Alberta’s move to ‘activity-based funding’ will improve health care despite naysayer claims

After the Smith government recently announced its shift to a new approach for funding hospitals, known as “activity-based funding” (ABF), defenders of the status quo in Alberta were quick to argue ABF will not improve health care in the province. Their claims are simply incorrect. In reality, based on the experiences of other better-performing universal health-care systems, ABF will help reduce wait times for Alberta patients and provide better value-for-money for taxpayers.

First, it’s important to understand Alberta is not breaking new ground with this approach. Other developed countries shifted to the ABF model starting in the early 1990s.

Indeed, after years of paying their hospitals a lump-sum annual budget for surgical care (like Alberta currently), other countries with universal health care recognized this form of payment encouraged hospitals to deliver fewer services by turning each patient into a cost to be minimized. The shift to ABF, which compensates hospitals for the actual services they provide, flips the script—hospitals in these countries now see patients as a source of revenue.

In fact, in many universal health-care countries, these reforms began so long ago that some are now on their second or even third generation of ABF, incorporating further innovations to encourage an even greater focus on quality.

For example, in Sweden in the early 1990s, counties that embraced ABF enjoyed a potential cost savings of 13 per cent over non-reforming counties that stuck with budgets. In Stockholm, one study measured an 11 per cent increase in hospital activity overall alongside a 1 per cent decrease in costs following the introduction of ABF. Moreover, according to the study, ABF did not reduce access for older patients or patients with more complex conditions. In England, the shift to ABF in the early to mid-2000s helped increase hospital activity and reduce the cost of care per patient, also without negatively affecting quality of care.

Multi-national studies on the shift to ABF have repeatedly shown increases in the volume of care provided, reduced costs per admission, and (perhaps most importantly for Albertans) shorter wait times. Studies have also shown ABF may lead to improved quality and access to advanced medical technology for patients.

Clearly, the naysayers who claim that ABF is some sort of new or untested reform, or that Albertans are heading down an unknown path with unmanageable and unexpected risks, are at the very least uninformed.

And what of those theoretical drawbacks?

Some critics claim that ABF may encourage faster discharges of patients to reduce costs. But they fail to note this theoretical drawback also exists under the current system where discharging higher-cost patients earlier can reduce the drain on hospital budgets. And crucially, other countries have implemented policies to prevent these types of theoretical drawbacks under ABF, which can inform Alberta’s approach from the start.

Critics also argue that competition between private clinics, or even between clinics and hospitals, is somehow a bad thing. But all of the developed world’s top performing universal health-care systems, with the best outcomes and shortest wait times, include a blend of both public and private care. No one has done it with the naysayers’ fixation on government provision.

And finally, some critics claim that, under ABF, private clinics will simply focus on less-complex procedures for less-complex patients to achieve greater profit, leaving public hospitals to perform more complex and thus costly surgeries. But in fact, private clinics alleviate pressure on the public system, allowing hospitals to dedicate their sophisticated resources to complex cases. To be sure, the government must ensure that complex procedures—no matter where they are performed—must always receive appropriate levels of funding and similarly that less-complex procedures are also appropriately funded. But again, the vast and lengthy experience with ABF in other universal health-care countries can help inform Alberta’s approach, which could then serve as an example for other provinces.

Alberta’s health-care system simply does not deliver for patients, with its painfully long wait times and poor access to physicians and services—despite its massive price tag. With its planned shift to activity-based funding, the province has embarked on a path to better health care, despite any false claims from the naysayers. Now it’s crucial for the Smith government to learn from the experiences of others and get this critical reform right.

Nadeem Esmail

Senior Fellow, Fraser Institute

Related Topics:#AlbertaHealth #FraserInstitute #NadeemEsmail AlbertaActivityBasedFunding feature

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Premier Smith: Canadians support agreement between Alberta and Ottawa and the major economic opportunities it could unlock for the benefit of all

Published on December 6, 2025

Todayville

From Energy Now

By Premier Danielle Smith

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If Canada wants to lead global energy security efforts, build out sovereign AI infrastructure, increase funding to social programs and national defence and expand trade to new markets, we must unleash the full potential of our vast natural resources and embrace our role as a global energy superpower.

The Alberta-Ottawa Energy agreement is the first step in accomplishing all of these critical objectives.

Recent polling shows that a majority of Canadians are supportive of this agreement and the major economic opportunities it could unlock for the benefit of all Canadians.

As a nation we must embrace two important realities: First, global demand for oil is increasing and second, Canada needs to generate more revenue to address its fiscal challenges.

Nations around the world — including Korea, Japan, India, Taiwan and China in Asia as well as various European nations — continue to ask for Canadian energy. We are perfectly positioned to meet those needs and lead global energy security efforts.

Our heavy oil is not only abundant, it’s responsibly developed, geopolitically stable and backed by decades of proven supply.

If we want to pay down our debt, increase funding to social programs and meet our NATO defence spending commitments, then we need to generate more revenue. And the best way to do so is to leverage our vast natural resources.

At today’s prices, Alberta’s proven oil and gas reserves represent trillions in value.

It’s not just a number; it’s a generational opportunity for Alberta and Canada to secure prosperity and invest in the future of our communities. But to unlock the full potential of this resource, we need the infrastructure to match our ambition.

There is one nation-building project that stands above all others in its ability to deliver economic benefits to Canada — a new bitumen pipeline to Asian markets.

The energy agreement signed on Nov. 27 includes a clear path to the construction of a one-million-plus barrel-per-day bitumen pipeline, with Indigenous co-ownership, that can ensure our province and country are no longer dependent on just one customer to buy our most valuable resource.

