Activity Based Funding won't solve waitlists and overcrowding in hospitals: study

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Activity Based Funding won't solve waitlists and overcrowding in hospitals, creates barriers to needed reforms: study

Vancouver -- As Canada's premiers meet in Victoria to discuss different approaches to health system reform, a new study raises serious concerns about "Activity Based Funding" (ABF), a new funding model that pays hospitals based on the number of surgeries they perform.

ABF has been introduced in B.C. and is being considered in Alberta, Quebec and Ontario. However, research evidence from the U.S., U.K. and Europe shows that ABF's narrow focus on increasing "activity" in one part of the health-care system does not address the system-level changes needed to control health-care costs and improve patient care.

Beyond the Hospital Walls: Activity Based Funding Versus Integrated Health Care Reform focuses on the use of ABF in B.C., but its findings are applicable to other provinces as well. Key findings include:

- ABF fails to address the root causes of overcrowding and long waitlists: lack of accessible, effective community-based services for people with chronic illnesses, such as the frail elderly or mental health patients. These patients often end up in hospital, "blocking" beds.
- ABF is designed to increase volume by rewarding "activity" but does not focus on improving patient care. In fact, ABF creates an incentive to focus on lower-risk patients and procedures and can lead to the under-treatment of people with higher, more complex needs.
- ABF is complex to administer; the international evidence that it improves cost-efficiencies in hospitals is at best mixed, and in many jurisdictions it has led to increased costs.
- ABF can be used to encourage competition among hospitals and private clinics, creating barriers to collaboration and service integration.

In contrast, successful health-care system reform initiatives in other jurisdictions have focused on integrating hospitals with primary-care family doctors and community care seniors' homes, community clinics, etc. These systems have prioritized collaboration across sectors, co-ordination of services, improving patient experience and clinical outcomes, and reducing the inappropriate use of high-cost emergency and in-patient hospital services. These more integrated systems have been most effective in improving quality of care and controlling cost increases.

Lead author Marcy Cohen says that in spite of the federal government's recent rejection of a leadership role in health-care reform, a national strategy is essential for ensuring long-term sustainability of our public health-care system. "We're hoping that the premiers will come together to take a broad look at how to make changes that will lead to system-wide improvements in patient care, instead of focusing narrowly on changing only one part of the health system or on privatizing care. What's needed is a visionary Canada-wide plan based on solid evidence from successful health-care systems internationally."

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