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| The Activity-Based Funded future for hospitals? (Source: The Health Roundtable) |
Since 2008, negotiations between the Australian Commonwealth and State governments have been progressing towards the implementation of a nationally consistent system of Activity Based Funding (ABF) for Australian hospitals. Basically, ABF is a system for allocation health funds based on the activities/treatments they undertake. Consequently, funding allocations are driven by activity type, quantity of activity by type, and standardised cost per activity type (cost).
ABF is not a new idea, Notwithstanding this, introducing a nationally consistent ABF framework represents a significant national health reform. Driving this reform is a desire to better understand and control rising health care costs driven by new treatments, an ageing population, and increasing rates of chronic and preventable diseases. The overriding fear is that:
Without this reform, state and territory government budgets will be overwhelmed by their rising health spending obligations ... Projections show that by 2045-46, health spending alone would be more than all revenue collected by state and local governments (Source: yourhealth.gov.au).
What would be the benefits of ABF be to addressing these fears? How would it help to better understand, allocate and control health expenditure? Read more here and here.
Although there are many supporters of the initiative, there is also vocal opposition to the introduction of ABF. Consider the following quote from Greens NSW MP John Kaye:
Activity-Based Funding turns hospitals into factories and patients into products. It will undermine outcomes, further demoralise professional health staff and hit the elderly and mental patients particularly hard (Source: John Kaye Media Statement).
The core of this criticism is a deemed incompatibility between costing and caring in the health sector. What would be the grounds for this deemed incompatibility? Particularly, how does recourse to activity-based methods potentially inflame these criticisms?
What do you think about this use of ABC? Is this a well founded reform? Or is this a case of business methods overreaching into the administration of important government services? You decide.
