Guidelines and Checklist for Bush Nursing Hospital Redevelopment
1. Background
1.1
Increasingly, in order to maintain their viability and better meet the needs
of their local communities, Bush Nursing Hospitals (BNHs) have been seeking
to change their service delivery models. Some BNHs have sought strategic
alliances with local public facilities (eg formal mergers, co-locations
or public financial support).
1.2
This process presents a real opportunity to plan and co-ordinate present
and future services so that there is a demonstrable benefit to the rural
communities involved. On the other hand, there are risks which need to
be addressed and minimised.
1.3
Although each proposal for BNH redevelopment will be considered on its own
merits, the purpose of these guidelines is to provide public and bush nursing
hospitals with a framework within which to consider potential developments.
1.4
All proposals must demonstrate how services have been redeveloped to better
meet the needs of local communities and must be in the public interest.
1.5
Any proposal involving a BNH and an acute public hospital must involve and
receive the endorsement of both the Regional Director and the Director,
Acute Health. Where a proposal involves residential care services, the
endorsement of the Director, Aged, Community and Mental Health Division
(ACMH) is required. Involvement needs to be at an early stage and not be
presented as a fait accompli for approval after expectations of
all parties have been raised.
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2. Healthstreams and Multi-Purpose Services (MPS)
2.1
Particular focus will be given to proposals involving BNHs situated in more
remote locations where alternative public services are less accessible,
and which may be appropriate for Healthstreams or MPS models.
2.2
All queries regarding potential Healthstreams and MPS proposals should be
developed by the agencies concerned in conjunction with the local Regional
Office.
2.3
The Department's Rural Health Unit can provide further advice about the processes
and specific guidelines for developing and implementing Healthstreams proposals.
2.4
The Department's ACMH Division can provide further advice about the processes
and specific guidelines for developing and implementing MPS proposals.
2.5
Where the requirements for a Healthstreams or MPS development have been satisfied,
new financial arrangements will be negotiated within the context of these
respective programs and their guidelines.
3.Checklist for Proposals to Amalgamate or Co-locate BNHs with Public
Hospitals
Statutory and Regulatory Requirements
3.1
All proposals must comply with existing Victorian statutory and regulatory
requirements. These include the Health Services Act 1988, the Health
Services (Private Hospitals and Day Procedure Centres) Regulations 1991 and
the Guidelines for the Development of Acute Hospital Services 1990.
These documents are amended from time to time and are available from Information
Victoria (1300 366 356 local call cost) or at http://www.legislation.vic.gov.au/ on
the web.
Appropriateness and Classification of Services
3.2
An examination of VIMD data provided by BNHs raises many questions
about the appropriateness, and particularly the classification, of
existing service provision. There is a real possibility that many services
currently classified as acute would be more accurately described as
aged care.
3.3
It is the responsibility of the Department's Regional Office to examine VIMD
data in consultation with BNH management in order to gain a full understanding
of the existing work of the BNH. This is necessary for, and will assist
in, the determination of appropriate services on a geographic basis. In
addition it will promote greater transparency in the transfer of resources
from the relevant Program.
Needs Analysis and Service Planning
3.4
Any amalgamation or strategic alliance can only be considered on the basis
of a comprehensive needs analysis and concomitant service plan. This work
should be performed on a collaborative basis with the Regional Director,
the BNH, as well as all relevant public hospitals and aged, community and
mental health services within the catchment area
3.5
Preference will be given to proposals where the service plan clearly demonstrates
that the benefits accrued from the proposal will provide a better and more
appropriate level and type of service delivery than that which exists at
present.
3.6
The Regional Director shall act as the facilitator of this process, which
must be consistent with regional service planning policy directions. Successful
proposals must have the support of the Regional Director and all relevant
agencies in the region.
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Business Plan and Financial Projections
3.7
Proposals must be accompanied by a three year Business Plan and financial
projections, including balance sheets, cash flows and operating forecasts.
These projections should include anticipated savings from synergies created
by the amalgamation or alliance. Balance sheets should reflect the true value
of assets and liabilities, with any written-down assets included at their
new value.
Risk
3.8
Proposals must not transfer significant one-off or recurring risk on to the
public sector. If the proposal involves amalgamation or a more integrated
strategic alliance with an acute public hospital, the BNH will be required
to have prepared a due diligence report, and the public agency must be protected
from any debts or legal liabilities incurred by the BNH.
3.9
It is important that in any amalgamation or merger assets are written down
to a realistic value prior to being incorporated into the public
hospital accounts. Proposals should indicate that the Regional Office is
satisfied that the recorded value of BNH assets are appropriate. Recommended
write downs should be detailed.
3.10
Although BNH accounts may show a net accumulated surplus, this does not necessarily
mean that the organisation has available liquid assets to meet its short
and medium term obligations. It is important to know whether a proposed
amalgamation or merger will have a negative cash flow impact. This needs
to be considered by the Regional Office.
