Long-term care is intended for people with long-term functional or cognitive disabilities. It integrates the functions of health services and accommodation in a single setting, with access to 24 hour nursing care as well as assistance with activities of daily living (CIHI 2010a). In Canada, long-term care is offered through a mix of public, private for-profit, private not-for-profit, and religious-based providers. The terms nursing home, intermediate care home, residential care facility and long-term care home are used interchangeably.
Nursing homes and other types of institutional care made up $17 billion of Canadian health expenditures and were estimated to be 9.7% of Canada’s total health care expenditures in 2010 (Canadian Union of Public Employees 2009). In 2008, there were nearly 194,000 long-term care beds in Canada or 90 beds per 1000 population aged 75 or older (Sutherland & Crump 2011).
Funding long-term care: Canada
Long-term care funding tends to be split into health services and accommodation services. The health services component is usually publicly funded through a per-day amount (per diem) or a combination of global budgets and per diem, depending on the province (Ontario Ministry of Health & Long-Term Care 2010). Accommodation services are generally funded by the resident through a co-payment; provinces tend to apply a means-testing process to adjust the co-payment amount (Mazurkewich 2010).
This funding mechanism share similar characteristics to that of global budgeting for hospital care. Its strengths are its budgetary predictability and ability to control costs, but it fails to create any financial incentives for providers to increase volume or transition patients to less intense care when appropriate (Ontario Ministry of Health & Long-Term Care 2010).
To try and overcome the limitations of global budgeting, Alberta and Ontario have recently announced plans to implement activity-based funding (ABF) to fund long term care in their respective provinces. In Alberta, ABF is being phased-in over a six-year period, starting first with public facilities (Community Care Information Management 2011). In Ontario, a multi-year implementation is currently underway (Lin et al 2009).
Funding long-term Care: International examples
In Australia and the United States, ABF has been implemented as a basis for remunerating long-term care facilities, as well as skilled nursing facilities, inpatient rehabilitation, and nursing homes.
In the US, ABF was introduced in 2002 as means to stem the growth in costs that had been observed in the 1990s (Buntin et al 2009). Recent evidence seems to suggest it was successful in this regard; not only has ABF reduced growth in costs, but it seems to have done so without affecting clinical outcomes (Colla et al 2010; Zhang et al 2008).
However, ABF seems to have adversely effected cost-efficiency in long-term care and evidence regarding its impact on the quality of care are mixed (Grabowski 2001; Zinn et al 2008). The reduction in cost-efficiency is related to an increase in administrative nursing costs (of approximately 4%).
In some for-profit long-term care facilities, a reduction in nurse staffing levels has also been observed (Starkey et al 2005), a concern given the finding of a positive relationship between staffing levels and quality of care (Castle et al 2007; Briesacher et al 2009). For example, ABF has been associated with a reduction in rehabilitative services, with a stronger association being observed in private facilities (McKnight 2006). It may not be all bad news, as there is some evidence to suggest that more intense competition between facilities is associated with higher scores on quality measures (Liu et al 2003; Schlenker et al 2005; CIHI 2007).
