Funding for the HI Service is provided on a cost share basis by the Commonwealth and the jurisdictions by means of annual grants. The current funding arrangements will cease in June 2014. Funding certainty for the operation of the HI Service is important, both for DHS as the Service Operator and the jurisdictions. Implementation of the Service will involve a significant cost to all healthcare organisations, but particularly to the jurisdictions where changes to clinical systems and the associated costs of changing business processes across a large workforce will be very substantial. While there is any uncertainty about the ongoing funding there is a risk that there will be reluctance to make the full scope of changes needed to embed the HI Service into normal business operations which will impact adoption.
Payments for the operation of the HI Service are made on a cost recovery basis. Base fees are paid quarterly in advance and adjusted each quarter for actual costs. To date the actual costs have always been lower than the projections. This may change as utilisation increases, especially if take up occurs in projects/sites outside NEHTA’s control.
A review of the financial model for the HI Service was undertaken by KPMG. The review found that the model and assumptions made in costing the Service was sound.4
Both DHS and NEHTA highlighted the importance of a robust process for estimating demand as the utilisation of the HI Service starts to increase. It was reported that the process around demand planning and the impact on resources and costs has improved significantly since implementation of the Service. However as the Service evolves, there will be factors affecting the costing process, for example:
- Automating processes that are currently manual will introduce efficiencies
- Changes in DHS from using IBM to an insourced model
- Implementation of change requests to increase the capacity of the HI Service to cater for increased demand which will lead to an infrastructure upgrade and additional capital costs in 2013.
If accepted, a number of recommendations made in this report would have funding implications that would need to be considered in the future funding arrangements for the HI Service, in particular those related to system functionality and technical and support infrastructure (Recommendations 4,7,10,11,12,13,17,18,19 and 23).
Recommendation 4 – Funding
It is recommended AHMAC review options for a long term funding model for the HI Service to promote the sustainability of the Service. This should include a review of the demand estimation methodology to assess its effectiveness in planning for growth generated by programs outside of NEHTA’s control and implementation of processes between NEHTA and DHS to manage the impact of unanticipated spikes in demand.