Midland Region Asset Management Plan - Kia ora, welcome...

Draft Midland Region Clinical Service Plan

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ANNEXES

Annex 1: Service specification (project brief)

Annex 2: Midland region DHB staff involved in the consultation process

Annex 3: Summary of data collected through regional surveys

Annex 4: Methodological notes including:

- financial modelling approach and assumptions - scenario modelling approach, assumptions and detailed results


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Annex 1: Service specification (project brief)

Purpose

The purpose of the project is to develo9p a regional Clinical Services lPlan (CSP) that focuses on clinical and financial sustainability ion the Midland region. A dreaft CSP will be completed for consideration by DHBs as part of their District Strategic Plan process by the end June 2010.

The CSP woill describe a 10 year plan fro regionally led, collaborative community and hospital sercices in the Midland Region, taking a whole-of-system approach. The plan will take a lon-term (20 year) view of health needs across the Midland population and will match that future linical service provison and infreasturcture requirements.

The CSP will include and assessment of the status quo financial situation of Midland DHBs, likely cost growth and changes required to live within the expectd future fuinding track. It will include a 5-10 year financial forecast.

From this process, the CSP will identify 3-4 lcinical services in which regional collavboration across Midland can address issues of financial and clinical vulnerability.

Scope

Inclusions

The final plan will be a coherent document that includes obth primary and hospital servivers and that provies a regional roadmap to enable DHBs in the Midalnd region to make critical strategic decisions about the future deliver of specialist

health and disability support services, for example, in relation to:

The distribution of 24/7 acute and elective secondary services;

The distribution of teriatry services;

Future capital investment decisions; and

Changes to melds of care, levels of care, or locus of care required to improve quality and live within the avilaable resouces.

The final output will provide a suggested high level future configuration of services.

Exclusions

Phase 1 (to30/6/2010) exculeds developing specific modesl of care (MOC) for services/service grouping but will describe a range of broad options for the MOC

Project deliverables

Three project reports are the deliverables for the Midland Region Clinical Services plan. These reports will be combined to form a complete Midland Region Clinical Services Plan for the Midland region.

The three deliverables are are:

1. Current state analysis (end Feb 2010) 2. Future state analysis (end April 2010) 3. The draft clinical services plan. (end June

2010).

Each will aim to be a concise easily read document, with an emphasis on graphic display and key points. Docs will be made available electronically, with detailed appendices available electronically, but not included in emailed docs.

The documents will aim to avoid ‘so what?’ responses, with the implications of major issues spelled out.

Documents will not bear the LECG logo, but will be issued in a standard regional format and signed off by the Steering Group. The final document (draft CSP) will be signed off by Midland CEOs.

Deliverable 1: Current state analysis (due end February 2010)

This deliverable will describe the current state of service provision in the Midland Region. Exact content will alter according to availability of information.

The purpose of the current state analysis is to describe the current configuration of services, current capacity, current demand, financial situation and current issues & challenges.

The report will include, but is not limited to:

Current service configuration / access / capacity

a. A description of services that exist within each DHB using the role delineation model (RDM).

b. Describe current SMO & RMO medical FTEs by specialty & DHB, and total nursing & allied health FTEs by DHB

c. Current facility capacity – beds, theatres.

d. The number/% of people currently travelling to seek medical care

e. Number/% of people within a particular travel time of an acute hospital, or tertiary centre.


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f. Issues arising from current service configuration.

Current health outcomes

a. Life expectancy by DHB & for the region

b. Age specific all cause mortality rates by DHB and for the region

c. Age specific ambulatory sensitive hospitalisation rates by DHB and for the region

d. Disparities indicators – the above measures shown separately by ethnicity.

e. Possible condition specific burden of disease / prevalence data if available for specific conditions or known risk factors (eg smoking rates, obesity, activity rates, immunisation rates, CVD screening rates).

f. Issues arising.

Current utilisation of services / demand

a. Inpatients

i. Current volumes of cases and case weights by specialty including day patients and inpatients

ii. Intervention rates, (both acute and electives services separately) by both specialty and DHB. Also age-adjusted data for comparison between DHBs and national averages.

iii. Current interdistrict flows – CWDs aggregated across specialties, and total value in $ (matrix presentation format)

b. Ambulatory & community care

i. Total number of first specialist appointments (FSAs) and follow up appointments (FUs) by service and by DHB and Emergency Departments (EDs). Data to be shown per 100,000 population for comparison between DHBs.

ii. Community: total amount spent and FTEs of district nurses, mental health services and other community services (inc NGOs).

iii. Total cost of age residential care / total bed days

c. Primary Care

i. Total GP FTE by PHO & DHB

ii. Enrolled population by PHO/practice

iii. Describe after-hours availability of services.

iv. Total cost of pharmaceuticals and laboratory services

d. Total cost of public health units, which include the ost of public health officers, restaurant inspections, monitoring, and surveillance and shool helath promotions. (this was later removed from the specification)

e. Issues arising from current utilisation.

Vulnerable services

a. Table showing services that are vulnerable (that may not be clinically sustainable) with rationale

Measures for determining vulnerable services

include services with:

Fewer than three senior medical officers (SMOs)

Low discharge rates

Difference between actual numbers of medical staff in a specialty and the number required by workload (based on benchmarks)

Low numbers of ED attendances

This section will also include qualitative information, obtained through interviews and surveys.

Financial information

a. Balance sheet & P&L information by DHB

b. PBFF funding provided.

