sustainable financial support.

References

Curtis, K. et al., 2011. Do AR-DRGs adequately describe the trauma patient episode in New South Wales, Australia?. Health information management journal, 1(40), pp. 7-13.

Heslop, L., 2012. `Status of costing hospital nursing work within Australian casemix activity-based funding policy`. International journal of nursing practice, 1(18), pp. 2-6.

`Isik, O., Jones, `C. & `Sidorova, A., 2013. `Business intelligence success: The roles of BI capabilities` and` decision-making environments`. Information & management, 1(50), pp. 13-23.

Nocera, A., 2010. Performance- based hospital funding: a reform tool or an incentive for fraud?. Medical journal of Australia, 4(192), p. 222.

O`Reilly, J. et al., 2012. `Paying for hospital care: the experience with implementing activity- based funding in five European countries`. Health, economics, policy and law, 1(7), pp. 73-101.

Turner, L., Sutch, S., Dredge, R. & Eagar, K., 2012. International casemix and funding models: lessons for rehabilitation. Clinical rehabilitation, 3(26), pp. 195-208.

Uzkuraitis, C., Hastings, K. & Torney, B., 2010. `Casemix funding optimization: working together to make the most of every episode. Health information management journal`, 3(39), pp. 47-49.

`Vian, T., Miller, C., Themba, Z. & Bukuluki, P`., 2012. Perceptions of per diems in the health sector: evidence and implications. Health policy and planning, 3(28), pp. 237-246.