Health Minister Stephen Wade releases KordaMentha report into SA Health’s CALHN budget blowout, places them in charge

A private company which oversaw the rescue of the Whyalla steelworks will be put in charge of turning around budget blowouts in the SA Health agency that runs the RAH. This is how it plans to save $276 million over the next three years.

• November 25: New boss Lesley Dwyer on how she’ll tackle budget
• November 20: CALHN inefficiencies revealed in KordaMentha report
• November 15: KordaMentha auditors paid $220k for 10 weeks
• October 19: Plan to put CALHN into effective administration
• September 20: CALHN to blow budget by $303m

A private company which oversaw the rescue of the Whyalla steelworks will be put in charge of turning around budget blowouts in the SA Health agency that runs the Royal Adelaide Hospital.

Health and Wellbeing Minister Stephen Wade today released a long awaited report from auditors KordaMentha into a $300 million budget blowout in the Central Adelaide Local Health Network, and announced they would be put in charge of its implementation.

The new contract for KordaMentha will cost taxpayers $18 million.

It aims to turn around CALHN’s budget blowouts by 2021, as efficiencies ramp up over three years. Savings of $41 million are expected by the middle of 2019, $101 million in 2020 and $134 million in 2021.

The report says the network must become “high performing and accountable”, and flags attempts to reduce the length of time people spend in hospital to bring down costs.

KordaMentha’s plans to save $276 million in three years include:

DRAMATICALLY cutting patients’ length of stay by an average of 1.5 days, saving $130 million over three years and freeing up 65,000 “occupied bed days” per annum;

CUTTING agency nurse numbers by half to save $10 million and trying to reduce nurses’ sick leave to save $9.7 million;

OVERHAULING rosters and cutting overtime;

GAINING greater revenue from privately insured patients;

IMPROVING efficiency in both health services and financial services;

STRICTER controls on purchasing.

The consultants plan to have a team of 23 working on the reform plan, including staff brought in from interstate.

KordaMentha will take control of CALHN’s finances for at least a year while new chief executive Lesley Dwyer and her team retain clinical control.

The report refers to today as “Day Zero” of the financial recovery plan but an interim strategy already in place plans to “flex down” 90 beds — only using them at times of high demand — by next June.

KordaMentha will be tasked with fixing the budget blowout at Central Adelaide Local Health Network, which runs several hospitals including the Royal Adelaide. Picture: AAP/ Brenton Edwards

The report finds CALHN patients stay longer than national benchmark times.

There will also be attempts to avoid unnecessary hospital admissions.

Mr Wade said the government had a comprehensive plan to turn around the system.

“The diagnosis for CALHN is extremely serious, with a cost overrun of more than $300 million,” he said.

“CALHN is performing below its peers across a range of patient outcomes.

“We have inherited a financial and organisational mess from the former Labor Government, but today we launch a responsible road map back to stability and excellence.

“The former Labor Government stuck their head in the sand, but we are drawing a line in the sand.”

Ms Dwyer, a British nurse and administrator who today takes over as head of CALHN, has bluntly acknowledged she needs to “change some long entrenched attitudes” within the organisation’s bureaucracy.

The KordaMentha implementation report also flags improving IT to create efficient work practices, creating more accountability and moves to “optimise public and private patient revenue”.

It shows a significant worsening in CALHN’s budget started in 2017.

KordaMentha partner Chris Martin said the plan provided a clear roadmap to ensuring improved patient outcomes and operations that met or exceeded national standards.

“While the organisational and financial recovery will be a complex and, at times, challenging undertaking, we are confident that with the appropriate leadership, resourcing and stakeholder commitment, the target outcomes can be achieved within a three-year timeframe,” the company said.

KORDAMENTHA’S STRATEGY

■ Develop a new strategy to minimise unnecessary hospital admissions

■ Test and expand new methods for discharging patients

■ Speed up assessment and treatment of emergency department patients

■ Improve links with services that care for patients after hospital discharge

■ Raise more money from private patients treated in public hospitals

■ New controls on recruitment, rostering and payroll management

■ Better planning for rosters to use staff efficiently

■ Create new system to deal with bed and staff use during “Christmas ramp down”

■ Implement a system to ensure equal care and decision-making on weekends

■ Create more flexibility in bed use to cater for times of high demand

■ Use equipment more efficiently

■ Improve IT services, including a new electronic patient records system

■ More training for staff working on special projects

■ Create new strategies to hire and keep good staff

■ Implement talent management and succession planning

■ Streamline payroll services

■ New organisational structure to improve bureaucratic accountability

■ Fix failing duress alarm system

■ Improve data reporting to speed up patient flow

■ Monthly reporting on costs of key health activities

WHAT THE CALHN RUNS

■ Royal Adelaide Hospital

■ Hampstead Rehabilitation Hospital

■ The Queen Elizabeth Hospital

■ GP Plus Health Care Centres

■ Breastscreen SA

■ Prison Health Services

■ SA Dental Services

■ SA Pathology

■ SA Imaging

■ SA Pharmacy

■ SA Biomedical Engineering

■ Sterilisation

■ Clinical and Corporate Support Services

■ Planning and Performance Directorate

■ Sub-acute and mental health services