Some health policy experts are warning a new surgical funding model now being used in a dozen Alberta public hospitals is unlikely to be a silver bullet for addressing long surgical wait times.
The province recently launched patient-focused funding for hip and knee replacements, cataract surgeries and shoulder repairs at 12 public hospitals.
With this model, hospitals are paid based on the number and type of procedures they perform in lieu of receiving fixed budgets. Set rates also take into account the complexity of cases.
At a recent news conference, Premier Danielle Smith touted the plan as a way to make hospitals more efficient.
“It rewards hospitals for treating more patients instead of making every patient a cost,” she said.
“And it’s a system that is transparent. It shows taxpayers where their money is going, and it means we, as government, can hold hospitals and other providers accountable.”
This is the first phase of a larger rollout. The province plans to expand the model to all public hospitals and more surgeries down the line.
“The idea and the concept is not that bad. The idea is that the funding follows the patient,” said Stacey Litvinchuk, a former senior program officer of surgery operations at Alberta Health Services.
But Litvinchuk is worried about how the plan will be executed in Alberta’s hospitals, which are already struggling.
“I think it could put the system further at risk,” she said, adding hospital budgets and staffing levels are already stretched.
“When they do more volume, it’s going to pull resources away from other complex surgical procedures [and] other complex care within a hospital.”
The danger, according to Litvinchuk, is that Albertans could end up waiting longer for serious procedures, including cancer and heart surgeries, at a time when many are already waiting longer than clinically recommended.
The Alberta government said the plan will not direct hospitals to simpler cases, and they will still have the authority to make decisions about who they treat and how.
“Patient complexity is explicitly built into the funding formula, and no funding system — including the current global model — prevents a hospital from choosing how to allocate its resources internally,” press secretary Maddison McKee said in an email.
“What changes is the funding mechanism, not the clinical priorities that govern care.”
Shifting how hospital funding is doled out is not a new practice.
In 2013, the Canadian Institute of Health Information published a document on activity-based funding (ABF). At the time it said many Canadian jurisdictions were eyeing some form of it as a way to improve access and address growing wait times.
Different forms of the model have been used to varying degrees in other provinces and other countries for years.
British Columbia tried a version of it, redirecting a portion of global budgets at its 23 largest hospitals, starting in 2010. The program quietly shuttered a few years later.
Quebec, which began rolling out its version of patient-focused funding about a decade ago, has also moved away from this system.
CBC News reached out to Santé Québec, which runs the health system in that province, and was told patient-focused funding was suspended in 2024 and is no longer used.
Alberta unveils new surgery funding model for public hospitals
“It’s not a silver bullet to decrease waitlists or improve access. It’s not a silver bullet to reducing costs or spending,” said Jason Sutherland, a professor and director for the Centre for Health Services and Policy Research at the University of British Columbia.
“In many implementations, spending goes up because volume goes up. So it really has to be a measured approach to: ‘what problem do we want to solve with activity-based funding?’”
According to Sutherland, the model does create a financial incentive for hospitals to do more and is one of the “strongest policy options” for provincial governments with that goal in mind.
Sutherland, who studied the B.C. experience, said its version of patient-focused funding had a very limited impact. While there was an increase in the volume of care in the largest health region, no difference was found in the other regions, he said.
“The experience provides a number of key lessons for other provinces contemplating similar reforms; the small magnitude and short-term reforms in the province did little to change hospitals’ behaviors quickly, if at all,” the study, published in 2016, concluded.
Researchers did not find any evidence that the quality of care was impacted in B.C.
Ontario also has had a version of patient-focused funding in place for more than 10 years, according to Sutherland.
The Montreal Economic Institute, which calls itself an independent public policy think tank, issued a paper in 2024 calling for Alberta to adopt activity-based funding.
“ABF has been associated with reduced hospital costs, increased efficiency, and shorter wait times, areas where Alberta is lacking and reform is needed,” the paper stated.
About 26,000 Alberta surgeries will be paid for this way during the current fiscal year, according to the Alberta government.
“Thinking that activity-based funding … alone is going to save the day is misguided,” said Karen Palmer, who led a systematic review of international jurisdictions using activity-based funding, published in 2015.
“It hasn’t proven to do that anywhere else in the world. So I don’t expect it will save the day in Alberta.”
Palmer, an adjunct professor at Simon Fraser University and the University of Toronto, looked at jurisdictions where entire global hospital budgets are replaced by fixed payments for each episode of care. Alberta is not currently doing this.
The study found a 24-per-cent increase in patients discharged into post-acute care, meaning they were released before they were ready, she said, adding that can lead to the need for more support outside of the hospital.
The results also appeared to show an increase in readmission, she said.
“Any jurisdiction that’s going to adopt activity-based funding can’t be certain that it will be harmless,” said Palmer.
“It’s just an experiment, really.”
According to Palmer, the funding model encourages more efficient scheduling, higher throughput and fewer idle operating room hours, but on its own it doesn’t increase staffing numbers or post-op beds to support that.
She expects in Alberta any initial improvement in wait times for targeted procedures would be temporary.
“And then as happened in other countries, for example in Australia, the improvements were not even over time. They reached plateaus and then the waits became longer again,” she said.
“I think this is why many countries that implemented full-on activity-based funding are actually moving away from it and going back to sort of these mixed funding models.”
The Alberta government has said patient-focused funding is part of a larger strategy to boost surgical capacity, which includes recruiting more health-care workers.
In an email, it said its “phased implementation allows Alberta to monitor early results and refine the approach over time.”
It has not shared any timelines.
