“The Times They Are A’ Changin’”: Ontario’s Health System Funding Reform

Tyler ChalkThe Hospital for Sick Children

CAPHC Annual Conference

October 2016

Objectives

• Understand how (and why) the Ontario government fundamentally changed how hospitals are funded in 2012

• Review some consequences (intended and otherwise), how hospitals have responded, and the critical importance of analytics

Ontario reformed hospital funding in 2012 to help bend the cost curve and catch up with leading health systems

• Healthcare is 42% of every dollar the province spends• If trends continue, grows to 70 cents in 12 years• Clear trend in year-over-year funding changes

• Ontario is late to the game • Learning from other jurisdictions

Source: Ontario Ministry of Health and Long-Term Care

Moving from global funding to patient-based funding

5

HBAM• Competitive model, share of the pie exercise (zero-sum game)• $5.2B divided between hospitals each year

The Health-Based Allocation Model (HBAM) uses clinical, financial and demographic data to allocate 40% of provincial funding for hospitals

Quality-Based Procedures: fixed rate x volume funding with clear incentives to improve quality, reduce variation and cost, and earn a positive margin

• Clusters of patients with related diagnoses

• Objectives: standardize care minimize inappropriate practice variation encourage investments in

quality and safety

“Here is Edward Bear, coming downstairs now, bump, bump, bump, on the back of his head, behind Christopher Robin.

It is, as far as he knows, the only way of coming downstairs.

But sometimes he feels that there really is another way, if only he could stop bumping for a moment and think of it."

A.A. Milne (from Winnie-the-Pooh)

Funding reform – a burning platform for change at Ontario hospitals

Making time for strategy, while keeping up with operations…

Impact on hospitals

Unintended Consequences? Data QualityClear Winners and Losers

- Significant redistribution of funding each year

- Concept of “forced improvement”

- Need to confront systemic issues

- Premium on new models of care, collaboration, analytics

- “If it wasn’t documented and coded, it didn’t happen and we wont pay for it”

- Clinical Documentation Improvement as a major growth industry

- Stifling innovation?

- Ambulatory care

- Case weight methodology

- Non-clinical investments

Inset

The analytics journey

Thank you!

tyler.chalk@sickkids.ca