Issues and challenges

Discussion on issues and challenges will be largely

qualitative in nature. Information will be obtained through surveys and workshops.

Deliverable 2: Future state analysis (due end April 2010)

This deliverable will outline and discuss four options for service configuration within the Midland Region.

The four suggested scenarios are (subject to further input and customising from stakeholder feedback):

1. The status quo (only modelling only demographic changes over a 10-20 year period)


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2. Regionalisation (centralise where possible)

3. Localisation (provide services as close as possible to where people live)

4. Devolution (maximising use of primary care centres).

For each scenario, the report will include:

1. Population projections by DHB and region (same under each scenario)

2. Service volumes - projected future demand by DHB (including inpatients, ambulatory / community, primary care & public health)

3. Future workforce needs, (based on future demand times benchmarks)

4. Future facility requirements (beds, theatres, outpatient clinics, primary care centres)

5. Future challenges / opportunities:

a. Vulnerable services / hospitals.

b. Future workforce issues based on work force availability forecasts.

c. Future funding gap issues – based on a projection of the cost structure and PBFF for each DHB, modified for the impact of the different models of care / service scenarios.

d. Future access impacts

i. Future RDM map / revised service configuration map

ii. Future travel time issues

e. Future opportunities to enhance services

f. How changes to models of care might impact on workforce requirements, financial sustainability, service location/utilisation and health outcomes.

Deliverable 3: The draft Clinical Services Plan (due end June 2010)

Deliverable 3 will draw from and build upon the two previous reports, including:

1. Identification and further analysis of a preferred scenario from Deliverable 2 in order to develop it into a preferred option – to be based on stakeholder feedback.

2. Provision of a roadmap for achieving the preferred option, including discussion of key enablers such as:

a. Workforce

b. IT

c. Facilities

d. Contract / incentive structures

e. Culture / communication network between DHBs.

3. Risk analysis of the preferred option.

Monitoring & Reporting

This will be two-fold:

Milestone deliver and reporting, specifically the achievement of the deliverables listed above, being:

1) Current state analysis (end Feb 2010)

2) Future state analysis (end April 2010)

3) The draft clinical services plan. (end June 2010)

A montly progress report submitted by LECG showing progrtess agians the programme plan and outlining any issues for resolution.


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Annex 2: Midland region DHB staff involved in the consultation process

Midland region DHB staff involved in the

consultation process

Steering Group Membership

Tom Watson, Chief Medical Adviser Waikato, Chair Helene Carbonatto, General Manager Planning and Funding, Tairawhiti Dorothy Gilliland, Allied Health, Bay of Plenty Kerry-Ann Adlam, Director of Nursing, Taranaki Ditre Tamatea, General Manager Māori Health, Waikato Phillip Balmer, Chief Operations Officer, Bay of Plenty Professsor Ross Lawrenson, Waikato Clinical School Lu-Ana Ngatai, Portfolio Manager, Lakes Letham White, Chief Financial Officer, Bay of Plenty Hamish Gibson, Midland DHBs Relationship Manager, National Health Board Ian Goulton, Midland Regional CSP Programme Manager Clinical Reference Group March 16 2010 attendees: Waikato Jan Adams, Chief Operating Officer Hospitals Emergency Barbara Garbutt, GM Population Health and Older Persons & Rehab Service Sue Hayward, Director of Nursing & Midwifery

Peter Wright, Clinical Director - Organised Stroke Service Brett Paradine, GM Planning & Funding Ross Lawrenson, Waikato Clinical School Tom Watson, Chief Medical Adviser, Chair of MRCSP Andrew Darby, Clinical Director Mental Health Urban Inpatients Wayne De Beer, Director of Clinical Training Gerry Devlin,Clinical Director Heart & Lung Services Deirdre Rohlandt, Clinical Unit Leader Obstetrics & Gynaecology Phil Weston, Clinical Unit Leader Child Health Marg Carey, Manager, Community Health Ngaruawahia John McCaskill-Smith (CEO Pinnacle) Lakes Johan Morreau, Chief Medical Advisor Lisa Hughes, GP Liaison Des Epp, Rotorua GP Group ( IPA ) Gary Lees (Director of Nursing & Midwifery) Dan Tartaglia , Clinical Director and Senior Physician Taranaki John Doran, Chief Medical Officer Greg Stevens, Emergency Department Head of Department Nicky Nelson, Paediatrician Charlie Brown, Anaesthetist Tairawhiti Bruce Duncan, Chief Medical Advisor Lynsey Bartlett, Director of Nursing Torben Iverson, joint Clinical Director O&G Diane Van de Mark, joint Clinical Director O&G Bay of Plenty

Marg Norris, Midwife Leader, Women, Child and family Ros Jackson, Nurse Leader, Surgical Services Troy Browne, Medical Leader, Surgical Services Liz Spellacy, Specialist, Health of Older People Julie Robinson, Director of Nursing Derek Sage, Clinical Director, Emergency Department John Kyndon, Chief Medical Advisor Dorothy Gilliland, Allied Health Leader Neil Graham, Clinical Training Director Ian Goulton, Midland Regional CSP Programme Manager LECG David Moore Martin Hefford Tom Love Clinical Reference Group May 18 2010 attendees Waikato Clyde Wade – Head of Medicine Ross Lawrenson, Waikato Clinical School Wayne DeBeer, Director of Clinical Training Jill Dibble, RCS Manager Luis Villa, Midland Network Damian Tomic, Midland Network Hugh Kininmonth, Hauranki PHO Lakes Lisa Hughes, GP Liaison Des Epp, Rotorua GP Group (IPA) Gary Lees (Director of Nursing & Midwifery) Graham Guy, Lake Taupo PHO Kirsten Stone, Rotorua Area Primary Health Services Taranaki Greg Stevens, ED Head of Department


