Funding Policy Section

A/Manager - Daniel Borovnicar 9096 8438

The Funding Policy Section is responsible for the development and implementation of policy on all aspects of the funding formulae for Victorian public hospitals. Current work includes the production of the State cost weights; hospital budget targets; funding for non-admitted emergency services; non-admitted metropolitan and rural services; rehabilitation and special grants. It aims to improve the equity and efficiency of public hospital funding and has expertise in the development and implementation of classification systems. It is primarily responsible for the annual production of Victoria - Public Hospitals- Policy and Funding Guidelines.

Funding Victoria's Public Hospitals: Background

The Victorian public hospital recurrent funding system is based on the role and activities of hospitals as measured by their patients and treatment patterns and associated activities such as teaching, research or super-specialised units.

The coordination, development, refinement and maintenance of the formula used to determine hospital funding is undertaken in the Funding Policy Section. Since the development and introduction of casemix in July 1993, a major part of hospital funding (more than 60%) has been based on the number, type and treatment costs of individual patients. The collection and production of cost weights is undertaken in this Unit.

The development of an activity-based funding system for the majority of hospital outpatients was completed and introduced in July 1997. It is known as the Victorian Ambulatory Classification and Funding System (VACS).

Refinement of payments to inpatient rehabilitation patients in designated units as identified by the Casemix Rehabilitation and Funding Tree (CRAFT) was introduced in 1999.

Product Costing

Understanding patient and product level costs is a vital management information tool that can enhance the efficiency and effectiveness of service delivery in hospitals. The Product Costing System actively assists hospitals in this regard through the provision of a patient and product level costing bureau service, which enables these facilities to understand their particular cost issues and also provides them with the ability to benchmark their costs against their peers. We are working towards creating a centralised cost data monitoring and benchmarking system within the Department.

The Department is also working towards creating a methodology to cost hospital services by the complete care packages they provide for patients (eg, incorporating acute, sub acute and other costs within the one "expanded" DRG).