Activity-based funding has merits but must be implemented very carefully, says a University of Alberta health care researcher.
The province is planning to move away from its current block-funding approach by phasing in activity-based funding for seniors' facilities starting April 1. This funding system provides money based on each resident's needs rather than a specific amount per person. The plan is for activity-based funding to start in hospitals in April 2011.
In nursing homes, the change could be positive because activity-based funding has the potential to provide more money where it's required, said Donna Wilson, a health care researcher with the University of Alberta.
"The worry is that it will just take money away from some nursing homes and give it to other nursing homes," she said. "This has to be done very, very carefully."
There can be huge variances in the level of care required by nursing home residents. Some nursing homes in the province have a relatively easy load, while those who take on the most complex residents have great difficulty providing care for the money they receive, Wilson said.
She cautioned that activity-based funding "has never been known for having generous staffing and generous funding."
In order to define the needs of long-term care residents, the province will adopt an internationally accepted system called RAI — Resident Assessment Instrument. This is an extremely well researched system that is also a good data collection tool, Wilson said, but one of its imperfections is that it assumes a resident's condition and needs are consistent and stable from day to day, which isn't necessarily the case.
Alberta Health Services board chair Ken Hughes believes the new funding system will bring equality across facilities, provide more transparency to taxpayers and smooth out inefficiencies.
"It creates a real discipline about how we spend money," he told the Gazette recently. "We need to spend every nickel we get as effectively as we possibly can."
Health economist and former St. Albert mayor Richard Plain foresees problems with the setting of pay rates for care, given the differences in volume and cost between small rural facilities and large urban ones. The same conflict will arise when applying the model to a long-term care system that includes non-profit and for-profit providers, he said.
"Activity-based funding can be one of the worst things that ever happened to whole sets of hospitals and access to services, on the other hand, being beneficial in certain areas," Plain said.
Study
Canadian Doctors For Medicare studied various activity-based approaches in the United States, Australia, England and Western Europe and found no evidence that this type of model, on its own, brings shorter wait times or cost control. This is because the funding approach tends to be part of a broader strategy involving various financing and delivery methods.
"Under some conditions it may lead to increased health care costs," the organization stated in a 2009 report.
If not implemented carefully, activity-based funding can lead to rural hospital closures and provide a disincentive for hospitals to provide low-volume but needed care, the report says.
"If linked to increased investor-owned, for-profit delivery, then it can also threaten co-ordination of care, increase the unit cost of health care and threaten care quality," the report states.
The right-wing Fraser Institute supports activity-based funding in the belief that the current block funding system provides no incentive to health care facilities to operate efficiently or provide higher quality care.
"This change will mean better value for taxpayers' dollars and an increase in the availability and quality of services for patients," wrote a Fraser Institute health analyst in a Calgary Herald column last August.
Covenant Health, which runs St. Albert's Youville Home, has been sending employees to preliminary workshops to learn about the new funding system, said spokesperson Salima Bandali.
"AHS is still fine-tuning the model. We don't know yet what the impact will be," she said.
