Corporate Plan 2017–18

Message from the CEO 

I am pleased to present the Independent Hospital Pricing Authority’s Corporate Plan 2017-18 for the reporting periods 2017-18 to 2020-21, as required under paragraph 35(1)(b) of the Public Governance, Performance and Accountability Act 2013.

In 2011 the Commonwealth and all state and territories entered into the National Health Reform Agreement. One of the outcomes agreed was that the parties improve the patient access to services and public hospital efficiency through the use of activity based funding (ABF) based on a National Efficient Price. IHPA’s primary role is to determine the National Efficient Price for public hospital services funded on an activity basis, and the National Efficient Cost for services that are block funded.

James Downie
CEO, Accountable Authority

Our purpose

IHPA was established to promote improved efficiency in, and access to, public hospital services by providing independent advice to Australian governments in relation to the efficient costs of public hospital services and developing and implementing robust systems to support Activity Based Funding (ABF) for those services. IHPA’s objects and functions are conferred by legislation and are set out in section 131 of the National Health Reform Act 2011.

IHPA’s principle vehicles for promoting efficiency are its determination of the National Efficient Price (NEP) and the National Efficient Cost (NEC) for public hospital services annually and building a national classification system for all hospital services.

Classifying an activity undertaken by a hospital and then accurately pricing that activity enables transparent and efficient comparisons to be made between hospitals and jurisdictions. In making such comparisons possible, IHPA plays a lead role in the introduction of a nationally consistent and effective ABF system.

The Agency’s purpose and activity structure

Purpose Activities Enabling Activities

To determine the National Efficient Price and the National Efficient Cost for public hospital services.

  • Perform our pricing functions
  • Refine and develop hospital classification systems
  • Refine and improve hospital costing
  • Develop hospital data requirements and collect data
  • Attracting, developing and retaining a skilled workforce
  • Independent decision making and stakeholder engagement

    Strategy and performance

    IHPA’s strategic objectives below will ensure delivery of its core activities in 2017-18. This Corporate Plan should be read in conjunction with the IHPA Work Program 2017-18 which provides a detailed description of the work IHPA will undertake to fulfil its objectives in 2017-18.

    1. Perform our pricing functions


    • Develop and refine the pricing models which will ensure the accurate determination of the NEP.

    Initiatives for 2017-18

    • Incorporating changes in the approach to the calculation of the NEP and NEC which incorporate pricing for safety and quality and a pricing approach for avoidable readmissions.

    2. Refine and develop hospital activity classification systems


    • Develop and refine hospital activity classifications 
    • Seek input from clinicians and ensure acceptance of classification systems by committees including IHPA’s Clinical Advisory Committee.

    Initiatives for 2017-18

    • Consultation on a new Australian Teaching and Training Classification
    • Further refinement of the Australian Mental Health Care Classification
    • Undertake the review of the Australian Refined – Diagnoses Related Group (AR-DRG) classification.

    3. Refine and improve hospital costing


    • Establish and maintain national costing standards
    • Develop and apply appropriate costing models
    • Ensure effective collection and processing of costing information to support ABF outcomes.

    Initiatives for 2017-18

    • Release of the Australian Hospital Patient Costing Standards V4.0.

    4. Develop hospital data requirements and collect data


    • Develop appropriate data specifications
    • Ensure information provided for decision making meets those specifications  
    • Enhance data submission capability
    • Protect privacy and ensure data security.

    Initiatives for 2017-18

    • Implementation of a new highly secure, cloud-based data facility that will ensure IHPA remains at the forefront of data security and capability.

    Operating environment

    IHPA consults extensively with Commonwealth, state and territory governments, the private sector and other stakeholders. It also has regard to national and international best practice.

    Input from stakeholders through IHPA’s multiple committees and working groups ensures that IHPA’s work is informed by expert advice.

    Managing risk

    The ongoing management of risk is an integral part of IHPA’s Corporate Governance Framework which is underpinned by relevant risk assessment processes.

    The mature risk management framework includes a range of internal controls and ongoing assurance programs that are designed to maintain IHPA’s flexibility to effectively achieve its objectives while ensuring compliance obligations are satisfied.


    Key areas of focus for 2017-18 include:

    IHPA’s work program incorporates a substantial amount of technical work which requires significant specialist workforce capability. IHPA’s workforce planning strategies will continue to emphasise both core public sector skills and the enhancement of the expert skills IHPA requires to meet its objectives.

    IHPA will also continue to strengthen its management and leadership teams by enhancing performance feedback and providing targeted learning and development programs.

    IHPA relies on the use of information and communication technology (ICT) systems to conduct its business and consult with stakeholders. IHPA will continue to apply the most up to date measures to effectively use and protect its information (and that of its stakeholders). In doing so it will prevent data breaches, manage the risk of inadvertent information disclosure and ensure business continuity.

    Strengthening our capabilities in 2017-18

    Key areas of focus in 2017-18 include:

    • Staff development
      • Continued development of staff through attendance at internal and external training opportunities. IHPA will also continue to monitor staff turnover rates and give genuine consideration to feedback provided to the agency via the annual Australian Public Service ‘State of the Service’ report and IHPA’s Culture Survey undertaken during 2016-17.
    • Flexible working arrangements
      • IHPA supports a flexible work environment and will continue to support all staff in providing working arrangements that suit individual needs.
    • Secure data management
      • IHPA will implement a new secure data management system to support the core technical functions of the system, whilst ensuring the current high standards of the data security are maintained.
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