- 10 February 2020
- Duration: 1:49:23
Before I begin, I wanted just to acknowledge the traditional owners of the land that we're meeting on today and acknowledge the elder's past, present, and emerging or anyone that might also be throughout the state on our webinar.
So today is what we consider a bit of an induction session, but not so much for your role on a board per se, because your specific entity will need to work with you and run you through what are the particulars of that entity for you to go through. However, there's a bit of a need that we’ve seen in the past about actually understanding what exactly is this health system that we’re in and what does that kind of mean for us as a role in the board.
And there’s a heck of a lot of jargon and a heck of a lot of strange language that you will encounter as a board director in the hospital and public health service that can seem a little odd and alien and those sort of things. So this induction is really about that idea of, “What is it exactly within our role that I need to be able to understand enough to even know that I understand?”.
So it's that idea of if you're going to another country—say you're going to France—it's pretty good to learn how to say things like, “I don't speak French,” and to know when you've actually said that or, “I would like to go to the bathroom. Can somebody help me with that.” Those sort of requests and those sort of ability to understand when you don't understand is pretty critical to be board director so you can say, “Okay. I recognize what you're saying there but I don't know how that fits overall.”
So this would be relatively, in some ways, overly simplified version of the health system. But what we’ll do is give you a pretty good crash course into how does this best work and what are some of the key things that about the health system as a director I need to understand? What are the key accountabilities in a way that that the different regulators are going to hold us to account?
Before going to our main slides one thing to be aware of is the Director’s Toolkit is available on our website that covers off pretty much anything - any query that you'd need to have as a director of a Public Health Service or a Public Hospital or Ambulance Victoria for that matter in the state. And I would also—If you're also on the board of any kind of other community organization this works to take you through pretty much all of the things that any director of the board needs to understand.
All you would need to be doing is when you see examples and then those examples would be very hospital-centric because it’s designed for our hospitals. You would just be able to substitute that for examples for the board you’re on. One of the things that it does go through that I do recommend if you hadn’t had a chance is go through the first couple chapters, which do talk about the significant level of regulation that directors of our Public Hospital and Public Health Service need to be aware of.
You'll see I've got a nice little non-exhaustive list coming up a little later that'll be nice and daunting. At the end of today's session, it's likely that you'll feel both kind of comforted and a little overwhelmed. And if that's kind of the neat spot that you've found yourself you've probably got the gist of it. It's not supposed to be a space that you can go to a session and suddenly being expert in. It's one of those spaces where this just helps you wade through all of the terminology and accountability requirements.
So the role of a board director is the same on a Public Health Service or Public Hospital as it is for any entity. You've got all of the same fiduciary duties as you would on any entity. You’ve got all those say risk management obligations. You’ve got performance management of your CEO including hiring and firing the CEO.
You've got all those same fiduciary obligations, all the specific regulatory obligations that you would have no matter what entity you’re on. The only major difference that you've got from being on a Public Hospital health service or compared to any other entity is firstly it’s a public entity, which means the rules around integrity are a lot harsher.
And by harsher, I mean we can't have processes that aren't transparent. You can't agree what conflict on a lot of commercial boards. The board itself can consent to a degree of conflict depending on what the nature of that is. You can never agree as a board to having any form of conflict of interest on the board because you're not the supposed the owners of that entity.
So you can't go to a shareholder or shareholder meeting and say “Hey, look this conflict, it’s only minor but we think it's in our interest.” Even a conflict of interest that you think has a synergy with your entity cannot be consented to. So they're really very strict rules for public entities. And to give you a sense of that we've put one of these on everyone's table, which is the code of conduct for a director of a public entity.
So anyone who's on a public entity in Victoria needs to abide by this code. This is enforced by statue so it's subordinate legislation. The other thing you need to remember when you're being on a Public Hospital or Health Service Board is what its key goal is, which again is different to a lot of commercial entities whose key goal would be setting up profit and then a bunch of other kind of secondary things.
Your primary goal is safe high-quality clinical services. So when you're thinking about a report that comes in if you keep focusing on that each time, when you have a report that comes into your board if you’re on BHP you're thinking, “How does this affect our ability to extract those resources? How does this affect our stock market pricing?”
If you're on a hospital board you should be thinking, “How does this staffing issue affect our ability to deliver safe clinical services?” So keep bringing that back all the time for your questions because that’s the primary purpose of your board. And a really good example of an entity that didn't quite do that well—And if you remember back in the day when there was the investigation into some of the concerning conduct of employees at Yooralla quite a while ago.
VMIA came in as the insurer and brought in a nice legal team and it created this barrier between you Yooralla and the rest of the parties that were aggrieved by that. And quite rightly they were heavily criticized for that reaction because their entire purpose was to help the people without having this antagonistic adversarial relationship with. So it actually contradicted their purpose. So it puts you in a space that is often if you're in a commercial board the way that you would behave differently to where your purpose is actually these safe clinical services as you keep bringing yourself around that.
So a bit of a crash course into our health system when you're looking at Victoria’s health system in somewhat isolation this is where you would actually see the space. And the reason I put this upfront is that a lot of you would have quite a few key funders and regulators of your entities other than the Victorian Government. However, all of your entities have still been incorporated under state statute, which means all of these boards, so all of you answer to a state minister, not a federal minister.
So if you're a public hospital or a public health service you would answer to the Minister for Health. If you’re Ambulance Victoria, you would answer to the Minister for Ambulance Services. If you were in Forensicare you would be answering to the Minister for Mental Health. You then would interact when issues arise as a board that you would interact with the department as the arm of the minister and you would also then interact with your executive.
A key thing here to remember is that accountability that you're answerable to the Minister, because a really common error that directors make when they’re asked, “Who am I most accountable to?” and they'll say something like, “My community,” that's not the answer. You're most accountable to the Minister for Health.
You are of course accountable to community because you're required as part of your duties to make sure that you've heard your community and that you’re making your services in such a way that actually serves that community's need. But there are a lot of times when what the community wants isn't what your hospital can give them because if you come back to your purpose, say for clinical services if you can't deliver that safely you can't deliver it period.
And so your community may kick and scream and wail and cry and say, “We need this service,” and your answer has to be, “No.” And so that's a really key separation if you only cared about that community you would be going and doing whatever they asked you to do. Health services take up about a third of the state's GSP each year.
Indeed if we were to look at the entire health spent for Victoria it would take up pretty much the entire state's GSP. So when you're looking at, “What’s the kind of level of attention my entity's going to get?” it's very high. You're going to be the largest employer or one of the largest employers in your community. You're going to have a significant amount of attention from government and political arms as well as regulators.
And you're also one of the few parts of the community that the community actually loves. So there's not that many government things out there that communities like, Yes, let's have more of that,” and you're one of them. So elections we’ll win and lose based on what's going on with your health service and what's happening with you.
So it’s a really difficult space for you to play in at times, which is one of the reasons why we talk about things like liability and what does that mean, how does that label you as a Director? There's quite a lot of mixed roles. You'll find that as a health service you'll probably do a whole bunch of both of these and not necessarily all from either call.
But we’ll be very aware of as health services that you'll have a huge level of interaction and partnership with the entities that deliver the other things that you're not that are on this list. So, for example, if you're a smaller hospital you might not do complex tertiary care, but you would probably do the pre-care and the post-care for that patient.
And if the procedures needs a small remediation so someone's done has had a stitch that needs redoing, of course, your health service would step in and do that. If you're a large tertiary service, you would still need to be interactive as you've got with other entities because you’ve still got to manage how many people are turning up to your ED and how can you manage keeping people well?
So there's actually those investments in that. A really big one to point out is just aged care up here. A lot of our public hospitals are their main providers of aged care in Victoria as opposed to other states where private entities are the main providers of aged care. In Victoria we've pretty much got if you're a public provider of aged care it will likely to be happening out of a public hospital.
If you're a private provider, then it could also be happening out of a private hospital. So it's a very key element just to be aware of that your hospital will likely be providing age care and therefore being regulated by the Minister of Aged Care, which is a federal minister. That said, we're answerable to the State Minister for Health because that's still your incorporated model. So as a board remembering, “That's one of my regulators but I'm accountable to the Minister for Health.” So just keeping that in mind.
So just to give you a sense of the size of this. So Victoria's had a devolved governance model for a few decades, including activity-based funding which we'll look at in a moment. But that's led us to have a lot of small hospitals across the state. There’s kind of pros and cons to that, the pro being lots of local engagement and interaction at the ground level.
The con of that is the reduction of economies of scale, so we’re seeing services amalgamate on their own. This isn't though the government coming in and forcing people together but they’re saying, “We can't attract this particular specialist on our own. The three of us could.” And so joining together to be able to be able to do that.
Health services do that through actually formally amalgamating, so just putting one board above the three entities or they might do that through partnerships and sharing of particular conditions between entities. We've got a lot of our public health services this as opposed to public hospitals. So public health services are those really large entities that you see across the state and on the main major towns.
So things like Bendigo Health, Barwon Health, these really large entities and then in Melbourne you'd be very accustomed to them entities like the Austin, Monash Health, The Alfred, that sort of thing. It’s worth also mentioning that in our public hospitals we have two Early Parenting Centres, Tweddle and Queen Elizabeth.
And so they have a slightly different case-mix than other entities but there're still public hospitals. And there are a lot of other entities that are significant in the sector that we also will be interacting with as a health service all the time and that's Ambulance Victoria, obviously for that exchange of patients, both emergency and non-emergency.
