SERVICE AGREEMENT PERFORMANCE FRAMEWORK

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1 Version 1.0 Final Amended December SERVICE AGREEMENT PERFORMANCE FRAMEWORK Activity Based Funding and Management

2 Contents 1 Executive Summary 3 2 Background 5 Overview of the Department s Performance Framework 5 3 Purpose of the Service Agreement Performance Framework 7 4 Service Agreement Performance Monitoring and Reporting Process 8 Service Agreement Performance Monitoring 8 Exceptional Events 8 Service Agreement Performance Reporting 8 Service Agreement Quarterly Performance Review Meetings Changes to KPIs 10 New KPIs 10 Changes to Existing KPIs 10 Removal of KPIs 10 6 Service Agreement Performance Management Process 11 Principles of the Service Agreement Performance Management Process 11 Elements of Service Agreement Performance Management 12 Performance Intervention Levels Key Performance Indicators Data Summary 16 8 Service Agreement Key Performance Indicator Definitions 20 2

3 Executive Summary 1 Executive Summary This document presents the Service Agreement Performance Framework and consolidates work commenced and progressed in the and versions. The version reinforces the focus on Activity Based Funding (ABF) and management and has matured to include: Specific activity Key Performance Indicators (KPIs) that are directly aligned to the funded outputs of the Tasmanian Activity Based Funding Model. Selected process KPIs that recognise the importance of accurate and timely coding of patient data in maintaining the integrity of the ABF system. Furthermore, while mental health services transferred to THOs from 1 July 2013, no specific KPIs were included in Service Agreements, thus enabling the services to consolidate within THO structures before the introduction of formal management processes. The version addresses this previous gap through the inclusion of three specific KPIs that enable a broad analysis of the of the mental health service system across a number of domains, including quality, effectiveness, efficiency and access. Drawing on lessons learned, the version retains the monitoring and management processes outlined in These processes were practically applied by both the Department of Health and Human Services (the Department) and THOs throughout , providing clarity to both parties in relation to the identification, escalation and de-escalation of identified issues. The version reinforces the over-arching objective of facilitating long term, sustainable improvement in areas where a concern has been identified. While escalations remain a central feature, they will generally only be recommended in circumstances where a THO is unable to demonstrate to the Department that: The concern is being actively managed and monitored by the THO. A robust and transparent plan for sustainable improvement is in place within the THO. It possesses the necessary skills to achieve sustainable improvement in the area of concern. In 2014 the Minister approved delegation of certain Ministerial powers and functions that enables the Secretary to escalate or de-escalate concerns for; Level 1 (unsatisfactory ), requesting a Performance Improvement Plan from THOs. Level 2 (sustained unsatisfactory ), ability to appoint a Performance Improvement Team. The Minister retains the power to appoint a Ministerial Representative to assist the Governing Council, if considered necessary, as part of a Level 2 escalation. The Minister also retains the power to approve a Level 3 escalation. The version moves to address any previous uncertainty regarding the carryover of existing escalations from one Service Agreement year to the next. Whereas previously escalations ceased at 30 June of the Service Agreement year in which they were initiated (regardless of whether the issue had been remediated at that time or not), escalations will now remain in place until such time as the requirements of any associated escalation are met. 3

4 Executive Summary Where possible, the version continues to be aligned to state and national strategic priorities. The annual (rolling) Statement of Purchaser Intent, which signals purchaser intentions over the coming five years, provides detail on the annual purchasing priorities and policy drivers for the Department. 4

