The government of Alberta has just made a very brave pronouncement. Instead, they will begin linking hospital reimbursement to how many and what kinds of procedures are done. The surgical funding model begins to phase in for some surgeries in 2026. The bill seeks to reduce overall healthcare expenses and increase competition among public and private health care providers.
The initiative aims to incentivize providers to provide better outcomes—an effort that could alter the way hospitals focus their efforts on patient care. Health Sciences Association of Alberta, which represents many health-care workers, have slammed the plan. They argue that it will inevitably push private companies to focus only on low-complexity surgeries to cash in.
A Shift Towards Competition
Under the new funding model, hospitals will be subsidized according to the number of procedures they perform. The more surgeries a facility does, the more money they get. This provides them a leg up in the competitive healthcare market. The rationale of this model is to motivate hospitals to provide efficient, effective care that produces better outcomes for patients.
As Dr. Shelley Duggan stated, such a system makes the quality of our healthcare that much more critical. She added that “quality has to be a first order metric that needs to be pursued. She noted that one hospital could do more procedures than its rival. Funding distribution should truly be based on the opposite—rates of complication and prevalence of infection.
The federal government is looking to take these successful practices pioneered by their Scandinavian counterparts. There, hospitals discharge their surgical patients back into a robust community-based healthcare ecosystem. Advocates for this change argue that it can help improve patient care and save money.
Concerns Over Resource Allocation
Opponents of the new funding system have raised worries over increased strain on hospitals’ resources. The Health Sciences Association of Alberta, a union representing health providers, contends the model will incentivize hospitals to put profit ahead of patient care. Mike Parker stated, “The number and quality of major surgeries performed in the public system will go down, as hospitals lose staff and become forced to rent public surgical suites back to specialists within these same corporations.”
There is increasing anxiety that the model’s risk structure will push private providers to cherry pick low-complexity surgeries. This, in turn, would lead to Alberta’s hospitals being increasingly under-resourced and understaffed.
We heard from Dr. Andrew Longhurst, who walked us through the implications of this strategy. He cautioned that activity-based funding incentivizes a healthcare provider’s discharge of patients as soon as possible. He warned that this would create a new “perverse incentive” for hospitals to focus on short turnovers instead of more holistic care.
Ongoing Developments in Alberta’s Healthcare System
Alberta’s new provincial government is strongly committed to an aggressive model of public healthcare privatization. They are breaking up Alberta Health Services and creating new agencies to provide public health. Acute Care Alberta, one of the four new entities we created, started less than a week ago. Despite big potential gains in rural communities, the new funding model can’t be deployed there because of worries about the size of the market.
The existing global grant funding model directly incentivizes small rural facilities and universal admissions. This collaborative, data-driven approach creates a sense of stability as the changes roll out. Nevertheless, detractors contend that the move toward privatizing has adverse effects on public healthcare.
Sarah Hoffman remarked on the potential consequences, stating, “It feels a lot like further steps to create more opportunities for the government to privatize health care.” Premier Danielle Smith, the new leader who took office last October, strongly supported the new approach. She maintained that the old system did not encourage improvements in care for Americans and limited the smart spending of dollars.
