Alberta
Alberta’s move to ‘activity-based funding’ will improve health care despite naysayer claims
From the Fraser Institute
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
Alberta
SERIOUS AND RECKLESS IMPLICATIONS: An Obscure Bill Could Present Material Challenge for Canada’s Oil and Gas Sector
From Energy Now
By Tammy Nemeth and Ron Wallace
Bill S-243 seeks to “reshape the logic of capital markets” by mandating that all federally regulated financial institutions, banks, pension funds, insurance companies and federal financial Crown Corporations align their investment portfolios with Canada’s climate commitments
Senator Rosa Galvez’s recent op-ed in the National Observer champions the reintroduction of her Climate-Aligned Finance Act (Bill S-243) as a cornerstone for an “orderly transition” to achieving a low-carbon Canadian economy. With Prime Minister Mark Carney—a global figure in sustainable finance—at the helm, Senator Galvez believes Canada has a “golden opportunity” to lead on climate-aligned finance. However, a closer examination of Bill S-243 reveals a troubling agenda that potentially risks not only crippling Canada’s oil and gas sector and undermining economic stability, but one that could impose unhelpful, discriminatory measures. As Carney pledges to transform Canada’s economy, this legislation would also erode the principles of fairness in our economic and financial system.
Introduced in 2022, Bill S-243 seeks to “reshape the logic of capital markets” by mandating that all federally regulated financial institutions, banks, pension funds, insurance companies and federal financial Crown Corporations align their investment portfolios with Canada’s climate commitments, particularly with the Paris Agreement’s goal of limiting global warming to 1.5°C. The Bill’s provisions are sweeping and punitive, targeting emissions-intensive sectors like oil and gas with what could only be described as an unprecedented regulatory overreach. It requires institutions to avoid financing “new fossil fuel supply infrastructure” and to plan for a “fossil-free future,” effectively discouraging investment in Canada’s energy sector. To that end, it imposes capital-risk weights of 1,250% on debt for new fossil fuel projects and 150% or more for existing ones, making such financing prohibitively expensive. These measures, as confirmed by the Canadian Bankers’ Association and the Office of the Superintendent of Financial Institutions in 2023 Senate testimony, would have the effect of forcing Canadian financial institutions to exit oil and gas financing altogether. It also enshrines into law that entities put climate commitments ahead of fiduciary duty:
“The persons for whom a duty is established under subsection (1) [alignment with climate commitments] must give precedence to that duty over all other duties and obligations of office, and, for that purpose, ensuring the entity is in alignment with climate commitments is deemed to be a superseding matter of public interest.”
While the applicability of the term used in the legislation that defines a “reporting entity” may be a subject of some debate, the legislation would nonetheless direct financial institutions to put “climate over people”.
There are significant implications here for the Canadian oil and gas sector. This backbone of the economy employs thousands and generates billions in revenue. Yet, under Bill S-243, financial institutions would effectively be directed to divest from those companies if not the entire sector. How can Canada become an “energy superpower” if its financial system is directed to effectively abandon the conventional energy sector?
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Beyond economics, Bill S-243 raises profound ethical concerns, particularly with its boardroom provisions. At least one board member of every federally regulated financial institution must have “climate expertise”; excluded from serving as a director would be anyone who has worked for, lobbied or held shares in a fossil fuel company unless their position in the fossil fuel company was to help it align with climate commitments defined in part as “planning for a fossil fuel–free future.” How is “climate expertise” defined? The proposed legislation says it “means a person with demonstrable experience in proposing or implementing climate actions” or, among other characteristics, any person “who has acute lived experience related to the physical or economic damages of climate change.” Bill S-243’s ideological exclusion of oil and gas-affiliated individuals from the boards of financial institutions would set a dangerous precedent that risks normalizing discrimination under the guise of environmental progress to diminish executive expertise, individual rights and the interests of shareholders.
Mark Carney’s leadership adds complexity to this debate. As the founder of the Glasgow Financial Alliance for Net Zero, Carney has long advocated for climate risk integration in finance, despite growing corporate withdrawal from the initiative. Indeed, when called to testify on Bill S-243 in May 2024, Carney praised Senator Galvez’s initiative and generally supported the bill stating: “Certain aspects of the proposed law are definitely achievable and actually essential.” If Carney’s Liberal government embraces Bill S-243, or something similar, it would send a major negative signal to the Canadian energy sector, especially at a time of strained Federal-Provincial relations and as the Trump Administration pivots away from climate-related regulation.
Canada’s economy and energy future faces a pivotal moment. Bill S-243 is punitive, discriminatory and economically reckless while threatening the economic resilience that the Prime Minister claims to champion. A more balanced strategy, one that supports innovation without effectively dismantling the financial underpinnings of a vital industry, is essential. What remains to be seen is will this federal government prioritize economic stability and regulatory fairness over ideological climate zeal?
Tammy Nemeth is a U.K.-based energy analyst. Ron Wallace is a Calgary-based energy analyst and former Permanent Member of the National Energy Board.
From the Fraser Institute
It’s unusual to see a provincial government take on health-care reform. But not so in Alberta, where major reforms have been underway for almost a year. The province has long struggled with lengthy waits for non-emergency care and a majority (58 per cent) of Albertans last year were unsatisfied with the government’s handling of health care.
And who could blame them?
The median wait last year in Alberta was 19.2 weeks to see a specialist (after getting a referral from a family doctor) followed by the same amount of time to receive treatment. This combined 38.4-week wait marked the longest delay for non-emergency care in Alberta since data were first published more than 30 years ago. Also last year, an estimated 208,000 patients waited for care in Alberta. These waits are not benign and can result in prolonged pain and discomfort, psychological distress, and can impact our ability to work and earn money.
In fact, according to our new study, last year health-care wait times in Alberta cost patients $778 million—or more than $3,700 per-patient waiting. This estimate, however, doesn’t include leisure time after work or on weekends. When this time was included in the calculation, the total cost of these waits balloons to more than $2.3 billion or around $11,000 per patient.
Again, to its credit, the Smith government has not shied away from reform. It’s reorganized one of province’s largest employers (Alberta Health Services) with the goal of improving health-care delivery, it plans to change how hospitals are funded to deliver more care, and it continues to contract out publicly funded surgeries to private clinics. Here, the government should look at expanding, based on the success the Saskatchewan Surgical Initiative (SSI), which helped increase that province’s surgical capacity by delivering publicly funded surgeries through private clinics and shortened the median health-care wait from 26.5 weeks in 2010 to 14.2 weeks by 2014.
The SSI also “pooled” referrals in Saskatchewan together and allowed patients to choose which specialist they wanted to see for treatment, and patients received estimates of how long they would wait before choosing.
In Alberta, however, family doctors still refer patients to one specific specialist at a time yet remain potentially unaware of other appropriate doctors with shorter waits. But if Alberta also put specialist wait lists and referrals into one list, and provided updated wait times information, a family doctor could help patients choose a specialist with a shorter wait time. Or better yet, if Albertans could access that information online with an Alberta health card, they could make that decision on their own while working with their family doctor.
Make no mistake, change is in the air for health care in Alberta. And while key policy changes are now underway, the Smith government should consider more options while this window for reform remains open.
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