5 Background 2 Background Overview of the Department s Performance Framework Under the Tasmanian Health Organisations Act 2011 (the Act), the Minster for Health (the Minister) enters into annual Service Agreements with THO Governing Councils. The development of, and advice regarding these Agreements originates from the Department (acting on behalf of the Minister as the Purchaser). The Department s purchasing function is supported by a number of governing instruments, including the Purchasing Framework, which outlines the process followed in purchasing services, and this document, the Service Agreement Performance Framework, which codifies the process of monitoring THO against the requirements of Service Agreements. In addition to its role as the Purchaser, the Department has a broader responsibility as System Manager to undertake such strategic, planning and monitoring functions and activities as necessary to enable it to provide assurance to the responsible Ministers (the Minister for Health and the Treasurer have joint responsibilities under the Act) that the Tasmanian health system is being managed effectively and efficiently. There are many activities that occur in the Tasmanian health system, outside of those that are purchased directly from THOs through Service Agreements that should be subject to ongoing monitoring. The Monitoring Suite (currently under review as part of the One Health System reform programme), governed by the Monitoring Suite Operational Guidelines, enables the System Manager to gain an understanding of the state of Tasmania s publicly funded health services, supplementing the quasi contractual arrangements of Service Agreements. Should there be a patient safety issue that requires an urgent response, it will be guided by the Clinical Governance Framework. The functions of Purchaser and System Manager cannot be viewed in isolation of each other - the nature and volume of services purchased will impact on the effectiveness and efficiency of the Tasmanian health system and the primary mechanism for effective system management is through informed, appropriate purchasing. Purchasing is a necessarily transactional process, and so must be contextualised to be effective as a mechanism to enact Government policy in health and to ensure that purchasing decisions reflect the longer term application of strategy. An annual (rolling) Statement of Purchaser Intent (currently under review as part of the One Health System reform programme), which signals purchaser intentions over the coming five years, will act as the bridge between the functions of the Purchaser and System Manager. This will be the translational implement linking the activities of the Purchaser to the priorities of the System Manager and will be released in the first quarter of every calendar year. The dual role of the Department as both Purchaser and System Manager is represented graphically in Figure 1. 5

6 Background Figure 1: Inter-relationship of compliance and monitoring. 6

7 Purpose of the Service Agreement Performance Framework 3 Purpose of the Service Agreement Performance Framework Annual Service Agreements between the Minister and THO Governing Councils set out the expectations of each THO in terms of the volume and quality of services to be delivered and the funding provided in relation to the delivery of those services. It is the responsibility of Governing Councils to ensure that THOs deliver the requirements of Service Agreements once established. It is the responsibility of the Department to ensure that THO against those requirements is monitored and managed to ensure that where necessary, the intervention options available to the Minister under the Act are effectively implemented. The Service Agreement Performance Framework codifies the process of monitoring THO against the requirements of Service Agreements to ensure that where determined necessary, the management options available to the Minister under the Act are effectively implemented. It describes an integrated process for the monitoring and of THO against the requirements of Service Agreements and provides both the Department and THOs with a clear delineation of roles, responsibilities and expectations in response to identified Service Agreement issues. It should be read in conjunction with the following key documents: THO Service Agreements; State-wide Clinical Governance Framework; and THO Funding Guidelines - Activity Based Funding and Management (yet to be released). In addition, a number of key system management frameworks have been committed to under the One Health System reform programme. These include: Statement of Purchaser Intent; Purchasing Framework; and Monitoring Suite of Indicators. These frameworks are currently in the early stages of review and development and are due for completion by 31 January

8 Service Agreement Performance Monitoring and Reporting Process 4 Service Agreement Performance Monitoring and Reporting Process Service Agreement Performance Monitoring Annual Service Agreements between the Minister and THO Governing Councils include specific KPIs and associated targets. KPIs and targets are systematically considered and adopted in the following order of preference where practical: Existing national policy based targets. Existing Tasmanian health policy based targets. New targets based on previous baselines. s establish the levels of that determine whether any action is required regarding the identification and management of Service Agreement issues. Not all national or state based targets form part of Service Agreements. Some have been determined as better placed within the Monitoring Suite as broader markers of the effective and efficient management of the Tasmanian health system. Further information regarding the target source is provided in Section 8. Exceptional Events There may be circumstances beyond the reasonable control of THOs which may prevent the achievement of s and it is important that such circumstances are recognised. At its discretion, and on a case-by-case basis, the Department will consider requests from THOs to consider such circumstances as part of the ongoing monitoring process. The intention is to recognise extraordinary and generally unforseen events beyond the reasonable control of the THO, but not planned service interruptions such as capital works or ad hoc operational difficulties. THOs are expected to provide the Department with timely advice of such circumstances and to actively mitigate any risk(s) to achieving s. Service Agreement Performance Reporting At the end of each quarter, the Department provides the responsible Ministers with THO Quarterly Service Agreement Performance Reports, outlining Service Agreement against all KPIs over the preceding quarter and, where necessary, recommended interventions. The reports are compiled by the System Purchasing and Performance (SPP) Unit of the Department following completion of quarterly Service Agreement review meetings with THOs. 8

