Nothing much has changed since the last time Alberta’s United Conservative Party (UCP) trotted out its “patient-focused funding” scheme for hospitals. It’s still a bad policy that will force hospitals to game the system, increase bureaucracy, and hurt patients while delivering few benefits.
Naturally, this is not what the UCP claimed Monday in an announcement that this bad idea will soon be rolled out in a dozen public hospitals in Alberta or in its April 7, 2025, announcement that the scheme was in the works.
“Patient-focused funding is about making sure resources follow the patient and the care being delivered,” said the canned quote assigned in Monday’s press release to Hospital and Surgical Health Services Minister Adriana LaGrange, now one of Alberta’s quadrumvirate of health ministers.
“Exploring innovative ways to allocate funding within our health care system will ensure that Albertans receive the care they need, when they need it most,” she enthused in last year’s version when she was still Alberta’s one and only health minister.
Neither of these statements is likely to turn out to be true.
As for Premier Danielle Smith, her canned quote Monday was more interesting, pointing clearly to the neoliberal ideology she has espoused throughout her years in right-wing media and right-wing government.
“The current global budgeting model has no incentives to increase volume, no accountability and no cost predictability for taxpayers,” she said. “By switching to an activity-based funding model, our health care system will have built-in incentives to increase volume with high quality, cost predictability for taxpayers and accountability for all providers.”
It is certainly true that with activity-based funding, as this U.S.-style funding model is more accurately known, Alberta’s health care system will have incentives to increase volume. Not necessarily the services that are needed, though. The rest, as we shall see, is pish-posh.
“Patient-focused funding,” it should be noted, is a tendentious euphemism intended to leave the impression it will make things better for patients, which it will not.
Now seeing as the government has repeated its announcement, I am going to repeat significant parts of my response to its 2025 version.
I asked then: “What will really happen when the United Conservative Party Government puts Ms. Smith’s new acute-care funding model into effect at Alberta hospitals?”
And Jonathon Ross, a clinical professor of medicine at the University of Toledo in Ohio, answered in a 2013 article.
“I would advise extreme caution and careful assessment of the implications for cost, quality, access, equity and efficiency before adopting this hospital funding model,” wrote Dr. Ross in a piece for the Canadian Healthcare Network.
Activity-based funding, he asserted, “has serious side effects.”
“One of the dangers is that ABF can be used to ‘game the system,’” Dr. Ross said. “When you pay hospitals according to diagnosis, the incentive is to increase or otherwise modify your diagnosis so your hospital will make more money. And that’s exactly what happened when the United States implemented ABF for U.S. Medicare patients.”
“Here in the States, we have a small army of nurses reviewing every case in hospital to remind us to use special words just the right way so we can get more money for each case,” he observed. “The incentive is to list all of the diagnoses you can possibly list for every patient, as some of these will increase the payment even if it does not change your management one bit.”
In addition, he warned, there will also be additional pressure to discharge patients too soon, as if there wasn’t already. “If the hospitals game the codes upward, then you need another army of regulators to catch them and code them back down,” he explained. “There is now a large hospital bureaucracy whose job it is to up-code the severity of illness of Medicare patients and another large Medicare bureaucracy trying to figure out how to stop the hospitals from gaming the system.”
Nothing had changed by last year since Dr. Ross wrote that article. In a January 2025 Substack, Nobel Prize winning economist Paul Krugman showed that this is one of the reasons the U.S. health care system costs Americans so much.
“Medicare is supposed to provide older Americans with the health care they need,” he said. “Yet instead of focusing solely on how best to achieve that goal, we have an arms race between insurance companies trying to game to system to charge more and deliver less and government officials trying to rein them in.” (Well, I guess we won’t have government regulators trying to rein them in in Alberta or, Heaven forbid, the Republic of same!)
In both news releases, last year and now, the government also perpetrated its ongoing fraud about how the U.S.-inspired “reforms” it’s importing are somehow European in origin.
As Canadian health researcher and political economist Andrew Longhurst wrote this year in January, “the Alberta government decontextualizes international health systems.” While he was speaking of the government’s blatantly false claim that heavily regulated dual-physician practice as permitted in Germany and the Netherlands is the same as what is being proposed by the government in “red tape” averse Alberta, the same intentionally misleading claims can be found in the Smith Government’s media statements about activity-based funding.
“Instead of bolstering our public health care system, and our publicly administered, publicly delivered surgical services, the Alberta government is undermining our hospitals by requiring them to compete for funding,” Alberta Friends of Medicare Director Chris Gallaway said yesterday.
“Alberta has operating rooms sitting empty and unused every single day because this government would rather pursue convoluted schemes to subsidize private profits, even while their failed privatization strategy has already reduced public capacity,” he said.
“Activity-based funding pushes hospitals towards quicker, less complex procedures at the expense of comprehensive care, proper follow-up and better health outcomes,” said Opposition Hospital and Surgical Facilities Critic Sarah Hoffman, a former Alberta health minister.
Yesterday’s announcement said all hospitals where the program will be piloted are operated by Alberta Health Services and Covenant Health. Edmonton’s Royal Alexandra Hospital and Calgary’s Rockyview Hospital are on the list.