There are also a lot of non-emergency patient transport private providers now that you’re entity would be interacting with. Forensicare is our primary forensic mental health institution in the state and it also provides quite similar services and very similar to the hospitals. Ambulance Victoria and Forensicare both have SOPs. We’ll get into what on earth did I just say in a sec. Health Purchasing Victoria is a mechanism that we use in state to get economies of scale where we had none before.
So we realized that we've got this kind of spread out model that's kind of scattered things to the wind. So how can we strengthen that? Capitalisms not really going to help us out with that because it’ll have us all competing with one another and driving prices up. So the state created HPV, which is a purchasing body that can purchase for every hospital in the state as a single sole provider.
And that then allows for economies of scale to happen through that mechanism instead, with being aware that we have three denominational hospitals as well in the state, that's Calvary, Mercy and St Vincent’s. They provide public health services in the same way as any other public hospital, public health service does in the state, but they are national bodies.
All of our public hospitals would be aware as a director of public hospital you’d aware which region that you sit with the kind of major core groups, some of them are split slightly as you can see particularly in that Hume space over there where you kind of got it between the Shepparton and Albury Wodonga space just because of the size of those regions.
If you’re not sure which region you’re in as a public hospital that’s one the first things that you should make sure that you understand. And that would also tell you which part of the department you would talk to first as well. Every single region has dedicated departmental staff just to that region in addition to all of the other staff that everybody shares across the whole states. So you've got those additional supports there.
Our health priorities across the board, these are—If you look at some of the—I don't know if anyone recognizes some of these but some of these have been around for decades. I dug up a PowerPoint presentation in this kind of ancient version of PowerPoint when I was looking—stumbled across it from the early eighties and it talked about patient cantered care and integrative design and all of these fabulous things.
So this is a long piece of work in the making where those goals are all audible, but it demonstrates that if we're still trying to achieve them while we're in a completely different space than we were in the eighties, we still have work to do, we still spaces to go there. I think one of our clearest space for hospitals and acute entities like yourselves one of the biggest spaces there is finding that sweet spot between what the patient actually wants and what the clinical outcomes are.
And they don't often align. So a clinician might have a whole bunch of KPIs they have that comes out from that patient. That patient really, they wanted to be able to do is go to the bathroom unaided. And the outcome might be very different to what they want as compared to what that clinician goes, “Yep, your electrolytes are perfect. You’ve got this blood pressure, you’ve got—” but the patient and the care that they’re still carrying around a colostomy bag.
And so it's around making sure that that alignment. I think another large space that we're also focusing on at the moment is that disparity between outcomes, that variation why is it that your postcode can determine what level of care you get in a state like Victoria where healthcare is being provided without cost to the patient, why is that the case? How could we make that better? How could we level out that variation?
And preferably not level out by bringing the high ones down, preferably by bringing the others up. But it's worth noting what are some of the current things that you as a director need to keep in mind. And there's a few really significant matters around, but the reasons why I raise these and I’ll walk through it in a moment, is that as a director there is a significant court ruling that you might be aware of in a Central case.
This was during the GFC when the Centro is a large kind of debt selling firm around a bunch of morals and things like that. Centro were part owners in Southland or something like that. Then they made a mistake in the annual report and in their financial accounts, regarding the debts that they were dealing with. Now there's a whole range of issues why that case went south.
But one of the key learnings that the court brought forth from that is that if debt wasn't a big deal at the moment we can kind of forgive you for kind of looking over the financial accounts and missing this little section about the debts on there. Except for in the group of the GFC at the time and everybody was aware that this was all about selling and short selling debts and all of the different things.
So the very topic of the GFC was the very part of their annual report and financials, they didn't bother looking at. Indeed, when it went to court it was found out that not a single director had read their and their report all their financials at all. So I’ve no idea that that was a mistake there because they hadn't bothered to read it.
And so the court was very clear that firstly you’re obviously required to actually look at the documents and materials that come to you, but the main learning that's relevant to what we're talking about here is that the GFC put that board on notice about debts and selling debt and investing in debts and those sorts of things.
The GFC put them on notice and so that was now should have been front and foremost of their mind. And so if that’s right in the front of your mind then you'd be looking at, “How are we doing on this?” in your financial reports.
And so if you take that principle and that idea things that are in the really strongly in the public domain are things that should be front and foremost in your minds as directors and that Court says that you're all on notice to any of these things that are really strong in the public domain at the moment.
So if you look say two years ago the biggest thing that was in the public domain that everybody was paying attention to was Djerriwarrh Health Services and the tragedy of around ten babies that were found that had died that ought not have avoidable deaths. So that had a huge focus for the department and hospitals across the state on the quality and safety of our health services. Now that works not even close to being finished and its part of your key purpose is safe clinical services.
But as well as that some things that are on the kind of public domain right now that you have been alerted to by being in such a fate may delay these things like the budget sustainability. So it's expected that you'll understand that, A, you’ve got to be responsible with money that is taxpayers funds, but also that there isn't as much revenue as usual, stamp duty is down, things like that. So hospitals are going to be expected to try to do more with less.
The Royal Commissions is we've got three Royal Commissions happening at the moment. You will be expected to understand how that might affect and impact your entity and it shouldn't just be a case of, “Ah, my CEO, he knows that.” Not good enough. Anyone should be able to ask you, “How does this affect your hospital?” And you should be able to give a sense of what that is, because these are things that again put public on notice.
So what's the quality of your aged care services? We shouldn’t be depending on your CEO. What level of assurance—what could you help, hang your hat on to say, “Yes, I know my services are safe or not.” Why do you know that? How do you know that they're safe? What’s your basis for that?
People with their disability, the Royal Commission into Abuse of People with a Disability, again, that’ll hear a lot of us in hospitals and health services in terms of the effect on our services, because we're primary providers of care to people with a disability.
And similarly the Mental Health Royal Commission that's looking at the standards of care and the system itself, of course, that will be a huge level of involvement for public hospitals and health services. So then you’ll have a sense of how our services working, do we have some of these issues that are coming up in that Royal Commission? Should we be addressing those?
Using these public things as points of accountability for yourself. Other really key ones that I think people would be very aware of is workplace culture occupational violence. Occupational violence obviously will be one of those things that comes to the forefront of your mind every time we have some either hideous incident of a clinical person being assaulted like we had on the case only a few weeks ago, where the party that had assaulted a paramedic was able to then walk away with just a community corrections order.
And the concern and issue around that, “What does that mean to desensitize and that sort of treatment of people that are trying to serve the community?” So, again, those things are matters that are now as a health service board they're a matter of interest for you, there's something that you should be diving into and looking at and thinking about and feeding on to really understand those issues and how your hospitals deal with them.
Because, well, when you weren't on the board there weren’t things that were necessarily a key consideration for you, but they are now because these are your staff in your entity you’re dealing with. Aged Care has had some accreditation changes that people need to be aware of including the board needs to be able to put a range of standards that they themselves are assured of.
And, again, being assured doesn't mean, “My CEO says it's great.” That's not good enough. How do you think that this is working? What makes you believe that these services are doing the right thing? It can't be enough that you've got a good CEO that you're confident in.
And, finally, aboriginal cultural safety. We mentioned before about that disparity between outcomes. There’s a significant disparity of outcomes between aboriginal consumers of health care and non-aboriginal consumers of health care.
And that's a significant gap. It's not a small or just a little minor variation. It is really stark and so you need to be thinking to yourself, “Do we have a lot of patients that are from an aboriginal background? If so, what are we doing about that?” And if we only have the occasional one how we're managing that and when that person does come in the door, we’ve got no exposure to it. We don't know what we're doing in that space. Do we have a couple of people that we can immediately set that person up with in order to help them navigate?
So it's the sense of, “How much is this affecting them? What's a proportionate response?” The department is the arm of the Minister for you so any you as directors can contact the department. Most of the time we would take your issue through the chair first and the chair would raise it to the department, but particularly if you've got concerns that you think, issues that are with the chair themselves, that would be something that you would be free to come to the department and talk to the department over.
And I'll mention here on this point as well is they’re obviously there are protected disclosure mechanisms within Victoria too if you see something that's either inappropriate conduct or—That's in terms of some behaviours whether that be some form of harassment type behaviour or there's also protected disclosures around other conduct that you've seen. Perhaps you've detected fraud, or you’re really concerned about the reasoning being given by the executive and you don't feel like you're getting traction. Indeed, if you feel like that relationship between you and the department is tainted because the chair is usually the person coming to the department, you do have the right to go to IBAC or the Victorian Public Sector Commission.
A couple of agencies to be aware of, Safer Care Victoria monitors all of the different safety KPIs in your health service. If there’s significant sentinel event they also assist you in managing and learning from that. In Victoria, the Agency for Health Information provides a range of different data services to health services including giving them a couple major reports, monitor inprism, that are there to help you have something that you're comparing against so you're not just taking our executives' word for it.
We’re providing you this as an objective outside source so that you can then have a look at that yourself. Other thing that you need to be aware of the Victoria Public Sector Commission. That commissioner is your commissioner, the health commissioner is not the commissioner for the directors of the board, is the Victoria Public Safety Commission.
The health commissioner is actually the Health Complaints Commissioner. So if anything they're the commissioner that's you versus that. That's the one that everybody that's got a problem with your entity you would go to the Health Complaints Commissioner. If you've got a concern about your entity yourself or your board, you can talk to the Victoria Public Sector Commission.
