Glossary

Term / Definition
Agreed Referral Criteria / The basis on which Patients will be identified, referred and accepted/refused.
AR-DRG / Australian Refined Diagnosis Related Group
ASA score / American Society of Anesthesiologists score
BMI / Body Mass Index
BPS / Budget Payment System
Contracted Surgical Procedures / The elective surgical services specified in the Service Agreement that are to be provided by the Successful Provider for patients sourced from the Referrer in accordance with the Service Agreement
Contractual Close / Date of execution of contracts
Closing Date / Date for the lodgement of Submission, being Thursday 24 October 2013
Closing Time / The date and time by which Submissions are to be received by the Department, as defined in Section 7.1
CRAFT / Casemix Rehabilitation and Funding Tree
Department / Department of Health
DRG / Diagnosis Related Group
ENT / Ear Nose and Throat
ESIS / Elective Surgery Information System
ESIS Public Provider / This includes the 21 public health services for which elective surgery data is publicly reported plus the two public health services (Albury Wodonga Health and South West Healthcare) for which elective surgery data is not currently publicly reported.
ESWL / Elective surgery waiting list
Evaluation Criteria / The evaluation criteria set out in Section 6.2
Evaluation Process / The process outlined in this document by which Submissions will be evaluated by the Department
FESS / Functional Endoscopic Sinus Surgery
Final Payment Date / Three months after expiry of the Term subject to satisfactory data submission to the VAED
IAP / Industry Advisory Panel
ICD-10-AM / International Statistical Classification of Diseases and Related Health Problems, 10th Revision, Australian Modification
Initiative / The 2013-14 Competitive Elective Surgery Initiative for public and private providers ($15 million in 2013-14)
MACSS / Ministerial Advisory Committee on Surgical Services
Minister / Minister for Health
NEST / National Elective Surgery Target
Nominated Surgical Procedures / The surgical procedure(s) that Providers nominate in theSubmission and intend to provide during the Term set out in Section 4.2
NPA / National Partnership Agreement on Improving PublicHospital Services
Option Terms / First Option Term 1 July 2014 to 30 June 2015
Second Option Term 1 July 2015 to 30 June 2016
Third Option Term 1 July 2016 to 30 June2017
Patients / Patients that are treated under this Initiative
Proposed Surgical Procedures / The procedures that the Department has proposed for this Initiative set out in Section 4.1
Private Provider / A private provider participating in the RFS process in a treating capacity
Provider / A public or private provider participating in the RFS process in a treating capacity (rather than in a referring capacity)
Public Provider / A public provider participating in the RFS process in a treating capacity (rather than in a referring capacity)
Referral / Patients that meet the agreed patient selection criteria
Referrer / An ESIS reporting public health service that the Provider enters into a collaboration with to source elective surgery waiting list patients. Contact details for Referrers are set out in Appendix D.3.
RFS / Request for Submission
RFS Process / The process for the calling, preparation, submission and evaluation of Submissions
RFS Terms and Conditions / The terms and conditions set out in Section 8 of this document
Service Agreement / The contract entered into by the Department, the Successful Provider and the Referrer, being the document annexed to the RFS at Appendix B.
Service Agreement Term Sheet / A term sheet that sets out the key terms of the Service Agreement for Contracted Surgical Procedures to be provided by the Successful Providers
Short-Listed Provider / A Provider who is short-listed in the evaluation process and invited to enter into negotiations with the Department
Specialist Medical Practitioner / The medical specialist that will be delivering the Contracted Surgical Procedures under the Initiative
Submission / A formal response from a Provider to the RFS
Successful Provider / Provider(s) that the Department selects and will contract with to deliver the Contracted Surgical Procedures
Term / 1 January 2014 to 30 June 2014
TURP / Transurethral resection of the prostate
VAED / Victorian Admitted Episodes Data Set
VASM / Victorian Audit of Surgical Mortality
WIES / Weighted Inlier Equivalent Separation

1.Introduction and purpose

The 2013-14 State Budget allocated $420.7 million of funding over four years to be allocated on a competitive basis to drive efficiencies in elective surgery, meet increasing levels of demand and treat more Victorian elective surgery patients sooner.