Indigenous co-ownership also provide millions in revenue to communities along the route of the project to the northwest coast, contributing toward long-lasting prosperity for their people.

The agreement also recognizes that we can increase oil and gas production while reducing our emissions.

The removal of the oil and gas emissions cap will allow our energy producers to grow and thrive again and the suspension of the federal net-zero power regulations in Alberta will open to doors to major AI data-centre investment.

It also means that Alberta will be a world leader in the development and implementation of emissions-reduction infrastructure — particularly in carbon capture utilization and storage.

The agreement will see Alberta work together with our federal partners and the Pathways companies to commence and complete the world’s largest carbon capture, utilization and storage infrastructure project.

This would make Alberta heavy oil the lowest intensity barrel on the market and displace millions of barrels of heavier-emitting fuels around the globe.

We’re sending a clear message to investors across the world: Alberta and Canada are leaders, not just in oil and gas, but in the innovation and technologies that are cutting per barrel emissions even as we ramp up production.

Where we are going — and where we intend to go with more frequency — is east, west, north and south, across oceans and around the globe. We have the energy other countries need, and will continue to need, for decades to come.

However, this agreement is just the first step in this journey. There is much hard work ahead of us. Trust must be built and earned in this partnership as we move through the next steps of this process.

But it’s very encouraging that Prime Minister Mark Carney has made it clear he is willing to work with Alberta’s government to accomplish our shared goal of making Canada an energy superpower.

That is something we have not seen from a Canadian prime minister in more than a decade.

Together, in good faith, Alberta and Ottawa have taken the first step towards making Canada a global energy superpower for benefit of all Canadians.

Danielle Smith is the Premier of Alberta

Alberta

A Memorandum of Understanding that no Canadian can understand

Published on December 6, 2025

Todayville

From the Fraser Institute

By Niels Veldhuis

The federal and Alberta governments recently released their much-anticipated Memorandum of Understanding (MOU) outlining what it will take to build a pipeline from Alberta, through British Columbia, to tidewater to get more of our oil to markets beyond the United States.

This was great news, according to most in the media: “Ottawa-Alberta deal clears hurdles for West Coast pipeline,” was the top headline on the Globe and Mail’s website, “Carney inks new energy deal with Alberta, paving way to new pipeline” according to the National Post.

And the reaction from the political class? Well, former federal environment minister Steven Guilbeault resigned from Prime Minister Carney’s cabinet, perhaps positively indicating that this agreement might actually produce a new pipeline. Jason Kenney, a former Alberta premier and Harper government cabinet minister, congratulated Prime Minister Carney and Premier Smith on an “historic agreement.” Even Alberta NDP Leader Naheed Nenshi called the MOU “a positive step for our energy future.”

Finally, as Prime Minister Carney promised, Canada might build critical infrastructure “at a speed and scale not seen in generations.”

Given this seemingly great news, I eagerly read the six-page Memorandum of Understanding. Then I read it again and again. Each time, my enthusiasm and understanding diminished rapidly. By the fourth reading, the only objective conclusion I could reach was not that a pipeline would finally be built, but rather that only governments could write an MOU that no Canadian could understand.

The MOU is utterly incoherent. Go ahead, read it for yourself online. It’s only six pages. Here are a few examples.

The agreement states that, “Canada and Alberta agree that the approval, commencement and continued construction of the bitumen pipeline is a prerequisite to the Pathways project.” Then on the next line, “Canada and Alberta agree that the Pathways Project is also a prerequisite to the approval, commencement and continued construction of the bitumen pipeline.”

Two things, of course, cannot logically be prerequisites for each other.

But worry not, under the MOU, Alberta and Ottawa will appoint an “Implementation Committee” to deliver “outcomes” (this is from a federal government that just created the “Major Project Office” to get major projects approved and constructed) including “Determining the means by which Alberta can submit its pipeline application to the Major Projects Office on or before July 1, 2026.”

What does “Determining the means” even mean?

What’s worse is that under the MOU, the application for this pipeline project must be “ready to submit to the Major Projects Office on or before July 1, 2026.” Then it could be another two years (or until 2028) before Ottawa approves the pipeline project. But the MOU states the Pathways Project is to be built in stages, starting in 2027. And that takes us back to the circular reasoning of the prerequisites noted above.

Other conditions needed to move forward include:

The private sector must construct and finance the pipeline. Serious question: which private-sector firm would take this risk? And does the Alberta government plan to indemnify the company against these risks?

Indigenous Peoples must co-own the pipeline project.

Alberta must collaborate with B.C. to ensure British Columbians get a cut or “share substantial economic and financial benefits of the proposed pipeline” in MOU speak.

None of this, of course, addresses the major issue in our country—that is, investors lack clarity on timelines and certainty about project approvals. The Carney government established the Major Project Office to fast-track project approvals and provide greater certainty. Of the 11 project “winners” the federal government has already picked, most either already had approvals or are already at an advanced stage in the process. And one of the most important nation-building projects—a pipeline to get our oil to tidewater—hasn’t even been referred to the Major Project Office.

What message does all this send to the investment community? Have we made it easier to get projects approved? No. Have we made things clearer? No. Business investment in Canada has fallen off a cliff and is down 25 per cent per worker since 2014. We’ve seen a massive outflow of capital from the country, more than $388 billion since 2014.

To change this, Canada needs clear rules and certain timelines for project approvals. Not an opaque Memorandum of Understanding.