There's also a huge level of resources there for your role in the board and even things like walkthroughs on how to hire a new CEO, performance management of CEOs, those sorts of things. It's a real strong level of resources that complement that toolkit quite well. And, again, they'll apply to any public entity, not just a hospital. So if you're on other boards you have to use those resources there too.
The last one at the bottom is the Building Authority. You won't have huge involvement unless you got a large capital bill. So, for example, if anybody here is from Western Health, you’d be hearing it from those guys pretty regularly. If you're just doing some fabric upgrades and things like that you'll likely, you’re CEO will manage that themselves.
Again, in terms of all of the different sorts of documents and reporting and everything that comes through to you, some of the key ones to be aware of is Safer Care Victoria’s quality framework. The clinical governance framework’s role is to help you figure out what questions should I be asking. It doesn't give you a nice list of questions. It gives you a space to go, “What are the questions I should be asking here?”
We're quite loathed to give people just a set of questions other than a few examples here or there because otherwise people just tick off those questions and don't actually think about what's the content at hand. And I've already spoken about the reports, but to bring you to the clinical governance framework this is a really useful—This is basically a summary of the frame, of the clinical governance framework, but I use it as a really key tool for asking questions.
So when you try to ask yourself what about bring yourself back to that purpose of, “Okay, this report has been brought to me from the executive. I need to make sure that our key purpose of a safe clinical services are being provided. How does this report affect our consumer partnerships? How does this report affect our risk management? What risks does it present? What risks does it actually mitigate? How would this affect our clinical practice or our relationship with our clinicians?”
So using these as questioning points is quite useful for you as a director to sit there and use those as kind of categories of questions for you to think about when you've got a report in front of you does this consider all of those parts? Because no matter what the report is that's in front of you it will have some impact on your clinical services, whether or not it's a, “Oh, this is just the number of them learning. It's just a plain reporting facts. This is what we've delivered.”
Well, then your question would be, “Did we deliver them safely to possess the highest quality? Where did we do well with, we do poorly, what can we learn from that to get safe clinical services?” So it's that constant repetition of bringing yourself back around to that purpose. I'm going to take a breather just to see if there any questions because that's kind of a bit everything all in one hit just to give you a really fast, here’s the entire kind of 40 odd billion dollars’ worth of health that’s delivered in the state. Any questions?
New director from one from the rural health services, one of the things that I struggle with in the funding model, heard the funding models broken in Australia, not alone in signing off a deficit budget and being under quite severe financial stress. So I guess my question is given that we have probably crumbling infrastructure, we have ageing assets, we’ve seen examples of the Austin where we’ve got a huge cost and we’re being asked to get that resolved. We’ve got issues with digital technology and cyber security in our hospitals. We’ve got challenges in our rural health area, in regard to service provision, mental health transport and all those sorts of things.
So given that this activity based funding model is broken and we as directors have additional fiduciary duties, what’s being done about this in regards to the funding model.
So just a summary again because they’re going to be people watching online. They may not have heard the question, essentially there's a concern that the funding model’s not working as intended. How might we fix that? Particularly when we've got a whole bunch of sources of costs and not necessarily a whole bunch of sources of money?
Part of that goes back to that, this slide that I had before around, yes, money is extraordinarily tight at the moment because there's generally less revenue. So there's less revenue, there’s less money to go around. You’ve got a demand on the public purse. “This is the size of the purse. We’ve just had that shaved off by stamp duty.”
So that's a general concern that health services need to be aware of, their boards need to deal with. One of the things that we'll look at in a moment is those ideas of liability that come with being a director and the fiduciary duties that come with that and how does that look within the funding model. The funding model itself I think broken is probably the wrong word for it. It does have pros and cons to it.
So, for example, we found on outputs rather than outcomes. So that means you might incentivize lots of episodes of treatment when a more overall overarching mechanism might be better. At times when the state has tried to put in a far more capitation, also capped at a certain rate to incentivize that longer journey of care. Sometimes we can work with the Commonwealth on that, sometimes we can't.
Their dependencies between the state and the Commonwealth and to ensure that we've got all of our funding sources to really have funding sources. What I think it's probably worth doing is if we look through some of those accountabilities and how those mechanisms actually work, it should provide you some comfort, particularly that idea of signing off on a deficit SOP and what that actually means for you as a director.
Obviously, if you’re a private company you wouldn't be very happy starting with a budget that said we’re in deficit and we're going to stay in deficit. So what does that mean for you as directors? The funding model itself it does actually—It's designed to manage the manner of activity that you're performing and that you're doing in your health service.
And we do a few tweaks there as well, but I think it's actually a pretty good sag way to exactly what we're going to talk about which funding and accountability. And I think by the time we finished this and I talk about liability, I think you'll actually be a bit more satisfied. So let's see how it go.
This is the kind of basics of how the state allocates funding to our health services. We start with a point of figuring out what demand is across the board that's modelled based on the previous year and there’s a great amount of activity. We determine things like what is it exactly that you as a health service can or ought to deliver and what are the particular targets, we'll set with that?
Now you'll see some of these fabulous terms you'll hear all the time in a hospital. WEIS. I'll get to exactly what is in just a sec. But it's useful to understand that WEIS is essentially a unit of measurement like a meter. It’s telling you how many of something you're doing like grams or kilograms, how many apples do I have? You could answer by saying, “ten apples,” or you could answer by saying, “I've got two kilograms.”
It would be still telling you the same thing. Once we've got an agreement that we've put together that'll be a combination of this kind of output funding as well as what we call input funding. So input funding is kind of block grants that are provided to entities due to something, having a set cost.
So your emergency department, for example, is funded with a combination of a block grant of, “This is how much it costs to keep the doors open, lights on, minimum staff all year round.” That's a set just sunk cost that it will cost that regardless of what you do and regardless of how many people walk in.
Much the same as Ambulance Victoria can't be funded on a service by service model because you're actually paying for a standing army. You're paying for people to be available rather than paying for people to turn up. But for most of your funding, you're able to be funded based on, “How many did I actually do?” and including those small rural block funding.
While we give block funding for some flexibility you still need to reconcile that back with the department and say, “Yes I delivered five of these and eight of these and of 20 of these.” And that would add up to that amount of block funding that you’re provided. There is a degree of negotiation and there is, of course, a degree of error margin, because we—It's anyone here there's going to be you’ll provide—
You provide a little bit more than your stop target or a little bit less than your stop target there's a bit of flexibility there to manage that and there's also things that might kick in around to say before we ever did a flu epidemic. And that means you're MD’s get completely inundated with cases.
You're stuck with a fixed ED budget and your SOP targets and budget; the department would then work to be able to supplement that budget. So we would go to Treasury or we would seek funds for that to then come back and supplement those budgets because you can’t control if there’s an epidemic.
I think I’ve already talked about that a little bit but it's useful to just be aware of the types of funding that we manage when we’re talking to yourselves and our treasury colleagues to get money for you is this idea of unavoidable demand. So these are patients that you can't not treat, you can't defer them, you can’t delay them, they have to treated now or they have to be funded in this way.
That's just standing on for the minimum level of Ambulance Victoria, standing up at any one time. If we start seeing lightning storms on a really high pollen day, we might then stand up a whole bunch of extra Ambulance Victoria employees and that then comes into this more variable funding. We will stand up, but we don't have to but we’re standing up in anticipation for that, or if everything's kind of run nicely as modelled you'll have your kind of block funding to deal with those emergencies.
These have be funded because they are, and you'll have that activity-based funding to manage each actual event. I know that accumulated funding is generally what we would consider elective surgery. It's really important just to key in here. Elective surgery is not by choice surgery. Elective surgery, a heart transplant is elective surgery.
So these are still necessary and critical operations. The public and media don't quite understand the term elective surgery. They think that means like cosmetic or stuff you can choose to do or not. Elective surgery is a universal term that's used across the world and public health systems to talk about anything that can be deferred. So that deferral might be only an hour but it's deferrable.
Emergency is where there's no deferral ability. So you’ll cut that category for that patient can wait zero minutes. You have to deal with them right now. Deferrable is elective. So that can kind of create a bit of a misunderstanding with the public because we don't fund unnecessary cosmetic procedures with the public purse. People would need to pay for those themselves.
So this fabulous activity-based funding and its unit that we call WEIS. The best way to think about this is most of us will understand what an outlier is, that thing that's kind of abnormal outside your statistical bell curve and inlier is something that's normal, sitting inside that bell curve, what’s a normal everyday thing. So if I'm saying an inlier equivalent, I'm saying could have the equivalent to any ordinary thing, the normal average old idea.
A separation means a type of procedure. So, at the moment, you’re now talking about inlier equivalents of ordinary everyday procedure that a patient's undergoing and then we weight it. And so that weighting is that idea that you will have this single unit that's for your for all kind of your average everyday care. So if we said, for example, say an appendectomy is a totally normal everyday average care, it would be worth one WEIS because it doesn't require weighting because it's completely normal.
But so that patient that came in also had a significant heart murmur, was on blood thinners and that procedure needed to account for that and it was an emergency procedure. So they're having to take that into account during that procedure. You can imagine that what was a normal everyday procedure has now become a lot more complex than it was for the other patient that came in that was the kind of 21-year old sports person getting their appendectomy.
This person’s now a lot more complex and that will cost you a lot more. And so we weight that. So all of those different factors that made that patient more complex is then reflected in the weightings that are provided for it. And so what you'll have is you'll have that single procedure and then those comorbidities weighted on top of that.
