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Ontario is making changes to the way it funds hospitals to ensure families get access to the right health care, at the right time and in the right place. The new patient-based funding model will see hospitals funded based on how many patients they see, the services they deliver, the quality of those services and other specific community needs. Currently, hospitals get a lump sum based on their previous year’s budget with no link to the type or quality of care they provide.
Working in partnership with hospitals, Ontario will phase in the new patient-based funding model over the next three years. The new model will also provide a better return for taxpayer dollars and result in:
Shorter wait times and better access to care in their communities
More services, where they are needed
Better quality care with less variation between hospitals.
Allowing health care funding to follow the patient instead of the hospital is part of the McGuinty government’s Action Plan for Health Care and builds upon the significant progress that has been made in improving Ontario’s health care system since 2003.
“Our current funding model for hospitals is out of date and doesn’t reflect the needs of the communities they serve. As part of our Action Plan we are implementing a system that funds hospitals to increase services where needed, deliver quality care more efficiently and serve more patients.”
— Deb Matthews, Minister of Health and Long-Term Care
“The Ontario Hospital Association has been a long-time supporter of patient-based payment because it has tremendous potential to align hospital funding with positive patient outcomes.” — Mark Rochon, Interim CEO, Ontario Hospital Association
91 hospitals are transitioning to the patient-based funding model.
55 small hospitals will be excluded from the new model to recognize the unique role they play within their communities.
Other jurisdictions have been using this type of funding model and have shown benefits such as decreased wait times and a higher number of procedures. Sweden adopted a similar model in 1992, England in 2003 and British Columbia and Alberta in 2010.
[ *Sources at the Ministry of Health and Long Term Care have confirmed that Norfolk General Hospital will be moving to the new patient-based funding model CP ]
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Find out more about how hospital funding is changing to benefit patients.
For public inquiries call ServiceOntario, INFOline at 1-866-532-3161 (Toll-free in Ontario only)
Patient-Based Funding For Hospitals
March 19, 2012
Hospitals currently receive one lump-sum payment called a global budget, which is based on a hospital’s previous budget, instead of on a hospital’s performance. There are significant disadvantages to this funding model, including differences in the quality of care, how much a procedure costs at each institution, patient outcomes and specific community needs such as population growth.
The new patient-based funding model would fund patients instead of the institutions, meaning families get the right health care, at the right time, in the right place. The new model is also more cost effective. There are two main components to patient-based funding.
1. Health-Based Allocation Model
Health-Based Allocation Model is an evidence-based funding method that takes into consideration the population and clinical needs of the communities served by a hospital.
Population information includes age, gender and growth projections, as well as socio-economic status and geography. Clinical information measures how many complex patients are receiving care and the types of care being provided to the community.
For example, hospitals that serve growing and more clinically complex communities will see an increase in their funding over time.
2. Quality-Based Procedures
Health care providers will receive funding for the number of patients they treat for select procedures, using standard rates that are adjusted for each procedure. Ontario will establish prices for hospital services based on efficiency and best practices.
Starting in April, Quality-Based Procedures will include:
Dialysis and other treatments for chronic kidney diseases
Other quality-based procedures will be added over time.
Global budgets will still be in place for activities that cannot be modeled. Small hospitals and forensic mental health services will continue to be funded through global budgets.
Patient-based funding will be phased-in over the next three years as follows:
April 2011 Phase 1
April 2012 Phase 2
April 2013 Phase 3
0% 6% 15% 30%
1.5% 40% 40% 40%
98.5% 54% 45% 30%
Educational materials, toolkits and other supports are being made available to all hospital administrators. All hospitals will be informed of their new patient-based funding levels over the next few weeks.
Hospital Funding In Action: Before And After Examples
Knee Replacement Surgery
Current funding model: Surgery is funded through a hospital’s global budget or the provincial Wait Time Strategy, often with significant cost variations between hospitals. For example, in one large community hospital a knee replacement surgery costs $6,795, while in another large community hospital it costs $5,529.
