ANNUAL PERFORMANCE STATEMENT

This statement has been prepared for paragraph 39(1)(a) of the PGPA Act, for the reporting period 1 July 2015 to 30 June 2016.

In my opinion, as the accountable authority of the National Health Funding Body, the performance statement accurately represents the NHFB’s performance in the above specified period and complies with subsection 39(2) of the PGPA Act.

Mr Lynton Norris

Chief Executive Officer
National Health Funding Body

19 October 2016

NHFB PURPOSE

The purpose of the NHFB is to provide transparent and efficient administration of Commonwealth, state and territory funding of the Australian public hospital system and support obligations and responsibilities of the Administrator (as described in the NHFB Corporate Plan and Portfolio Budget Statement).

NHFB PERFORMANCE FOR 2015–16

This Annual Performance Statement reports against the deliverables in the first NHFB Corporate Plan 2015–16. The goals and deliverables are derived from the NHFB Strategic Plan 2013–2016 objectives and include the Portfolio Budget Statement (PBS) 2015–16 program objectives.

The measures describe the deliverables and activities the NHFB must undertake to assist the Administrator in meeting his legislative functions under the Act and the Agreement.

The NHFB has continued to meet all performance measures in 2015–16, matching the performance in 2014–15. The year–to–year comparison has been shown through the mapping of the 2014–15 deliverables against the deliverables in the 2015–16 Corporate Plan.

The performance of the NHFB in
2015–16 has been impacted by a number of government decisions regarding the future of the NHFB which created workforce resourcing and retention issues. This has stabilised following the Council of Australian Governments (COAG) meeting on 1 April 2016 and the subsequent Heads of Agreement, which continues the role of the Administrator and the NHFB.

PERFORMANCE RESULTS AND ANALYSIS

PERFORMANCE MEASURE ONE

STRATEGIC OBJECTIVE ONE: ACHIEVE BEST PRACTICE AND ACCOUNTABILITY

To achieve best practice and accountability through assisting the Administrator in implementing and overseeing a nationally consistent public hospital funding arrangement through the National Health Funding Pool.

Performance Measure One addresses the Portfolio Budget Statement Outcomes:

  • Assist the Administrator to develop the Three Year Data Plan and associated calculation approach.
  • Assist the Administrator to ensure the National Health Funding Pool operations are in accordance with directions from the responsible state or territory Minister, and in line with the National Health Reform Agreement.

As in prior years, in 2015–16 the NHFB efficiently oversaw, authorised and processed all payments into and out of the National Health Funding Pool and into the State Managed Funds.

The NHFB has maintained a 100% achievement of this performance measure, due to the robust control framework supporting the Payments System.

Incremental improvements were made to the supporting framework for the Payments System in 2015–16; however, the NHFB was limited in the improvements that could be made due to the government’s intention (until April 2016) to close the NHFB from March 2018.

The Administrator’s Three Year Data Plan 2015–16 to 2017–18 was accepted by COAG Health Council without direction.

Deliverable
Outcome
2015–16
2014–15

Process and oversee National Health Reform funding and payments through the National Health Funding Pool.

Payment for hospital services through the National Health Funding Pool were effectively overseen and authorised through the National Health Funding Administrator Payments System.

Tick

Tick

Manage the integrity of the National Health Funding Administrator’s Payments System.

Appropriate protocols and procedures were in place to manage payments.

Tick

Tick

All payments made in accordance with authorised documentation at the direction of Ministers and/or their delegates.

Tick

Tick

Verification from the states and territories in relation to the operations of the National Health Funding Pool and State Managed Funds.

Tick

Tick

Monthly verification of transactions through the National Health Funding Pool and State Managed Funds.

Tick

Tick

Deliver the rolling Three Year Data Plan.

Determine the minimum level of data required to calculate to Commonwealth contribution, conduct reconciliation activities and ensure national comparability under the National Health Reform Agreement.

Tick

Tick

Improvements to the National Health Funding Administrator Payments System allow the NHFB, and states and territories, greater flexibility in managing payments.

Payment for hospital services through the National Health Funding Pool were overseen and authorised through the National Health Funding Administrator Payments System.

Tick

Tick

100% of payments made in accordance with direction from the responsible State or Territory Minister.

100% of payments were made in accordance with the direction from the responsible State or Territory Minister.

Tick

Tick

PERFORMANCE MEASURE TWO

STRATEGIC OBJECTIVE TWO: PROVIDE INCREASED TRANSPARENCY AND EFFECTIVE REPORTING

To provide increased transparency and effective reporting on what local hospital networks are funded for services delivered.

Performance Measure Two addresses the Portfolio Budget Statement Outcome:

  • Assist the Administrator to transparently report on the operations of the National Health Funding Pool and state managed funds as outlined in the Agreement.