9 Service Agreement Performance Monitoring and Reporting Process Service Agreement Quarterly Performance Review Meetings Quarterly review meetings are co-ordinated by SPP. Meetings are characterised by: Common standard agenda for all meetings, varied for specific local issues and the escalation status. THO led discussion that enables THO representatives to describe their proactive management from an operational-level perspective. Aiming to reduce the need for further escalation of the response. Clear recording and communication of actions and requirements of the THO and the Department. Core attendance is kept to a minimum to facilitate smooth and efficient conduct of business ensuring coverage of each domain. Additional attendees may be included where attention to specific areas of requires the involvement of staff with specialist expertise and knowledge. Each meeting will have the following core attendees: The Department: SPP Deputy Secretary and the Chief Financial Officer will attend all meetings. Other Departmental Directors or their representatives will attend as required. Generally, representatives of SPP will also attend and provide secretariat support if required. THOs: The attendance of the THO Chair is required. Attendance by other members of the Governing Council and/or senior executives is at the discretion of the Chair, unless attendance of a specified executive is requested by the Secretary or delegate. It is anticipated that the THO Chief Executive Officer will attend. The Secretary of the Department may attend if and when a issue has been escalated and is unsatisfactory. 9

10 Changes to KPIs Changes to KPIs New KPIs Finance and Activity Based Management THO cash liquidity. Acute admitted raw separations. Admitted patient episode (clinical coding) including contracted care timeliness. Admitted patient episode (clinical coding) including contracted care accuracy. Mental Health 28 Day re-admission rates. Acute 7 day post discharge community care. Seclusion rates. Primary Health and Aged Care Aged Care Assessment Team (ACAT) priority category one clients seen on time in all settings. Aged Care Assessment Team (ACAT) priority category two clients seen on time in all settings. Aged Care Assessment Team (ACAT) priority category three clients seen on time in all settings. Changes to Existing KPIs Finance and Activity Based Management Acute admitted weighted separations (replaced by the following KPI); Acute admitted inlier weighted units (same day and multi-day). Emergency Department Ambulance offload delay (replaces the following two KPIs); Incidence of ambulance presentations to emergency departments experiencing offload delay. Total time (hours) spent by ambulance presentations in offload delay. Removal of KPIs Alcohol & Drug Number of individual clients accessing the Pharmacotherapy Program (removed from Service Agreement to be included in Monitoring Suite). 10

11 Service Agreement Performance Management Process 6 Service Agreement Performance Management Process Principles of the Service Agreement Performance Management Process The Department s approach to monitoring, and response is shaped by the principles outlined in Table 1 below. Table 1: Principles of the Performance Framework Realistic Performance and funding expectations will be balanced with the resources and capacity of the health system and the current fiscal environment. Consistency and Transparency The Department will apply a consistent and transparent method for assessing against clear, agreed s, and responding where appropriate. The default response to the non-achievement of targets will be escalation, with the Minister (or delegate) maintaining discretion to waive such escalations. Accountability The Department and THOs have distinct and separate roles and accountabilities as Purchaser and Provider respectively. The Department, on behalf of the Minister, will negotiate Service Agreements with THOs and monitor against the requirements of those agreements. THOs are accountable for delivering services to the agreed standards outlined in Service Agreements and ensuring that an effective internal framework is in place that demonstrates processes to actively monitor the requirements of those agreements. Informed Purchasing The Department s System Manager role will inform the establishment of purchasing priorities and KPIs, in turn shaping negotiation of Service Agreements. Integration The Department recognises change or variation in a particular aspect of may require changes to other, interdependent, elements of the system. The Department acknowledges that influences outside the control of THOs may affect and such factors will be considered when is assessed. Recognition Superior will be recognised and reviewed by the Department for lessons to be shared across THOs. 11

