Learnings from 2016 and focus for 2017

22nd May 2017Charles Strickland(acting) Health Sector Director

Better public services

Agenda

Learnings from our financial audit of Hospital and Health Services

Learnings from our performance audit of high value equipment

Focus areas for 2017

Report to parliament

Hospital and Health Services: 2015–16 results of financial audits(Report 9: 2016–17)

Tabled 31 January 2017

Sector results

Increasing demand creates financial pressures for HHSs.

Financial performance

HHSs need to understand the incremental cost of additional activity

Sustainability

Three HHSs have exhausted their surpluses built up over previous years (evidenced by a negative four-year average).

Figure notes:• Arrows signify change (positive or negative) compared to 2014–15• Traffic lights represent QAO’s assessment criteria (Appendix D)

Internal controls

HHSs are not resolving audit issues in a timely manner.

55 per cent of internal

control deficiencies

reported in 2015–16

relate to prior years

The future

Hospital and health services face a number of financial challenges due to increasing demand for services.

Factors driving growth:

increasing population

admission rates

older Queenslanders.

Changing funding arrangements with the Australian Government

new national cap of 6.5 per cent growth per year

The future

Hospital and health services also face a number of operational challenges.

Maintaining ageing infrastructure

half of the HHSs did not achieve their targeted spend in 2015–16

need to balance asset maintenance and clinical services

Changing technology—‘digital hospitals’

two hospitals went digital in 2015–16

five digital hospital implementations underway

Report to parliament

Efficient and effective use ofhigh value medical equipment(Report 10: 2016–17)

Tabled 9 February 2017

High value equipment

The health system can better use high value medical equipment in delivering services to patients.

What’s needed:

better coordination of strategic asset management

sufficient funding for the replacement of health technology

equipment

coordination of how equipment is utilised and monitored

documented justification for procurement, including costs and value

for money.

Strategic asset management (contd)

There is a lack of understanding over actual cost of replacement

documentation is either absent or limited

systems do not provide a consolidated overview

Findings

Findings

Replacement funding

Two-year cycle replacement funding is capped, and insufficient to

meet growing cost of replacing equipment

legacy agreement has not been reviewed

growth in health service and lack of asset management understanding

of cost

Replacement funding (contd)

Forecast shortfall of $390 million by 2018–20

exploring leasing options

Findings

Recommendations

We recommend that the Department of Health undertakes:

a stocktake of health technology equipment that the health system holds, and determines whether the existing asset information system is suitable for managing this equipment

a review of the replacement funding program, to account for the continuing growth of existing equipment and identify the most suitable arrangement for replacement.

Some equipment is well utilised; others show room for efficiency

improvement

better consideration required of spare capacity

links to lack of overall understanding

Findings

Achieving value for money

A lack of documentation to demonstrate value-for-money decisions

are being made

responsibilities for replacement vs new documentation

unclear total cost of ownership consideration

service need works on ‘we’ve always needed it’ approach

confusion over who should own the funding for replacement and

therefore negotiate the value for money solution

Findings

Recommendations

We recommend that the Department of Health—in collaboration with Hospital and Health Services:

standardise performance metrics and utilisation reporting to identify available capacity and system-wide improvements

improve transparency and rigour in how replacement decisions are made to ensure value-for-money outcomes.

Focus areas for 2017

Financial sustainability

Payroll management

Asset management

Achieving health

outcomes

Performance audits in the health sector

Rolling strategic audit plan lists:• our current performance audits• planned performance audits for the next three years

Updated each year

Available on our website www.qao.qld.gov.au

Sent to accountable officers

Government

Parliament

Public services

Relevance

How we assesses topics

The idea is assessed using a robust and disciplined approach.

Financial

Economic

Social

Environment

Significance

Assurance

Insight

QAO value

Sector priorities

Performance gap

Timing

Priority

Q&A

For more information on what we raised in this presentation:

Hospital and Health Services: 2015–16 results of financial audits (Report 9: 2016–17)

Efficient and effective use of high value medical equipment (Report 10: 2016–17)

www.qao.qld.gov.au/reports-resources