And those things are all coded in after the patient's discharge so you'll get—Essentially your clinicians would be noting those things down and those complexities. As they go tell you to coders who put them in a system that then comes to the department and we can then fund based on that. And I'll have to say for a moment, especially for those that have a very sophisticated knowledge of very clearly dumbed down version and overly simplified version of how these work.
The policy and funding guidelines that determine all of these weightings that are provided to everybody for those weightings is about two inches thick of different types of codes and variations. But it's important for you as directors to understand this as a concept. You don't need to understand it in that really detailed way that you'll see if they might need to know or that your key coding areas need to know.
What you do need to understand is that principle because that way when you think about, “I’ve been given ten WEIS?” So let’s say if this is just a unit like kilograms, I think I’m allowed to buy ten kilograms of apples. Now if they're only average apples that gives me 30 of these average apples. But I’ve got these ridiculous ones and only got five, but I still only get to buy ten kilos.
So it’s remembering that your WEIS is that unit like kilograms which might mean five procedures for that amount or it might mean thirty just depending on the complexity that you're getting. And that’s really important for you to understand is one of your accountabilities is watching your SOP targets, which we're about to look at.
I’ve pretty much gone through that idea and the idea of it getting complex and having some other issues going on with that. So what I wanted to then—I might just return to this spot so that we can remain on that space. When you’re looking at your particular target it's going to be really critical for you to be thinking about, “Am I above target?” which means I've kind of got more apples than I got money for and I'm now going to have to pay somebody back or below target, meaning I've paid these guys and yet I haven't even bought my money's worth of apples.
So somebody's going to want a reconciliation of those apples in either direction, noting that there's that error margin, but then how do you manage that? That'll be one of your key accountabilities because they'll often be a reason for that. So as a board you’ll be questioning, “Why is it that I only got five apples this time? Last time we got eight. Why is that?”
It might just simply be, “Hey, look we had this really strange scenario. We had these really complex patients coming in and it's just kind of blown that number of procedures versus actual kilograms out.” At the same time though it might be something that was really significant. You might actually have a really significant staff culture problem that people aren't actually doing their entire shift or they're not doing good hand overs and complications are arising that ought not to have risen.
When you're looking at those targets being under or over you should be thinking about whether or not that's a good thing and what are we doing about that as an entity?
So can I just ask you a question?
I actually think this is diminishing the critical role of WEIS, reducing it to apples if I might say so. Can you give us a couple of examples, a couple of clinical examples where this might play out so that might work out better for me anyway?
Yeah, a really good example of where you'd be having somewhere close to one WEIS, a pretty straightforward procedure would be an appendectomy. It's probably actually not quite one but it's—You say it's a non-complex every day, this is what I planned, we knew it was happening in a couple days to prep, that's all good.
The comparison for that would be say a bone marrow transplant that would be in the kind of 70 to a hundred WEIS for that one procedure. So you would get now—Also something, one of the things that as board directors you'll start seeing everything in this terminology as well, one WEIS is worth about $5,000. So when you're looking at the cost to your entity of those procedures just like ten kilos of apples you have a cost, one of those WEIS, the appendectomy, you’ve actually got about five grand for that depending on complexities.
For the bone marrow transplant that's now you’re now looking at 40, 50 thousand-dollar procedures. And then it gets even further, and you can go up to a hundred, 200 thousand-dollar procedures if you’re looking at say a paediatric cardiac transplant is up in there, well above that sort of space.
But that's how many WEIS its costs.. That’s how many kind of kilograms that's cost. I should also point out at this point that there's a Commonwealth activity based unit as well that you will need to be at least aware of even though most of your reports come back in WEIS, that unit is called an NWAU, a National Weighted Activity Unit.
It's basically yards and meters.. kilograms and pounds. So they're measuring the same thing. They've got slightly different calculations to get them to work out but they're still both measuring weight or they’re both measuring length. They're measuring the same idea. They've got the same weighting idea so if you understand one you understand the other, but you also know that one kilogram isn't one pound. Yes, there's a conversion between them but they are still measuring mass.
Does that help with that clinical example of the difference between these?
The clinical example helps, yes.
Yes, good, thank you.
Can you have a WEIS at a value of less than 1?
Yes, so that’s—There's not many procedures that fit in that ballpark, but you can imagine if this is an inlier equivalent you would clearly have some procedures that are very straightforward that are underneath. Sorry.
Can I just clarify that the WEIS allocated a part of the SOP - that’s just a guess based on previous cases.
It's a very nice educated modelled guess.
It's a guess so your—You indicated before we should look at the WEIS as up and under – it may be “Am I being treated efficiently enough?” but surely the first variable is in cases that we hadn't anticipated.
That’s right. And so—
Exactly, and so that’s where you come back to that idea of is a degree of block funding to help supplement things like your emergency department, because that does absorb just a huge amount being of itself. But if it is the space—Remember it's the unavoidable demand space as well that emergency department. It's the group of people that you can't turn away. They've walked in the door.
You might be able to say, “You're not urgent enough for us to see you. Go see a GP,” but these days we've got—We’re actually doing pretty well with all of our diversions, meaning most of the people coming into the EDs now are actually needing to be treated by your hospital.
So when you've got that—
[crosstalk] Depends - Not so much in the country. Sorry.
So it does depend on where you, on where you are and if it's an urgent care centre and things like that. But if they're coming to ED then how you manage that will then very much determine whether or not you're in a position to fund them just with the amount that that emergency department has its own funding for and that's what you should be trying to aim for.
But a really good example is when you do have say a bus crash and your ED is now flooded with people, that EDs not funded to deal with that on a daily basis. It's not designed to be able to manage that so you would then be dipping into your bucket of money that's the planned bucket of money that comes from all of that WEIS funding.
And so you’re dipping into that to supplement that and to supplement your emergency department. So that question then comes in the department says, “Why didn't you spend all your WEIS? And you get that opportunity to say, “Because we had this bus accident and it’s diverted out. We had to divert funds to that.
So it's a conversation and a discussion. You'll have targets and goals but it's a conversation [crosstalk].
But you’re not suggesting that we stop treating people?
Because our WEIS is over.
And that's why you've got to manage waiting lists because you've got to manage waiting lists within all of all your targets. So remember you don't just have a WEIS target—
You also have a budget target.
So you’re saying we don’t treat once we’ve reached that.
Well, I think—
Managing waiting lists don’t treat people.
Tell us in around weight of a years’ worth of procedures but we’re certainly not saying, “Treat every single person that you can as soon you can as quickly as you can if you’re not funded or capable of doing that. So when we make an agreement with you it’s based on your burn rate and your ability to actually get through those patients.
But if you're going far higher than that and then you should actually be looking at whether or not I need to cool down as an entity and that would be something you can come to the department talk about. And you might get a message of, “No, we need you to burn hotter.”
In that case that then becomes an agreement where you're going to need supplementary funding to help you do that. And so that's why these things become a negotiation.
A trigger point to have a conversation.
Most definitely. And there’s certainly already that built into the SOPs error margin. Because these are modelled so we know that you're not going to necessarily hit something on the nail that we modelled the year before. And we know that things happen throughout the year, but there’re definitely trigger points for a conversation with the department.
But also if you're burning too hot or too cold, they should be trigger points for you asking your executive why, “Why we burning or going above target? Why is that and can we afford it?” Because you still have a budget so if you're still trying to meet your budget and you save clinical services then you need to manage that rate. And that's exactly the tension that we're seeing at the moment with the budget sustainability tension that we're seeing at the moment, that we are actually having a really high demand.
In some areas that demand is well beyond just at a population growth, but for the whole state. Because they've got areas that have significantly higher growth or significantly higher demand and that's coming being met by a kind of a weaker financial position for the state, trying to manage that demand rate.
And that's exactly the tension that's being mentioned is that tension about, “How do I manage my budget and my burn rate, that I still need to make sure I'm providing those procedures because elective surgery isn’t some optional cosmetic thing. These are procedures people need.”
So managing that is a core responsibility of the entity and that's something you should always be alive to. Again, there's not necessarily a black-and-white answer because it will depend on what your entity’s dealing with, but the biggest issue we're facing at the moment across the board and what was my kind of number one issue for this sector right now is that tension between really serious levels of demand and really tight fiscal environment.
And those two things butt heads very distinctly.
Can I just ask about the WEIS model. What evaluations, have they done on this and is the transaction cost actually worth it? Are we using the right tool, thinking about the empires that have been built around coding number three and a half thousand on different WEIS codes there at. Is there any chance that at some stage in the future this model can be evaluated and can we see the results.
So just the question in case people couldn’t hear the webinar, what have we evaluated the WEIS model? Is it kind of any good? Is it worth sticking with? The WEIS model itself does get evaluated and the entire funding model for acute services gets evaluated every couple of years by Treasury.
We're currently undergoing what's called an acute phase review. So that's where the Treasury looks at all of those elements as to whether or not they are worth it and whether or not they’re worth a bang for buck. On your notes you'll see that we do actually have scenarios where we find that activity-based funding doesn't work very well.
One of the spaces that it works really well is providing us clinical information to understand that not just the demand that the state has but the types of demands the state has, the types of complexities we have. So all of those of coders are useful for more than merely their funding reconciliation. They provide us data and things we need to understand around our whole state and sort of health conditions that our state has and those sort of ideas.
Will we keep this? I dare say we’ll will keep activity-based funding for some time into the future because the Commonwealth are pretty married to it and we're quite dependent on the Commonwealth for our funding so if we saw a change it would be from WEIS to and where our transition into the Commonwealth’s funding mechanism.
