New funding formula abandons patient-centered care for payer-centered care

In Ontario, when a health policy fails, it appears you expand it.

For four years Ontario has been attempting to use payment-for-results (P4R) funding to improve ER wait times. As we reported recently, only about a fifth of the P4R money allocated to hospitals in the Central East region was distributed this quarter, the rest – more than $4 million – was returned to the Ministry of Health. The hospitals couldn’t reach the targets set for them.

Sending more than $4 million back to the Ministry of Health will not help them reach those targets any faster.

Queen’s Park is fixated with the idea that only competition for cash can lead to improved wait times. On the other hand, they expect the system to integrate with more cooperation between providers.

These are not compatible ideas.

If you are competing, there’s little incentive to cooperate with your competitors.

As part of its restructuring of hospital funding, Health Minister Deb Matthews plans to gradually expand the percentage of hospital funding that is tied to pay-for-performance schemes, driving hospitals to compete with each other for scarce funding.

They say the evidence is in their ability to bring down wait times in a number of key areas connected to the 2004 health accord, which just happened to provide the provinces with $41 billion in new funding spread out over 10 years.

When you throw a bunch of cash at something, you can’t always conclude that the results necessarily came from the way you organized distribution of that funding.

This was the false argument the UK Blair government made last decade after it dramatically shot up health care funding in Britain from 6.8 per cent of GDP (GDP = size of the economy) to 9.4 per cent within five years. The improvements in health care outcomes weren’t attributed to this massive increase in funding, but instead used to justify market competition and privatization.

When hospitals are forced to compete for procedures, it also changes the dialogue on health service planning. What happens to the LHIN plans to create centers of excellence within each region if those centers fail to meet the competition price? What happens if the winning competitors all turn out to be large urban hospitals?

Who is going to foot the bill when hospitals lose a service, forcing them to pay severance costs and to renovate or close facilities?

Such a random method of allocating health services also suggests an abandonment of the concept of patient-centered care. Clearly, when you allocate services based on cost, it becomes about the convenience of the payer, not the patient.

The change also throws the cards in the air with regards to individual hospital planning. The Ontario government has come a long way from former Health Minister George Smitherman’s pledge to give hospitals a long-term window on sustainable funding in which to do planning.

Tom Schonberg, chief executive of the Queensway Carleton Hospital, told the Ottawa Citizen “we’re blind. We don’t have enough details to be able to plan properly.”

It’s clear from recent stories in the media that what hospitals are planning for is the worst case scenario. There is no question that should funding not materialize, that even more beds will be closed and staff will face layoffs.

The South East LHIN has already told its hospitals to plan for a zero increase in funding. The Ottawa Hospital says it is planning on a one per cent increase.

According to the Citizen, the new hospital funding will work this way:

2012-13
Global Funding – 54%
Funding based on demographic profile – 40%
Pay-for-performance – 6%

2013-14
Global Funding – 45%
Funding based on demographic profile – 40%
Pay-for-performance – 15%

2014-15
Global Funding – 40%
Funding based on demographic profile – 40%
Pay-for-performance – 20%

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