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Peter Marko, Consultant Anaesthetist Tairawhiti Bruce Duncan, Chief Medical Advisor Lynsey Bartlett, Director of Nursing Bay of Plenty Troy Browne, Medical leader, Surgical Services Derek Sage, Clinical Director, Emergency Department Dorothy Gilliland, Allied Health Leader Neil Graham, Clinical Training Director Ian Goulton, Midland Regional CSP Programme Manager LECG David Moore Martin Hefford Hospital visit to Taranaki DHB – 23 March 2010 Interviewees included: Ngawai Henare – Chief Advisor Māori Health Representatives from Tu Tama Wahine, Te ihi Rangi Trust and Tui Ora Limited Don Theobold – HOD Anaethetist Greg Stevens – HOD Emergency Department Laird Madison – Physician Peter Liston – Oral and Maxillofacial surgeon Richard Feltham – Managing Partner, Fulford Radiology Samir Heble – Clinical Director of Mental Health Gillian Gontheir – Dietician Kerry-Anne Adlam – Director of Nursing Colin Shorvon – Senior Psycology Advisor Vicky Lee – Advisory Physiotherapist Marie Marchant – Social Worker Coordinator/Advisor Marianne Pike – Social Worker Mary Bird – Allied Health Manager

Rosemary Clements – Clinical Services Manager Ian Dawson – Business Analyst Karmin Erueti-Thatcher – Smokefree Auahi-Kore DHB Coordinator Steve Perry – Senior Financial Analyst Anne Kemp – Manager of Quality and Risk Gavin Wooley – General Manager, Organisational Development and HR Joy Farley – General Manager, Hospital Services Tony Foulkes – Chief Executive Officer Ramon Tito – Kaumatua Rosemary Ireland, Christine Nicolas, Andrew Brook – Primary care meeting Hospital visit to Tairawhiti DHB – 24th March 2010 Interviewees included: Jim Green – Chief Executive Officer Laurie Biesiek - Human Resource Manager Helene Carbonatto - GM Planning and Funding Lynsey Bartlett, Heather Robertson, Sue Kennedy, Julie Crawshaw and Penny Forsfall - Director of Nursing/Primary Nurse Leaders and Allied Health/ District Nurse Manager/Social Work Team Leader. Meeting with the SMOs and RMOs Rob Armstrong and Carol Ford – Turanganui PHO representatives Jason Ward, Kate Mather, Kath Cordiner – Provider Arm Managers and Electives Manager Leadership team Nellie Brooking, Te Miringa Huriwai – NPH PHO representatives Patrick McHugh - Primary GP Liason Hospital visit to Bay of Plenty DHB, 29th March 2010 Interviewees included:

Phil Cammish – Chief Executive Officer John Kyngdon – Medical Director Dorothy Gilliland – Allied Health Medical Leaders Gordon McKay, General Manager, Human Resource Nurse Leaders and Business Leaders Julie Robinson, Director of Nursing Grant Pollard, General Manager of Planning and Funding Janet McLean, Māori General Manager of Planning and Funding Planning and funding team Primary Care representatives Hospital visit to Waikato DHB, 30th March 2010 Interviewees included: Craig Climo – Chief Executive Officer Clyde Wade – Head of Medicine Jan Adams, Chief Operating Officer Cameron Buchanan, Clinical Unit Leader, Clinical Services Brett Paradine – General Manager of Planning and Funding Deidre Rohlandt – Clinical Unit Leader, Obstetrics and Gynaecology Grant Howard – Group Manager Waikato and Thames Hospital Sue Hayward – Director of Nursing and Midwifery Alan Grainer – Chief Information Officer Hospital visit to Lakes DHB, 31st March 2010 Interviewees included: Planning and Funding Team Executive Management Team Cathy Cooney, Chief Executive Officer Gary Lees


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Heads of Departments Clinical Director, Nursing Representatives and Services Managers Meg Gustafson – GP Liaison Dr Paul Willard – consulting physician Primary care team Māori Health Team Health services managers Alex Wheatley – Chief Information Officer


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Annex 3: Summary of data collected through regional surveys

Introduction

Two surveys were conducted as a part of the consultation process for creating this Clinical Services Plan. The purpose of the first survey was to gain an understanding of the key issues facing the Midland Region, and to identify vulnerable services in the region, and within each District Health Board. The second survey was used to test the ideas and proposed initiatives in this plan, and allow for widespread feedback on the initiatives. The surveys were accessed by respondents through an URL link. The link was distributed to key personnel within each DHB, who then forwarded the link to whomever they thought appropriate. These included:

Chief Medical Officers;

Senior Medical Officers;

GP Liaisons;

GPs;

Directors of Nursing;

Nurses;

The Clinical Reference Group; and

Maori Planning and Funding General Managers.

Every person who received the survey was invited to send the link on to whom ever they believed would be interested in contributing. In these appendices, we provide the quantitative results from the surveys.

First survey – identification of vulnerable services

A break down of respondents self identified DHB, health care setting, and area of work is provided in the next 3 tables

Select the category that best describes your area of work.

