Integrated funding

Provinces pay people and institutions to deliver health care to their residents. How they pay for this care matters: a large and growing body of international research confirms that the choice of payment models used to fund health care providers can have a strong influence on their behaviours (Sutherland, 2011).

Despite this evidence, the subject of health care payment systems tends to receive scant Canadian public attention outside of the relatively narrow (and mostly irrelevant) confines of our perpetual national debate around the optimal share of public versus private financing of health care services (Flood & Xavier, 2008). In reality, irrespective of the mix of public versus private financing or delivery arrangements, the types of mechanisms that provincial governments use to pay for health services have significant impacts on the way providers deliver care. In recent years, several provinces have explored significant reforms to some of these payment models (6,7). However, for the most part, provinces continue to pay the piper to play the same tune.

At the opposite end of the incentive spectrum, Canadian hospitals are for the most part, paid for their cost of business with fixed lump sums of annual funding that are provided irrespective of the quality or quantity of services they deliver. Internationally, these payment models have been associated with such behaviours as rationing services and running lengthy wait lists (Schut & Varkevisser, 2013; Busse et al, 2011).

Much has been written of the problems presented by these and other Canadian payment models for particular types of health care providers. Perhaps more problematic than the effects of any one of these payment models, however, is the larger picture of fragmentation they contribute to. Provinces’ major health care sectors—typically delineated as primary care, acute care, post-acute care, home and community-based care, drugs, mental health and public health services—are all administered in a confusing field of silos, with disconnected financial flows, performance measurement systems, organizational structures and governance arrangements.

While many other countries struggle with similar issues around health system integration (Tsiachristas et al, 2013), Canadian systems appear to be particularly fragmented
even by international standards, evidenced by our poor standings in international health system performance: in a recent survey of OECD countries, Canada ranked 10th of 11 in overall health care performance, above only the US (Davis et al, 2014), with poor showings in the important sub-categories of safety (10th of 11), coordination of care (8th) and timeliness of access (11th).

The recent experience with international payment reforms provides some potential lessons for Canadian policy-makers. A number of countries are stepping beyond modifying sector-specific payment models to implement broader payment reforms that attempt to align the incentives of multiple types of providers. For a detailed look at the international experience and options for Canada, please download our policy brief.