Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698060502597.pdf (Liberia)
Activity-Based Funding Principles and Developments in Canada Jeff Hatcher Canadian Institute for Health Information May 19, 2016 jhatcher@cihi.ca cihi.ca @cihi_icis Canadian health care What makes the news?
Aging population • Increase in disability and chronic disease Health disparities • Social determinants Quality • Timely, effective, safe Cost • Sustainability 2 Canada: Jurisdiction and responsibility for health care delivery 10 provincial and 3 territorial governments • Regional health authorities Federal government • Responsible for certain populations (e.g., First Nations) 3 Canada: Some milestones in public health insurance All provinces have universal hospital insurance, with cost-sharing by federal government All provinces have universal insurance for physician care 1961 1972 1947 1962 Province of Saskatchewan introduces universal insurance for hospital care Saskatchewan introduces universal insurance for physician care 4 Canada: Health care delivery Hospitals • Some publicly owned; some not-for-profit • Payment: Global budgets > case mix funding 5 Canada: Health care delivery Physicians • Self-employed with hospital admitting privileges • Payment: Fee for service > capitation 6 Canada: Health care delivery Long-term care homes • Some publicly owned; some not-for-profit; some private for-profit • Payment: Global budgets > case mix funding 7 Canadian health care: Value?
8 Canada: Wait time for knee replacement Source: Wait Times web tool, CIHI.

www.cihi.ca/en/health- system-performance/ performance-reporting/ international/oecd-interactive- tool-quality-of-care > Access > Wait Time: Knee Replacement.

9 Canada: 30-day in-hospital fatality for heart attack Source: Wait Times web tool, CIHI.

www.cihi.ca/en/health- system-performance/ performance-reporting/ international/oecd-interactive- tool-quality-of-care > Quality of Care > 30-Day In-Hospital Fatality: AMI.
10 Canada: Access to family doctor within a day Source: Wait Times web tool, CIHI.

www.cihi.ca/en/health- system-performance/ performance-reporting/ international/oecd-interactive- tool-quality-of-care > Access > Same or Next Day Appointment.

11 Canada: Obstetric trauma Source: Wait Times web tool, CIHI.

www.cihi.ca/en/health- system-performance/ performance-reporting/ international/oecd-interactive- tool-quality-of-care > Patient Safety > OB Trauma: Instrument.
12 Health spending per person, 2013 Norway Sweden Denmark CANADA Iceland Finland 29 country average Netherlands* Estonia $6.170 $5.153 $4.847 $4.569 $3.677 $3.645 $3.566 $3.309 $1.663 $0 $1.000 $2.000 $3.000 $4.000 $5.000 $6.000 $7.000 Notes * Data for 2004.

Source OECD Health Statistics 2015 (June edition), OECD.

© Canadian Institute for Health Information, 2015.

13 Canadian health care: Value?

14 Canada Methods of funding hospitals and long-term care homes 15 Canada: Global budgets 16 What is casemix?
The mix of patients treated by hospitals or other health care facilities 17 Casemix groups and cost weights Casemix group • Clinically similar patients Casemix group Average cost Cost weight Hip replacement $12,000 Cost weight Asthma • Reflects resource intensity Normal delivery Normal newborn $2,880 $3,360 $840 All case mix groups $6,000 18 2.00 0.48 0.56 0.14 1.00 Casemix-based budgets Funding for upcoming year • Based on volumes and burden of morbidity of patients from from previous year 19 Activity-based funding (ABF) Case mix group Hip replacement Asthma Normal delivery Normal newborn Funding Payment price $12,000 $2,880 $3,360 $840 Volume Payment price 20 ABF design and implementation • Scope of ABF and exclusions • Activity level targets • Pricing incentives 21 Canadian experience with ABF 22 Alberta: ABF for long-term care homes Funding of health care costs only • Accommodation paid for by resident Model factors • Beds, occupancy, case mix and turnover Objective is consistency, fairness and transparency 23 Alberta: What’s next?
• Expand ABF into supportive living and home care • ABF for hip and knee replacements 24 Ontario: Hospital funding • Action Plan for Health, 2012 • Health system funding reform 25 Ontario: Hospital funding Health Based Allocation Model (HBAM) Quality-Based Procedures (QBPs) • Casemix-based budgeting • Activity-based funding • ~40% of public funding, ~$5B • Goal is 30% of public funding • Objectives: Equitable allocation among hospitals, greater efficiency • Objectives: Reduce practice variation, increase quality of care, greater efficiency 26 Ontario: Health Based Allocation Model • Calculate expected expenses for each patient ‒ Patient characteristics: diagnoses, age, gender, socio-economic status, rurality ‒ Hospital characteristics: teaching, remoteness, size, specialization • Apply population growth rates • Sum to hospital level 27 Ontario: Quality-Based Procedures (QBPs) • 17 QBPs currently being funded • Selection process - Cost impact, clinical evidence, practice variation, support for change • Steps in development - Best practices, clinical process improvement, pricing on best practice, quality indicators • Hospital A’s funding = Price × Hospital A’s volume 28 Ontario: What’s next?
• Review and strengthen HBAM and QBPs • Explore integrated funding models 29 Canadian experience with ABF 30 Possible favourable effects of ABF • Equity in allocations across hospitals • Transparency • Cost-efficiency • Clinical practice • Timely and effective care • Wait times and access to care • Patient satisfaction 31 Possible unfavourable effects of ABF • Increased system costs • Upcoding • Unnecessary care • Cherry picking • Skimping 32 Activity-based funding in Canada, in summary • Early indications that ABF is well received and contributes to value • ABF has gained a foothold • ABF implementations are in stages – no rocking the boat • Hints are that ABF will spread 33 cihi.ca jhatcher@cihi.ca @cihi_icis