The NHFB continued to fulfil all deliverables associated with Performance Measure Two in 2015–16. The Administrator’s Annual Report 2014–15 was tabled in the Commonwealth Parliament on 28 October 2015 and provided to all state and territory Health Ministers. Importantly, all State Pool Account financial statements received an unqualified audit from the relevant Auditor–General, which is attributed to the robust assurance framework.

The NHFB produced and published a total of 1,780 monthly reports for the Administrator (at national, state and territory and local hospital network level).

Deliverable
Outcome
2015–16
2014–15

Develop and publish the National Health Funding Pool Annual Report and Financial Statements for each financial year.

The Annual Report for the Administrator of the National Health Funding Pool submitted to all Australian Health Ministers for tabling and is available from: publichospitalfunding.gov.au/publications/annual-reports.

Tick

Tick

Financial statements were prepared for each State Pool Account, and were audited by the relevant Auditor–General.

Tick

Tick

Ensure monthly reporting requirements under the National Health Reform Act 2011are satisfied.

Monthly reports produced and published, including national reports, a report for each state and territory, and a report for each local hospital network, for each month.

Tick

Tick

The Administrator’s monthly reports are available from publichospitalfunding.gov.au/reports.

Tick

Tick

PERFORMANCE MEASURE THREE

STRATEGIC OBJECTIVE THREE: ENABLE ACCURATE COMMONWEALTH CONTRIBUTION CALCULATIONS

To enable accurate Commonwealth contribution calculations by using nationally consistent pricing and costing standards.

Performance Measure Three addresses the Portfolio Budget Statement Outcome:

  • Assist the Administrator to calculate the Commonwealth contribution to the National Health Funding Pool.

There were eight updates to the Commonwealth contribution for 2015–16 and eight payment advices provide to the Commonwealth Treasurer and state and territory Health Ministers.

In addition, specific advice was provided to the Treasurer for the 2015–16 Mid-Year Economic and Fiscal Outlook (MYEFO), the 2014–15 Treasurer’s Determination (including the reconciliation of estimated and actual volume of services for 2014–15), the 2016–17 Commonwealth Budget, and the initial 2016–17 Commonwealth contribution calculation. All payment advices were accepted by stakeholders, endorsing the NHFB’s approach to transparency in the calculation and reconciliation of funding entitlements. The increasing maturity of the Commonwealth Contribution Model allows a high level of flexibility and responsiveness to changing stakeholder needs.

Deliverable
Outcome
2015–16
2014–15
Calculate the Commonwealth contribution accurately (assessed by acceptance of the calculation by the Commonwealth, states and territories).

Current and future year Commonwealth Contribution Models developed and presented to stakeholders, and used by the Administrator to calculate the Commonwealth funding contribution for each state and territory.

Tick

Tick

Calculation and payment advice accepted by stakeholders.

Tick

Tick

Reconcile estimated and actual volume of service delivery for calculation of Commonwealth contributions.

Processing of actual data received under the Administrator’s Three Year Data Plan and calculation of weighted hospital services (measured in NWAUs).

Tick

Tick*

Reconciliation of actual NWAUs to estimated NWAUs.

Tick

Tick*

Calculation and payment of funding impact from reconciliation.

Tick

Tick*

The calculation informs the Administrator’s advice to the Treasurer, and under the National Health Reform Agreement, Commonwealth funding will include a 45 per cent contribution to efficient growth in public hospital services in 2015–16.

The Administrator advised the Commonwealth Treasurer and state and territory Health Ministers of the Commonwealth funding calculation amounts throughout the year using the Commonwealth Contribution Model.

Tick

Tick

* Deliverable was met in 2014–15, however was not required to be reported in 2014–15.

PERFORMANCE MEASURE FOUR

STRATEGIC OBJECTIVE FOUR: DEVELOP PRODUCTIVE AND EFFECTIVE PARTNERSHIPS

To develop productive and effective partnerships with relevant stakeholders to enable the objectives of the Agreement to be achieved.

The NHFB strengthened relationships with stakeholders throughout 2015–16, with regular meetings of the Administrator’s JAC and the NHFB CFO/RAG Committee including a combined two–day workshop in March 2016.

The NHFB, in its role of supporting the Administrator, worked productively with all key national health committees.

The NHFB contributed to NHIPPC and NHISSC through active committee membership including engaging NHIPPC and AHMAC on data matching for funding integrity and possible uses of the Administrator’s data holdings.

NHFB staff worked productively with IHPA through their JAC, TAC and NACAWG Committees.

The NHFB CEO presented at the IHPA Activity Based Funding Conference in May 2016. The presentation provided health system insights using data analytics, leading to collaboration with other agencies.

