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How should we evolve funding for short stay hospital programs?

4 Jun 2024, by Amy Sarcevic

Visit the Mental Health Models & Facilities Forum Website

Short stay hospital programs are becoming increasingly popular in Australia, with growing evidence that they improve patient outcomes in a variety of healthcare categories.

In the realm of mental health, short-stay crisis units – therapeutic spaces for stabilising, assessing, and referring patients – have reduced emergency department wait times and in-patient admissions. In emergency care, more broadly, similar results have also been achieved.

But, while research surrounding the model has proliferated, there is one lingering misconception, which – according to Ravi Carouthers, Head of Health Fund Relations and Revenue at Healthe Care – is stunting its growth.

“One of the common views is that shorter stays equate to lower costs, because there’s less time in hospital; and therefore the remuneration from the funders should be lower than say a three or four day stay in hospital after a hip or knee replacement.

“In actual fact, 70 – 80 percent of healthcare costs are acquired in the first six to seven hours of hospital admission – so the economics of a short stay program often don’t stack up. Add to that the additional resources required for short stay hospital care – more allied health, patient education programs etcetera – and it’s enough to make it unviable for some providers.”

For healthcare categories in which short stay programs are more viable, this lack of funding alignment can still be off-putting.

“It reduces the incentive for providers to pursue short stay options, because there is still a large mismatch between the effort involved and the funding available,” Mr Carouthers said.

“Funding hospitals on the basis of their bed days might seem reasonable at a glance, but it’s not always a commensurate reduction in overheads, so we need to explore other options.”

Pressure for Australia to evolve its funding mechanisms to align with short stay programs is mounting, with demand for healthcare services – particularly mental health – having exploded in recent years.

Since the pandemic began, the volume of people seeking acute mental health support has surged by around 70 per cent year-on-year, with a major workforce shortage exacerbating waiting lists. In psychiatric wards, beds are often occupied above capacity.

Demand for short stay units is also growing, but these services are often better equipped to expedite people through the healthcare system – not just the hospital building.

Despite increased demand for its short stay unit, Wollongong Hospital achieved a 27.5 percent improvement in the number of patients transferred from ambulances to the ED within 30 minutes, compared with the same quarter the previous year.

“It’s important we explore better funding models, as it’s a real push and pull factor for hospital operators considering the short stay paradigm,” Carouthers said.

Debating this topic further, Ravi Carouthers will join an expert panel at this year’s Mental Health Models and Facilities Forum and Short Stay Hospital Forum, hosted by Informa Connect.

Alongside Ravi, the panel at the Mental Health Models Forum will feature:

• Dr Kerryn Rubin, Clinical Director of Mental Health Service, Peninsula Health
• Justin James, Chief Executive Officer, HIF

Topics of discussion include:

• How to secure adequate funding to meet growing demand for services and innovative model of care?
• Are there opportunities for collaboration between public and private sectors? Any learnings from the two?
• Are there funding priorities within the clinical model of care?
• Any examples of successful innovative funding strategies or partnerships?

Learn more and register here.

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