Overview
Alberta’s government is taking another step in refocusing the health care system to ensure investments in health care are managed more efficiently.
This work includes taking the opportunity to reform health care funding to improve transparency, make health spending more accountable and improve overall health care delivery.
We are exploring changes to acute care funding through the development of a patient-focused funding model for Alberta.
About patient-focused funding
Patient-focused funding, also known as activity-based funding, is a way of paying hospitals for the type and volume of services they provide. The funding model is based on the number and type of patients who are treated and the complexity of their care, which ensures funding is tied to the actual care provided to patients. A value is placed on all the services a hospital provides and funding is allocated accordingly. By providing financial incentives for hospitals to increase volume, patients may have improved access to care and lower wait times.
This type of funding model focuses on efficiency, value for money and creates greater accountability and transparency in spending. A policy brief from the University of British Columbia's Centre for Health Services and Policy Research states that activity-based funding creates financial incentives for hospitals to increase activity levels, funding is adjusted to reflect patients’ levels of clinical complexity, and costs can be reduced through more efficient use of resources. It is a transparent funding method because each hospital is paid the same amount for the same type of hospitalizations.
Support for the model
The Canadian Institute for Health Information indicates that activity-based funding can increase efficiency of resources, improve transparency of health care spending, improve access to care, increase equity in funding among health care organizations and provide better accountability in the health care sector.
Patient-focused funding offers an alternative to global budget funding models and has been implemented across most developed nations over the past 30 years. It has been successfully implemented in Australia and many European nations including Norway and Sweden to address wait times and access to health care services, and is currently used in British Columbia, Quebec and Ontario in various ways.
Improving our health care system
Alberta is well-positioned to pursue patient-focused funding because of the implementation of Connect Care, which collects clinical data on all procedures in our hospitals so information flows between health care providers and patients throughout their care journey. Patient-focused funding will enable a clearer line of sight for us to ensure that the right care is delivered at the right time, and in the right place, as multiple organizations begin to provide health care services across the province.
When it will start
A patient-focused funding working group, which includes members from Acute Care Alberta, Alberta Health Services, Covenant Health and Alberta Health, will review relevant research and the experience of other jurisdictions, engage stakeholders, define what is meant by patient-focused funding in the Alberta context and identify and run a pilot to determine where this funding approach can best be applied and implemented as early as the 2025-26 fiscal year.
This work will also include:
- recommending how to expand patient-focused funding to other procedures performed by health service delivery operators of Acute Care Alberta
- identifying ways to accommodate the funding model for small or rural hospitals
- addressing additional costs that may be incurred related to new investments in technology, data capturing reporting procedures, auditing or other increases in administration and IT costs to effectively implement and track patient-focused funding
Final recommendations will be provided to the Minister of Health later this year with implementation of patient-focused funding for select procedures across the system in 2026.