Answer Options Response Percent

Response Count

Clinical role - medical 44.0% 150

Clinical role - nursing 24.9% 85

Clinical role - allied health

8.8% 30

non clinical role e.g. management and administration

22.3% 76

Which DHB region do you primarily work within?


Response Count

Taranaki DHB 39.0% 133

Waikato DHB 23.5% 80

Lakes DHB 9.7% 33

Bay of Plenty DHB 15.5% 53

Tairawhiti DHB 11.7% 40

A significant proportion of work occurs across two or more DHBs

0.6% 2

Which health care setting do you primarily work within?


Response Count

Hospital (base) 68.0% 232

Hospital (rural/community)

14.7% 50

Primary Care 7.9% 27

Other Community 9.4% 32

Other (please specify) 36


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Respondents were asked to rank the strength of services provided within their DHB as ‘strong’, ‘sustainable’, ‘vulnerable’, ‘unsustainable’ or ‘don’t know, N/A’. Services were split into seven different categories:

Medical services

Non-surgical cancer services

Paediatric and women’s health

Surgical services

Clinical support services

Mental health services

Primary care services The tables over the next few pages provide the results. The numbers in the tables represent the total number of respondents who ranked each service as depicted at the top of each column

Below is a list of medical services provided by DHBs in the Midland Region. Please rate these services as you see them within your DHB.

Answer Options strong sustainable vulnerable unsustainable Don't know, N/A Rating Average Response Count

General Medicine 30 70 27 2 21 2.01 150

Cardiology 32 44 33 4 36 2.08 149

Endocrinology/Diabetes 14 46 47 4 37 2.37 148

Gastroenterology 26 40 28 5 46 2.12 145

Immunology 1 17 33 13 83 2.91 147

Infectious Diseases 5 30 43 12 57 2.69 147

Neurology 3 17 46 26 52 3.03 144

Renal Medicine 3 33 63 15 35 2.79 149

Rheumatology 2 30 55 8 53 2.73 148

Respiratory Medicine 7 51 45 5 37 2.44 145

Pain Management 10 46 51 12 29 2.55 148

Older People's Health 19 44 49 6 28 2.36 146


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Below is a list of non surgical cancer services provided by DHBs in the Midland Region. Please rate these services as you see them within your DHB.


Medical Oncology 25 40 35 3 46 2.16 149

Radiation Oncology 16 30 28 10 64 2.38 148

Haematology 13 38 31 3 61 2.28 146

Below is a list of surgical services provided by DHBs in the Midland Region. Please rate these services as you see them within your DHB.


General Surgery 35 56 34 1 23 2.01 149

Cardiothoracic 6 27 30 14 68 2.68 145

Dental Surgery 12 41 38 4 52 2.36 147

Maxillofacial 14 28 30 6 68 2.36 146

Neurosurgery 9 15 25 19 77 2.79 145

Ophthalmology 19 58 23 2 44 2.08 146

ORL Head & Neck 16 39 28 2 60 2.19 145

Orthopaedic 46 58 18 1 24 1.79 147

Plastic Surgery 6 24 28 15 73 2.71 146

Burns 2 21 27 14 81 2.83 145

Spinal Surgery 6 16 38 16 69 2.84 145

Urology 13 49 37 9 38 2.39 146

Vascular Surgery 15 50 27 4 48 2.21 144

Dermatology 9 25 35 9 60 2.56 138


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Below is a list of clinical support services provided by DHBs in the Midland Region. Please rate these services as you see them within your DHB.


Radiology 34 48 40 7 19 2.16 148

Pathology 16 65 39 1 27 2.21 148

Emergency Medicine 25 59 43 3 18 2.18 148

Intensive Care 27 72 27 1 21 2.02 148

Anaesthetics 49 59 14 0 25 1.71 147

Clinical Genetics 1 11 20 11 102 2.95 145

Please rate mental health services as you see them within your DHB.


Mental Health 15 61 39 2 27 2.24 144

Please rate primary care services as you see them within your DHB.


Primary care services 15 64 47 4 20 2.31 150


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Second survey – testing the plan

A break down of respondents self identified DHB, health care setting, and area of work is provided in the next 3 tables

Which DHB region do you primarily work within?


Response Count

Taranaki DHB 33.1% 56

Waikato DHB 24.3% 41

Lakes DHB 13.6% 23

Bay of Plenty DHB 18.3% 31

Tairawhiti DHB 7.7% 13

A significant proportion of work occurs across two or more DHBs

3.0% 5

Which health care setting do you primarily work within?

Answer Options Response

Percent Response

Count

Hospital (base) 65.7% 111

Hospital (rural/community)

9.5% 16

Primary care 14.8% 25

Other community 10.1% 17

Other (please specify) 27

Respondents were then asked to rank their opinion of the proposed initiatives as ‘strongly agree’, ‘agree’, ‘unsure’ ‘disagree’ or ‘strongly disagree’.

The results were as follows:

1) We propose that the five Midland DHBs establish a regional clinical governance mechanism that would focus on improving safety and quality by

measuring and reducing variation in care

putting in place clinical risk management strategies

improving clinical effectiveness

developing shared clinical audit arrangements

providing regional credentialing arrangements for clinicians working in each specialty area

2) We also propose establishing regional clinical networks to:

develop and implement integrated patient pathways across primary, secondary and tertiary providers

ensure clinical engagement in service planning

establish guidelines for levels of service to be provided at each hospital; and

put in place strategies to support vulnerable services with an initial focus on:

o obstetrics o renal services o cardiac services o anaesthesia and intensive care

Select the category that best describes your area of work.


