Last year four hospitals tried a new payment model. It’s working.
In late 2007, four Vancouver-area hospitals quietly switched to a radical new funding model. Instead of receiving an annual operating budget from the government, they would be paid per medical procedure performed. Almost a year into the pilot, the preliminary results are in—and they’re good. “In some cases we are seeing over 25 per cent more patients experiencing shorter wait times in the emergency department,” says Ida Goodreau, president of Vancouver Coastal Health, which runs several of the hospitals in the pilot.
One of the primary goals of the new system is to shorten wait times. Because hospitals are paid per procedure, the more procedures they perform each month, the more money they get. The new system also provides bonuses for speedy care. For instance, if a broken bone is treated in less than four hours, a hospital could get an extra $100.
The incentives seem to be working. At the hospitals taking part (Lions Gate, Richmond, Vancouver General and St. Paul’s), the number of patients getting a bed in 10 hours or less jumped from 46 per cent in the first half of 2007 to 66 per cent this year. Lions Gate saw a particularly big leap in efficiency with the number of urgent-care patients treated and released in less than two hours surging from 29 per cent to 51 per cent.
“If you give someone all the money up front, every patient who comes along is just a bust to you—they’re just using up your money,” says Brian Day, the former head of the Canadian Medical Association. “That’s bad management. It doesn’t encourage productivity.”
B.C. is now considering a wider shift to activity-based funding. It’s not the only province. In January, New Brunswick announced that it is also considering activity-based funding, and according to Day, so is Quebec.