This follows on from the $44 million of funding committed to the Competitive Elective Surgery Initiative in 2012-13.

$101 million has been allocated for the 2013-14 financial year and has been split between three funding pools:

  • A pool for Elective Surgery Information System (ESIS) reporting public providers ($77 million);
  • A pool for the public and private providers currently delivering surgery under the 2013 Elective Surgery Services Deed of Agreement ($9 million); and
  • A pool for public and private providers to be allocated via a new competitive Request for Submission (RFS) process ($15 million).

This RFS has been issued by the Department of Health (Department) and relates to the pool of funding ($15 million in 2013-14) to be contested by public and private providers (the Initiative).

The Department intends to contract for 2013-14, 2014-15, 2015-16 and 2016-17. The maximum value to be covered by these contracts will be $165 million, including $15 million to be allocated for 2013-14.

The Department is seeking Submissions from all potential private and public providers (Providers) interested in participating in the Initiative.

This RFS provides further information on the Initiative including policy context and objectives, governance, scope of surgical services, proposed commercial framework, the Evaluation Process that will be applied by the Department and the instructions for preparation and lodgement of Submissions.

The RFS is issued by the Department subject to the specific terms and conditions contained in this document.

1.1.Structure of Request for Submission

The structure of the RFS is as follows:

  • Section1: Introduction and purpose

Provides an outline of the RFS Process including key dates and the protocol for communication between Providers and the Department during the RFS Process.

  • Section 2: Policy framework and context

Provides background information on the Initiative and in particular the policy framework and objectives of the Initiative.

  • Section 3: Governance and stakeholders

Provides an overview of the governance framework.

  • Section 4:Scope of surgical procedures

Provides an overview of the scope of surgical procedures which are included in the Initiative.

  • Section 5: Commercial framework

Provides an overview of the Initiative’s proposed commercial framework including key contractual terms.

  • Section 6: Evaluation of Submissions

Provides an overview of the Evaluation Process to be applied in the evaluation of the Submissions.

  • Section 7: RFS – Submission Process

Provides an overview of the process Providers are required to follow for the Submissions.

  • Section 8: RFS Terms and Conditions

Provides the terms and conditions of the RFS Process.

Appendices

  • Appendix AService Agreement Term Sheet

Provides a general outline of the main terms that are included in theService Agreement between the Department and the Successful Providers.

  • Appendix BService Agreement

AService Agreement will be executed between the Department, the Successful Private Provider and the Referrer (tripartite contract). Successful Public Providers will be engaged via an exchange of letters. The draft Service Agreement will be emailed to all potential Providers by 26 September 2013.

  • Appendix CSubmission requirements

Provides details of the requirements for the Submission.

  • Appendix DSupplementary information

Provides further information that Providers may find useful in preparing their Submission.

1.2.RFS Process

1.2.1.Indicative timetable

The table below outlines the timetable for the RFS Process, the selection of the Successful Providers and the delivery of the Contracted Surgical Procedures.

Table 1: Indicative timetable

Milestone / Date
Issue of Request for Submission / Thursday 19September 2013
Information sessions / Information Session 1
Tuesday 24 September 2013 at 11.00 am
Room 1.02, 50 Lonsdale StreetMelbourne
Webinar
Thursday 26 September 2013 at 1.00 pm
Information Session 2
Friday 27 September 2013 at 10.00 am
Room 1.02, 50 Lonsdale StreetMelbourne
Lodgement of Submission / Thursday 24 October 2013
Selection of Successful Providers / October / November 2013
Notification to Successful Providers and Contractual Close / December 2013
Delivery of Contracted Surgical Procedures / 1 January 2014 – 30 June 2014

1.2.2.Provider enquiries

Providers will be given an opportunity to interact with the Department throughout the RFS Process in accordance with the RFS Terms and Conditions set out in Section 8. All correspondence, notifications, contact and enquiries in respect to this RFS and the Initiative overall are to be communicated to:

Ms Carmen Yiu
Manager, Acute Inpatient and Specialist Clinics Program
Department of Health

Any enquiries that Providers may wish to make in order to clarify their interpretation of the RFS, or for any other purpose, should be submitted no later than seven working days prior to the Closing Date.

