1. Introduction

1998 - 99 will be the sixth year of casemix funding. It marks the consolidation of improvements to established policies for inpatient and outpatient funding and refinements to major access and performance programs. The major objectives for 1998 - 99 funding are to improve access to appropriate care through growth and to maintain and extend quality initiatives.

At the time of printing, the Department was reaching the end of negotiations with the Commonwealth Department of Health and Family Services on the Australian Health Care Agreement. If the offer currently on the table is agreed there will not be any changes to funding in 1998 - 99 except that some funding may be available through the National Development Fund Sub-Program. In the event of a more attractive outcome, hospitals will be advised of targetted initiatives at the earliest opportunity.

There is international recognition that growth in population, ageing of the population and newly available clinical treatments, drugs, diagnostic tests and other technological developments are increasing the demand for and costs of hospital treatment. Additional funding has been provided for 1998 - 99 in recognition of this increase in demand. Targetted improvement of access to meet demand will continue through incentives to deal with priority areas, and attention will be given to prevention and the promotion of substitutes to hospital care. Allocation of growth WIES has been made to areas of greatest population growth contingent on hospitals' ability to supply services within access criteria. In 1998 - 99 there will be additional growth in throughput levels for specific providers; a lifting of the level of same day medical caps for all hospitals; and an increase in the number of tender WIES.

Certainty was given to hospitals in 1996 - 97 by the introduction of options as a means by which the Department contracted additional throughput. Hospitals were able to finalise planning of their year's throughput by end August, enabling early planning. This certainty is continued for 1998 - 99. The element of contestability will be increased this year by increasing the Tender Pool and enabling Networks and rural hospitals to tender for WIES in terms of volume and price within overall planning and appropriateness guidelines. Networks and rural regions are the major agencies for the planning and distribution of services.

At a State level, the Department will extend the scope of services it provides via contestable provider selection processes consistent with Victorian Government and National Competition policy. The Metropolitan Health Care Services Plan, released in October 1996, foreshadowed a significant private sector role in building new facilities to remodel and refurbish Melbourne's public hospital system. In metropolitan areas during 1998 - 99 and 1999 - 2000 the Austin and Repatriation Medical Centre (including Mercy Hospital for Women), and the proposed new hospitals at Berwick and Knox will be put to contestable tender. In rural areas the Latrobe Regional Hospital has been managed by a private group since February 1997 with the commencement of services from the new hospital scheduled for August/September 1998. Tenders are being received during June for the new Mildura Hospital.

Quality

Quality of hospital care will continue to have high priority. In 1998 - 99 additional funding ($12.9 million) has been provided for the enhancement of maternity services. Funding will be provided to improve antenatal and post-natal services, to develop services for special needs groups, to encourage initiatives that promote effective care during pregnancy and childbirth and to improve consumer information on care options. A number of strategies to improve infection control in hospitals have been recommended by the Infection Control Taskforce. Additional funding has been provided to strengthen statewide systems for infection surveillance and control, and to assist hospitals to meet best practice guidelines in this area. Additional payments will also be made for all Aboriginal and Torres Strait Islander inpatients to enhance their care.

Further work to develop and report measures of quality of care will be undertaken in 1998 - 99. Such measures increase information available to the community about the performance of the health care system but are also essential for development of benchmarks and for feedback to acute health care providers. To ensure that there is a clear focus on patient needs, options for incorporating patient feedback into indicators of hospital performance will be further explored.

The focus on improving access to care by providing financial incentives to meet performance targets remains in 1998 - 99. The new Hospital Access Program brings together the former Elective Surgery and Emergency Services Enhancement Programs with recently established indicators for acute inter-hospital transfers for critically ill patients. Planning for similar targetted systems to promote other aspects of continuous quality improvement will be developed over the coming year.

Objectives

The major objectives for 1998 - 99 are to:

• Increase the number of patients treated in response to increased demand;
• Encourage providers to develop systems which measurably improve quality and are more consumer focused;
• Develop useful measures of health care quality;
• Improve access to antenatal and postnatal care;
• Improve current performance for emergency and elective services;
• Increase and standardise same day caps and undertake a detailed review of same day funding policies;
• Increase contestability and encourage further care innovations and efficiencies through the extension of the Tender Pool and a specific funding pool for rapid technological advances;
• Maintain the level of hospital outpatients with the continuation of VACS funding and the extension of VACS to Ballarat and Bendigo hospitals;
• Improve access to specialist services in rural areas and support local decision-making with rural hospital targets set by regional consultation and agreement; and
• Improve statewide systems of infection monitoring and control.