The NHFB’s proactive and continual engagement has led to these strong results.

Deliverable
Outcome
2015–16
2014–15

Maintain and continually strengthen productive partnerships and collaboration with all stakeholders, based on trust and respect.

Networks and partnerships maintained through working groups, advisory committees and other mechanisms.

Tick

Tick*

Inform stakeholders of opportunities to improve sustainability of funding for public hospitals.

Report to COAG Health Council, AHMAC, NHIPPC, NHISSC and other national committees.

Tick

Tick*

Present at conferences relevant to the NHFB work program.

Tick

Tick*

* Deliverable was met in 2014–15, however was not required to be reported in 2014–15.

PERFORMANCE MEASURE FIVE

STRATEGIC OBJECTIVE FIVE: OPERATE AS A FULLY FUNCTIONAL AND COMPLIANT AGENCY

To operate as a fully functional and compliant agency, meeting statutory and legislative obligations.

The NHFB continued to implement the PGPA Act requirements for a non–corporate entity through 2015–16, including the development of the first rolling Corporate Plan, covering the period 2015–2019.

Good governance principles were reaffirmed, with a total of 15 internal audits and 12 external audits undertaken. NHFB staff completed refresher training in workplace health and safety and fraud awareness in June 2016. The fulfilment of this performance measure is reflective of an internal commitment to integrity in all processes and practices.

The NHFB Annual Report 2014–15 was tabled in the Commonwealth Parliament on 28 October 2015 and provided to all state and territory Health Ministers.

Deliverable
Outcome
2015–16
2014–15
Robust policies and procedures are in place, including ensuring all NHFB values are reflected and compliance with relevant statutory and legislative requirements.

Policies and procedures in place to ensure the integrity of the NHFB and health and wellbeing of staff.

Tick

Tick*

Staff committees convened to maintain the health and wellbeing of staff, e.g. Workplace Consultative Committee.

Tick

Tick*

All compliance reporting requirements of the NHFB as a non–corporate entity met.

Tick

Tick*

Adhere to good governance principles and practices while conducting business in an ethical manner.

Governance policies and practices, including internal audits, overseen by an external Audit Committee.

Tick

Tick*

Appropriate policies in place for risk and fraud.

Tick

Tick*

* Deliverable was met in 2014–15, however was not required to be reported in 2014–15.

SUMMARY OF FINANCIAL PERFORMANCE

NHFB OPERATING RESULT

The net operating result as at 30 June 2016 was a deficit of $53,561, within the Department of Finance approved deficit of $0.132 million for 2015–16 to complete outstanding funding integrity initiatives.

Revenue for the year was $4.409 million compared to the internal budget of $4.565 million. The variance of $0.156 million includes the following:

  • a reduction in revenue of $80,000 from the Department of Health for completion of the Transformation to Closure Plan. This amount was offset against the Department of Health shared services costs
  • $81,182 lower than expected cost recoveries from the Department of Health for the Hospital Accountability and Performance Program (HAPP) project which explored health system insights using innovative data analysis.

Expenditure for the year to 30 June 2016 was $4.463 million, compared with budgeted expenses of $4.778 million, which is an underspend of $0.315 million. The major variances were in employee expenses and contractors.

TABLE 10: NHFB RESOURCE STATEMENT, 2015–16

Actual available appropriations for
2015–16
$’000
Payments made in
2015–16
$’000
Balance remaining in
2015–16
$’000

Ordinary annual services

Departmental appropriation1

6,364

4,375

1,989

Total ordinary annual services

6,364

4,375

1,989

Special appropriations

Total resourcing and payments

6,364

4,375

1,989

1 Appropriation Bill (No. 1) 2015–16, prior year departmental appropriation and section 74 receipts.

TABLE 11: EXPENSES FOR OUTCOME, 2015–16

Budget1
2015–16
$’000
Actual expenses
2015–16
$’000
Variation
2015–16
$’000
Outcome: To provide transparent and efficient administration of Commonwealth, state and territory funding of the Australian public hospital system, and support the obligations and responsibilities of the Administrator of the National Health Funding Pool.

Program 1.1: National Health Funding Pool administration

Departmental expenses

Departmental appropriation2

4,409

4,463

(54)

Special appropriation

Total for Program 1.1

4,409

4,463

(54)

Total for Outcome 1

4,409

4,463

(54)

2015–16
2014–15

Average Staffing Level (Number)

14

19

1 Full year budget, including any subsequent adjustment made to the 2015–16 Budget.

2 Departmental appropriations combine ‘Ordinary annual services (Appropriation Bill No. 1)’ and ‘Revenue from independent sources under section 74 of the PGPA Act.