Alberta to tie hospital funding to number, type of procedures performed

Alberta's government will soon tie public hospital funding to the number and type of procedures performed, a move critics warn won't improve the public system and will only accelerate private delivery.

Premier Danielle Smith said Monday the new "activity-based" model, expected to be implemented for some surgeries in 2026, will drive costs down by fostering competition among public and private providers who will be rewarded for delivering better results.

"The old top-down approach offers no incentive to do more for patients and limits our ability to direct dollars where they can get the best results," Smith said.

"The problem here is [that] hospitals miss their target and there's no accountability because they've already got the pot of money."

Smith said in publicly funded, privately run surgical facilities, routine eye, hip and knee surgeries can be done much faster than in public hospitals. She said the new model will see government funding follow the patient, making health care more efficient, lowering wait times, providing more transparency and attracting more surgeons to the province.

She added that if hospitals have idle operating room time, they will need to "be creative" and become more efficient. Otherwise they'll lose funding or their operating room space could be lent out to private surgical companies.

Smith's United Conservative government is in the midst of dismantling Alberta Health Services, once responsible for overseeing the entire provincial health system, and reducing it to a hospital services provider.

One of four new public health organizations being created, Acute Care Alberta, began operations a week ago.

Alberta NDP Opposition health critic Sarah Hoffman said the publicly funded health-care system needs to be efficient, but it shouldn't be forced to sacrifice quality based on turning patients over quickly.

Hoffman said the new model is about shifting more funding, and profits, to private surgical providers.

"[It] feels a lot like further steps to create more opportunities for the government to privatize health care," she said. "They are more focused on what they like to call competition than they are on actually making sure people get good health care."

The Health Sciences Association of Alberta, a union representing health-care workers, said the model will create incentives for private companies to cherry-pick low-complexity surgeries that maximize profits and could leave Alberta's hospitals under-resourced and understaffed.

"The number and quality of major surgeries performed in the public system will go down, as hospitals lose staff and become forced to rent public [surgical] suites back to specialists within these same corporations," said association president Mike Parker.

The current "global" grant funding model will still be used for small rural facilities, general admissions and emergencies, but Smith said it's not working for surgeries in the province's busiest hospitals.

Parker said the only reason the new model isn't being implemented in rural communities is because rural populations can't create a large enough market for for-profit providers.

Health Minister Adriana LaGrange said the cost per surgery will be made publicly available, and said doctors and facilities will be compensated for doing more complex surgeries.

"They will actually have increased funding for the more complex ones," she said.

Quality is most important, AMA president says

The Alberta Medical Association hasn't yet been consulted on the changes but president Dr. Shelley Duggan hopes physicians will be involved in the working group. 

Duggan said the new funding model has the potential to help health care by changing how hospitals see patients. However, she said there need to be appropriate guardrails in place. 

"Quality has to be a prime metric that must be followed," she said. "A hospital could say 'well we do two times more procedures than the other hospital so you should pay us more.'

"But perhaps they have more complications, more infection. The patient comes back to hospital more frequently. So, it is going to be very important that the details are well thought of before this is rolled out."

Andrew Longhurst, a health policy researcher at Simon Fraser University in British Columbia, said changing the funding model when the province is breaking apart Alberta Health Services is a bad idea. 

He is concerned that Smith and LaGrange cite jurisdictions such as Europe and Australia as examples where this type is funding is used, without providing proper context. 

Longhurst said facilities have focused on patients with less complex surgeries who don't need any overnight care in the hospital. 

"The incentive with activity-based funding is to discharge the patient as quickly as possible, because anything beyond the surgery itself is a cost, and you don't want that eating into your overhead," he said. 

"What we see is that perverse incentive of discharging and getting rid of that patient as quickly as possible."

Longhurst said Scandinavian countries save costs by discharging their surgical patients into a more robust community and home health care system than what Alberta has.