Alberta
Activity-Based Hospital Funding in Alberta: Insights from Quebec and Australia
From the Montreal Economic Institute
Quebec has experienced increased productivity and efficiency, as well as reduced costs, in those sectors to which ABF has been applied
Alberta’s healthcare system costs more than those of many of its peers across Canada and internationally, yet underperforms by many metrics—wait times perhaps being the most visible.(1) For instance, while Alberta consistently spends a fair deal more per capita on health care than Canada’s other large provinces do, the median wait time from referral by a GP to treatment by a specialist was 33.3 weeks in 2022, versus 29.4 weeks in Quebec, 25.8 weeks in British Columbia, and 20.3 weeks in Ontario. Albertans waited a median 232 days for a hip replacement that year, longer than those in Quebec, British Columbia, and Ontario.(2) In Australia, meanwhile, the median wait time for a total hip replacement in 2022 was 175 days in public hospitals.(3)
One of the things keeping Alberta’s healthcare system from better performance is that it relies on global budgets for its hospital financing. Such a system allocates a pre-set amount of funding to pay for an expected number of services, based largely on historical volume. The problem with global budgets is that they disregard the actual costs incurred to deliver care, while undermining incentives to improve outcomes. This ultimately leads to rationing of care, with patients viewed as a cost that must be managed.
Activity-based funding systems are associated with reduced hospital costs, increased efficiency, and shorter wait times, among other things.
An alternative is activity-based funding (ABF), which has largely replaced global budgeting in many OECD countries, and is starting to do so in some Canadian provinces.(4) With ABF, hospitals receive a fixed payment for each specific service delivered, adjusted for certain parameters.(5) If a hospital treats more patients and delivers more services, it receives more funding; if it does less, it receives less. In essence, the money follows the patient, which has a dramatic effect: patients are now viewed as a source of revenue, not merely as a cost. Studies have shown that ABF systems that include appropriate safeguards for quality and waste are associated with reduced hospital costs, increased efficiency, and shorter wait times, among other things.(6)
To increase its capacity and performance, Alberta should consider moving to such a system for hospital financing. As over 25% of total health spending in the province goes to hospitals,(7) driving down costs and finding efficiencies is of paramount importance.
ABF models vary by jurisdiction and context to account for distinct situations and the particular policy objectives being pursued.(8) Two jurisdictions provide interesting insights: Quebec, with ABF hospital funding being gradually implemented in recent years, and Australia, where after more than three decades, ABF is the rule, global budgets the exception.
ABF in Quebec: Increased Performance and Decreased Costs
Quebec’s hospital payment reforms over the past two decades have been aimed at better linking funding with health care delivery to improve care quality and access.(9) These patient-based funding reforms (a type of ABF) have resulted in increased volumes and efficiency, and reduced costs and wait times for a number of surgical and other procedures in Quebec.(10)
These reforms started in 2004, when Quebec applied ABF in the context of additional funding to select surgeries in order to reduce wait times through the Access to Surgery Program.(11) The surgeries initially targeted were hip replacement, knee replacement, and cataract surgeries, but other procedures were eventually integrated into the program as well. Its funding covered the volume of surgeries that exceeded those performed in 2002-2003, and it used the average cost for each specific surgery. Procedures were classified by cost category, which also took into account the intensity of resource use and unit cost based on direct and indirect costs.
The expansion of ABF in Quebec aims to relieve hospital congestion by driving down wait times and shrinking wait lists.
By 2012-2013, this targeted program had helped to significantly increase the volume of surgeries performed, as well as decrease wait times and length of stay.(12) However, as ABF was applied only to surplus volumes of additional surgeries, efficiency gains were limited. For this reason, among others, the Expert Panel for Patient-Based Funding recommended expanding the program,(13) and in 2012, the Government of Quebec began considering further pilot projects for gradual ABF implementation.(14)
- In 2015, ABF was implemented in the radiation oncology sector, which resulted in better access to services at a lower cost, with productivity having increased more than 26% by 2023-2024, and average procedure costs having fallen 7%.(15)
- In 2017-2018, ABF was implemented in imaging, which resulted in the number of magnetic resonance imaging tests increasing more than 22% while driving the unit cost of procedures down 4%.(16)
- Following the above successes, in 2018-2019, the colonoscopy and digestive endoscopy sector also moved to ABF, which led to a productivity increase of 14% and a 31% decrease in the case backlog.(17)
Overall, then, Quebec has experienced increased productivity and efficiency, as well as reduced costs, in those sectors to which ABF has been applied (see Figure 1).
The Department of Health and Social Services continued to expand ABF to more surgeries in 2023, following which it was expected that about 25% of the care and services offered in physical health in Quebec hospitals would be funded in this manner, with the goal of reaching 100% by 2027-2028.(18) Further, the 2024-2025 budget expanded ABF again to include the medicine, emergency, neonatal, and dialysis sectors.