Response Count

Clinical role - medical 56.8% 96

Clinical role - nursing 18.3% 31

Clinical role - allied health

6.5% 11

non clinical role e.g. management or administration

18.3% 31

Do you generally agree with the proposal to establish a regional clinical governance mechanism?


Response Count

Strongly Agree 29.6% 64

Agree 43.5% 94

Unsure 18.5% 40

Disagree 4.2% 9

Strongly Disagree 4.2% 9


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Do you generally agree with the proposal to establish regional clinical networks?


Response Count


Agree 45.9% 90

Unsure 15.8% 31

Disagree 3.1% 6


3) We propose that the DHBs should work together to help Maori achieve the same health status as non-Maori as a premise of the clinical services plan. This would involve investing in earlier intervention and prevention in Maori families.

Maori Health Equity: Do you agree with this goal?


Response Count


Agree 33.9% 64

Unsure 14.3% 27

Disagree 4.8% 9


4) We consider that increasing subspecialisation together with clinician lifestyle choices will make recruitment and retention even more difficult for rural hospitals in the future. We propose that Midland DHBs seek common solutions to their rural hospital viability problems, including:

reduced reliance on inpatient hospital services

closer working relationships between rural GP services and rural hospital staff

increased use of paramedics on a see and treat basis

greater use of telehealth more planned services in rural hospitals

(eg visiting outpatient clinics)

greater focus on nurse led services

Do you agree with this proposed approach?


Response Count


Agree 40.4% 72

Unsure 18.0% 32

Disagree 7.3% 13


1.1.1 5) We propose that the DHBs work

collectively with primary care staff to change the models of care substantially over the next 10 years, including:

moving to fewer, bigger centres

improving GP access to diagnostic services

increasing integration between general practice and community health services and between general practice and secondary care

enabling and encouraging primary care to take a leadership role in the management of long term conditions such as diabetes, CVD, mental health, frail elderly

giving primary care providers a greater stake in the outcomes of care - for instance, by sharing gains and risks

developing multi-disciplinary teams in primary care initiatives

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) We propose that the DHBs work collectively to ensure that the future workforce has sufficient staff numbers to meet future health service demands, and that training and development prepares people for future models of care. Implications include:

support for medical generalist roles

further development of advanced nursing and allied health practitioner roles to take on some tasks currently performed by doctors

development of shared training resources (including online resources)

numbers to meet future health service demands, and that training and development prepares people for future models of care. Implications include:

o support for medical generalist roles

o further development of advanced nursing and allied health practitioner roles to take on some tasks currently performed by doctors

o development of shared training resources (including online resources)

o possible merger of current training and development roles into a single virtual or actual regional team across DHBs

o possible development of shared nurse educator and allied health leader roles across DHBs

o improved rural/provincial training opportunities

Do you generally agree with this proposed approach?


Response Count


Agree 37.6% 65

Unsure 17.9% 31

Disagree 7.5% 13


7) We propose that regional DHBs collaborate to achieve better access to information across providers and settings, including:

creating a regional repository for laboratory and radiology reports

creating e-referral and e-discharge systems across the region

reciprocal sign on rights for clinicians in different DHBs, including GPs over time moving to shared patient records.

Do you generally agree with this proposed approach?


Response Count


Agree 31.8% 55

Unsure 9.2% 16

Disagree 3.5% 6



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Annex 4: Methodological notes

FINANCIAL MODELLING APPROACH AND ASSUMPTIONS

This annex sets out the general approach to the financial modelling and the key

assumptions used to generate the forecasts.

Purpose of the financial modelling

The financial modelling undertaken as part of the CSP development process provides an

integrated financial statement of the midlands region including pro forma revenue

statement and balance sheet, and an integrated statement of projected capital needs. It

forecasts financials to 2019/20.

The financial modelling undertaken includes:

Regional standardised financial model, including individualised inputs from each of the region’s DHBs

Regional forecast of Caseweight Discharges (CWDs), adjusted for Interdistrict Flows (IDFs)

Regional forecast of staff numbers, adjusted for the CWD forecast

Regional strategic capital asset forecast1

Pro forma financial projections of the region

The primary intent of the financial modelling work stream was to estimate the financial

impact of the relative changes proposed by the business cases from a regional

perspective. For example, the regional financial statements show the benefits (e.g. costs

savings) and costs as a result of the impact of reduced revenue to the individual DHBs,

and the region as a whole, through changes in service delivery.

1 The regional strategic capital asset forecast was done in the Regional Asset

Management Plan (“RAMP”). The CSP financial modelling uses capital forecasts from the RAMP as an input.

The financial modelling framework is based on a suite of five DHB financial projection

models that are aggregated to provide a set of integrated financial statements for the

midlands region DHBs [including revenue statements, cashflow statement and simplified

balance sheet].

Simplified forecasts and scenarios

There were limited resources to develop comprehensive cost models for this exercise.

Therefore we have used simplified models that aim to capture the key impacts of the

demand forecasts. That is, the modelling approach was to focus on simplified forecasts

which highlight the changes between various business case options.

Collaboration with DHBs

The financial model and the underlying assumptions were developed using a collaborative

approach with the five DHBs. Each of the CFOs and/or finance managers were given an

opportunity to review the model and its key assumptions before it was finalised.

General methodology

The methodology estimates financial projections for each DHB based on the base year

financial (ie actual FYE 2009, as reported in the DAPs) and expected trends in

demographics, regional demand, including inter district flows and other economic trends.

