Brennan Report - Department of Health and Children
Brennan Report - Department of Health and Children Brennan Report - Department of Health and Children
Report of the Commission on Financial Management and Control Systems in the Health Serviceyears. The speciality costing system has as its output a set of costs for each speciality areawithin a hospital. It distinguishes between the direct costs of treating a patient and the indirectcost associated with patient care.In 1993 the Department of Health, for the first time incorporated a casemix adjustmentwithin its budgetary allocation to a group of fifteen hospitals. Wiley (1997) 4 summarises theessentials of this casemix adjustment as follows:‘hospitals are stratified according to teaching or non-teaching status; activity data fromthe relevant hospitals are assigned to Diagnosis Related Groups and a case mix adjustedcost is estimated for the individual hospital and hospital group; a budget allocation rate isthen determined on the basis of a ‘blend’ of the hospital’s case mix adjusted case cost andthat estimated for the relevant hospital group.’Casemix analysis was used to make small adjustments to 5% of the in-patient budgets; theremaining 95% was based on the hospital’s historical allocation.This mechanism was introducedon a budget neutral basis, with the inefficient hospitals losing funding and the efficient hospitalsgaining additional funding.This process was extended to 21 hospitals in 1994, 23 hospitals in 1995 and 26 hospitals in 1996(Fitzgerald et al, 1998) 5 . It has since been extended to all public acute hospitals discharging morethan 5,000 patients per annum, 32 in total. These 32 hospitals account for 74% of all acutehospital activity in Ireland. Casemix has also been extended to day cases.The casemix adjustment for 2002 for the 32 hospitals are shown in Figure Ax.1. This showsthat one hospital lost approximately ¤ 1million, while one hospital gained approximately¤ 800,000.4Wiley, M.M., Financing the Irish Health Services, Chapter 15; Robins, Joseph, (ed), Reflections on Health: Commemorating Fifty Years ofthe Department of Health, 1947-1997 (Dublin, Department of Health, 1997) pp 210-221.5Fitzgerald,A, and Lynch, F., Casemix Measurement:Assessing the Impact in Irish Acute Hospitals,Administration (Spring 1998) 46 pp29-54.176
Appendix 5Figure: Ax.1 Casemix Adjustment 2002(1,000,000) (800,000) (600,000) (400,000) (200,000) 0 200,000 400,000 600,000 800,000 1,000,000Graph depicts actual Casemix Budget outturns by hospital (names deleted) from anegative outturn of ¤ 1m to a positive outturn of ¤ 800,000The casemix budgetary mechanism was designed to improve hospital efficiency. Hospitals areinformed, by the Department of Health and Children, of their ranking relative to others withintheir group.Although the adjustments are small in the context of the overall hospital budget, itdoes provide an incentive for hospitals to improve productivity so as not to lose funding.The rate of adjustment to hospital budgets (known as the blend rate) has increased over timeto 20% of the hospital in-patient budget and to 10% for day cases.The Department of Healthand Children has indicated that it plans to extend this blend rate in the future. It has beenrecognised, however, that some improvements need to be made to the speciality costing systemto ensure uniformity of cost data across hospitals. Once this has been achieved, the blend ratemay be extended. Figure Ax.2 shows the development of casemix over time.177
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Appendix 5Figure: Ax.1 Casemix Adjustment 2002(1,000,000) (800,000) (600,000) (400,000) (200,000) 0 200,000 400,000 600,000 800,000 1,000,000Graph depicts actual Casemix Budget outturns by hospital (names deleted) from anegative outturn <strong>of</strong> ¤ 1m to a positive outturn <strong>of</strong> ¤ 800,000The casemix budgetary mechanism was designed to improve hospital efficiency. Hospitals areinformed, by the <strong>Department</strong> <strong>of</strong> <strong>Health</strong> <strong>and</strong> <strong>Children</strong>, <strong>of</strong> their ranking relative to others withintheir group.Although the adjustments are small in the context <strong>of</strong> the overall hospital budget, itdoes provide an incentive for hospitals to improve productivity so as not to lose funding.The rate <strong>of</strong> adjustment to hospital budgets (known as the blend rate) has increased over timeto 20% <strong>of</strong> the hospital in-patient budget <strong>and</strong> to 10% for day cases.The <strong>Department</strong> <strong>of</strong> <strong>Health</strong><strong>and</strong> <strong>Children</strong> has indicated that it plans to extend this blend rate in the future. It has beenrecognised, however, that some improvements need to be made to the speciality costing systemto ensure uniformity <strong>of</strong> cost data across hospitals. Once this has been achieved, the blend ratemay be extended. Figure Ax.2 shows the development <strong>of</strong> casemix over time.177
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