Government & policy

Alberta to change funding formula for providers

EDMONTON – Alberta is poised to make dramatic changes to the way hospitals and nursing homes are funded, the head of the province’s health super-board says. As of April 2010, Alberta Health Services will begin moving toward what it calls “activity-based funding” in nursing homes.

The same funding model will be rolled out in hospitals, assisted living centres and emergency medical services in April 2011.

In the case of nursing homes, activity-based funding will create incentives for organizations to take patients with higher needs, said Stephen Duckett (pictured), CEO of Alberta Health Services.

“What we’re trying to do is have some sort of equity across the province and also equity for the proprietor,” said Duckett, after giving a speech at the Edmonton Petroleum Club.

“At the moment, there is no incentive on a proprietor to take more dependent people. Their entire incentive is to take less-dependent people.” That leaves more dependent people in hospitals, waiting for placement in the community, Duckett said. In Alberta, about 400 people are in this situation each day.

“If we actually pay proprietors to take the more-dependent people, they’re more likely to do so.”

Duckett said there is currently no consistency in how nursing homes are funded.

“Essentially, each of the previous (health) regions developed different ways of paying for the capital costs of nursing homes, different ways of paying operating costs and different effective prices for the stay,” Duckett told the Economics Society of Northern Alberta.

Alberta Health Services is now using a tool, created largely by the University of Michigan Institute of Gerontology, that clusters residents into 30 groups that represent their needs and how much they cost the health system.

Using the activity-based funding model, Alberta Health Services will compensate nursing homes based on the patients’ needs. For instance, homes will get a certain amount of money for a patient with Alzheimer’s who is also incontinent, and another cash infusion for a patient in a wheelchair who needs to be hooked up with IV medications. Less money will go to homes with less-complicated patients.

“We’re not actually looking to save money per se with this change in April 2010, but obviously, in equalizing the payments, we’ve got to make sure we don’t set the rate so that they are always the most expensive, but set the rates as an efficient rate,” Duckett said.

“When I arrived here, there didn’t seem any rhyme or reason in how different hospitals got funded and how different nursing homes got funded, so in the end, the amount of money you got was the result of a lobbying exercise and what we’re trying to do is make it a fair basis for funding.”

Posted Nov.26, 2009