Enquiries and the Department’s responses will be circulated to all Providers, except where:

  • the Provider nominates in their enquiry that it relates to proprietary information, relevant to its Submission; and
  • the Department is of the opinion that the enquiry and the Department’s response are not material to the integrity of the competitive nature of the RFS Process.

In the event that a Provider nominates that an enquiry relates to proprietary information relevant to its Submission, and if the Department is of the opinion that the enquiry is not proprietary in nature, the Department will advise the Provider, who will be given the option to withdraw the enquiry. If the Provider then reaffirms its request for a response to the enquiry, the enquiry and the Department’s response may be circulated to all Providers.

An independent probity auditor, Pitcher Partners Consulting, has been appointed to ensure that the initiative is conducted in accordance with Government probity requirements. Any queries or concerns about probity matters should be directed to:

Dr Richard Shrapnel PhD

Executive Director

Pitcher Partners Consulting

+61 3 8610 5000

Further information about elective surgery in Victoria is available at:

Providers should contact Victorian public hospitals for further data and information on elective surgery waiting lists for the Proposed Surgical Procedures. A list of Elective Surgery Information System (ESIS) hospitals, including contact details, is contained in Appendix D.3.

More information about Victorian public elective surgery providers is available at:

1.2.3.Additional information and clarifications sought by the Department

Notwithstanding any other requirements of this RFS, the Department may require Providers to submit additional information or clarifications. Providers will be required to promptly respond, in writing, to all such requests for additional information or clarifications. Where such information is not provided within the timeframe nominated by the Department, the Department reserves the right to continue the evaluation of the Submission on the basis of the available information.

1.2.4.Information sessions

Providers can choose to attend an information session or participate in a webinar:

Information Session 1

Tuesday 24 September 2013 at 11.00 am

Room 1.02, 50 Lonsdale StreetMelbourne

Webinar

Thursday 26 September 2013 at 1.00 pm

Information Session 2

Friday 27 September 2013 at 10.00 am

Room 1.02, 50 Lonsdale StreetMelbourne

Attendance at aninformation session or participation in the webinar is not mandatory.

Providers wishing to attend an information session or participate in the webinar must register by Monday 23 September 2013.

2.Policy framework and context

2.1.Overview

The Victorian Government is committed to working with the health sector to deliver necessary reforms to ensure that services are delivered efficiently and are sustainable. The challenge facing Victoria’s health care system is that demand, driven by population growth, an ageing population and increases in chronic and complex conditions, is growing faster than available revenue. Furthermore, the uncertain global and national economic climate requires a greater focus on efficiencies in government spending to ensure Victoria is well placed for the future.

Elective surgery is one area facing demand growth and the Victorian Government is usingnew approaches to delivering public elective surgery with both public and private providers, to drive efficiencies and maximise the value of Victorian Government funding.

The Department’sElective Surgery Access Policy (2009) provides policy direction and guidance for public health services in Victoria to ensure that patients are treated equitably, within clinically appropriate timeframes, and with priority given to patients with an urgent clinical need. Victorian public health services are responsible for ensuring compliance with the policy and for providing accurate data sets for performance management. Timing for elective surgery is based on clinical urgency and thentreatment in turn within clinical urgency categories (category 1, 2 and 3). Targets are structured around these categories.

To help meet demand for elective surgery and support progress against targets, the 2013-14 Victorian State Budget allocated $420.7 million of funding over four years to be allocated on a competitive basis to drive efficiencies in elective surgery, meet increasing levels of demand and treat more Victorian elective surgery patients sooner. This follows on from the $44 million of funding committed to the Competitive Elective Surgery Initiative in 2012-13.