The financial model was first used to forecast the financial projections for the base case

scenario.

The modelling framework was then be used to forecast financials for two scenarios. The

scenarios reflect differences in caseweights and differences in the cost of external

providers.

The financial projections are then compared to the base case to determine the

incremental value (from a regional perspective) of each scenario considered.


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Model structure

The forecast financial projections are based on:

The financials for the initial base year (ie DAP budget for 2009)

FFT and demographic forecasts

Economic assumptions including CPI and labour indices

Capital forecast based on the RAMP

Inputs for simple calculations of interest and depreciation

Income and Expenditure projections

Income and operating projections are calculated in three main categories to provide a

total DHB consolidated view:

DHB provider arm

Governance and Funding administration arm

External provider payments

The provider arm section of the model covers all income and expenses relating to hospital

and community services run and provided by the DHB. This section of the model also

includes the income and operating expenditure associated with corporate and non clinical

support services, and IDF income.

The governance and funding administration section of the model forecasts the income

and operating expenditure for all resources involved in the distribution and monitoring of

the funding distributed by the DHB. These resources fund the administration team and

the DHB board of directors.

The external provider arm includes all services that are provided outside of the DHB such

as primary health services.

To date, most of the focus (in terms of inputs and calculation detail) has gone into the

provider section of the model. The other two model sections exist to provide a total DHB

view and have been populated with less detail. However, each section is based on the

same input structure to provide flexibility for more detail if required.

The key limitation of this structure is that it effectively scales income (and to a lesser

extent cost) so that the proportions between the provider and the external provider arm

remain the same whereas in practice DHBs do have some flexibility in these allocations.

(However, on average this assumption is probably reasonable because in practice DHBs

are bound by long term contract agreements with external providers.)

Consolidation

The income and expenditure projections for each DHB are brought together and

combined with other inputs to provide a consolidated

Income statement forecast

Simplified balance sheet forecast

Statement of cashflow forecast

Assumptions in the Base case financial projections

Broadly speaking, the financial projections are based on opening value (e.g. for income or

Service Modelling

Demand Modelling

Aggregate Midland Region Financials

Waikato DHB

Lakes DHB

BOP DHB

TairawhitiDHB

TaranakiDHB

Waikato DHB

Lakes DHB

BOP DHB

TairawhitiDHB

TaranakiDHB

Regional Financial Statements

DHB input templates


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expenditure) that is scaled by changes in demand and appropriate economic trends.

Revenues and Expenditures for the years 2008/09 – 2012/13 are as they were reported in

the DAPS

Revenues and expenditures for later years (i.e. 2013/14 – 2019/20) are based on

projections from 2012/13 onwards. Thus the 2013/14 financials provide the opening

value.

Revenue projections

Revenue has been accounted in three separate categories across the these main sections

of the model

Internal Funder Arm revenue

Other Crown revenue

Other revenue

Opening revenue for the years 2008/09 – 2013/14 were sourced from the DAPs.

Internal Funder Arm revenue

Internal Funder Arm revenue is revenue that is allocated on a PBFF basis received by the

Funder arm (from MoH) and distributed to the Provider arm, Governance arm and to

External Providers. (I.e., for service contracts between the funder and internal and

external providers). This income includes national IDF inflows as these come through the

funder as well.

Internal Funder Arm revenue is projected according to assumptions about changes in

Future Funding Track (FFT) and demographics changes. The FFT adjusts DHB revenue for

inflation and for advances in technology and also efficiency gains. Demographics funding

provides for changes in the total number and structure of the population.

The assumptions for Internal Funder Arm Revenue were obtained directly from the

Ministry of Health. The assumptions are summarised below.

Crown Funder Revenue Adjustments from 2013/14 – 2019/20

Year 13/14 14/15 15/16 16/17 17/18 18/19 19/20

Waikato 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0%

Tairawhiti 3.1% 3.5% 3.5% 3.3% 3.3% 3.3% 3.3%

BoP 4.4% 4.5% 4.4% 4.4% 4.4% 4.4% 4.4%

Lakes 3.4% 3.7% 3.7% 3.7% 3.7% 3.7% 3.7%

Taranaki 3.5% 3.4% 3.4% 3.5% 3.5% 3.5% 3.5%

Other Crown revenue

Other Crown revenue is revenue received by the provider arm directly from the Ministry

of Health for direct contracts with the DHB Provider, and also revenue from other Crown

entities e.g. ACC, NZ Blood Services and other directs contracts between DHB Providers.

Other Crown Revenue is forecast to increase at the rate of inflation (2.5% per annum in

the out years).

Other revenue

Other revenue is income sourced from patients, interest, donations, grants, rental, etc.

Other Revenue, which includes revenues from Non-Devolved contracts (e.g. ACC) is

forecast on same the basis of Crown Revenue

Personnel Cost projections

Personnel Costs are projected by changes in the Full Time Equivalent (FTE) staff numbers

employed, by group, and the average salary rates for that group. The groups are:

Clinical Staff/Doctors

Nursing Staff

Allied Health/Support

Management/Administration staff

FTE projections

Opening FTE values for staff for the years 2008/09 – 2013/14 were sourced from the

DAPs.


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Provider Arm FTEs are forecast using the change in CWDs from year to year. For example,

if CWDs increase by 4% for that DHB over a year, FTEs will also increase by that number.

