Your GL looks
nothing like
my GL
Sandra Thompson
Julia McGinty
Senior Analyst, Clinical Costing
Manager Funding and Costing
Northern Sydney Local Health District
ABF Taskforce
May 2013
Introduction
 Transformers
– Battle between noble Autobots (led by the wise Optimus
Prime) and the devious Decepticons (commanded by the
dreaded Megatron)
– Vehicles turn into robots
– Allspark, a mystical talisman that would grant unlimited
power to whoever possesses it
 General Ledger (GL)
– Patient costing is the ‘Allspark’ mystical talisman as it
can be very powerful information
Key GL Challenges
 Fundamental requirement of costing is aligning expense
with activity
 The General Ledger structure needs to reflect audit, budget
and financial accounting guidelines
 The GL should be simple and clean with a Management
Reporting System sitting on top of it
 We try to make it a Management Reporting System to
satisfy our operational requirements
 Trying to get the GL to be all things for many requirements
often results in a complicated and messy dataset
Key GL Challenges
 NSW has Local Health Districts – the largest being Hunter
New England, which has 41 hospitals
 Clinical Networks, such as mental health or renal services
operate across facilities within an LHD
 Outreach services may operate out of one hospital to many
hospitals, especially in the rural LHDs
 Historical emphasis on Net Cost of Service performance
What do we need from the GL?
 Cost Centre – Structure and accuracy
 Account Code – Structure and accuracy
 Adherence to Business Rules
Cost Centre – Structure and Accuracy
 50,000 General Fund cost centres in NSW – ranging from
a couple of 100 in one LHD to over 7,000 in another LHD
 Direct and Indirect Cost Centres
– 6 or 7 character code (6 numeric +/- 1 alpha)
– One LHD – last 3 characters constant – CXXX100 is for ED –
C819100 Excellent Hospital ED, C829100 Fantastic Hospital ED
– One LHD – no structure
 Indirect Cost Centres
– Expenses that need to be distributed by different overhead
allocation statistics – utilities and workers compensation premium
Cost Centre – Structure and Accuracy
 Unallocated Cost Centres = Dumping Grounds
– A number of LHDs have an ‘Unallocated Cost Centre’ for every
hospital and LHD wide service/department
– July to December 2012 – nearly $36m in expense in unallocated
cost centres - 9.28% of total expense in one of these LHDs
– Mixture of direct and indirect expense – pathology charge,
depreciation, domestic supplies, fuel light and power charges,
agency salaries and wages
 Correct Cost Centre
– Prosthesis rebate in wrong hospital – NCOS result was great,
patient level costing prosthesis cost bucket was wrong
– Medical Imaging cross charge in CE Cost Centre
– Invoices posted to one cost centre, accruals posted
in another
Account Codes – Structure and Accuracy
 NSW has 1,600 expense account codes
– Specificity is variable
– A170570 – Herbs & Spices
A100210 – S&W Base Nursing
 NSW has 59 costing expense account codes
 Standard Mapping Table has been developed
Account Codes – Structure and Accuracy
 Correct Account Codes
– S&W Other – nearly 2% of total S&W – more than $100m across
NSW
– Business Unit cross charging – one account code which maps to
Admin Expenses Costing Account Code, for services relating to
domestic, catering and maintenance – each of which need to
separately reported for costing - $12m in one LHD
– Use an ‘unused’ account code, if there is no appropriate account code
– A180025 Coal for $56m of purchased clinical services
Business Rules
 Adherence to the Business rules for the Standard Chart of
Accounts
– Especially for recoups (credit expense) and recoveries
(revenue)
Why does it matter?
 A LOT of time is spent transforming the GL for patient
costing processes
 More regular and timely costing is made that bit more
difficult
 MORE IMPORTANTLY all the changes made to cost
centres and account codes results in the costing GL
looking very different to the FMIS GL
 Cost Centre Managers, Business Managers, Finance staff
do not recongnise the numbers
 Time is spent explaining why the changes were required
and what was done rather than reviewing the
results
Engagement
 Incorporation of costing account code and cost centre
mapping tables in Statewide Management Reporting Tool
facilitates monthly ABF Performance reporting.
 Refer issues directly back to Finance Departments – credit
expenses
 The District and Network Return requires Chief Executive
sign off
 Internal Audit Program developed
 Six monthly costing – identify GL issues sooner rather than
later
Building Partnerships and Advocacy
 ABF Taskforce attends the CFO meeting with all the
LHD/SHN Directors of Finance
 Quarterly state meetings with Finance and Costing Teams
 Accountants in the ABF Taskforce who can talk the talk
with the LHD/SHN accountants when required
 Refer issues to appropriate Directors of Finance as
required on behalf of costing officers
 High level support really makes a difference
– One LHD CE sat in on every meeting the costing team had with
the cost centre managers!
Education
 All presentations that reference data quality include
references to GL data quality
 The 3 C’s – Counting, Coding and Costing
 Coding is not just ICD-10-AM
 The greatest impediment to regular costing is not uncoded
records, but the General Ledger
 Encompass all levels of the organisation – so many staff
input data into the GL – probably more than PAS, if you
consider all the ordering and journaling
 The patient journey is not just clinical, but also
financial
COST CENTRE CREATION / MAINTENANCE FORM
New Cost Centre Y/N
Name of Cost Centre:
Y
SMRT PROJECT CODE e.g. 10000
FACILITY MATRIX
If this cost centre covers MORE THAN ONE FACILITY, on what BASIS should the costs be distributed to facilities.
Facility
Description
Manly Hospital
Mona Vale Hospital
Royal North Shore Hospital
B212
B214
B218
PROVIDE EITHER A OR B
A. OVERHEAD COST CENTRE DETAILS (How and where to allocate.)
Cost Centre type
What w ould be a reasonable overhead allocation statistic to allocate these costs w ithin facilities?
Should these costs be allocated to all cost centres w ithin the facility?
If not how should they be constrained? E.g. Surgery cost centres only or exclude Mental Health
Link to activity
OR
B. FINAL PRODUCT COST CENTRE - PROGRAM DETAILS
Inpatient Services %
Provide details of activity area
Ambulatory Services %
NAPOOS Clinic Name
Other Services %
TOTAL
Provide Details
0.00
Publishing Results
 There is nothing quite like a published result which looks a
bit funny to assist with engagement
2011/12 Average Cost for Selected Hospitals
G46C - Complex Gastroscopy, Sameday
$3,000
$2,500
$2,000
NSW Ave
$1,500
$1,000
$500
$A
B C D
E
F G H
I
J
K
L M N O
 The funny results may be related to patient data, but may
also be related to GL data, or both
How do we know it is changing?
 Costing officers are being called and asked their opinion
about the treatment of a cost centre or an account code by
Finance teams
 Budgets are being recast
 Staff are being paid from multiple cost centres to reflect
Outreach services
 More engagement and openness
Further opportunities
 Patient level costing reconciliation with project acquittal
reporting
 GL data KPIs – we have them for admitted patient data
collections – why not the financial data collection
– Business Unit eliminations
– Clinical expenses (MSS, drug, prosthesis) in non clinical
cost centres
– % of expense in ‘Other’ type account codes – Other
S&W
– % of expense in account codes across all cost centres
Why does it REALLY matter?
 This is not about transforming the GL just to improve the
rigour of patient level costing – although that is important
 We can’t embed Activity Based Funding as a management
tool if we can’t accurately unpack the cost to start
addressing unwarranted clinical variation