This expansion of ABF aims to relieve hospital congestion by driving down wait times and shrinking wait lists.(19) It will also align Quebec’s health care funding with what has become standard in most OECD countries. In Australia, for instance, ABF is the rule, not the exception, covering a large proportion of hospital services.
Australia’s Extensive Use of ABF
Australia also implemented ABF in stages, as Quebec is now doing. It was first introduced in the 1990s in one state and adopted nationally in 2012 for all admitted programs to increase efficiency, while also integrating quality and safety considerations.(20) These considerations act as safeguards to ensure efficiency incentives don’t negatively impact services. For instance, there are adjustments to the ABF payment framework in the presence of hospital acquired complications and avoidable hospital readmissions, two measures of hospital safety and service quality.(21) If service quality were to decrease, funding would be adjusted, and payments would be withheld. Not only has ABF been successful in increasing hospital efficiency in Australia, but it has also enabled proactive service improvement, which has in turn had a positive impact on safety and quality.(22)
ABF now makes up 87.0% of total hospital spending in Australia, ranging from 83.6% in Tasmania to 93.0% in the Australian Capital Territory.
Currently, ER services, acute services, admitted mental health services, sub-acute and non-acute services, and non-admitted services are funded with ABF in Australia. This includes rehabilitation, palliative, geriatric and/or maintenance care.(23) Global budgets are still used for some block funding, but this is the exception, restricted to certain hospitals, programs, or specific episodes of care.(24) Small rural hospitals, non-admitted mental health programs, and a few other highly specialized therapies or clinics or some community health services tend to be block funded due to higher than average costs stemming from a lack of economies of scale and inadequate volumes, among other things.
When first introduced, ABF made up about 25% of hospital revenue (approximately where Quebec currently stands).(25) ABF now makes up 87.0% of total hospital spending in Australia, ranging from 83.6% in Tasmania to 93.0% in the Australian Capital Territory (see Figure 2).
There is more variability, however, at the local hospital network level within territories or states. For instance, between 2019 and 2024, an average of 92.3% of total funding for the hospitals in the South Eastern Sydney Local Health District was ABF, and just 7.7% was block funding.(26) For the hospitals in the Far West Local Health District, in comparison, ABF represented an average of 72.0% of total funding, and block payments 28.0%, over the same period.(27)
The proportion of ABF funding per hospital is dictated, for the most part, by the types and volumes of patient services provided, but also by hospital characteristics and regional patient demographics.(28) For example, there could be a need to compensate for differences in hospital size and location, or to reimburse for some alternative element of the fixed cost of providing services. In the Far West Local Health District, on average 65.1% of block funding between 2019-2020 and 2023-2024 was provided for small rural hospitals, while only 1.4% of the block funding in the South Eastern Sydney Local Health District was for these types of hospitals.(29) Ultimately, these two districts serve very different populations, with the Far West Local Health District being the most thinly populated district in Australia.(30)
Overall, ABF implementation in Australia has significantly improved hospital performance. Early after ABF implementation, the volume of care in Australia increased, and waiting lists decreased by 16% in the first year.(31) Between 2005 and 2017 the hospitals that were funded by ABF in Queensland became more efficient than those receiving block funding.(32) In addition, ABF can contribute to reductions in extended lengths of stay and hospital readmission,(33) both of which are expensive propositions for health care systems and also tie up hospital beds and resources.
Conclusion
ABF has been associated with reduced hospital costs, increased efficiency, and shorter wait times, areas where Alberta is lacking and reform is needed. To increase its health system performance, Alberta should consider emulating Quebec and moving to an activity-based funding system. Indeed, based on the experience of countries like Australia, widespread application should be the goal, as it is in Quebec. Alberta patients have already waited far too long for timely access to the quality care they deserve. The time to act is now.
The MEI study is available here.
* * *
This Economic Note was prepared by Krystle Wittevrongel, Senior Policy Analyst and Alberta Project Lead at the MEI. The MEI’s Health Policy Series aims to examine the extent to which freedom of choice and entrepreneurship lead to improvements in the quality and efficiency of health care services for all patients.
The MEI is an independent public policy think tank with offices in Montreal and Calgary. Through its publications, media appearances, and advisory services to policy-makers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.
From COVID Chronicles
It confirms big problems with public health and provides a roadmap for how to do it right the next time around; let justice and healing begin.
The Government of Alberta has released a report following an investigation into the province’s response to the declaration of the COVID-19 pandemic.
The announcement can be found in this X post from, Eric Bouchard, a member of Alberta’s legislative assembly.
The report itself can be found here.
