Development of NSW’s draft cost accounting guidelines (CAG) for ABF implementation

NSW Ministry of Health, 2012

Responding to national developments in activity based funding and NSW strategies in this area, the NSW Ministry of Health engaged Health Policy Analysis to develop the NSW Cost accounting standards. The Standards bring into one place the key principles and standards that the Ministry, Local Health Districts (LHDs) and Specialty Health Networks (SHNs) must implement in capturing and reporting expenditure data and costs of service delivery to meet state and national requirements.

To develop the Standards, Health Policy Analysis reviewed NSW and national requirements, and also consulted with stakeholders about issues in current documentation underpinning the cost accounting process. The final Standards were presented in three volumes. Volume 1 provided the context for the Standards: outlining key principles and overviewing processes of capturing expenditure data and costing. Volume 2 included guidance on issues relevant to costing, such as aligning cost centres with costed products, and allocating revenue across programs. Volume 3 was the technical supplement describing key aspects of the state based build for the costing application which was implemented across NSW LHDs.

The NSW Cost accounting standards helped to facilitate a close collaboration between different groups within the Ministry and health services, recognising the important contributions of each group, and the impact resulting from decisions made based on the data that are output from the cost accounting process.