Health System Funding Reform

In 2012, through Ontario's Action Plan for Health Care, the provincial government introduced Health System Funding Reform, which significantly changed the way that hospitals across Ontario are funded.  Given the provincial deficit situation, and realizing that health care costs cannot continue to grow at the expense of other vital provincial programs like education and social services for example, the Ministry of Health and Long-Term Care introduced a new funding model that encourages more efficient delivery of services and treatments through a patient-centered funding model where funding is based on the services provided and the patients served.  The funding model uses evidence to inform health spending so that money truly follows the patient and drives quality improvement.  Through this funding model, the provincial government is also shifting health care dollars to health care provided in the community.  Read more about Health System Funding Reform in our Health Link column and from the Ministry of Health and Long-Term Care.

There are two key components to Health System Funding Reform.

Health Based Allocation Model (HBAM)

Health Based Allocation Model funding (HBAM) is an evidence-based allocation that considers factors such as age, gender, rural geography and patient flow.  The goal is to drive efficiencies and quality patient care and to shift funding to community providers to provide the right care in the right place at the right time.  HBAM funding comprises approximately 40% of the HSFR allocation.

Quality-Based Procedures (QBPs)

Quality-Based Procedure funding is allocated to specific procedures based on a "price multiplied by volume" approach.  This involves providing evidence-based allocations to targeted clinical groups.  The price is structured to provide an incentive and adequately reimburse providers for delivering high-quality care.  QBP funding comprises approximately 30% of the HSFR allocation.

Operating Within the Funding Model

Going forward, Muskoka Algonquin Healthcare's financial sustainability will continue to be challenged under Health System Funding Reform.  It will be imperative to find operational efficiencies on an ongoing basis until our cost structure is aligned with the new funding model.  We are ever mindful of continuing cost pressures around labour, drug and supply costs, as well as infrastructure needs facing our hospitals in a period of funding restraint.  We know we need to continue to make adjustments moving forward in the face of ongoing challenges to absorb compensation increases as there is no funding from the government for incremental compensation increases for new collective agreements.  At the same time, we are aware that the government plans to shift routine procedures currently performed in hospitals to specialized not-for-profit community clinics.  We will monitor the potential impact this may have on MAHC.  MAHC continues to work with the Ministry, the North Simcoe Muskoka LHIN, and the Ontario Hospital Association to address the unique challenges medium-size community hospitals face under Health System Funding Reform.