But that's not going to be a significant change in what you're talking about, about all of that resource cost encoders and those sorts of things. I think they're kind of—My main answer to that would be, yes, activity-based funding has huge levels of benefits for us in terms of understanding our state in our data.
But it has a lot of flaws as well such as incentivizing heaps of tiny little procedures, rather than just one capitated bottle which I referred to briefly before and that idea that if you're funded on every tick then that might incentivize you to have five ticks rather than just doing a really good service for that one patient.
So it can incentivize these kind of artificial start/stop points and these artificial divisions where a capitated bottle that caps the funding for that entire stream of service would be better used there. And they are very much things that we're trying to work through with the Commonwealth because Victoria has been in this model for a long time.
We already had capitation models before health reform because we'd already kind of evolved to that point and had to actually unravel some of them. And now we're being able to put those back up again, the Commonwealth became more experienced to start moving out, again go back into that phase.
But that's definitely a weakness of the model. And indeed the model doesn't really work well with entities whose consumer populations too small, because it also the whole idea of modelling the budget is based on that idea of modelling the demand based on all these coding’s and whatever complexities are.
If you're a town that only had two births last year and had three the year before, you had 15 the year before that. That was just a really busy town three years ago, not anything to do with this big part of your model. And so it's an idea that activity-based funding doesn't work at all for some points and so we still use far more flexible funding models in other areas where we know that that's just not going to cut it.
If we try to model that in advance, we can't predict it, where if we try to model the Royal Women's Hospital and how many births are going to happen there that's easy, because there's so many of them. It goes into a nice neat bell curve quite quickly and we can figure out where everybody's going to sit and what the majority of our system will look like.
But you need a bit of size for that to happen. Just a question [crosstalk].
Yeah, I suppose it was just following on from what you’ve just been saying, which is small rural funding model. So I'm assuming that block funding was based on historical WEIS and I don’t know how do we actually update that. We’re both a growing population with the changes with her. And so I was just wondering how..
So for the people watching at home, the small rural funding model it's based on kind of a historical WEIS model. It does have a degree of modelling in that in that we look at what is your kind of normal level of burn rates and things like that.
But we do take into account then the population growth of your catchment zone and those sort of things. And so there's probably three elements when you're looking at funding. One of them is price which is when I bought a Big Mac ten years ago this is what it costs. The same Big Mac now costs more price. Within that there’s a whole bunch of things like wages and electricity, all the things that contributed to the cost of that burger.
The other part of its demand and that's that equation where if your populations grown by five percent and the rest of the population’s only grown by three, you need more demand dollars than that because you need to match that different population growth. And that's how many people going into McDonald's and ordering a Big Mac to how many am I selling that changes from ten years ago to now.
And the third element is that kind of cost quality variable which is things like, “Well, now we want Angus beef in it instead.” So now it's become a better-quality burger without any real change in our ability to charge differently or anything like that. So that becomes an additional complexity.
And so those are the three key elements that we take into account when we're working through what your SOP will be into each entity. It is an individual negotiation with each individual entity as to what is that hospital's particular demand growth and their projections. One last question so and I'll move on.
WEIS is dynamic, what version are we up to now.
We’re at least 10 in there.
Yes, so WEIS is updated quite regular, particularly those DRGs. So we get quite a lot of understanding where a lot of the DRGs we’ll code down where we've actually made doing something cheaper than we used to do because we no longer need this many people to do it. Or the technology is now so cheap where when we were first doing it the technology was really expensive and now we're doing it now it's actually pretty straightforward.
So that idea can mean that that DRG might decrease the weighting on your WEIS unit for that same procedure because that particular things not as hard to deal with as it was 20 years ago. But you'll have the other way around as well where we didn't do this extra point here ten years ago but now we have to because it's the base model of care now, but it didn't even exist ten years ago.
So that might really ratchet up the price for that other procedure. Really good example there is a kind of different cancer treatments. Some of them have become incredibly cheap based on them being ubiquitous type procedures and others, at the same time, have become incredibly expensive based on breakthrough technology and very new forms of looking for things and targeting cells and customized treatments and things like that.
So you can really get both of those shifting. It's the exact same procedure from kind of that idea of why it is still addressed a bone marrow transplant? Yeah, it is but we do it have a lot more. We either do it a lot more easily or we do these parts of it easier, these parts over here now that we do that we didn't do before, because we didn't realize that this would increase the rate of maintaining the transplant.
So now we do this extra thing that might cost them over 20 WEIS and all it's there to do is to help reduce that rejection rate or something like that. So the DRGs do get shifted and updated and amended based on what is that clinical environment that we're looking at.
And that's done separately to the departments. The department hasn’t got a role in determining DRGs. That's something that's done by a group of people that are far wiser than us when it comes to clinical notes. And those DRGs weightings effect whether it’s Commonwealth funding or state funding, their weightings will effect all these things.
To be able to finish that conversation around that funding question, about signing that, say, deficit SOP. We need to look this SOP, this bit about accountability because you’ll then start getting that bigger picture as to what's this whole big giant beast that I'm trying to chew on and why is it as scary as it while also being not as scary.
It's one of those elements that everybody that is a director faces that it's easier to be a director than you think because all you have to do is read all of the papers and consider all of the things that you can put on notice for and consider those things and ask the questions.
It's all you have to do. It’s harder than you think because you actually have to do all of that because you can't just sit back and not do it. You can't just sit back and let other people ask questions. You actually have to go and read those and do those things.
This is a non-exhaustive list of the legislation that directly impacts your entities. Each one of them is a different statute. Some of them legislation that all companies would be affected by. Things like a OH&S legislation, the Crimes Act for things like fraud and theft. There's quite—Equal Opportunity Act and stuff like that. So quite a few things that are applicable to any entity.
There are some there that are applicable to only public entities like the Financial Management Act. This is one of the key pieces of legislation you'll need to be aware of and Minister to Finance directions that come out of that as to what you're required to do to acquit your financial responsibilities.
Your key Health Legislation is down here if you're a public hospital, Early Parenting Centre or Health Purchasing Victoria or public health service or multi-purpose service. Health Services Act is your primary legislation. If you’re a non-emergency transport or Ambulance Services Act and if you're Forensicare or you are a hospital that admits mental health patients, which is pretty much anyone with the urgent care centre, ED, by default then the Mental Health Act will apply to you as well.
Just another statute to be aware of with the idea of admitting people into your hospital or receiving presentations into your ED of a person who is or appears to be mentally ill, there's obviously a lot of drugs that people can take that make them appears mentally ill as opposed to if they actually are mentally ill. Then their current Crimes Mental Impairment Act there also will impact you, because this act works in conjunction with the Mental Health Act to help understand when is it that you might be able to put restraining type characteristics on a patient. What are the rules for that? How does that work? Mental Health Act, in particular, talks about your role as providing that person the care that they can't provide themselves.
Similarly, the Crimes Mental Impairment Act talks about the level of care provided to this person because they're no longer competent to consent and no longer competent to actually make these decisions for themselves. That said, again, Mental Health Act will be sitting there telling you that your goal here should be assisted decision-making, not substituted decision-making.
So you don't just sit there and go, “You’re not competent. I'll make the decisions.” Instead, you would work with that patient to find out what decisions can they make and where they can't make decisions you try to make them for them in best interest.
So quite a complex array of legislation there. Another really critical one down here Health Records Act and Public Administration Act. Public Administration Act is that idea if you’re all serving as part of the state's publics apparatus so you're all now public servants in that regard and you're all now fall under the purview of the Public Administration Act. That's where the public sector commissioner's powers come from and where the powers to enforce this come from.
The Health Records Act is also a data privacy type act in Victoria as well but while you need to understand that in that idea of just respecting people's privacy the Health Records Act has a higher standard, because health information obviously is more sensitive what’s human nature than other types of personal information.
So your phone number or your address isn't going to be as critical as to whether or not you're on a waiting list for a transplant or something like that. These are things that have your information that no one else should be able to know about. That also—Just by looking that is a non-exhaustive list. Okay. It should give an indication that you have a lot of regulators that are interested in what you do and a lot of regulators that can prevent you doing what you do.
And so it's very important that you're complying with those statutes and that in our public hospitals in rural Victoria particular, because they'll have a huge level of regulation from Aged Care Act, the Commonwealth Act and NDIS, in that transition of a patient from your hospital into NDIS. And that, again, can be really tricky, and I don't think that the NDI have that right yet.
So I think that kind of the consensus there is that is still a work in progress and certainly not at any point where either the hospital or the NDIA would like it to be. People, for example, stay way too long waiting for the NDIA to be able to give them their care plan, to be able discharge them and they're sitting in hospitals for way too long.
Remainder of that accountability that despite all of that legislation you're primarily accountable to your minister, which is the state minister. And that's where a lot of the time you will have just things do arise that your role will be to make sure you've discussed all this with the department to find a resolution.
Other things will be a case so that your entity can manage that and that's fine, but any significant risk or significant matter that is in your purview you have a duty to make sure the department's aware of it.
And the reminder there hospital CEO, when appointing a hospital CEO including a reappointment their remuneration conditions, everything like that, have to be approved by the secretary. It's not something that the board can approve on their own nor can they even just approve a reppointment, even if it’s just a year or six months requires secretary approval.
In terms of what you’re required to deliver, that will be outlined in your statement priorities. And so that's the SOP. You'll always hear about this every single board meeting. You'll hear about it constant, “Where are we on the SOP?” And you should, because this SOP is essentially your contract with the department as to all of the things with the minister.