Governance and Funder Arm FTEs, and External Provider FTEs, are assumed to remain at

2013/14 levels throughout the forecast period.

Outsourced personnel costs are forecast to change proportionately with changes in-

sourced personnel costs.

Salary projections

Salary rates incorporate assumptions about salary step adjustments and Labour Cost

Index (LCI). In the base case, the LCI is set to 2.5% and there are no salary step

adjustments. The model allows for these to be varied in the scenarios.

All personnel costs are subject to efficiency gains, should the scenario being modelled

include efficiency gains.

Other operating costs

Other Operating costs are taken forward by CPI (Consumer price index), less any efficiency

gains.

Asset base forecast

The model includes a simplified forecast of the regional asset base. The forecast is based

on opening asset value, less depreciation on opening asset value, plus capital outlay less

depreciation on capital outlay less asset disposals.

Equity forecast

The model includes a simplified forecast of equity. The forecast is based on opening

equity plus forecast changes in equity, including equity injections, and net surpluses or

deficits.

Debt forecast

The model includes a simplified forecast of debt, based on opening debt plus projected

debt drawdowns. The BoP DHB has debt drawdowns projected in 2014, 2015 and 2016 of

$15 million, $10 million and $10 million respectively. Aside from that, no debt drawdowns

have been included. All capex is assumed financed by cash reserves.

Depreciation forecast

The model includes a simplified projection of depreciation for all of the DHBs except

Waikato and BoP. Waikato and BoP have provided depreciation cost forecasts for the

entire forecast period based on their own LT capital projection models. This was felt to be

more accurate than a simplified calculation.

The depreciation calculation for the other DHBs separates depreciation on the opening

asset base (as at FY 2009) from depreciation on capex incurred post 2009.

Depreciation on opening asset base

This simplified calculation of depreciation on the opening asset base assumes a straight

line depreciation rate based on asset lives. Depreciation in the DAP years stays as it is. In

outyears, then the calculation assumes that if the sum of depreciation against the asset

class in the in years is less than the value of the asset at FY 2009, then depreciation will be

the remaining asset value % the straight-line depreciation rate.

Depreciation on Capital Forecast

Depreciation on the capital forecast is based on average expected asset lives of each asset

class.

Assumptions common to all DHBs

Common assumptions

Assumption type Rate Years applied

CPI 2.5% pa All years


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LCI 2.5% pa All years for all FTE categories (doctors, nurses, allied health/support and management/administration)

FFT 2.5% pa All years (CPI)

Labour cost step changes

Assumed included in LCI

All Years

Efficiency factor (on personnel costs only)

0.0% All years

Assumptions varied in the Optimal Primary Care scenario

The Optimal Primary Care scenario does not change any of the assumptions in the base

case, except for the following:

Change in CWD, flowing through to forecast FTES, which flows through into labour costs

0.25% increase in years 2010/11 – 2015/16 for increase in outsourced services

Assumptions varied in the Maori Health scenario

The Maori Health scenario does not change any of the assumptions in the base case,

except for the following:

• Change in CWD, flowing through to forecast FTES, which flows through into

labour costs

• 0.25% increase in years 2010/11 – 2015/16 for increase in outsourced services


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SCENARIO MODELLING APPROACH, ASSUMPTIONS AND RESULTS

Ethnic Equity Scenario

Goal

To understand the potential impact of reducing inequality in utilisation of health care

between ethnic populations.

Method

Assume that Maori and Pasifika people have the same utilisation of services as non

Maori/Pasifika people in the matching DHB, sex, ageband and specialty of service. Move

towards this assumption over a period of five years, starting in 2009/10, with 20% of

Maori and Pasifika people moving to the new utilisation rates each year.

All other parameters are held constant with the base forecasting scenario. While this is in

some ways a bit of an artificial approach, the intent is to understand the resource changes

which are purely associated with ethnic differences in utilisation.

Key findings

For inpatient services, there is an ongoing drop in patient caseweights of 7% compared to

the baseline case. This has several interpretations:

In an absolute sense, this means that there is a permanent reduction in caseweights compared to the base forecast. For every year from 2015 there will be 7% less need for inpatient activity (and, proportionately for related outpatient activity).

Across the Midland region, this amounts to a financial impact, at 2008/09 caseweight prices, of approximately $76 million annually.

A more operational interpretation of the result, given that the base scenario has a rapidly increasing annual trend in caseweights, is that it will take approximately 8 years longer to attain a given level of caseweight utilisation than predicted in the base forecast. From this perspective, the resource impact of ethnic equity in utilisation is a one off gain (although admittedly over quite long period).

As might be expected, the two areas in which there is the greatest absolute impact are general medicine and medical subspecialties (see graph below). This

reflects the driver of the overall result: higher baseline Maori and Pasifika utilisation of hospital resources, manifested in high rates of ambulatory sensitive hospitalisation, which are largely medical admissions.

If the same ethnic equity scenario is applied to general practice utilisation, the new forecast for GP consultations (and implicitly for associated services such as pharmaceuticals, laboratory tests etc) tracks at approximately 1.5% above the base forecast. As with the hospital result, this simply assumes Maori/Pasifika utilisation at the European level. But, if Maori and Pasifika people start with a higher level of health need than other ethnic groups, it is likely that a higher level of effective primary health care will be needed in order to maintain health status and prevent individual need for avoidable hospital care. In reality, it is therefore likely that substantially more than 1.5% of additional resource would be needed in primary care and public health in order to achieve the hospital resource impacts calculated here.