12 Service Agreement Performance Management Process Elements of Service Agreement Performance Management Service Agreement management will involve: On-going monitoring and review of THO against the requirements of Service Agreements. Identifying a concern and determining the appropriate response. Determining when a intervention is necessary and the level of intervention required. Determining when the intervention needs to be escalated or can be de-escalated. Performance Intervention Levels As in , there are four levels in the Service Agreement Performance Framework. The level of response and intervention dictates the action required by THOs and/or the Department. In 2014 the Minister approved delegation of certain Ministerial powers and functions that enables the Secretary to escalate or de-escalate concerns for; Level 1 (unsatisfactory ), requesting a Performance Improvement Plan from THOs. Level 2 (sustained unsatisfactory ), ability to appoint a Performance Improvement Team. The Minister retains the power to appoint a Ministerial Representative to assist the Governing Council, if considered necessary, as part of a Level 2 Performance Escalation. The Minister also retains the power to approve a Level 3 Performance Escalation. The non-achievement of any individual Service Agreement will lead to the immediate identification of a concern and application of the intervention process outlined below. Service Agreement KPIs require compliance and the achievement of assigned targets within the specified period. Generally, a escalation will only be recommended in circumstances where a THO is unable to demonstrate to the Department that: The concern is being actively managed and monitored by the THO. A robust and transparent plan for sustainable improvement is in place within the THO. The THO possesses the necessary skills to achieve sustainable improvement in the area of concern. The Minister may waive any recommendation received from the Department to proceed with a escalation. Based on the response provided by THOs to concerns, an issue may be escalated or deescalated in a non-sequential fashion. Service Agreement KPIs are viewed independently of each other - that is, escalation or de-escalation is managed on the basis of each KPI, without mitigation by in other KPIs. Performance Escalation Level 0 (Satisfactory Performance) If a Service Agreement is achieved by a THO, the KPI will be assigned Level 0 (satisfactory ). Satisfactory will be noted in the THO Quarterly Service Agreement Performance Reports provided to the Minister and may be reviewed for lessons to be shared across THOs. Performance Escalation Level 1(Unsatisfactory Performance) The non-achievement of a Service Agreement will lead to the immediate identification of a concern and the application of the intervention process. In the event of non- 12

13 Service Agreement Performance Management Process achievement, the Secretary will consider escalating the issue to Level 1 (unsatisfactory ). Before taking this action, the Chair and CEO will be advised of the intention to escalate and be provided with an opportunity to provide more information to the Department in relation to the issue. In such circumstances, CEOs must provide supporting information within 7 days from receipt of the request. Performance Escalation Level 2 (Sustained Unsatisfactory Performance) At Level 2, direct intervention will occur due to sustained unsatisfactory. Formal notification of the intention to escalate to Level 2 will be provided by the Secretary to the Chair and the CEO. Depending on the nature of the concern, at Level 2, the Secretary may appoint a Performance Improvement Team or the Minister may appoint a Ministerial Representative to assist the Governing Council in its oversight of the THO s functions. Performance Escalation Level 3 (Challenged and Failing) For sustained concerns that have not been resolved, the Secretary may recommend to the Minister that a higher level of response be initiated (Level 3 challenged and failing). Formal notification of the intention to recommend to the Minister that escalation to Level 3 should occur will be provided by the Secretary to the Chair and the CEO. Table 2 summarises the escalation/de-escalation response process. Figure 2 demonstrates the escalation/de-escalation decision process. 13

