High length-of-stay outliers under casemix funding of a remote rural community with a high proportion of Aboriginal patients

Abstract

The diagnosis related groups (DRG) classification was designed primarily to categorise patients of acuteshort-stay hospitals in urban areas. As one might expect, many studies have shown it is a less effectivepredictor of the needs - and consequently the costs of care - of remote and socio-economicallydisadvantaged communities.One way of improving the equity of funding involves separating the cases in each DRG into inlier andoutlier episodes, and making different resource allocations for each category. This paper summarises theoutlier payment model used by the Health Department of Western Australia, with emphasis on highlength of stay outliers. The model provides additional funds for high length of stay outliers, but fundinglevels are deliberately set below the actual estimated costs of care, on the assumption that some of theadditional costs are a consequence of poor care management.All high length of stay outlier episodes in the East Pilbara Health Service in 1997-98 were examined.It was found that the outliers were predominantly Aboriginal patients from remote communities withhigher than average needs for care as indicated by their greater tendency to have multiple conditionsrequiring treatment. The age distribution of high length of stay outliers was quite different from thatfound in most Australian hospitals, in that there was a higher proportion of young children.It is concluded that, although the ideas on which the funding model is based are sound, revisions ofdetail need to be considered to reduce the risk that the burden of cost containment will fall to adisproportionate degree on the most disadvantaged groups of patients.