Moving towards patient-focused health care funding would spur on competition, innovation and specialization in New Brunswick’s hospitals, says a University of Guelph health economist.
“Competition gives suppliers the opportunity to try new things,” said Brian Ferguson, who is also the Health Care Fellow in Economics with the Halifax-based Atlantic Institute for Market Studies.
Ferguson said patient-focused funding for public health care is a way to ensure money goes to where it is needed the most.
“It would allow hospitals to specialize because they would know that if they became kind of a provincial site for a particular type of surgery, the money would come with the patients.”
Patient-focused funding is also known as volume-based, activity-based, or fee-for-service funding. Ferguson suggested mixing a patient-focused model with a so-called global or fixed budget system as the best approach.
Under such a mixed system, a health authority in New Brunswick that manages a region’s hospitals and facilities would receive a basic budget at the start of the fiscal year from the province. It would also receive additional money from Fredericton as patients access medical services.
As it stands the health authorities receive their entire budget at the start of the year regardless of the number of patients they serve or procedures they perform.
New Brunswick Health Minister Mike Murphy said earlier this week that he’s open to looking at patient-focused health care funding after he’s dealt with the on-going problem of deficits in the province’s eight regional health authorities.
As it stands, the health authorities are expected to post a $55-million deficit this year, despite receiving an additional $105 million.
New Brunswick spends $2.1 billion on health care out of the overall $6.6-billion provincial budget.
Ferguson said there are examples New Brunswick could look to if it wants to see how patient-focused funding has worked out in other jurisdictions with public, universal health care.
“Most Australian states now use something like it. The state of Victoria started with a fee-for-service system back in the early to mid-90s and it resulted in an immediate increase in productivity in hospitals in Melbourne,” he said. “It then spread through an awful lot of the Australian states.”
The president of the Canadian Medical Association, Dr. Brian Day, said earlier this week that he supports patient-focused funding.
Day said such a funding model could eliminate wait lists, improve hospital efficiency and patient care and potentially turn New Brunswick into a destination for medical tourists.
Rebecca Walberg, director of health policy at the Winnipeg-based Frontier Centre for Public Policy, said the top five countries in the first-ever study comparing Canada with 29 European health systems all use a patient-focused or volume-based model rather than a global budgeting system.
Even though those countries have both public and private health care systems with multiple payers and providers, Canada, with its single-payer model, could still copy the patient-focused funding system.
“There is no reason at all why we couldn’t make that change.”
A patient-focused funding model, combined with patients’ rights legislation and better drug coverage plans could greatly improve the efficiency and value of the Canadian health care system, she said.
According to the Frontier Centre’s 2008 Euro-Canada Health Consumer Index, Canada ranks dead last out of the 30 countries when it comes to value for health care spending.
Michael Chisholm, vice-president for corporate affairs and chief financial officer for the Atlantic Health Sciences Corporation, said a patient-focused funding model would need to be studied carefully before it could be judged.
“It’s a very complex question that requires a complex review and understanding,” he said.
Chisholm said such a review would need to determine, among other things, how teaching hospitals would be compensated and who would set rates for procedures and what the amount of those rates would be.
Marilyn Quinn, president of the New Brunswick Nurses Union, said the patient-focused funding model also requires further study.
“At this point there are parts of it that make sense, but we really need to wrap our head around it in terms of whether it will create the kind of competition that’s healthy for the system.”