14 Service Agreement Performance Management Process Table 2: Performance Escalation/De-escalation Response Framework Level of Response Point of Escalation Response Level 0 Satisfactory Performance No action required Not applicable. Satisfactory noted in monthly Service Agreement Performance Report. Performance that exceeds expectations recognised. Point of De-escalation Not applicable. THO Act reference Not applicable. Level 1 Unsatisfactory Performance Performance Improvement Plan (PIP) required Non-achievement of a Service Agreement KPI target. 0 The Secretary formally requests the Governing Council to: o Provide a PIP for approval; o Comply with the requirements of the PIP, and o Meet with the Department to formally monitor the PIP. The Department prepares an Escalation Notice for the THO. The requirements of the PIP are met. Part 7, Division 3 (sections 60-62) Level 2 Sustained Unsatisfactory Performance Performance Improvement Team OR Appointment of a Ministerial Representative to assist the Governing Council. PIP targets are not achieved and the Department is of the opinion that the concern is unlikely to be resolved without: The involvement of a Performance Improvement Team OR The appointment of a ministerial representative to assist the Governing Council to improve. The Secretary will: o Formally notify the Governing Council that a Performance Improvement Team is to be appointed in respect of the THO. The THO will provide all reasonable assistance to the Performance Improvement Team OR o Recommend that the Minister give notice to the Governing Council of the appointment of a representative to the Governing Council. The instrument of appointment of the Ministerial Representative will specify the terms and conditions of the appointment. The period for which the Performance Improvement Team was formed expires OR The terms and conditions of the ministerial representative s appointment have been met. Part 7, Division 4 and Division 5 (sections 63-68) Level 3 Challenged and failing Changes to the governance of the THO may be required The Department is of the opinion the Governing Council has ceased to perform satisfactorily and no other action may be taken other than to dissolve the Governing Council. The Secretary will recommend that the Minister appoint an administrator who has the functions and powers of the Governing Council. The period and conditions specified in the administrator s instrument of appointment are complete. Part 7, Division 6 (sections 69-73) 14

15 Service Agreement Performance Management Process Figure 2: Performance Intervention Decision Process 15

16 Key Performance Indicators Data Summary Key Performance Indicators Data Summary Domain Code Finance and Activity Based Management KPI Source of KPI Target F&ABM_1 Variation from budget - full year projected DHHS-Budget and Finance F&ABM_2 THO cash liquidity DHHS-Budget and Finance F&ABM_3 Acute admitted raw separations Tasmanian Activity Based Funding Model (DHHS SPP). Negotiated with THOs. Recognises prevailing State Government policy directions Balanced budget THO Operating Account has a favourable balance As per individual THO Service Agreements F&ABM_4 Acute admitted inlier weighted units (same day and multi-day) Tasmanian Activity Based Funding Model (DHHS SPP). Negotiated with THOs. Recognises prevailing State Government policy directions As per individual THO Service Agreements F&ABM_5 F&ABM_6 Admitted patient episode coding (clinical coding) including contracted care - timeliness Admitted patient episode coding (clinical coding) including contracted care - accuracy DHHS (SPP) 100% within 42 days of separation DHHS (SPP) 100% within 30 days of advice from SPP Domain Code Safety and Quality KPI Source of KPI Target 16

17 Key Performance Indicators Data Summary S&Q_1 Hand Hygiene compliance ACSQHC 70% S&Q_2 Healthcare associated staphylococcus aureus (including MRSA) bacteraemia infection rate National Standard 2.0 per 10,000 patient days Domain Code Emergency Department KPI Source of KPI Target ED_1 Percentage of Triage 1 emergency department presentations seen within recommended time Australasian College for Emergency Medicine 100% ED_2 Percentage of Triage 2 emergency department presentations seen within recommended time Australasian College for Emergency Medicine 80% ED_3 Percentage of all emergency department presentations seen within recommended triage time NPA Hospital and Health Workforce Reform 80% ED_4 Percentage of emergency department did not wait presentations DHHS (SPP) </= 5% ED_5 Time until most admitted patients (90%) departed emergency department National Health Performance Authority As per individual THO Service Agreements AMB_1 Ambulance offload delay Australasian College for Emergency Medicine 85%</= 16 minutes 100%</= 31 minutes Domain Code Elective Surgery KPI Source of KPI Target ES_1 Elective surgery quarterly admission targets. This KPI excludes activity associated with any additional Commonwealth or State Government funded activity as outlined in Schedules E and F (Schedules F and G for the North West) Tasmanian Activity Based Funding Model (SPP). Negotiated with THOs. Recognises prevailing State Government policy directions As per individual THO Service Agreements 17