Potential Costs to Public Hospitals and the State Government:
Detailed consideration must to be given to the effect of the proposal
on public hospitals and the State Government, and this includes both
capital and recurrent funding impact analysis
3.11
The proposal's impact on private patient revenue must be set out in the business
plan. For example, will hospital revenue be lost as formerly private patients
of the BNH choose to be treated as public hospital patients? Sound argument
must be presented as to why patients would not choose to be treated as
public patients if the same services were available on a public basis.
The proposal should set out the actions to be taken to ensure that patients
who are privately insured continue to use their insurance when treated
at the former BNH premises. Note that the total exposure to the State if
all private BNH work were to be converted to publicly funded care is in
the order of $25 million.
3.12
A further cost implication is possible loss of public hospital revenue
if their private patients are diverted to a private facility. It
should be noted that the Department will not "backfill" public
hospitals with additional public WIES where their formerly private
patients have been diverted to a private facility, as a policy decision.
3.13
A number of BNHs have considerable deferred maintenance liabilities. The
Regional Office must give special attention to identifying and accounting
for this particular item.
3.14
Incorporation into the public system and/or role reconfiguration may also
have short term and longer-term capital requirements. For example, conversion
of an acute facility to a nursing home or other Commonwealth-funded aged
care facility may require major upgrades in order to comply with Commonwealth
directions and/or attract Commonwealth funding. It is imperative that the
Department be advised of potential capital requirements early in
the service planning process.
3.15
Role reconfiguration may also require early discussion with the ACMH Division,
and through it the Commonwealth. In particular, where new Commonwealth-funded
residential care places are being considered, fully Commonwealth-funded
places are the preferred outcome.
Infrastructure Efficiencies
3.16
Mergers, amalgamations and co-locations often present opportunities for improving
the use of scarce resources through increased efficiencies and greater effectiveness.
3.17
All plans must evidence a process of diligent examination of the opportunities
for rationalisation of services and sensible cost reduction.
Co-locations and Contestability
3.18
Where a proposal involves a co-location it must comply with Departmental
policy (see appendix one). In summary, this includes the following criteria:
- Compliance with all State legislation, Regulations and Guidelines
- Compliance with the State's responsibilities under the AHCA
- Compliance with all Commonwealth legislation, Regulations and Guidelines
- Compliance with National Competition Policy. Where Crown land or
public facilities are involved in private care provision, a contestable
process must be undertaken.
Financial Support and Costs
3.19
Where a proposal by a BNH to amalgamate, co-locate or form a strategic alliance
with a public hospital has met these guidelines to the satisfaction of the
Regional Director and Director Acute Health, some limited funding may become
available to assist the service redevelopment.
3.20
However this will normally be on a one-off basis where, for
instance, a capital injection is required to facilitate the redevelopment.
Some limited funds are available for this purpose.
3.21
Requests for additional recurrent funding beyond that which already exists
(eg for obstetrics, dialysis and emergency stabilisation) will generally
not receive consideration unless the auspicing public hospital is willing
to reallocate some of its existing WIES allocation with the approval of
the Regional Director and Director Acute Health. It is expected that the
Region, and relevant agencies, will also look to reallocation of aged,
community and mental health resources, where appropriate. This will require
the approval of the Director, ACMH.
3.22
A small fund ($500,000 Statewide) is available to support recurrent funding
in those rare cases where synergies created by amalgamations, mergers and
co-locations are still insufficient to address inherent viability problems.
This is however last resort funding and thorough investigation of all reasonable
efficiency measures must be undertaken before claims are made on this fund.
Once this funding is taken up on an annual basis, the fund cannot be replenished.
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Appendix One
Co-location Policy Summary Check List
Departmental policy in relation to the co-location of public and private
hospitals has been to assess each proposal on an individual case-by-case
basis. However, in doing so the following framework has been taken into
account in assessing any proposed private facility co-location.
- The State must comply with the existing Victorian statutory and regulatory
framework regarding registration of a co-located private hospital.
In particular, the proposed private hospital must meet the relevant
criteria specified in the Health Services Act 1988 and related regulations.
It is worth noting that this framework is currently undergoing a national
competition policy review, and that any significant recommended reforms relating
to the above will need to be examined closely.
- Any proposal must not compromise the State's responsibilities under
the Australian Health Care Agreement. These responsibilities include
the:
- adherence to the principles underpinning the AHCA
- provision of public hospital services to eligible persons shall
not be impeded; and
- need to ensure that patients have the right to choose public
care in public hospitals, or can elect to receive private care
in public or private hospitals.
- Any private hospital development should meet Commonwealth Government
statutory requirements and related guidelines, and in particular:
- a development should not shift costs from the State to the
Commonwealth or vice versa;
- the development should not reduce public patients' access to
services; and
- the difference between the public and private hospital should
be clearly discernible to patients presenting for treatment.
- The State must meet responsibilities under National Competition Policy,
and in particular should:
- foster competition as a means of maximising efficiency and
access to services;
- any private development which involves the use of public land
or facilities requires the Department's approval, and will be
required to undergo an open and contestable selection process;
and
- service contracts between private and public hospital operators
must be made on a commercial basis.
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