$250 million to be spent on new health care funding model

The biggest of B.C.’s hospitals will be eligible for new funds, on top of their annual big chunks called block funding, but the government has decided to move away from the latter as it can drive up waiting lists by rationing care when the money pot dries up.

Instead, hospitals will be expected to compete for new monies allocated to those hospitals that prove they’ll deliver more service to more patients at competitive prices, the government announced Monday.

The patient-focused funding model, also sometimes referred to as pay-for-performance, will now become a permanent fixture in the $2 million-an-hour health system. Numerous pilot projects over the past four years have shown that through innovation and efficiencies, more care can be delivered, at lower costs, when patients are seen as precious, revenue generators rather than mere expenses, Health Services Minister Kevin Falcon said.

Falcon chose an area in front of University of B.C. Hospital – where the emergency department was downgraded to an urgent care centre in 2003 – as the backdrop for his announcement.

The hospital’s hip and knee replacement program is a prime example of the change he wants to see. The government has given the hospital millions in additional incentive funding for a program in which operating rooms are used simultaneously to do more joint replacement cases. The program has managed to wring out efficiencies so that the per surgical case cost dropped to $12,000 from $13,296 at the same time as the hospital has performed 1,600 more cases per year – just by being smarter and more productive.

Dr. Bas Masri, head of orthopedics at UBC and Vancouver General Hospitals, said in an interview that since 2006 when the program was pioneered, waiting times for joint replacements have dropped from over a year to about three or four months. Patients still expecting to wait a year or so for their surgery nearly fall out of their chairs when they’re told the wait is much shorter, he noted.

Masri said with a block funding model, when money runs out and hospitals are over budget, cases may get cancelled or never scheduled. But with patient focused funding, a case late in the afternoon isn’t going to be cancelled because although it might mean paying a few hundred dollars in overtime to surgical nurses, the decision to pay overtime would be justified on the basis that the case represents $12,000 in revenue and the patient shouldn’t have to wait any longer for surgery.

A candid Falcon agreed, saying: "Under our block system funding, perversely, it actually works against the interest of the patient often so what will happen is hospitals will be looking at ways to protect their budget. Every patient coming in the door is looked at as an expense and something to be avoided. So this really flips that on its head. Because it says the better job you do in dealing with those patients, the more revenue you will receive. So actually it will work against those hospitals which try and protect budgets by doing less procedures. Which is what happens in Canada (where) we ration elective procedures."

Other programs which have been pilot tested and will likely continue with the $250 million (over the next two years) funding include emergency department decongestion in which hospitals throughout the Vancouver coast and Fraser regions are given incentive funding for treating and discharging patients within certain times, rapid access breast cancer diagnosis clinics and spinal surgery programs meant to process more patients, especially through day procedures.

There are four rapid access, breast cancer diagnosis clinics across the Lower Mainland. They opened last year with a targeted $5 million investment from the provincial government. Based on a European model in which screening, examinations and surgery are all done in one location to avoid multiple visits and speed care, the clinics began as pilot projects but will now likely continue as permanent programs through the $250 million fund.

Hospital officials contacted Monday were unable to say what other programs will vie for the funding but Falcon said he expects 23 large hospitals will eventually compete for the targeted monies. By 2012, he hopes to see 20 per cent of hospital budgets delivered through patient focused funding while 80 per cent remains in block funding.

Hospitals will apply for such funds to a new entity called BC Health Services Purchasing Organization whose medical director will be Dr. Les Vertesi, an emergency room doctor at Royal Columbian Hospital, and health system reformer who has had a long-standing involvement in the pilot programs. Vertesi also happens to be Premier Gordon Campbell’s brother in law.

David Thompson, the outgoing chair of Vancouver Coastal Health, has been named chair of the new organization. Falcon said the organization will ensure there are rigorous checks so hospitals don’t "cherry pick" the easiest cases or "churn out patients like fast food."

Vertesi acknowledged that some hospitals will likely gain more than others "but we’re not going to rob Peter to pay Paul," he said, referring to the fact that other hospital services shouldn’t suffer at the expense of the programs being "incentivized."