$101 million has been allocated for the 2013-14 financial year and has been split between three funding pools:

  • a pool for Elective Surgery Information System (ESIS) reporting public health services[1] ($77 million);
  • a pool for the public and private providers currently delivering surgery under the 2013 Elective Surgery Services Deed of Agreement ($9 million); and
  • a pool for public and private providers to be allocated via a new competitive Request for Submission (RFS) process ($15 million in 2013-14) (the Initiative).

Funding from the $77 million pool has now been allocated to public providers. This process delivered on average a 7.8 per cent discount to the Victorian WIES unit price. The Victorian WIES unit price in the 2013-14 Victorian health policy and funding guidelines[2] (for a DRG costweight of 1.0) for Victorian public hospitals differs by the size and location of hospital (peer group pricing). Further details on the case mix funding model are provided in Appendix D.1.

The Department intends to contract for 2013-14, 2014-15, 2015-16 and 2016-17. The maximum value to be covered by these contracts will be $165 million, including $15 million to be allocated for 2013-14.

This RFS is seeking submissions for the Initiative and is open to both public and private providers. Private providers should note that the patients under this Initiative remain as public patients, and should ensure that any insurances and indemnities take account of this.

The Initiative will treat public patients by either public or private hospitals (Providers). These patients will be referred by one of the ESIS public health services (Referrers). A full list of Referrers is set out in Appendix D.3, including contact details for each health service.

The Initiative will only fund the Proposed Surgical Procedures (listed in Section 4.1) for patients referred by a Referrer for treatment by a Provider, where the patient has consented to being treated by the Provider. No other procedures or referring hospitals will be considered for funding.

Referrers may also participate in this Initiative as Providers.

2.2.Objectives

The objectives of the Initiative are to:

  • maximise the value of Victorian government funding for elective surgery public patients over the long term;
  • drive efficiencies and innovation in elective surgery to improve access and maximise the number of public patients treated; and
  • encourage partnerships between the public and private sector for the delivery of public elective surgery.
  • Guiding Principles

In undertaking this Initiative the Department intends, where possible, to treat Public and Private Providers equally. It has been clearly articulated in the RFS where it may be necessary to make a departure from this principle (for example, where aspects of certain evaluation criteria and Submission requirements are not relevant to both Public and Private Providers).

3.Governance and stakeholders

3.1.Governance framework

An effective governance framework has been implemented for this Initiative to provide support, accountability, and an appropriate reporting structure throughout the planning and RFS phase of the Initiative. An overview of the governance structure is illustrated in Figure 1 below.

Figure 1: Governance structure

The key components of the governance structure are outlined below.

3.1.1.Department of Health

The Department has been tasked with the delivery of the Initiative. The Department has established a project team to progress the Initiative. The Department receives advice from the Industry Advisory Panel (IAP) and provides advice to the Minister for Health (Minister).

3.1.2.Industry Advisory Panel

The IAP has an oversight role, which includes:

  • providing advice about key features of the design of the Initiative to the Minister and the Department; and
  • having oversight and reporting on the conduct of the process and the outcomes.

The IAP has no role in the evaluation of Submissions.

3.1.3.Ministerial Advisory Committee on Surgical Services

The Ministerial Advisory Committee on Surgical Services (MACSS) providesadvice and makes recommendations to the Minister and the Department on the provision of surgical services in Victoria's public hospitals.

Further details on membership of the MACSS are available at:

4.Scope of surgical procedures

This section provides an overview of the elective surgical procedures that are being included in this Initiative.

4.1.Proposed Surgical Procedures

The Initiative will include a mixture of multi-day and same-day procedures.

The procedures proposed for this Initiative, and an extract of the elective surgery waiting list (ESWL) at Victorian ESIS public health services are summarised in the table below.

Table 2: ESWL for the Proposed Surgical Procedures