This is a report that is well-worth reading from beginning to end. The government identified numerous major problems with the handling of the pandemic response by Alberta Health Services. It is important to note that the current government in Alberta is not responsible for how the province responded to COVID-19. That responsibility falls upon the shoulders of the previous government. Thankfully, the current government is interested in knowing the truth, the whole truth and nothing but the truth. They also believe in being transparent with the public that they serve.
One of my biggest concerns from the report is identified in the opening letter where it states, “Our quest for answers was impeded by barriers, including reluctance from key stakeholders to engage with the Task Force’s mandate“. Shame on those involved with developing and implementing COVID-19 policies that failed to cooperate with officials from a sitting government that launched this investigation for the wellbeing of the public. The lack of transparency from whomever these key stakeholders are is unacceptable.
What I appreciate most about the report is that it is constructively critical, providing a path forward, that includes refocusing the mandate of public health services back onto the public as the primary clientele, as opposed to acting in the service of pharmaceutical companies. It serves as a blueprint to guide future responses. The path forward is based largely on traditional best practices that were established by truly following the science and forged in the successful management of historical outbreaks. It is highly reminiscent of the national pandemic response plans that existed in 2020; the ones that were supposed to be implemented for COVID-19 but that were thrown out within days of the pandemic being declared.
I can’t help but wonder how many lives could have been saved, how many hospitalizations could have been prevented, and how much healthier our population and current economies would be if this far more appropriate, science-based plan would have been implemented back in 2020.
This report from the Government of Alberta provides a precedent for the world as overwhelming numbers of people wake up and realize the need for massive reforms within public health.
Further, the report validates many of the concerns that a lot of people had about the response to COVID-19. The totality of evidence highlights how egregious it was to have vilified critical thinkers who simply wanted to engage in robust discussions out of genuine concerns for others and not fall victim to propaganda. Firing people who didn’t want to be coerced into having experimental medical interventions and debatable policies thrust upon them, de-licensing and disciplining independent-thinking health care professionals, and censoring experts under the nefarious disguise of ‘combating misinformation’ and ‘fact checking’; THEY WERE ALL EGREGIOUS WRONGS.
There should be fallout from a damning report like this. The gross mismanagement of COVID-19 has created a huge hot mess. The path forward starts with acknowledging this. Then we need to plot a course to navigate through this mess and thoroughly clean it up. These are essential if there is ever to be healing for all those that were victimized by power brokers that blindly followed propaganda and bought into the hatred and divisive tactics that were passionately modelled by the prime minister on down.
Building on this report, I am honoured to have been invited to speak at an upcoming event in Alberta. It is An Injection of Truth: Healing Humanity.
My talk will dovetail with this report from the Government of Alberta. The event is going to focus on the four pillars of healing. My presentation will start with ripping off the scab and exposing lies from public health agencies that contributed to a myriad of problems within the pandemic response. It will transition into providing some practical recommendations with respect to where we go from here.
Please consider posting your thoughts about this report in the comments section. Do you agree with aspects? Disagree with others? Were criticisms too light or too harsh? Were key issues missed? What do you think about the ideas for moving forward? This is opportunity to provide feedback. You have a sitting government that is showing a willingness to listen to all parties and perspectives. I will share feedback with the Members of the Legislative Assembly that I will be meeting in Alberta on March 3rd.
Alberta
The Davidson Report critiquing the Government of Alberta’s COVID-19 pandemic response finally released: Dr David Speicher
Courageous Truth
Scientific facts, personal views and life’s journey
The Dr. Gary Davidson report has finally been released by the Government of Alberta and confirms big problems with public health and provides a roadmap for managing future pandemics.
Nearly six months after Dr. Gary Davidson’s report was submitted to Premier Danielle Smith, it was publicly released quietly by the Government of Alberta on their website.
The only public statement about the report was on Eric Bouchard’s X account: “Dr. Gary Davidson’s report brings Alberta one step closer to the truth. https://open.alberta.ca/publications/albertas-covid-19-pandemic-response”. Eric followed up by saying “Alberta now has a tremendous opportunity to right many of the wrongs that took place over the last few years. We must work together to heal humanity and to earn back the trust of all Albertans.” and “I am committed to working with Albertans to ensure that the historical pain caused by the response to COVID-19 does not repeat. Thank you, Dr. Davidson, for your incredible work to get this report out. I look forward to hearing Dr. Davidson live on March 3, 2025.”
Purpose:
On November 14, 2022, the Premier of Alberta established a Task Force under the Health Quality Council of Alberta to examine the quality, use, interpretation, and flow of information and data that informed Alberta’s pandemic response to COVID-19 and provide recommendations on how to better manage a future pandemic.