Patient-based funding model: Uses one constant rate across Ontario for these procedures. That means all knee replacement surgeries will be funded at a single rate that will encourage efficiency and quality.
Patient-based funding also means better patient care throughout the full patient journey. Currently, there are no targets for how long it takes for a patient to receive rehabilitation care, or where they receive that care.
While evidence shows that 90 per cent of patients should be receiving community rehabilitative care following a knee replacement surgery, only an average of 84 per cent of patients are being discharged into community care now. Under the new model, a target will be set so that 90 per cent of patients receive community care.
Timing targets will also be set for rehabilitative care after a knee replacement surgery in both inpatient and community settings. For inpatients, the decision that they require rehabilitation will be made by the third day of after-acute care, while they are recovering in hospital. Outpatient targets will set the first post-discharge visit to occur within 24 to 48 hours, and visits two through 10 within the first 12 weeks.
Dialysis and Other Treatments for Chronic Kidney Disease (CKD)
Current funding model: Funding is provided based on each service or procedure and not the number of patients being treated. For example, if a hospital receives $1,000 for dialysis, the ministry has no way of knowing how many patients will be treated with those funds.
Patient-based funding model: Annual funding will be provided per patient and will cover a bundle of services that could include both dialysis and follow-up care. For example, approximately $30,000 will be provided to cover the costs for all the services for a patient to receive dialysis at home. This will include the supplies, medications, testing and follow-up care from a nurse and other health professionals like a dietitian.
Patient-based funding also means better patient care throughout the full patient journey. Currently, the type, care and number of treatments a patient receives may vary depending on where they are receiving care.
For example, the number of clinical visits and tests received may vary from one patient to another. Currently, a home dialysis patient in one part of the province may make five visits per year to an outpatient clinic to have their treatment monitored, while a patient in another area makes eight visits.
The new funding model means that a patient’s care will be consistent between communities. For example, a patient who is receiving dialysis at home will be covered for six clinic visits regardless of where he or she lives. The patient will be assured that his or her care remains consistent throughout the year and that supports are in place to ensure the supplies, follow-up care and medications needed are provided.
Zita Astravas, Minister’s Office, 416-327-9728
David Jensen, Ministry of Health and Long-Term Care,
Disponible en français
Supplemental: List provided by Ministry of Health and Long-Term Care
Small Hospitals not included in Patient-based Funding:
TORONTO Casey House
ALLISTON Stevenson Memorial
HALIBURTON Highlands Health Centre
ALEXANDRIA Glengarry Memorial
ARNPRIOR District Memorial
BARRYS BAY St Francis Memorial
CARLETON PLACE And District
DEEP RIVER And District
WALLACEBURG Sydenham District
DUNNVILLE Haldimand War Mem
HAGERSVILLE West Haldimand Gen
BLIND RIVER District Health Centre
CHAPLEAU Health Services
COCHRANE Lady Minto
ENGLEHART And District
ESPANOLA General Hospital
HEARST Notre Dame
IROQUOIS FALLS Anson General
KIRKLAND LAKE And District
LITTLE CURRENT Manitoulin HC
MATHESON Bingham Memorial
SMOOTH ROCK FALLS General
STURGEON FALLS West Nipissing Gen
WAWA Lady Dunn HC
DRYDEN Regional H C
FORT FRANCES Riverside H C Fac Inc
GERALDTON District Hospital
MANITOUWADGE General Hospital
MARATHON Wilson Mem Gen
NIPIGON District Memorial
RED LAKE Marg Cochenour Mem
SIOUX LOOKOUT Meno-Ya-Win H. C.
TERRACE BAY Mc Causland
NAPANEE Lennox And Add. Gen
EXETER South Huron
GODERICH Alexandra Marine And Gen
HANOVER And District
NEWBURY Four Counties H S Corp
ST MARYS Memorial
TILLSONBURG District Memorial
WINGHAM And District
FERGUS Groves Memorial Community
MOUNT FOREST North Wellington HCC