So your board chair the minister sign your SUP and it's a contract between them as what you've agreed to do and what money we've agreed to give you to do that. And that's in itself all kind of well and good and fabulous, but we know tension between the budget that we've got to allocate and those particular outputs that you'll be trying to sign up for, which is where it'll be really important when we get to those last bits about our directors duties.
What does that mean for you in terms of liability and what does that mean for you in terms of doing your job as a director and you’re fiduciary duties if you're being asked to sign up, for example, to a SOP you can’t possibly achieve without a deficit, things like that? What does that mean you’re for you as a director and as a board?
If you’re multipurpose service, instead of a SOP, you have a tripartite agreement with an agreement between the state, the commonwealth, and yourselves. If you're an Early Parenting Centre, you'll have a Health Services Agreement instead of a SOP. And all of you will have specific grants for things that might be in addition to your SOP and often come from other sources.
If you're considering, if you're wanting to then know what is it exactly that makes up all of those bits of WEIS inside my targets. So I've got my kind of targets, I’m going to produce ten apples for a dollar. That's my kind of contract for the department or I might have block funding.
So I might have a different type of output funding that isn't WEIS so it might be bed days for a mental health patient. How many hours of care did you provide them or something like that? A different unit. Who's determining all of those units? Who's figuring out? Who's putting like quantifying these? All of that is in the Performance of Funding Guideline.
It is so thick that it's not actually something we print. So it’s available on the web. Everybody should know and have access to their SOP. The SOP is a public document. It's on the Internet and you should be aware of it and knowing your own SOP. The Performance and Funding Guidelines, that’s something that’s far more for your management to be looking at, but it's useful to have a glance at to get a sense of what is that clinical example?
Come have a look at some things that—at a few procedures and not through, “Okay, this is kind of what we would get if this was the procedure and these were the complications.” And you get a bit of a sense of what's going on with that. It’s worth having a look at that. It's also worth understanding that for when you've got funding items that might be about bed days.
So if you've got your SOP that you're going to provide a hundred bed days of care for a particular class of patient, where it's not a WEIS amount. It's actually staying in that bed. That might be an aged care patient who's maybe had a fall, have been fixed up and now you're giving them sub-acute care to help them recover.
You're going to provide them bed days care for that. When you're funded on bed days your biggest risk isn't your WEIS target now. Your biggest risk is that bed being empty because you're still paying for staff while that beds empty and you're still paying for electricity. So when you're talking again about those burn rates that's the balancing act that you'll be playing is that sort of thing.
Remembering that balancing act is something that your management do but it's something that you should be thinking of and holding your management to account for how they're balancing that. You're not meant to be—You’re not expected to be an expert on how to balance those matters, but it is very much part of your accountability to see how you're traveling on those targets.
It's a significant risk that bed day rate for people that are very dependent on aged care as one of the primary funding mechanisms. So some of those small rural hospitals that might only have a few acute beds, the bulk of their hospital is aged care, empty beds is just money down the drain and that’s now because you're getting funded only when the beds full, but you're incurring costs when they're not.
And the last one which is the how does the department monitor all of this and manage this as the Performance Management Monitoring Framework. That's something where we meet with your CEO probably every quarter to work through that, depending on if you've got performance issues.
We'll be meeting with you more regularly. If you're doing pretty well we might step back a little bit, but the Performance Monitoring Framework talks about what is the department does to monitor and manage how everyone's performing individually and as a system.
And that's also those points when you'd be raising some of your key concerns with the department, but I wouldn't be waiting to your performance meeting if it was a significant risk that was unfolding you would raise that straight away. So, for example, the Austin the wash is not working, that gets raised right away. They don't wait for the performance meeting to raise that with us because we can then help them coordinate across the system to get alternative mechanisms for that to work.
So I think I've already talked about this where it talks about what your SOP is the document that's your contract that talks about all of the different requirements of you, also how where the budgets been modelled from and those sorts of things. And we’ll refer you back to the price and formulas and the Policy and Funding Guideline that’s relevant to you.
The SOP and the Performance Monitoring Framework are reviewed every year as well to make sure that what we've got in there is appropriate for both you individually, but also there's a kind of first couple parts of the SOP are things that we expect the whole system to do.
So every year we'll be looking at those, what are those huge items that we've all been put on notice for? And we'll put them in the front of the SOP to remind everybody, “Okay, we're on notice on this at the moment, so we need to make sure that we're agreed that, that’s something wrong with that.”
So, for example, there'll be something in the in that front part of the SOP about aboriginal cultural safety, there’ll be a requirement for hospitals to be working on that, making sure that they've got some sort of planning and managing aboriginal consumers when they come through.
Performance Monitoring Framework. Again, it’s one of those spaces of it’s really useful spot for you as a director. While this is what we use to monitor you and sort of questions we ask it's really useful to you as a bit of a cheat sheet as a director to be asking your exec, because it helps you bring back to all of those ideas of, “What is it exactly we're meant to be doing?”
If this is how the department holds your entity into account it’s certainly useful to you to hold your own exec to account. And so you will see some really specific elements there because it's that reminder that your hospital is still a business. It has to run with a budget. It's got all of these competing demands on it like any other business.
So how are you managing all of those elements? A key difference to be aware of that was a significant change from the tragic incidents at Djerriwarrh were in that time what we did was we summarized a lot of these elements as in a performance score.
So people could just have a bit of a score out of a hundred and it gave them just a real quick off-the-cuff, “Oh, good. I’m kind of 98, That’s pretty good, right?” And so it was that idea of giving your pretty easy to use, easy to reference score that helps you understand what was going on. The problem being was that Djerriwarrh at the height of those deaths had a 99 score.
And so what that demonstrated was that the department's mechanism of monitoring these services was completely inadequate. And so while you’re obviously significant clinical governance failures in that hospital, both at the clinical level through the leadership and at the board level, there was also significant failure by the department on how they’re monitoring this and how we're oversimplifying the way that we’re monitoring it.
Now we didn't only rely on that score, but it was a significant point for us to for doing a quick skim through.. “Let’s look at anybody who's below 80,” that sort of thing, was at times a quite reckless approach. And that's certainly not the approach that we take now on that reflection of that. And it’s one of the very significant change is that this is a far more risk-based approach.
So where you’ve got risks arising, they’re the sort of things that we'll be talking to you about in this. Where there aren't risks crystallizing in this space, you'll find that we aren’t really talking too much about them. So we'll be very much looking at what are those issues that are worrying you and worrying us rather than talking about everything at the meeting.
That certainly your chance to talk to us and us to you but, like I said, you don't have to limit it to that that court, that regular meeting. You'll always be able to contact the department with this risk you're concerned about.
And so lastly the role of the board and the reason why I leave this kind of as that last topic is that this is one of those points where we can flush out a bit about all of us kind of just overwhelming amount of information that I have provided you in this little squished time slot.
What on earth do you do with that and what's your role in using that? First thing that we'd say is this, as I said when we first started, the role of the board is the same for any other board entity. So every company in the world has these governance requirements if you're a board director. You're required to do all of your duties and comply with legislation, all of those sorts of things.
Again, the Director's Toolkit actually goes to a fair bit of detail both into the legislation type laws, so things like the Occupational Health and Safety Act, the Health Services Act, Health Records Act, these sort of things. But it also has a whole chapter that goes into, “What are all of the other sort of laws and duties I need to understand in order to be a director?”
And that's where things like fiduciary duties come from. And so fiduciary duties, anyone that's got a finance background will be aware of them, anyone with a law background be aware of them. Most people with a clinical background would be aware of or they should.
But people often confuse them with being a financial duty. They’re certainly not. So fiduciary duty is the duty that a director holds because it is now placed in a position of trust and confidence in which that entity is vulnerable to whatever the decisions are that director makes. So the whole entity is gone and put all of this vulnerability and said, “Here, the directors. It's now for you to make this decision.”
And so it's completely vulnerable to whatever decision those directors make. So your duty is to put that entity first and put you last. That is the fiduciary duty. And so you see that in relationships of trust and confidence all the time the law will read into that, a fiduciary duty.
So a clinician and a patient, the clinician has a significant level of knowledge, disparity, and power from that patient. There is a high level of vulnerability between them. The court will read a fiduciary relationship between those that you as that clinician are now required to not put what you'd like to do first and sort of things you think are exciting or what you think would be a nice thing to try.
It's what would get the best outcome for that patient based on what they’ve spoken to you about. And remember that these duties usually come into play where there's a significant outcome for that vulnerable individual. So if you're a lawyer it's to your client. We've got a whole Royal Commission going on right now just purely due to one barrister breaching the fiduciary duties to their clients.
That's the entire summary of Lawyer X, that barrister did not fulfil their fiduciary duty. The barrister's clients were vulnerable to their counsel. Their counsel knew things they wouldn't tell anybody else. The council had a responsibility to them to act in their best interests and she did not. That's a significant breach of fiduciary duty and is the summary of the entire scandal.
Similarly, in the summary of the Bank's Commission, the Royal Commission into the banks, what was the summary there? Financial advisors breaching their fiduciary duty. They have an obligation to their client because they had power to make decisions about that clients’ money.
Those decisions should have been made in the client's best interest. Not in the financial advisor's best interest. Those decisions are required to be made in the client's best interest, not in the bank's best interest. They breach the financial and their fiduciary duty to their clients.
That entire banks scandal breach of fiduciary duty. So this is one of your critical duties and this is where all of those other things that fall out of that that we talk about when we talk about integrity they all fall out of that duty for you to act in a way that puts the entity first and you make yourself subservient to that.
