Key messages

  • Nine health services have the opportunity to retain funding as a result of the efficient management of blood and blood product
  • The nine health services have been provided with a budget equal to the cost of the blood estimated to be required for their patients.

Summary of funding policy

From 2015-16 the department provided nine health services with a budget equal to the cost of the blood and blood products estimated to be required for their patients in the coming year.  Health services that efficiently manage their blood and blood products will retain the unused funding.  This provides an additional incentive to improve the management of blood and blood products beyond the current strategies. 

Justification for the funding policy approach

The funding policy for blood and blood products is based on:

  • Department pays national organisations for blood and blood products
  • Blood is a scarce resource
  • Strengthening the price signal for efficient management of blood and blood product
  • Nine health services selected for stronger price signal

Department pays national organisations

The department provides the current funding for blood and blood products to the national organisations that collect, process and deliver blood products to health services.

Health services do not receive funding or pay the national organisations directly and therefore they do not have a price signal contributing to their efforts to efficiently manage blood and blood products.

The national approach for managing and paying for blood and blood products is used by all jurisdictions. The obligations and responsibilities for each stakeholder have been established through agreements. 

Blood is a scarce resource

Blood and blood products are scarce resources that require effective management, and reducing overall cost through reduction in waste has significant benefits to the system and the community. 

Achieving the same or better outcomes for patients at a reduced cost is beneficial for the system because it frees up often limited resources to be used elsewhere.

Strengthening the price signal

A range of national and local efforts are underway to reduce the waste of fresh blood products.  Previous funding approaches have resulted in a weak price signal for health services.  This reduced the incentive for providers to achieve further efficiency.  To promote optimal management of the limited blood resources a stronger financial incentive has been considered necessary.

Nine health services selected

The nine health services selected account collectively for approximately 60 per cent of the total cost of blood and blood products.  Each of the nine health services has a diverse mix of blood and blood products.  The large volume and diverse mix increases the ability of the health service to realise efficiency improvement.  

Private health services, smaller public health services and other providers have been excluded because: 

  • The department does not have funding arrangements with private hospitals, and the Human Tissue Act (Vic) 1982 regulates buying and selling of blood
  • Private pathology largely services the private hospitals, with many of these hospitals individually representing less than two per cent of the total budget
  • Smaller public health services individually account for less than two per cent of the total budget. 

These exclusions are in place to ensure that the program of devolved blood budgets is administratively manageable by all parties.

Further information

Manager, Blood And Pharmaceutical Programs
Phone: 61 3 9096 2506
Email: Michael.Furey@dhhs.vic.gov.au.