Paying for Hospital Activity
This is something that I just recently learned about the Canadian health system — you don’t get paid more (as a hospital) for treating more patients.
That’s really shocking, considering the notion of medical “piecework” traces back through a long history. Piecework has it’s flaws — getting paid for “what you do” instead of outcomes can lead to unnecessary testing, medications, or surgeries. But just paying a pre-planned amount, regardless of volumes, doesn’t seem like the answer either.
So, British Columbia is looking to move away from that:
Health Minister George Abbott said Canada is pretty much the only jurisdiction in the world where hospitals receive a block of annual funding, regardless of how many patients they treat. Many European nations use so-called activity-based funding.
Abbott said a continuing pilot project at four Vancouver emergency departments has shown patients were assessed 10 per cent quicker when the facilities were given financial incentives to provide speedier service.
Abbott said results show that activity-based funding presents a promising opportunity for patients because wait times would be reduced as hospitals increase productivity and compete for business.
“We will continue to do what I think will be a gradual shift from block funding to more activity-based funding,” he said, adding the current system doesn’t reward facilities that are innovative.
A Canadian surgeon is a loud critic of the current approach:
Handing hospitals a chunk of money every year is “foolish,” Day said, because it doesn’t encourage productivity or provide managers with any incentive to fill spots when procedures are cancelled.
The lack of incentive might seem pretty obvious, wouldn’t it? In healthcare, we count on people being caring and being aligned around wanting to treat more patients — at least there’s more alignment on that note than there often is in manufacturing. Being able to care for more patients should be rewarding and should feel good. So it’s interesting to wonder why an institutional laziness might occur where people won’t work harder unless they’re paid more.
A critic of the potential change says:
“Activity-based funding formulas, for instance, don’t reward regions for keeping people healthy and engaging in health promotion activities as opposed to interventional activities,” said Noseworthy, a member of the board of directors for Doctors for Medicare.
No easy answer, is there?
Noseworthy advocates funding based on population size, as is the case in Alberta.
But Alberta has had a rapidly growing population, thanks to the oil boom, so the budgeting process might not keep up with the population growth.