Alberta's healthcare system is facing challenges with higher costs

Alberta's healthcare system is facing challenges with higher costs and underperformance relative to other provinces in Canada and international peers.

One potential solution to address these issues is transitioning to an activity-based funding (ABF) system for hospital financing. The current global budget approach does not adequately reflect the real costs of care delivery and can lead to care rationing and inefficiency.

ABF allocates a fixed payment per service rendered, adjusted for factors such as patient complexity, which provides financial incentives for hospitals to treat more patients efficiently. This shift can encourage hospitals to view patients as sources of revenue rather than costs to be managed, potentially improving outcomes.

Quebec's experience with patient-based funding, a variant of ABF, offers a promising case study. Since its introduction in 2004, the program has increased surgical volumes and reduced wait times for certain procedures. Expanded pilot programs in radiation oncology and imaging services have shown further improvements in productivity and cost reduction. By 2027-2028, 25% of care and services at physical health facilities in Quebec are expected to be funded through ABF.

Australia provides another example of successful ABF implementation, with the model covering 87% of total hospital spending and contributing to decreased waiting lists, hospital stays, and readmissions. The system includes quality and safety standards to ensure that cost reductions do not compromise service quality.

Considering these examples, Alberta would likely benefit from adopting an ABF system for hospital funding, which could lead to better resource allocation, increased efficiency, and improved patient access to timely care. The province should analyze the best practices from these models to tailor an ABF system to its own context and healthcare objectives. This shift could be a critical step in addressing the persistent issues of cost and accessibility in the Alberta healthcare system.