What that means is things like conflict of interest aren’t about you. They're about what's best for that entity. So you might be a fabulous director, but that conflict can't occur. You might be so loyal to the entity that you can promise hand on heart, “I will never ever let that conflict come into play here.” Not good enough. It's not about you. It's in the best interests of that entity that the decisions of the board can't be held in disrepute, because you had an interest.
And remember those conflicts of interest can be across any kind of space. It doesn't have to be a financial interest. It doesn't have to be a relationship interest. It can be even merely something that it appears as a conflict and that conflict can be so great that that’s even though there's fabulous managing of that conflict and you've mitigated it and you've got right down to a point of, “Okay, there's no way that this can actually cause any actual decisions based on that,” if the reasonable person on the street would think that that would have been treated favourably in the direction of that conflict and that conflict is untenable.
And that's a much higher standard than the corporate world has to manage because you're a public entity and you have public trust. And so it's a significant level of trust that's far higher than what you would be normally expected. So a fiduciary duty should be considered a quite onerous burden, but that's the gig. And that summarizes your entire role as a director if everything you think about is what's the best interest of this entity?
And when I'm thinking about this entity, I'm thinking about what's its purpose so all the time you’re thinking say clinical services, “I've got to make a decision that works for the best interests of its purpose to provide safe clinical services.” And if that’s your constant merry-go-round you'll actually do okay, because it should be your touchstone as a director of any entity.
So clinical governance, why I’ve got that second? Because if you’re fulfilling your fiduciary duties, of course, you’re fulfilling your clinical governance obligations, because you would be always thinking about safe clinical services and how that works and how do I know that that's the case?
Because this entity is completely vulnerable. Its purpose is vulnerable. So how do I know that its purpose is being fulfilled? I can't just trust my CEO. How do I know? What could I pick up and say, I can point at this thing here and say, “That’s why?” And it can be very difficult in a hospital because you don't often get third-party sources of information.
So there is a duty there to make sure that what you're looking at has context. So if you're getting board papers that don't give you a sense of whether or not something is good or bad then you should be demanding better board papers. You should be telling your executive what you're required from them.
When we delve into clinical governance—we talked about that a little earlier as well—It is around having systems and processes and things like that in place, but it's also making sure that there is a board genuinely interested in this all the time because your entity's purpose is completely tethered to this.
So your role should be always to be looking at this particular element all the time. A lot of boards do this through things like actually starting every meeting with the discussion of a patient case, obviously not breaching the Health Records Act in the discussion of that case. But in discussing that case to remind them that this is what we’re here for is to be, is to be providing these clinical services to patients.
And so it’s that reminder to that and, again, reminding us of that example of Yooralla. Your job is not to be combative. Your jobs to fulfil the purpose. So you're meant to be wanting to hear bad news. If something bad happened, you should welcome hearing from that so you can then welcome what’s going to be done about that.
And so, again, that comes down to things like your culture and the way that you behave. How well do you receive had news? Do you attack the executive that provides you bad news? Did you get really upset and flustered and yell at them? That's not going to incentivize them telling you bad news. So you need to think about your conduct and what you're doing.
It’s not just, “I'm upset and frustrated,” but, “I need to make sure I'm getting this bad news because if I’m not getting this bad news it doesn't mean it's not happening.” It's interesting on that I had a director proudly tell me a couple of years ago, just after Djerriwarrh, that they’re very proud that they've got a zero-risk appetite for their hospital.
I said, “Okay, you're a hospital so how do you open the door? Your job is you’re receiving risk all the time. Isn’t that all you do? If you weren't receiving risk, well is it just a happy fun place. You're a hospital. On the same token if your job is to provide safe clinical services, how do you close the door? You wouldn't be able to do any of those without having a risk appetite.”
So it's being aware that you don't have a perfect world because your job is to accept risk. But how I then accept all that risk and fulfil my purpose of those safe clinical services? So, again, your see how much of this is fiduciary duties, acting in the interest of the Health Service. So their interest first, yours is second, acting in integrity in good faith. That term good faith means actually putting in positive effort to do something, to do the right thing.
Courts will actually make a distinction between actively doing good faith, not having good faith, which is just actively not doing that thing, and acting in bad faith. So it’s kind of three categories. Bad faith is usually fraud and clearly illegal. Lack of good faith is usually not necessarily illegal, but it will have real significant consequences on you.
And when we go back to that idea that was that question right near the beginning of, “How do I deal with a really tight financial situation with my SOP and I've got to try to meet these and I can’t meet the budget things”. Good faith is what you're required to have as directors. So in the Health Services Act, because we're aware—It’s actually in all of your enabling statutes. Because we're very aware that if you're a private company and you were looking like you're going into deficit you would go and talk to a creditor or some kind, get some sort of overdraft or a loan, have them make everything nice and clean and clear and that way you can pay your creditors if and when they come to you and you're all good.
Yeah, pretty straightforward stuff. You can't borrow. You’re a public entity. If you do borrow you have to kind of ask us permission and you can't borrow on your assets, because they're not your assets, they’re ours. So you've just been hamstrung like 30 times over now just preventing you from being able to acquire cash and funds to do exactly that role of not having a deficit and things like that.
What does that mean for you as a director? Because if that was a private company, if you couldn't borrow and you couldn't put anything over your assets, and you couldn't liquefy you would be then faced with trading while insolvent. You would be sending your company down a space where it would be trying to conduct its business when if somebody came in with a bill you wouldn't know if you could pay that because you can't get credit.
That's not the case in a public health service. So the Health Services Act and the two enabling acts, Ambulance Service Sector, Mental Health Act immunize you against liability in that situation. Well, with all situations. We are immune from the liability on one condition, you act with integrity and in good faith. If you don't immunity doesn't apply.
So what does that mean when you've got that SOP that you've entered into in good faith? It means that you've got to do the best you can to get that to the best position you can. The best budget outcome, best level of services provided. Does it mean that you will necessarily hit the mark? No, you might not. You might, you might exceed it. You might not meet it. It will really depend on what's happening to you year on year demand wise, but if you're operating with integrity in good faith you are immune from liability.
And immunity you should think of is greater than being insured because insured is, “If I catch the flu if I'm insured my insurance helps deal with my treatment. If I'm immune from the flu I don't catch it.” It's a much higher level of protection. You also do have director’s liability insurance as well and that's for the fabulous irony of what if somebody challenges whether or not you're immune?
That kind of space but again your immunity applies and so does your insurance if you act in good faith. So you can't just sit there and go, “Oh, well look. We can't make that budget so let it just go wherever it goes.” No, you still need to be working on that and controlling that and doing positive acts to make that as close as you can get it to what you agreed with the department and working with the department when there are issues you can't resolve and all of those sort of things. That's positive acts operating in good faith. Yeah.
Starting with the integrity when we haven't actually agreed to the SOP, we’re just told we have to sign it and we know we can’t meet it. So, I struggle with that.
So the integrity is your role within that and so it's around you doing what you can to meet that as best as you can.
To meet what the department says we should do.
Noting that you don't need—The Act doesn't require your agreement. So again, that's one of the reasons why for such a fundamentally strange position to be in. Can you imagine if you're a private company and you were purchasing a huge amounts of timber and they won’t—the timber company wasn't required to agree to your price, they could just set it themselves?
And so because of that extraordinary position that you're placed in there's an immunity and you have to be liable. It's for that purpose. It's that, “We get it, we do totally understand that that is a big ask and if you're in a private company no way could you accept that. But working in good faith, doing as best as your entity can to achieve that and bringing issues to the department and we'll all try to get through that as a system. It's certainly something that some of you might have been around some time ago—maybe even five years ago there wasn't as a good relationship between the department and health service entities and that made that part of it really difficult.
There was this kind of antagonistic relationship that was there but that’s something that actually has diminished and become more of a partnership where we, we’ll come to you when we've got a problem to see if you can solve it and vice versa. It's very much a relationship. So Austin's washers go down. There's no point us just going, “Oh, well. We just won’t have theatre for three weeks. Who else can help us with that?” And we will just try to get what we can done operating in good faith.
The other tension is the mental health of our staff that we’re asking to do is extraordinary things that really are beyond their capabilities when it comes to meeting these SOPs. We're responsible for the staff, as well as we are for our patients and residents, that plays out through sick leave etc.
Yep. Again, that's one of the reasons why you need to be watching those things on your, as your role of director. It’s not your role as the director to say, “This is too hard, somebody else's problem.” Your role as a director is to be monitoring that, looking for solutions and expecting your executive to come back with to you with solutions,” and then monitoring that solution to see that is actually making a difference and being implemented.
No system is perfect. All companies have those same sort of threats and pressures and you do have an obligation to your staff that they have a safe working environment and that they have a strong workplace culture and you have check-ins, that you have, we have the annual People Matters Survey, but as an entity that might not be sufficient for you.
The board chair of a very large public health service entity shared that they've done the public Matters Survey, People Matters Survey, and had then—We're seeing quite a large bullying cohort within a part of their Health Service. So they did a bunch of interventions. But before that did a quick baseline survey that was just more specific, just to unpack what was underneath the People Matters Survey, because it's a bit zoomed out.
When they’re unpacking that underneath and they got their report back to the board and it said of their entity they’ve had about seven to eight thousand staff that said they only had two to three bullying incidents to worry about. And so the board's response, “Pull the other one. Go do it again with better questions. That's clearly not the baseline.”
