This article supplied by Troy Media.

By Michel Gagnon and Krystle Wittevrongel

Alberta’s shift to activity-based hospital funding could be the blueprint other provinces need to fix Canada’s ailing health-care system

Canada’s health-care system is broken, and most Canadians have given up hope it will improve. Delayed surgeries, overcrowded emergency rooms and long wait times have become the norm. But in Alberta, there is finally a reason to believe change is possible.

The Smith government has announced plans to overhaul hospital funding by introducing activity-based funding, a model where hospitals are paid based on the number and type of treatments they provide, rather than receiving a fixed annual lump sum.

Currently, Alberta uses global budgets: hospitals receive a set amount each year, usually based on the previous year’s volume, regardless of how many patients they end up treating. This rigid funding model limits hospitals’ ability to respond to growing demand and discourages efficiency. It’s a little like only stocking two lifejackets on a boat because two people fell in the water last time around. Under this system, patients become a financial burden, creating an incentive to ration care.

The Montreal Economic Institute has advocated for change since 2012. About a year ago, we urged Alberta to abandon global budgeting in favour of a model that lets money follow the patient. Activity-based funding does just that, rewarding hospitals for providing timely, efficient care rather than merely staying afloat within a fixed budget.

Other countries with universal health care have already embraced this approach. Canada remains a notable outlier among OECD nations. Australia adopted activity-based funding 30 years ago. Within a year, care volumes rose and wait times dropped by 16 per cent. Today, this model accounts for 87 per cent of hospital funding in Australia. In 2022, the median wait time for hip replacement surgery was 232 days in Alberta, compared to 175 days in Australia. Importantly, countries such as Australia and Sweden maintained universal access to care while adopting this system.

Closer to home, Quebec’s gradual shift to activity-based funding has also yielded encouraging results. After the province applied the change to MRIs, costs fell by four per cent and procedures increased by 22 per cent. In radiology and oncology, costs dropped by seven per cent while productivity rose by 26 per cent. Quebec now aims for full adoption by 2027-28, showing that meaningful change is possible within our public system.

These examples show that a better way is possible. Yet most provinces remain stuck in outdated funding models that reward bureaucracy over patient care. If Alberta and Quebec can move forward, so can others. The case for action is national, not just provincial.

Of course, no funding model is without its flaws. That’s why Alberta is taking a phased approach, beginning with a pilot program and consultations to make sure the system fits the province’s needs before the full rollout in 2026. The good news is Alberta doesn’t have to start from scratch. Countries like the United Kingdom, Norway, Sweden and Australia have already faced—and overcome—common challenges such as gaming the coding system (inflating or misclassifying treatments to receive higher payments) or favouring quantity over quality. With the right safeguards in place, hospitals can stay focused on delivering care, not just managing budgets.

Alberta’s move to activity-based funding gives patients something rare in Canadian health care: a real reason to hope for better. But this  opportunity shouldn’t be limited to one province. With its thoughtful approach and clear commitment to reform, Alberta is offering the rest of Canada a blueprint for fixing what’s broken. Other provinces should take notice—and follow its lead.

Michel Kelly-Gagnon is founding president, and Krystle Wittevrongel is director of research at the Montreal Economic Institute, a think-tank with offices in Montreal Ottawa and Calgary.

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From the Brownstone Institute

By David Bell, Ramesh Thakur  

If we were designing a new WHO now, no sane model would base its funding and direction primarily on the interests and advice of those who profit from illness. Rather, these would be based on accurate estimates of localized risks of the big killer diseases. The WHO was once independent of private interests, mostly core-funded, and able to set rational priorities. That WHO is gone.

The WHO was originally intended primarily to transfer capacity to struggling states emerging from colonialism and address their higher burdens of disease but lower administrative and financial capabilities. This prioritized fundamentals like sanitation, good nutrition, and competent health services that had brought long life to people in wealthier countries. Its focus now is more on stocking shelves with manufactured commodities. Its budget, staffing, and remit expand as actual country need and infectious disease mortality decline over the years.

While major gaps in underlying health equality remain, and were recently exacerbated by the WHO’s Covid-19 policies, the world is a very different place from 1948 when it was formed. Rather than acknowledging progress, however, we are told we are simply in an ‘inter-pandemic period,’ and the WHO and its partners should be given ever more responsibility and resources to save us from the next hypothetical outbreak (like Disease-X). Increasingly dependent on ‘specified’ funding from national and private interests heavily invested in profitable biotech fixes rather than the underlying drivers of good health,  the WHO looks more and more like other public-private partnerships that channel taxpayer money to the priorities of private industry.

Pandemics happen, but a proven natural one of major impact on life expectancy has not happened since pre-antibiotic era Spanish flu over a hundred years ago. We all understand that better nutrition, sewers, potable water, living conditions, antibiotics, and modern medicines protect us, yet we are told to be ever more fearful of the next outbreak. Covid happened, but it overwhelmingly affected the elderly in Europe and the Americas. Moreover, it looks, as the US government now makes clear, almost certainly a laboratory mistake by the very pandemic industry that is promoting the WHO’s new approach.

Collaborating on health internationally remains popular, as it should be in a heavily interdependent world. It also makes sense to prepare for severe rare events – most of us buy insurance. But we don’t exaggerate flood risk in order to expand the flood insurance industry, as anything we spend is money taken from our other needs.

Public health is no different. If we were designing a new WHO now, no sane model would base its funding and direction primarily on the interests and advice of those who profit from illness. Rather, these would be based on accurate estimates of localized risks of the big killer diseases. The WHO was once independent of private interests, mostly core-funded, and able to set rational priorities. That WHO is gone.

Over the past 80 years, the world has also changed. It makes no sense now to base thousands of health staff in one of the world’s most expensive (and healthiest!) cities, and it makes no sense in a technologically advancing world to keep centralizing control there. The WHO was structured in a time when most mail still went by steamship. It stands increasingly as an anomaly to its mission and to the world in which it works. Would a network of regional bodies tied to their local context not be more responsive and effective than a distant, disconnected, and centralized bureaucracy of thousands?

Amidst the broader turmoil roiling the post-1945 international liberal order, the recent US notice of withdrawal from the WHO presents a unique opportunity to rethink the type of international health institution the world needs, how that should operate, where, for what purpose, and for how long.

What should be the use-by date of an international institution? In the WHO’s case, either health is getting better as countries build capacity and it should be downsizing. Or health is getting worse, in which case the model has failed and we need something more fit for purpose.

The Trump administration’s actions are an opportunity to rebase international health cooperation on widely recognized standards of ethics and human rights. Countries and populations should be back in control, and those seeking profit from illness should have no role in decision-making. The WHO, at nearly 80 years old, comes from a bygone era, and is increasingly estranged from its world. We can do better. Fundamental change in the way we manage international health cooperation will be painful but ultimately healthy.

Authors

David Bell

David Bell, Senior Scholar at Brownstone Institute, is a public health physician and biotech consultant in global health. David is a former medical officer and scientist at the World Health Organization (WHO), Programme Head for malaria and febrile diseases at the Foundation for Innovative New Diagnostics (FIND) in Geneva, Switzerland, and Director of Global Health Technologies at Intellectual Ventures Global Good Fund in Bellevue, WA, USA.

Ramesh Thakur

Ramesh Thakur, a Brownstone Institute Senior Scholar, is a former United Nations Assistant Secretary-General, and emeritus professor in the Crawford School of Public Policy, The Australian National University.