Key messages

  • Health services are funded for patient transport as part of the regular funding approach
  • Health services with high levels of patient transport expenditure as a component of total revenue receive additional funding.  High levels of expenditure occur because of geography or capability to manage patients with complex needs.  This particularly occurs for health services in rural Victoria
  • The threshold for receiving additional funding is 1.5 per cent of total recurrent funding
  • Additional funding is calculated as 75 per cent of expenditure above the threshold
  • The funding provided in any year is calculated annually using the previous year’s reported expenditure on patient transport and the current year’s total recurrent funding.

Summary of funding policy 

Funding to health services for patient transport is provided as part of the regular funding provided for the patient receiving care.  Some health services due to the geographic location and the size and capability of services to manage patients with complex needs have higher costs associated with transporting patients.  Higher transport costs are particularly the case for health services in rural Victoria. 

The department provides additional funding to health services that report outlier levels of expenditure for patient transport.  The department sets a threshold percentage of total funding that a health service must have exceeded in order to receive additional funding.  The department has set the threshold at 1.5 per cent of total recurrent funding.

The department calculates the additional funding to be provided to a health service as 75 per cent of the expenditure that has been incurred above the threshold. The department uses the expenditure data reported in the Chart of Accounts monthly submission from the previous year (to the year in which funding is received) and the total recurrent funding from the previous year (to the year in which funding is received) to make its assessment of whether the threshold has been reached to receive additional funding.

Justification for the funding policy approach

The funding policy for patient transport is based on:

  • Expenditure level
  • Outlier reimbursement threshold
  • 75 per cent cost recovery

Expenditure levels

The figure below shows that different health services have differences in the relative proportion of their total recurrent funding that is used to pay for transport.   

Diagram showing health service expenditure level on patient transport

Outlier reimbursement threshold

While the department accepts there are lots of differences between health services in the relative proportion of where expenses are incurred, patient transport is one area where the health service managers cannot significantly influence the costs.  

This occurs because patient transport costs are incurred by the organisation sending the patient.  Expenditure costs are not fully controllable because: 

  1. Health services a long way from Melbourne have higher costs due to the greater likelihood of air transfers, but the price paid in the regular funding approach does not provide additional funding due to distance from Melbourne, and 
  2. Smaller health services that have less ability to care for complex patients are more likely to transfer a patient before admission and thereby not receive any revenue to offset the transport costs.

The department uses a block grant to offset these additional costs.  The department has set the threshold to be eligible for the block grant at 1.5 per cent of total recurrent funding.  This threshold results delivers funding to health services that have outlier levels of expenditure.

75 per cent cost recovery

The department provides partial cost recovery for expenditure above the threshold in order to maintain an incentive for the efficient use of patient transport.  

Further information

Assistant Director, Service and Funding Projects
Phone: 61 3 9096 8372
Email: Denise.Ferrier@dhhs.vic.gov.au.