This report critiques the Government of Alberta’s response to the COVID-19 pandemic between 2020 and 2022. The report addresses 9 areas: governance and flow of information, regulatory bodies (e.g. the role of the College of Physicians and Surgeons of Alberta), modelling, non-pharmaceutical interventions, masking, testing, infection-acquired immunity, vaccines, and therapeutics. The task force attempted to remain neutral and examine information on both sides of the narrative. However, there was a “fundamental lack of transparency and willingness to reveal information and discuss decisions and actions taken by AHS during the pandemic.” and the task force found that there was “a lack of willingness on the part of AHS officials to cooperate with the Task Force in our requests for data and information.” [Pg 40-41]
Chapter 6: Testing
As a molecular virologist with expertise in the detection and surveillance of infectious diseases, the task force asked me to provide information and guidance on PCR, rapid antigen testing (RAT), and serological testing for SARS-CoV-2/COVID-19 during the pandemic. The report provides excellent background and the methods used to test people for SARS-CoV-2.
Unfortunately, I continue to see misinformation spread about the reliability of the PCR test, including the number of cycles and “97% false-positives”. Therefore, I will be providing a deep dive into the PCR test over the coming weeks, including presenting insight on one legal case where I served as an expert witness that asked whether or not a PCR test for COVID is a “genetic test” according to the Ontario labour code. I would be happy to answer any questions that people may have.
From The Davidson Report, I would like to highlight two key issues. The first is the classification of a COVID case being determined by a PCR-positive test result driving a “casedemic” rather than a “pandemic” and the second is regarding the millions of dollars wasted on unused PCR reagents and RATs.
It is important to note the following recommendations made regarding testing (P174):
- RT-PCR represents an excellent high-sensitivity test to aid in accurate diagnoses of symptomatic people – if they are used for the intended purpose and at optimal Ct values (vs. Ct values at “high positive” cut-offs).
- Rapid tests with reasonable accuracy should not be used for screening the general population but could be used as an additional diagnostic tool, where clinically indicated.
- We recommend that future pandemic responses prioritize minimizing severe disease and mortality over extensive case detection. Specifically, Alberta should focus on developing a screening tool to help estimate individual risk. This approach will optimize resource use by directing testing capacity, which can be appropriately directed by evidence-based practices, such as testing symptomatic individuals, those whose management may be influenced by test results, and for specific surveillance scenarios.
- We recommend that levels of immunity be gauged using a multi-antibody serological and/or mucosal assay that accounts for both pre-existing immunity as well as the presence of immune cells with the potential for cross-protection.
- All tests should also be professionally administered and sufficiently sensitive to detect low antibody levels while sufficiently specific to distinguish between target and non-target antibodies. This also applies to laboratory tests used to identify specific respiratory viruses. Individual risk estimates can then be used to inform individual needs for protection either through the use of personal protective measures and/or vaccination.
- Without being linked to a set of standardized clinical criteria, we recommend against the use of PCR tests as the sole criteria for a case definition. A confirmed case should include a pre-determined profile of signs and/or symptoms AND a positive test for the infection of concern PLUS any relevant patient history and confirmed epidemiological information.
- Ensure that local surveillance data are used and interpreted when determining strategy and policy.
Final Thoughts
Regarding the report, I think that it is a very well-written critique of the Government of Alberta’s response to the COVID-19 pandemic, but it is not a final conclusive report. This is a good start to opening the door for some important deep governmental discussions that need to happen, including diving deeper into the harms caused by the COVID-19 modRNA vaccines, like the DNA contamination and the presence of the SV40 promoter-enhancer nuclear localization sequences, the vast number of vaccine-injured people, and the increased risk of turbo cancer. While I am disappointed that the Government of Alberta, namely Premier Smith, tried to bury this report by sitting on it for six months and quietly releasing the report without a proper press conference on the week of the USA inauguration I am relieved to see that the report was finally made public. The government’s attempt to bury the report shows that this is indeed a damning report and the government’s response could have been much better. However, I hope that this report will bring about government transparency and begin that well-needed conversation so that our society can indeed heal.
Healing Humanity is the theme of the next An Injection of Truth happening on March 3, 2025 in Calgary, Alberta. During the event I will be sharing on the numerous ways the COVID-19 vaccines can potentially cause harm and what can be done to heal from those harms. I will share the stage with several other prominent scientists.
- Dr. Byram Bridle who has also shared his insights on The Davidson Report and will be “exposing lies from public health agencies that contributed to a myriad of problems within the pandemic response.”
- Dr. Gary Davidson will be presenting on the contents the report by the Alberta COVID-19 Pandemic Data Review Task Force.
- Dr. Denis Rancourt will provide a deep dive into the all-cause mortality.
- Dr. David Martin will definitely be a presenter that no one will want to miss.
In closing, I encourage everyone to read through The Davidson Report and post your thoughts on the report in the comments section. What did you like or disagree with? What would you like to see different next time? I would be happy to take your comments to Calgary in March 2025. I also hope that this will be one of many governmental task forces that take a deep dive into the governmental response to the pandemic. We desperately need one for each province and at the federal level.
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