New health-care funding model unveiled; Large hospitals to compete for cash for two years from $250-million pot

Vancouver Sun

By Pamela Fayerman, Rob Shaw and Richard Watts 
Sources: Canwest News Service and Times Colonist

The provincial government is changing the way it funds B.C.'s largest hospitals, a move health officials hope will lead to faster, better treatment.

The new system will provide financial incentives to those hospitals that demonstrate they can treat more patients quickly and cost-effectively, thereby lowering wait lists for common procedures like orthopedic surgery.

In addition to block funding, the big chunk of money hospitals receive each year, some hospitals will be eligible for extra money from a new $250-million pot over the next two years.

The government is making the change because block funding results in hospitals allowing wait lists to grow when money gets scarce.
Hospitals will now be expected to compete for new money by demonstrating innovations to deliver more service to more patients at competitive prices.

The patient-focused funding model, also sometimes referred to as pay-for- performance, will become a permanent fixture in the $2 million-an-hour health system.

Numerous pilot projects over the past four years have shown that through efficiencies, more care can be delivered, at lower costs, when patients are seen as precious revenue generators rather than mere expenses, Health Services Minister Kevin Falcon said.

The program will see the B.C. Health Services Purchasing Organization, incorporated in January, oversee the investment of $80 million in 2010-11 and $170 million in 2011-12.

The money will go to the 23 largest hospitals in B.C., including the Vancouver Island Health Authority's own Royal Jubilee, Victoria General and Nanaimo Regional General.

Exactly what types of surgery will be affected, in what hospitals, remains unknown. The facilities will have to negotiate deals with the government.

Howard Waldner, president and chief executive officer for the Vancouver Island Health Authority, welcomed the extra money.
He said VIHA welcomes a chance to show how competitive its hospitals are.

But Debra McPherson, president of the B.C. Nurses' Union, expressed suspicion that the newly created B.C. Health Services Purchasing Organization will prove to be a Trojan Horse devised to privatize health care.

McPherson said she worries some surgeries will eventually be tendered for bids, and that private operations might gain a toehold. McPherson asked what incentive hospitals will have to provide care in complicated cases when they are rewarded instead for getting people in and out quickly.

John Church, a political science professor specializing in public health care at the University of Alberta, said patient-focused funding raises some red flags.

Church said that when hospitals are funded based on the number of patients who are treated and discharged, the quality of care can suffer.

Reid Johnson, president of the Health Sciences Association of B.C., said that if the new funding model is a genuine attempt at innovation, then his union backs it. But it will not support any moves by hospitals to push patients through the system faster, without any regard for staff numbers.