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April 17, 2013

The dismal performance of Canada relative to other OECD countries on measures of wait times and access to hospitals underlines the need for rethinking the way hospitals are funded, according to a report released today by the C.D. Howe Institute. In “Paying for Hospital Services: A Hard Look at the Options,” authors Jason Sutherland, R. Trafford Crump, Nadya Repin and Erik Hellsten find more use of activity-based funding (ABF), in which hospital payments are based on the volume of care provided, is a viable complement to fixed annual lump sum budgets for rebalancing the financial incentives for Canadian hospitals.

“The partial introduction of activity-based funding would have a good chance of driving meaningful change, particularly with regards to the problems of long wait times and access to beds,” noted Jason Sutherland.