Hospital funding: what are the options for risk adjusting complication rates

Advice on Options for Risk Adjusting Hospital Acquired Complication Rates

This project gives special consideration to the practical aspects of implementing risk adjustment methods, including practical data issues such as differences in coding practices across states, and the implications of hospital size on complication rates.

This project was commissioned by the Independent Hospital Pricing Authority (IHPA), which was seeking advice on the appropriate risk adjustment methodologies for assessing hospital performance in relation to hospital acquired complications.

The project follows recent moves by the federal and state governments to incorporate quality into payment mechanisms under the current activity-based funding scheme for public hospitals, with the aim of stimulating improvements in the quality of service provided by hospitals.

As part of this project, researchers will review and advise on several possible approaches to risk adjusting measures of hospital quality, such as rates of hospital acquired complications including infections, so that unavoidable differences across hospitals in the severity of patients can be taken into account when making comparisons.

This project gives special consideration to the practical aspects of implementing risk adjustment methods, including practical data issues such as differences in coding practices across states, and the implications of hospital size on complication rates.

Impact

This research has direct implications on the funding of public hospitals, affecting how hospitals are paid in relation to their performance, especially if a move to a quality-based payment scheme results in high-performing hospitals being rewarded and low-performing hospitals penalised.

In addition, the choice of risk adjustment methods can also have implications on the transparency and perceived fairness of the payment scheme.

Collaborative Partners

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