18 Key Performance Indicators Data Summary ES_2 Percentage of category 1 patients admitted within the recommended time DHHS SPP. Negotiated with THOs. Recognises prevailing State Government policy directions As per individual THO Service Agreements ES_3 Number of over boundary, category 1 patients on the waiting list ES_4 Number of over boundary, category 2 patients on the waiting list ES_5 Number of over boundary, category 3 patients on the waiting list DHHS SPP. Negotiated with THOs. Recognises prevailing State Government policy directions DHHS SPP. Negotiated with THOs. Recognises prevailing State Government policy directions DHHS SPP. Negotiated with THOs. Recognises prevailing State Government policy directions As per individual THO Service Agreements As per individual THO Service Agreements As per individual THO Service Agreements ES_6 Number of patients on the waiting list waiting longer than 365 days DHHS SPP. Negotiated with THOs. Recognises prevailing State Government policy directions As per individual THO Service Agreements Domain Mental Health KPI Source of Target 18

19 Key Performance Indicators Data Summary Code KPI MH_1 28 Day re-admission rate NMDS </= 14.7% MH_2 Acute 7 day post discharge community care NMDS 75% MH_3 Seclusion rates To be included in NMDS < 9.6 per 1,000 patient days Domain Code Oral Health KPI (THO South only) Source of KPI Target OH_1 Number of Dental Weighted Activity Units (DWAUs) delivered between 20 December 2012 and 30 June 2015 NPA on Treating More Public Dental Patients Sep14: 80,945 Dec14: 91,794 Mar15: 102,470 Jun15: 111,868 OH_2 Proportion of 'Emergency' clients managed on the same day that they are triaged THO South (OHST) >/= 75% Domain Code Primary Health and Aged Care KPI Source of KPI Target PH_1 Aged Care Assessment Team (ACAT) - Priority Category one clients seen on time in all settings PH_2 Aged Care Assessment Team (ACAT) - Priority Category two clients seen on time in all settings PH_3 Aged Care Assessment Team (ACAT) - Priority Category three clients seen on time in all settings ACAP Minimum Data Set ACAP Minimum Data Set ACAP Minimum Data Set >85% >85% >85% The timeframes for data collection are specified against each KPI in the following Section 8 Service Agreement Key Performance Indicator Definitions. 19

20 8 Service Agreement Key Performance Indicator Definitions Finance and Activity Based Management Variation from budget full year projected Definition This measures the variance between full year budget and full year projected actual on a cash basis for all funding types. source Frequency of data collection and For Service Agreement monitoring, this indicator applies to the THO as a whole. Calculated by subtracting the full year projected cash forecast from the full year cash budget on an all funds basis including carry forwards. Balanced budget. Data Source Finance 1 DHHS Budget and Finance. This KPI will be monitored by Budget and Finance on a monthly basis. Performance will be assessed on a quarterly basis. THO cash liquidity Definition This KPI is a measure of a THOs ability to meet all their financial commitments when they fall due. If a THO is unable to meet their financial commitments within a given month, an advance of future funding is required to ensure the THO complies with Treasurer s Instruction (TI) 402. This KPI is an early indicator that there is the potential for a liquidity problem impacting on the THOs ability to meet financial commitments within the current financial year. source Frequency of data collection and Data Source Finance 1 This indicator is calculated by subtracting the total of the advance from the closing balance of the THO Operating Account at the end of the month to demonstrate what the unadjusted position would have been. THO Operating Account has a favourable balance. DHHS Budget and Finance. This KPI will be monitored by Budget and Finance on a monthly basis. Performance will be assessed on a quarterly basis. In the instance where a THO requires an advance of funds in one month, quarterly will enable a THO to take corrective action in the following month(s) to return the Operating Account to a favourable position. 20

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