Friday, February 28, 2014

How are Ontario hospitals funded?

Perth Hospital
Hospital funding has become a complex issue in Ontario. No longer does the government give hospitals the money they need. They fund them according to a patient-based funding model, whereby they fund specific procedures.

This amount is a per procedure rate set by the government at a level they deem supports 'best practices.'

scan: Ottawa hospital
This money has to cover internal staffing of clerks, nurses, security staff, support staff. As well, medical supplies, drugs, patient food, as well as the follow-up recovery time for surgery. Then there are insurance costs; heating, cooling (HVAC) costs; cleaning and sterilization.

For example, David Musyj tells us, hip and knee replacements, dialysis and cataracts, were the first to be funded this way in 2012 - 2013. The Met campus of Windsor Regional Hospital, for example,
  • was given $5790 for every knee surgery
  • and $6793 for every hip surgery.
What is excluded are physician salaries, which OHIP pays to them directly.

Ottawa hospital
I first encountered this funding model when teaching. back in the Ontario Harris government days, they went to per-pupil funding. It really didn't work well, since salaries varied across the province. Some school were older, larger, and had higher heating costs. Others had different staffing collective agreements, depending upon what taxpayer were prepared to pay. Others had higher special education students, with specific needs.

What are they failing to do?

Taking into account
  • quality assessment outcome of the procedures
  • patient satisfaction assessment
  • regional and population differences,
  • the number of procedures that are needed  (they are capped by fiscal year).
Musvj writes that the Ontario government intends to increase the types of procedures funded in this manner until 30% of hospital funding is allocated this way.
Ottawa Hospital
This year, Windsor Regional Hospital received news it would only receive funding for 4,849 cataract surgeries. They did 5022 the previous year, and in 2010 they did 5412 cataract surgeries. Healthcare recipients are demanding services, for which hospitals are not being funded.

In my SE LHIN, we have two hospitals, in Perth and Smiths Falls, where 6 beds have been closed in each facility. 
For Ontario, having health care consume close to 50 per cent of the provincial budget, facing an $11 billion operating deficit, a $260 billion debt, and spending 10 per cent of its annual revenues on the financing of this debt controlling health care costs is unavoidable.
By David Musyj 
David Musyj is president and CEO of Windsor Regional Hospital.
Recently, the Ontario government moved to “patient-based funding” which focuses on particular procedures and reimburses hospitals a set amount of moneys for the performance of each of these procedures. If a hospital does not perform these procedures they do not get the funding. Approximately 40 per cent of annual funding, known as Health Based Allocation Model (HBAM), will be determined by the growth of the local population, age, gender, complexity of services provided, socio economic status and geography, and the remaining 30% will be “base funding” which is meant to cover the fixed costs of operating a hospital such as heating, cooling, cleaning, insurance etc.

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