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WHAT IF: Financial incentives were better aligned across hospital and community settings by combining activity-based funding and global budgets?
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WHAT IF: Financial incentives were better aligned across hospital and community settings by combining activity-based funding and global budgets?

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Trafford Crump, University of British Columbia

Trafford Crump, University of British Columbia

Published in: Health & Medicine

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  • 1. What if…Financial incentives were better aligned across hospital and community settings by combining activity-based funding and global budgets?
    Trafford Crump, PhD
    Understanding Options to Improve Efficiency in Healthcare Spending and Healthcare Financing
    Toronto, ON
    July 10, 2011
  • 2. Main Issue
    • Currently, funding policies for acute and post-acute care are not aligned to achieve efficient patient flow
    e.g., alternative levels of care (ALC) observed across provinces
    Those patients formally discharged from acute care, but for whom appropriate discharge location is not available
    Acute hospital care historically funded through global budgets:
    Disincentives for discharging patients to post-acute care and increasing volume (i.e., exchanging relatively less expensive patients for relatively more expensive patients)
    No reward for improving quality or efficiency
    Post-acute carehistorically funded through a mix of global budgets + capitation:
    Disincentives for PAC facilities to accept more complex patient types
    No reward for positive outcomes
  • 3. Proposed Option
    Blending activity-based funding (ABF) with global budgets for funding acute and post-acute care (separately) is one funding option under consideration by policy makers
    ABF remunerates facilities based on volume of services + characteristics of the patients
    Patients assigned to unique groups based on clinical and demographic information
    Each group is associated with a predetermined funding amount
  • 4. Evidence
    ABF generally creates financial incentives that promote volume and efficiency.
    Hospitals
    ABF associated with:
    • Higher volumes of care
    • 5. Shorter lengths of stay
    • 6. Lower mortality (perhaps)
    • 7. Increase in overall spending on hospital care (due to higher volume)
    Post-Acute Care
    • Rehabilitation: ABF has reduced episode costs and lowered length of stay
    • 8. Long term care: Lowered per incident costs and (some evidence) improves performance scores
    • 9. Home care:No evidence
    Transition between facilities
    • No evidence
  • Challenges
    Hospitals
    ABF initiatives may be moot if no post-acute care location available (e.g., ALC will rise)
    Policy-makers have to be prepared for an increase in costs
    Post-Acute Care
    Timely and reliable data in post-acute care is limited (needed for setting prices)
    Some evidence from the US to suggest that public/private facilities react differently to ABF
    Unclear if there is the physical capacity in post-acute care for effective ABF initiative
    Transition between facilities
    Implications of introducing ABF on ALC utilization is unknown
  • 10. Implications for Canada
    Transition between acute and post-acute facility is a growing issue in Canada
    e.g., ALC utilization rising across many provinces
    This may be exacerbated by ABF initiatives for funding hospital care
    A complimentary post-acute care funding initiative is needed
    But whether or not ABF for post-acute care is an effective funding initiative is unknown
    Such an initiative should encourage coordinated care and shared accountability for patient outcomes across facilities
  • 11. www.hospitalfunding.ca
    Trafford Crump
    tcrump@chspr.ubc.ca