Dr Alasdair MacDonald Deputy Chair, Clinical Advisory Committee

1. The Independent Hospital Pricing Authority’s Clinical Advisory Committee Dr Alasdair MacDonaldDeputy Chair, Clinical Advisory Committee Wednesday 15 May 2013

2. The Innocent Clinicians Perspective • At the beginning of this process in those states not already familiar with ABF “You mean the more operations I do the more money the hospital gets?” • Was a familiar catch cry

3. Clinical Advisory Committee The IHPA Clinical Advisory Committee (CAC) is a key component of the National Health Reform Agreement and the National Health Reform Act 2011 which recognises the critical role of clinicians in the development of activity based funding CAC was established to ensure that clinicians have a voice in the development of a national activity based funding system through the provision of timely and quality clinical advice to inform Pricing Authority decision making

4. Clinical Advisory Committee • Members are appointed by the Commonwealth Minister for Health and are drawn from a range of clinical specialties and backgrounds to ensure CAC represents a wide range of clinical expertise • The 27 CAC members provide high level technical and clinical advice to the Pricing Authority on a range of issues such as activity based funding classification development and revision to guide policy development at IHPA and to inform the national efficient price and national efficient cost.

5. National Health Reform Act 2011 The Clinical Advisory Committee (CAC) is a statutory committee that was established under Part 4.10 of the National Health Reform Act 2011. The functions of the CAC as described in s. 177: a) to advise the Pricing Authority in relation to developing and specifying classification systems for health care and other services provided by public hospitals; b) to advise the Pricing Authority in relation to matters that: i) relate to the functions of the Pricing Authority; and ii) are referred to the Clinical Advisory Committee by the Pricing Authority; c) to do anything incidental to or conducive to the performance of the above functions.

6. CAC has played a key role in the development and revision of clinically relevant classifications which support the implementation of a nationally consistent ABF framework Informed IHPA’s work in classification development to ensure hospital data is grouped appropriately which in turn contributes to the determination of a national efficient price Provided critical input into the development of the Pricing Framework for Australian Public Hospital Services for 2012-13 and 2013-14 Informed the development of the national efficient price 2012-13 and 2013-14 and the national efficient cost 2013-14 through the provision of clinically relevant and timely advice What has been achieved?

7. What other roles do we play? • The strategic thinking clinician in the street role. (i.e. the ability to hypothetically apply the pricing process.) • Hence recognise possible inequalities • But also opportunities for gaming

8. Price and Quality (Carrot and/or Stick) • This remains a vexed issue with a joint working party with ACSQHC reviewing this issue but with little appetite to use a stick in this process. • But how best to reward quality without widening the gap between the so called “good and bad”. • How do we invest in improvement?

9. Teaching, Training and Research • How to Price? • Currently Block Funded. • A working Group has been established with CAC members and other experts in the area to price these aspects of healthcare. • But do they share more that an historically similar funding model?

10. Teaching • A dynamic environment with evolving models of education, a shift to in training assessment and increased scrutiny on accountability. • All adding strain to a model that has been dependant on pro-bono contribution and hence likely cost. • Are we future proofing our funding model or leaving the system vulnerable to unsustainable future costs.

11. Training • Regulatory and Award requirements • Compulsory CPD • Looming Revalidation

12. Research • The Pricing of the infrastructure that a Hospital requires to support and administer research agendas. • This is instrumental in recruitment and retention. • It is not a luxury as it maintains a hospital profile. • This not about funding research but about making a hospital research capable

13. What next? Continue to inform future key policy development at IHPA including the provision of key clinical input into the Pricing Framework for Australian Public Hospital Services 2014-15 and future national efficient prices and national efficient costs Work on activity based funding classification development for admitted acute care, non-admitted care, sub-acute care and emergency department care Advise on the plan to develop AR-DRG v 8 and ICD-10-am 9TH edition for acute admitted care

14. Assess the proposed approach to sub acute and non-acute services classification revision and development (AN-SNAP) and the revision of emergency department classifications Contribute to the development of mental health and teaching training and research classification systems during 2013-14 Undertake an evaluation of the implementation of activity based funding in Australia Play a key role in future policy development and pricing determinations through its assessment of the impact of new technology on hospital services delivery

15. Back to the Innocent Clinician I suggest we all lack training in Pricing and in no other aspect of our lives would we proceed without such training.

16. Personal Perspective • The Health System, ABF and IHPA will only survive in an environment of a realistic public expectation of their health system. • So it is the responsibility of everyone in the health profession to improve not only our own financial literacy but the publics health literacy and its understanding of the value equation.