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.
Alberta
Medical regulator stops short of revoking license of Alberta doctor skeptic of COVID vaccine

From LifeSiteNews
The Democracy Fund has announced that COVID-skeptic Dr. Roger Hodkinson will retain his medical license after a successful appeal against allegations of ‘unprofessional conduct’ by the College of Physicians and Surgeons of Alberta.
A doctor who called for officials to be jailed for being complicit in the “big kill” caused by COVID measures will get to keep his medical license thanks to a ruling by a Canadian medical regulator.
The Democracy Fund (TDF) announced in an April 4 press release that one of its clients, Dr. Roger Hodkinson, will retain his medical license after filing an appeal with the College of Physicians and Surgeons of Alberta (CPSA) over allegations of “unprofessional conduct regarding 17 public statements made in November 2020 and April 2021.”
Hodkinson had routinely argued against the dictates of public health and elected officials and “presented an alternative perspective on COVID-19, including the efficacy of masking and vaccines,” TDF noted.
In 2021, Hodkinson and Dr. Dennis Modry publicly blasted the then-provincial government of Alberta under Premier Jason Kenney for “intimidating” people “into compliance” with COVID-19 lockdowns.
In 2022, Hodkinson said that leaders in Canada and throughout the world have perpetrated the “biggest kill ever in medicine’s history” by coercing people into taking the experimental COVID injections and subjecting them to lengthy lockdowns.
These statements, among others, led the CPSA to claim that Hodkinson had promoted inaccurate or misleading information. “However, following negotiations with lawyers for The Democracy Fund, the CPSA limited its claims to arguing that Dr. Hodkinson’s comments violated the ethical code and extended beyond the scope of a general pathologist.”
Thus, Hodkinson did not “concede that any of his statements were false,” but “acknowledged that his criticisms of other physicians technically breached the Code of Ethics and Professionalism,” the group explained. “He also admitted that he should have clarified that his views were outside the scope of a general pathologist.”
Instead of having his license revoked, TDF stated that Dr. Hodkinson received a “caution” and will have to “complete an online course on influence and advocacy.”
“However, he did not concede that any of his statements were misinformation, nor did the tribunal make such a determination,” noted lawyer Alan Honner.
While Hodkinson received a slap on the wrist, a number of Canadian doctors have faced much harsher sanctions for warning about the experimental vaccines or other COVID protocols such as lockdowns, including the revocation of their medical licenses, as was the case with Dr. Mark Trozzi and others.
Some of Hodkinson’s warnings seem to have been vindicated by the current Alberta government under Premier Danielle Smith, who commissioned Dr. Gary Davidson to investigate the previous administration’s handling of COVID-19.
Davidson’s report, which was made public earlier this year, recommended the immediately halt of the experimental jabs for healthy children and teenagers, citing the risks the shots pose.
Alberta
Province introducing “Patient-Focused Funding Model” to fund acute care in Alberta

Alberta’s government is introducing a new acute care funding model, increasing the accountability, efficiency and volume of high-quality surgical delivery.
Currently, the health care system is primarily funded by a single grant made to Alberta Health Services to deliver health care across the province. This grant has grown by $3.4 billion since 2018-19, and although Alberta performed about 20,000 more surgeries this past year than at that time, this is not good enough. Albertans deserve surgical wait times that don’t just marginally improve but meet the medically recommended wait times for every single patient.
With Acute Care Alberta now fully operational, Alberta’s government is implementing reforms to acute care funding through a patient-focused funding (PFF) model, also known as activity-based funding, which pays hospitals based on the services they provide.
“The current global budgeting model has no incentives to increase volume, no accountability and no cost predictability for taxpayers. By switching to an activity-based funding model, our health care system will have built-in incentives to increase volume with high quality, cost predictability for taxpayers and accountability for all providers. This approach will increase transparency, lower wait times and attract more surgeons – helping deliver better health care for all Albertans, when and where they need it.”
Activity-based funding is based on the number and type of patients treated and the complexity of their care, incentivizing efficiency and ensuring that funding is tied to the actual care provided to patients. This funding model improves transparency, ensuring care is delivered at the right time and place as multiple organizations begin providing health services across the province.
“Exploring innovative ways to allocate funding within our health care system will ensure that Albertans receive the care they need, when they need it most. I am excited to see how this new approach will enhance the delivery of health care in Alberta.”
Patient-focused, or activity-based, funding has been successfully implemented in Australia and many European nations, including Sweden and Norway, to address wait times and access to health care services, and is currently used in both British Columbia and Ontario in various ways.
“It is clear that we need a new approach to manage the costs of delivering health care while ensuring Albertans receive the care they expect and deserve. Patient-focused funding will bring greater accountability to how health care dollars are being spent while also providing an incentive for quality care.”
This transition is part of Acute Care Alberta’s mandate to oversee and arrange for the delivery of acute care services such as surgeries, a role that was historically performed by AHS. With Alberta’s government funding more surgeries than ever, setting a record with 304,595 surgeries completed in 2023-24 and with 310,000 surgeries expected to have been completed in 2024-25, it is crucial that funding models evolve to keep pace with the growing demand and complexity of services.
“With AHS transitioning to a hospital-based services provider, it’s time we are bold and begin to explore how to make our health care system more efficient and manage the cost of care on a per patient basis. The transition to a PFF model will align funding with patient care needs, based on actual service demand and patient needs, reflecting the communities they serve.”
“Covenant Health welcomes a patient-focused approach to acute care funding that drives efficiency, accountability and performance while delivering the highest quality of care and services for all Albertans. As a trusted acute care provider, this model better aligns funding with outcomes and supports our unwavering commitment to patients.”
“Patient-focused hospital financing ties funding to activity. Hospitals are paid for the services they deliver. Efficiency may improve and surgical wait times may decrease. Further, hospital managers may be more accountable towards hospital spending patterns. These features ensure that patients receive quality care of the highest value.”
Leadership at Alberta Health and Acute Care Alberta will review relevant research and the experience of other jurisdictions, engage stakeholders and define and customize patient-focused funding in the Alberta context. This working group will also identify and run a pilot to determine where and how this approach can best be applied and implemented this fiscal year.
Final recommendations will be provided to the minister of health later this year, with implementation of patient-focused funding for select procedures across the system in 2026.
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