Publicly funded private clinics in Alberta have recently been in the news for all the wrong reasons. Earlier this month, the (now former) CEO of Alberta Medical Services, Athana Mentzelopoulos, alleged she was fired by the Smith government partly after launching an internal investigation into the contracting process for these facilities. While the allegations are yet to be substantiated, they highlight the importance of reforming the way hospitals—whether public or private—are funded by the provincial government.
First, it’s important to understand that publicly-funded private clinics—now referred to as Chartered Health Facilities [CSFs]—play an important role in Alberta’s universal health-care framework.
In the early-to-mid 2000s, the Klein government introduced legislation formally allowing regional health authorities to contract certain surgeries to private clinics. This partnership was expanded significantly by the Kenney government, with the current Smith government committed to further collaboration. Not only did the provincial government use these clinics to help clear the COVID-19 backlog, but about one in five scheduled surgeries now routinely take place in a CSF.
However, contracts for private clinics have to be routinely negotiated and renewed, with the number of procedures performed determined by government. Not only does this lead to unnecessary political skirmishes, but this top-down approach opens the door to exactly the sort of alleged lobbying Mentzelopoulos raised concerns over.
One way to depoliticize the appropriate level and remuneration of CSFs is to simply fund them according to activity.
How would this work?
If, and when, a patient is referred to a CSF for treatment by their doctor, the clinic would simply be compensated for the care provided at a rate comparable to public hospitals. This way, contracts would have to only be made in order to recognize CSFs as part of Alberta’s universal network. Once recognized, the question of how many procedures they perform, and payment received per procedure, would become moot.
In fact, this method of funding (commonly referred to as activity-based funding, or ABF) should be used to fund all hospitals—public and private—within Alberta’s universal health-care framework.
At present, Alberta’s government (like most provinces) primarily funds hospitals via global budgets. As the name suggests, hospitals under this approach are given a budget based on historical trends, within which to operate for the year. Great for total cost control and administrative efficiency but not so great for incentivizing care and dynamically responding to patient demand in real-time.
This outdated method of remuneration contrasts with the more modern ABF approach employed by the majority of universal health-care systems around the world, including Australia, Germany, and Switzerland (to name just a few). ABF ensures hospitals are paid according to the number and complexity of patients served in real-time.
In other words, money follows the patient to the hospital—public or private—where they receive care.
Switching to ABF also comes with other benefits. Empirical evidence suggests that ABF could potentially increase the volume of services, improve efficiency, and even potentially reduce wait times. Importantly, Alberta does not need Ottawa’s approval to enact ABF. In fact, Quebec started experimenting with a version of ABF way back in 2004. The positive experiences since then (such as increased productivity and lower cost per procedure) resulted in the province shifting to about 25 percent of hospital funding via ABF this year, with a goal of 100 percent by 2007-08.
Switching hospital funding from the current “global budget” model to ABF is a commonsense reform that Premier Smith can begin implementing almost immediately. Not only does it hold the promise of increased efficiency, transparency, and lower wait times, but it also depoliticizes the issue of where patients get treated and avoids the kind of scandals (warranted, or otherwise) that Alberta’s government is currently embroiled in.