The development of the proposals and processes outlined in this document has been undertaken with extensive industry consultation. Industry groups have provided substantial advice and support in the development of general policy initiatives, classification and implementation issues. Details of committees are provided in Appendix 1.

Metropolitan Services

Since their introduction, Metropolitan Health Care Networks have undertaken significant actions in improving the efficiency of their services through consolidation and restructuring across their various campuses. In November 1997, the existing North Eastern Health Care Network transferred part of its operations (primarily PANCH/Northern Hospital and the Bundoora Extended Care Centre) to the Western Health Care Network which became the North Western Health Care Network. The Austin and Repatriation Medical Centre was re-established as a independent entity, including Royal Talbot and Larundel.

Networks, in conjunction with the Department, have responsibility for ensuring increased equitable access to hospital services. One of the major directions of Victorian health policy is to redesign existing services to meet the needs of future populations and to ensure services continue to be accessible to changing populations. Network-wide targets with campus reporting allows Networks to redesign services according to local priorities, with appropriate accountability, within a State context.

In September 1997, the Southern Health Care Network voluntarily assumed management responsibility for a number of community health centres in its broad population area, enabling it to plan and provide a broader range of health services.

The major regional centres of Victoria also saw a significant amalgamation of health services during 1997 - 98. Barwon Health was created in April 1998 bringing together the Geelong Hospital, the Grace MacKellar Aged Care Centre and four community health centres in the Barwon and south coast areas. These elements together form a significant provider of the full range of health services for the Barwon region. This complements earlier amalgamations of acute and aged care services in the Ballarat Health Services and Bendigo Health Care Group.

Rural Services

Two major challenges face acute hospitals in rural communities. The first is maintaining access to specialist services at a time when it is difficult to attract and retain specialists in rural areas. The second challenge relates to small rural hospitals, and involves encouraging these hospitals to provide a wider range of community-based as well as bed-based health services. The policy for 1998 - 99 continues the policies established earlier to address both of these challenges. It is desirable that major regional referral hospitals and sub-regional hospitals have an appropriate range of specialist services so that rural people can access these services within their local area rather than travelling to Melbourne.

The Rural Specialist Services Grant will continue to foster and maintain specific specialty services in rural regional and sub-regional hospitals. In 1998 - 99, funding for each specialty will continue up to $60,000, with the total amount to be spent $7.6 million.

For the purposes of grant allocation under the Scheme, core specialist services include specialist services of general surgery, obstetrics and gynaecology, anaesthetics, and general medicine for sub regional and regional hospitals. For larger rural communities served by regional hospitals additional specialist services of paediatrics, orthopaedic surgery, psychiatry, geriatrics and rehabilitation and emergency medicine and other specialist services may be supported through the Rural Specialist Services Grant. Further details may be obtained from the Regional Provider Manager. Applications for these grants must be received by the Department prior to the 20 September 1998. Applications should be addressed to Regional Provider Manager.

The shortage of trained specialists in rural areas requires general practitioners to assume responsibility for delivering a greater range of services, particularly in the areas of obstetrics, anaesthetics, minor surgery and accident and emergency services. A Continuing Medical Education subsidy program for rural general practitioners commenced on 1 July 1996. The joint contribution to the costs of the program by the Department, hospitals and general practitioners will continue in 1998 - 99. The Rural and Isolated Grant has been retained at 1997 - 98 levels.

The Department has established the Healthstreams Program to enable more flexible funding and purchasing arrangements in small rural communities. Healthstreams now has eight agencies approved as participants in the Program with a further eleven agencies holding approved in principle status. These agencies have received Implementation Grants totalling almost $300,000 to date. Considerable interest has been shown by other agencies in participating in this Program.

In 1998 - 99 rural regions will have an extended role in WIES allocation and Rural Specialist Services Grant recommendations. For 1998 - 99, a Rural WIES Transfer Transitional Compensation Grant has been established. Rural regions have responsibility for appropriate service planning and delivery within their region and the tables in Appendix 1 reflect these regional allocations. In some cases this has meant the movement of WIES between hospitals within the region. A compensation grant will be paid for one year, 1998 - 99, to assist this transition. It is not applicable for WIES moved on a temporary basis during the year where hospitals perform under target.