You can't have an entity with seven-thousand people, and they be like three people that would meet. That’s ridiculous. So their role was to actually reject that report and say, “Thanks for giving us good news. Not what we wanted to hear. What we wanted to hear was the actual situation.” So we can then monitor what's actually going on, but that is part of the accountability, that idea of looking beyond the obvious being curious and informed.
That's remembering that Centro case that if you're on notice of a public issue then that becomes part of your zoom in. The public sector values from the is this code of conduct document here. All of your hospital staff have a similar code of conduct. You'll notice yours has a lot more stuff around kind of fiduciary duty type elements to them. Both of them include really basic things like being decent to find nice people.
And we can put these in a whole bunch of ways that we want but being just curious and nice and good to people is a fundamental of actually being a role model for a public sector organization. And that's our kind of list of those. Again, it's the idea of care and diligence. You're putting the needs of that entity first before yours which means you might be really tired and you don't want to read that paper but that's part of your duties so you need to read that paper.
We will just zoom in, and I did talk about this before when I talked about fiduciary duties, conflicts of interest are an extreme space in public sector entities that cannot—you cannot consent to any form of conflicts. So in a private company, the board either with or without the shareholders, depending on the Constitution, can actually consent to certain degrees of conflict. You cannot in a public entity.
The other side to that to be aware of is that some conflicts can be managed, because they're quite small and they might really disrupt the board meeting once every now and then. And so that person could leave the room and manage that conflict, but in other cases that conflict is such that it would kind of taint every decision-making point for the board.
So, for example, if you worked for one of the firms that was building Footscray Hospital then you wouldn't be able to sit on Western Health Board, that sort of thing. That same idea of those where those functions sit. I think anyone that’s done the ICD training has probably heard that idea of, “Fingers in, nose out.”
In a public health service sometimes you do need to stick your nose in a little bit to smell what's underneath the surface, but it is predominantly—you're not there for day-to-day management of these functions. You don't need to know how the DRGs work on every procedure. You don't need to know all of that.
You need to know that fundamental idea of how it works so that way if something doesn't appear to be working like your sub-targets you can query it. You can kind of understand the explanations they're coming to you because you understand the fundamental of what's going on here.
It's your executive’s role to actually implement those changes which is a pretty cool element. So if your role becomes that strategic direction for the entity, but it's the idea of detecting problems that would deviate you away from fulfilling the purposes and entities, say clinical services. So detecting that problem. Then you’d devise a solution, but that's your executive determining that solution and coming to you and saying, “This is what we're going to do about that problem that was detected.”
And then having some ability to monitor that that's even happening, because some—a lot of times in health these things are slow-moving beasts. It might take two years for that solution to actually play out to correct whatever the issue is that you detected. So you need to make sure you fill out with something that helps you along the way, figure out exactly, “Is this going in the right direction?”
In the same way, you need context because you need to know, “If I'm getting numbers—I’ve got an arbitrary number here of 52. Is that a good 52? Is this out of that of 60 or is it out of 500, because 52 would be a really bad score out of 500?” When I'm looking at different numbers when I’m playing golf or cricket, is it good to get a good score? Is it good to get a low score? High score versus low. Which one's good in this case, adverse incidence? You’re clearing playing golf.
So you’ve got to make sure access targets. You're going to be playing cricket or tennis or you want a high score as possible. So things like that you’ve got to be playing a different game and you might actually be playing a test series of cricket where you actually have to call it. It looks a pretty good score and monitor it, and monitoring whether or not that was the right point to call it
I feel like we’ve touched on is quite a bit in terms of those separations between the corporate governance and clinical governance. The corporate governance is the stuff that all boards have to do and clinical governance is the particular things you have to keep an eye on because you’ve got a health entity.
In the same way is that if this was say BHP they would have corporate governance and resources governments where they’ll be looking at different sort of resources mines, all the safety elements for that and they would be looking at the stock market prices, all of those things what BHP does for their core business.
Your core business is clinical governance. So you've got everything the other board has as well as that. And bringing it back to that very straightforward set. The question frameworks that I was providing around that Clinic Governance Framework and the Performance Management Framework, the reason why I suggested those up early is you will get a lot of material as a director and it can get overwhelming.
So some of that is thinking about whether or not what you're getting is useful. If it's not useful you should be talking to your board and your exec about that. I do recommend that your board should have in-camera meetings at the start and potentially at the end of every meeting. In-camera means that none of the executives are there, it’s just your board.
This means you can sit there and say, “Look. I was okay with these other reports but our finance report it's just total gibberish. I cannot get a sense from them of what is actually going on there.” Or whatever the particular matter is it's worth as a board sitting down and saying, “Is this useful for us?” having a bit of a discussion about how that could be improved and going back to your executive and getting that improvement so that it actually is useful for you to know, “Am I delivering safe clinical services? Am I managing my budget? Are my staff safe?”
All of those sort of questions and obligations that you have, make sure that your information that's coming to you is useful. If you don't you will drown. These are large beasts, hospitals. So in each of those reports you're trying to detect issues. Most of the time that's going to be a basic variance analysis so there's some shortcuts you could be doing.
You should be—If your board reports that come to you don't give explanations for why there is a variation from this time to last time you should be asking for that as a standard straightforward, “If there's a change why don't I know why?” You might have a threshold point where you go, “Oh, look,” if there's a change and the change is like 10 percent, because there's, the rest of it's kind of a normal seasonal variation or something like that.
The other thing you might do is have a bit of a—maybe a graph that shows you how this sort of changes on year so you can see whether or not we're currently in our seasonal space. Admissions certainly do, the admissions spike over winter and decline over summer. So if someone's showing you admissions and they've changed from one season to another then that would be a reasonable explanation.
And so it would have been probably useful for you to have a look at what was last year's entire seasonal variation and are we running consistent with that or do we have some really different spike in our admissions or sudden drop in our admissions that we should be doing something about? So context to help you detect problems is your key touchstone for that. You then have putting in some sort of response and monitoring that, again, that will just keep looping around because once you're monitoring it, you're likely then detect something else with that and continue that process of improvement.
And that is that idea of it's easy to be a board director because all you have to do is look at all of those reports and ask questions about them and become assured. But it's really hard because you have to actually read all of those reports and ask questions and become assured. So it's a gig that's not passive at all and if you're passive then you're not fulfilling your fiduciary duty. So I'm assuming that you’re probably a little overwhelmed and probably deprived of caffeine, but we've got a couple minutes for the last couple questions.
I presume the service to the patients, to the service as a whole override I think it’s to the [inaudible] patient in a situation [inaudible]?
So as a director you'll have both of those. You'll have what's my overall kind of patient cohort that I'm thinking about? So the question was should I be worried about the population of all of my consumers doing well versus say a single individual? You do care about that single individual because they are a serious learning point for you and you're still required to provide that individual safe clinical services.
But does that mean that the adaptions that you do say systemically would be perfect for every single individual? Perhaps not, but they would be perfect—they would be good for most of them and you would be attempting to manage those people that sit outside that.
I’m not saying I care less about them.
I think it’s the last part of your answer I was searching for.
Yeah. And it's why some of the detection part is really significant. So some of the things that—While I don't recommend that you kind of grapple down the walls and ninja yourself into the ward and kind of scurry around it's worth going on tours of your health service so that you can actually see what's going on in the ground.
It's also one of the reasons why we don't suggest for board directors tour the facilities either without an escort or without announcing to the—let the executive know that is that it can be really quite stressful for staff because you're their boss's boss’s boss’s boss. And you're coming over and looking over their shoulder. And so it's around actually keeping tensions intact.
The other scenario is that directors often won't be aware of the individual on the ground privacy requirements of patients and staff. And so they may inadvertently breach those spaces where if you've been giving a tour then that will actually be something that can be managed as you go. Because your executive would have sought, say, for example, consent for you be able to talk to a patient if you wanted to be able to talk to them about that.
That then would surely for you, bring the question of, “Well, how the heck do I know what's going on one hospital?” You could do things like mystery shopper examples of that where somebody walks through your entity and comes back to your executive and your board with feedback on the things they discovered.
And also that idea of being curious. A really good example is a colleague at the department that used to work in a quality and safety area recently passed from pancreatic cancer. But she took them time to pause and actually answer some questions to some clinical governance people around, “What has your journey been like?”
This was a very short time period and one of the things that she reflected on as a patient where she was in a chemo ward where everybody was either immobile or in wheelchairs or limited mobility because of the treatment. And so pretty much everybody was either seated and required to be moved to a wheelchair to move or were just sitting in a wheelchair.
And she said it was really interesting reflecting on going over to the reception desk when you needed to be able to tell somebody that someone’s finished or you need some assistance or something like that. Reception desk was about here level on a standing adult. So everybody in the ward that was a patient got a wall, that's all they got. And It's a new hospital.
And so what was missing in that hospital was nobody walked in say, “I'm a patient. How does this work for me? How does this give me the best clinical service?” And that's still something you should care about as a director. And of the main reasons for that is coming back to that idea of patient and staff safety is one of the leading causes of that level of frustration where we can see danger for staff from occupational violence, is frustration over things that are that small and that simple.
Because that person's already walked into your entity with all of their distress and so their ability to manage other distress is going to be uncharacteristically low. Any other thoughts or questions? I'll stick around for a little bit but thank you all and I'm hoping that you're at least a little reassured but also a little daunted.
The department hosted an annual induction workshop for new and reappointed directors to the boards of public health services and public hospitals. The workshop was held on Tuesday 29 October 2019 in the Melbourne CBD. This is a recording of the presentation.
Reviewed 10 February 2020