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Alberta should fund hospitals based on treatments performed to ease chronic wait times, urges MEI

  • Australian waits times dropped 16 per cent within one year after implementing activity-based funding.

Thursday, April 25th, 2024 – Adopting activity-based funding for hospitals in Alberta could shorten wait times and improve productivity, according to a Montreal Economic Institute study.

“Our current hospital funding model incentivizes treating the fewest patients possible, as each new patient represents an additional cost,” explains Krystle Wittevrongel, Senior Public Policy Analyst and Alberta Project Lead at the MEI. “It’s imperative that we transition to activity-based funding immediately in order to start bringing wait times down, as so many other jurisdictions have done.”

Wait times from referral by a general practitioner to treatment by a specialist in Alberta are among the highest in Canada: 33.3 weeks, compared to 29.4 weeks in Quebec and 20.3 weeks in Ontario.

Currently, Alberta’s hospitals are financed under a system called “global budgeting.” This involves allocating a pre-set amount of funding to pay for a specific number of services based on previous years’ budgets.

Quebec is transitioning to a model known as “activity-based funding.” Under this system, hospitals receive a fixed payment for each treatment delivered.

In Quebec, after adopting activity-based funding, the cost of an MRI fell by four per cent and the number of MRIs performed increased by 22 per cent. In the radiology and oncology sector, productivity increased by 26 per cent while procedure costs decreased by seven per cent.

Similarly, in the colonoscopy and digestive endoscopy sector, productivity increased by 14 per cent and the case backlog shrank by 31 per cent.

This isn’t unique to Quebec, as Australia experienced a 16 per cent drop in wait times within the first year after activity-based funding was implemented, according to the study.

“We can’t keep doing the same thing while expecting different results,” said Wittevrongel. “If we want a truly patient-centric healthcare system, let’s transition to something that we know works: activity-based funding.”

The MEI study is available here.

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The MEI is an independent public policy think tank with offices in Montreal and Calgary. Through its publications, media appearances, and advisory services to policy-makers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship. 

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