Purchasing and Resource Allocation

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Policy framework statement

The Purchasing and Resource Allocation Policy Framework specifies the financial and legislative framework that all Health Service Providers (HSPs) must comply with in order to ensure effective and consistent approaches to meet State Government budgeting and funding procedures and requirements, and purchasing and resource allocation processes, across the WA health system.

Purpose

The Director General (DG) of the Department of Health is the System Manager responsible for the overall management, strategic direction and stewardship of the WA health system. The DG will use policy frameworks to ensure a consistent approach to a range of matters undertaken by HSPs. Policy frameworks must be complied with and implemented as a part of ongoing operations.

The purpose of this policy framework is to ensure:

  • Compliance with the mandatory financial and legislative requirements that underpins the State Government’s budgeting and funding procedures under the Government Financial Responsibility Act 2000 and the Financial Management Act 2006.
  • Clarity of mandatory roles and responsibilities of the DG of the Department of Health as System Manager, the Mental Health Commission (MHC) as purchaser and the HSPs in the context of purchasing and resource allocation.
  • Required information to be provided to the System Manager from HSPs is clearly defined to ensure compliance with:
    • State Government budgeting and funding processes
    • Activity Based Management (ABM) requirements including the counting and classification processes for the admission, readmission, discharge and transfer of patients
    • Australian Government funding submission requirements including to the Department of Veteran Affairs, Administrator of the National Health Funding Pool and Independent Hospital Pricing Authority
    • Development of benchmarking standards for public-private providers
  • The fee schedule and procedures for Visiting Medical Practitioners working across the WA health system is outlined.
  • Explanation is provided of key systemwide budget, purchasing and resource allocation processes including budget and activity settings and the development of service agreements. 

Applicability

This policy framework is binding on each HSP to which it applies or relates.

Principles

The key principles that underpin this policy framework are:

Accountability
The use of financial resources, decisions and actions must be available and able to be communicated to external reviewers.

Financial Sustainability
Financial management decisions must not compromise long-term financial sustainability.

Stewardship
The use of financial resources responsibly, for the purposes that they have been provided, with adequate planning, control and consideration of risks.

Transparency
The management of financial resources must be documented and reported, in a clear, consistent and accurate manner.

Legislative context

The Health Services Act 2016 refers to policy frameworks in ss. 26-27 and s. 34(2)(c).
Other relevant parts in the Act that relate specifically to this policy framework include s. 34(2)(b) and Part 5.

The legislation below, may also apply: 
  • Financial Management Act 2006  
  • Government Financial Responsibility Act 2000  
  • National Health Reform Act 2011

Mandatory requirements

Under this policy framework HSPs must comply with all mandatory requirements* including:

*Any mandatory requirement document that references the Hospitals and Health Act 1927 must be interpreted as a requirement under the Health Services Act 2016.

Supporting information

The following documents support and inform the implementation of the mandatory requirements:

The following documents can be accessed via http://ww2.health.wa.gov.au/About-us/Service-agreements

  • Funding and Purchasing Guidelines 2016-17
  • Service Activity Amendment Guide. 

Policy framework custodian

Assistant Director General
Purchasing and System Performance Division

Enquiries relating to this policy framework may be directed to:
PolicyFrameworkSupport@health.wa.gov.au

Review

This policy framework will be reviewed as required to ensure relevance and recency. At a minimum this policy framework will be reviewed within two years after first issue and at least every three years thereafter.

Version Effective from Effective to Amendment(s)
1 1 July 2016 1 July 2017 Original version
2 1 July 2017 6 June 2018 Rescinded OD 0540/14 from Mandatory Requirements, superseded by MP 0058/17 (under Information Management Policy Framework)
3 6 June 2018 18 October 2018 New MP 0085/18, supersedes OD 0614/15 (OD was not allocated to a Policy framework).
4 18 October 2018 Current Rescind OD 0450/13 from Mandatory Requirements

Approval

This policy framework has been approved and issued by the Director General of the Department of Health as the System Manager.

Approval byDr D J Russell-Weisz, Director General, Department of Health
Approval date01 July 2016
Date published18 October 2018
File numberF-AA-40156

Compliance

This policy framework is binding on those to whom it applies or relates. Implementation at a local level will be subject to audit.

Glossary of terms

Term Meaning
Applicability Under Section 26 of the Health Services Act 2016, policy frameworks may apply to:
  • All Health Service Providers
  • A type of public health service facility
  • A type of public health service
  • A type of staff member of a health service provider.
Health Service Provider Means a Health Service Provider established by an order made under section 32(1)(b) of the Health Services Act 2016.
WA health system Pursuant to section 19(1) of the Health Services Act 2016, means the Department of Health, Health Service Providers and to the extent that Contracted Health Entities provide health services to the State, the Contracted Health Entities.