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

The diagnosis related groups (DRG) classification was designed primarily to categorize patients of acute short-stay hospitals in urban areas. As one might expect, many studies have shown it is a less effective predictor of the needs--and consequently the costs of care--of remote and socio-economically disadvantaged communities. One way of improving the equity of funding involves separating the cases in each DRG into inlier and outlier episodes, and making different resource allocations for each category. This paper summarises the outlier payment model used by the Health Department of Western Australia, with emphasis on high length of stay outliers. The model provides additional funds for high length of stay outliers, but funding levels are deliberately set below the actual estimated costs of care, on the assumption that some of the additional 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 with higher than average needs for care as indicated by their greater tendency to have multiple conditions requiring treatment. The age distribution of high length of stay outliers was quite different from that found 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 of detail need to be considered to reduce the risk that the burden of cost containment will fall to a disproportionate degree on the most disadvantaged groups of patients.