Study finds flaws in new funding model

By: Anna Goshua

Long wait-times are a serious and ongoing concern in the Canadian health care system. In fact, a study by the Canadian Institute for Health Information showed that four hospitals, one in Ontario, exceed the suggested three-hour wait period by two or even three times.

The predominant funding model for hospitals is global budgeting. Hospitals get a fixed amount of funding to cover costs of all services for the duration of the year. This means there is incentive to turn away additional patients, particularly those who are able to pay for their own treatment.

In light of the ways that global budgeting can compromise patient care, the concept of activity-based funding has been gaining popularity. In this model, hospitals are paid at a predetermined linear rate for providing a service to a patient. For instance, a certain amount of money would be granted to treat a patient suffering from pneumonia, regardless of how long the patient’s hospital stay was or the resources used.

“The move to activity-based hospital funding will lead to improved patient outcomes through a more consistent use of best practices and a better distribution of resources across the health care system,” David Jensen, a spokesman for the Ministry of Health, told the CBC.

However, a study led by McMaster researchers has shown that this model may not be as flawless as previously thought. In reviewing 65 relevant studies in countries where activity-based funding has been put in place, they found that there was a large increase in patients recovering in community-based facilities rather than hospitals. The rapid discharge of patients who would benefit from a longer hospital stay could compromise recovery and lead to heightened readmission rates.

“It's not more efficient if they die when they would otherwise not have died,” said Gordon Guyatt, a professor in the Department of Clinical Epidemiology and Biostatistics at McMaster, to the CBC. “It's not a good thing if they get readmitted to hospital.”

The study also raised concerns about the difficulties that the activity-based model would introduce toward tracking medical data. Hospitals would have the incentive to exaggerate records to make patients seem sicker than they actually are, so as to receive more funding.

The current aim of the government is to implement this model in 30 percent of all Ontario hospitals. While the intention to improve patient care is good, current evidence suggests that activity-based funding has been met with very mixed success. As such, rushing into its implementation may not yield the best results for patients seeking hospital care.

"It really is a question mark," Guyatt said. “If they were going to say, ‘OK, we're going to institute it in two communities, two hospitals,’ I would be much more sympathetic.”

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