In absolute terms, the greatest reduction in hospital resources from achieving equity is seen in Waikato and Bay of Plenty, reflecting their large size compared to other Midland region DHBs (see graph). But the percentage reduction in inpatient caseweights is greatest for Tairawhiti and Lakes (see table). Taranaki and Waikato actually have the smallest percentage gain. This result is driven by the existing level of ethnic utilisation disparity in those DHBs, and the relative size of Maori populations across the DHBs.

Discussion

The main point is that, when you start thinking about benefits of improved community and preventive care, Maori and Pasifika have the most to benefit. Improved models of care which reduce ASH are actually a matter of equity across ethnic populations, as well as an absolute concern. At one level this isn’t a surprise, but this approach to the analysis makes the issue stark.

Achieving equity is a good thing in itself, but over and above that, achieving equity of utilisation across ethnic groups is actually part of the answer to helping make health services more sustainable.

Limitation: Stats NZ population forecasts don’t explicitly predict population change across NZDep categories, so deprivation is not explicitly incorporated into this analysis. Where Maori/Pasifika are on average much more deprived than European people, assuming convergence of utilisation will be rolling up convergence in deprivation as well as ethnicity, to some extent. But there will still be some remaining deprivation inequity which is built in to this model.


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Absolute level of caseweight reduction

0

1000

2000

3000

4000

5000

6000

7000

2009

2010

2011

2012

2013

2014

2015

2016

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2018

2019

2020

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2025

2026

Year

Red

uced

casew

eig

hts

un

der

eq

uit

ab

le

uti

lisati

on

General Medicine

Medical subspecialties

Caseweight reduction via ethnic equity

0

5000

10000

15000

20000

25000

20

09

20

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20

11

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12

20

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20

14

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15

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Year

Inp

ati

en

t c

as

ew

eig

hts

Waikato

Taranaki

Tairawhiti

Lakes

Bay of Plenty


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Enhanced primary care scenario

Goal

To understand the potential magnitude of enhanced models of care upon DHB resources.

Method

The premise of the model is that caseweights for those specialty areas which are most

influenced by ambulatory sensitive care are adjusted from their current per capita level to

the per capita level of the Midland DHB which has the lowest rate. These lower rates are

then used as the starting point for the same population growth forecasting approach as in

the base case. At the level of individual DHBs, it is assumed that the move to the lower

utilisation rate takes place evenly over a five year period from 2009/10.

The lowest per capita caseweight utilisation across the five Midland DHBs was calculated

for each combination of:

Five year age band

Sex

Ethnicity

This process was completed for three specialty areas which were considered to be

strongly influenced by ambulatory care services: general medicine, medical subspecialties

and paediatric medicine.

Each age/ethnicity/sex specific caseweight utilisation level is currently achieved in at least

one of the five Midland DHBs. The assumption underlying the model is that best practice

as currently exhibited across the Midland region can be achieved, uniformly, by all DHBs.

Key findings

For all DHBs there is a reduction of approximately 20% compared to the base population growth forecasts.

At 2008/09 caseweight prices, this is approximately $170 million per annum lower than the base forecast.

Alternatively, the result can be seen as a one off gain that means a DHB takes approximately 12 years longer to attain the level of caseweight utilisation seen the base forecast.

For Bay of Plenty, Lakes and Waikato, the reduced caseweight utilisation continues to diverge (slowly) from the base case over time. In these cases there is not simply a level shift in the forecast utilisation, but also a slight lowering of the forecast slope.

The graph shows the base prediction and the scenario prediction for each of the 5 DHBs.

The only three specialty areas which have been changed in the model are gen med, med subspec and paed med. This indicates the importance of these areas in driving overall utilisation.

There is slightly greater impact for Maori than for non Maori – the scenario line for Maori tracks at 20% below the base case, compared to 18% for non Maori.

Discussion

The magnitude of resource which could be freed up by moving to most effective ambulatory care scenarios is potentially very large. Even if only half of the forecast avoided increase in resource were actually achieved, this would still be of the order of $80 million across the Midland region.

At this stage the scenario looks only at inpatient care, but additional benefits would be felt in: emergency department attendances (although where these lead to an admission this will already be accounted for in the caseweight data); aged residential care and outpatient attendances.


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Limitation: where a DHB has no activity for people in a given age/ethnicity/sex category,

which is especially likely where numbers are small, then they will register 0 utilisation. In

the current version of the model, this then carries across to other DHBs as the minimum

rate which they will achieve. So, if there are very few Pacific women aged 75-59 in

Taranaki, and zero medical subspecialty caseweights are recorded for that age group,

then this will flow through into the model and it will eb assumed that all other DHBs will

achieve zero caseweights for Pacific women aged 75-79. This will have the effect of

artificially inflating the predicted reduction of caseweights. However, since the effect is

inherently one of small numbers, the magnitude of the error will be small in absolute

terms. The group most affected will be Pasifika people, and the total caseweight

utilisation of Pasifika people in the base case is 1.9%, leaving little room to introduce large

scale error.

Enhanced ambulatory care: impacts for Maori and Other ethnic

groups

0

50000

100000

150000

200000

250000

2009

2010

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Year

Fo

rec

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t c

as

ew

eig

hts

Maori

Other

Enhanced ambulatory care: base case vs reduced ambulatory

sensitive care

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Year

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hts

Bay of Plenty

Lakes

Tairawhiti

Taranaki

Waikato

Midland Region Asset Management Plan - Kia ora, welcome...

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