Alberta rolls out activity-based surgery funding model to more public hospitals

Alberta is rolling out a new surgery funding model that ties money to patients, starting in a dozen public hospitals across the province.

The government calls it patient-focused funding and says it began last month for the initial group of hospitals, including Edmonton’s Royal Alexandra Hospital and Calgary’s Rockyview General Hospital.

The 12 hospitals, operated by Alberta Health Services and Covenant Health, will see their funding for surgeries be tied to the number and type of procedures they perform, rather than receive blanket budgets for surgeries.

There’s also a government-set price for each type of surgery, and documents about the trial released by the province say some have been set slightly below historical averages to encourage efficiency.

The switch to the new funding model was announced by Premier Danielle Smith more than a year ago.

1:57 Acute care funding changes in Alberta

At the time, Smith said it would make hospitals more accountable and drive costs down by fostering competition among public and private surgical providers who perform publicly funded procedures.

However, the initial rollout announced Monday is limited to public hospitals.

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Government officials told reporters during a briefing that the plan is to use the new funding system to inform future contract discussions with private providers.

Smith said at a news conference that the government had to “start somewhere” in terms of implementing the system and bringing costs down.

“This is about getting the level of efficiency up at all of our hospitals,” she said.

“We are starting from a position of fairness — that we know that different types of surgeries take different amounts of resources — and we want to be able to pay everybody fairly on that basis.

“As we learn more over the course of the next year, maybe there’ll be some adjustment based on what we discover on the efficiencies and the pricing.”

The funding model applies to knee, hip and cataract replacements, and arthroscopic rotator cuff repairs. The government said it could expand to include additional procedures and hospitals if the initial rollout goes according to plan.

Acute Care Alberta, the provincial health agency that oversees hospitals, released a “price book” on Monday.

In the book, knee replacement day surgeries, for example, are pegged at $8,530, but hospitals can receive more funding if patients have pre-existing conditions that make the procedure more complicated and resource-intensive.

That day surgery cost, according to the price book, equals a two per cent funding bump compared to historical averages. For knee replacements on patients with more complex conditions, hospitals are set to receive two per cent less than historical averages.

The funding bump for day surgeries and reductions for surgeries on patients with co-morbidities applies to hip and cataract replacements as well. Rotator cuff procedures are also being funded two per cent less than the historical average.

Acute Care Alberta says in the document that the initial trial with a dozen hospitals will be a “learning year,” as it tracks how the new system works.

The document says the agency knows emphasizing efficiency can create concerns about quality of care declining. An official with Acute Care Alberta said during the briefing that readmission rates, infections and other quality control measures will be monitored.

Dr. Aaron Low, Acute Care Alberta’s chief medical officer, said Monday that high-quality care is a priority for Alberta’s hospitals, regardless of funding model, and that the goal isn’t to do “high-volume, low-quality services.”

Smith also said she thought the push for efficiency wouldn’t compromise care, adding she expects surgeons and other health professionals to find ways to reduce downtime.

Sarah Hoffman, the Opposition NDP hospitals critic, said the funding model wasn’t a solution for surgical backlogs.

“Activity-based funding pushes hospitals towards quicker, less complex procedures at the expense of comprehensive care, proper followup and better health outcomes,” Hoffman said in a statement.

“If this government truly wanted to fix health care, it would invest in public surgical capacity, address bottlenecks across the system, and work with patients, providers and communities on real solutions.”

Government officials said during the briefing that signs of success for the new model will be increased surgeries and shorter hospital stays.

Acute Care Alberta’s price book indicates that close to 26,000 surgeries — half of which are cataract replacements — are planned to be funded through the new model in the first year.

In 2024-25, a little more than 65,000 hip, knee, cataract and rotator cuff surgeries were performed by both public and private operators, the document said.