Published Tuesday April 8th, 2008

FREDERICTON – Health Minister Mike Murphy’s future plans to fund hospitals based on the number of procedures is a step in the right direction, although he should be wary of treating rural facilities with special considerations, says a leading public policy expert.

Charles Cirtwill, executive vice-president of the Atlantic Institute for Market Studies, said introducing so-called activity-based funding instead of following the existing method of giving the health authorities a lump sum of money each year will make the health-care system more accountable.

However, he questioned Murphy’s recent comments saying a full-fledged activity-based funding system wouldn’t work because smaller, rural hospitals wouldn’t receive enough money to sustain themselves.

“It’s pretty clear that block funding creates a lot of unintended consequences that are negative for the health-care system,” Cirtwill said.

“We need to make a determination about the services we require; not the services that we want, or the services that it would be nice to have, but the services that we require,” he said.

The province should determine what services are required and fund rural facilities accordingly, he said.

“To open the door to maintaining every rural or urban facility just because it’s there now is very problematic,” Cirtwill added.

Recently, Dr. Brian Day, president of the Canadian Medical Association, reiterated his past comments that the province should move to such a formula to help alleviate wait times.

“There’s an incentive for the hospitals to be creative about getting patients out of the hospitals. Every patient you get out means more revenue by bringing in a new patient,” he told Canadaeast News Service in an interview. “(It replaces) giving hospitals all the money up front (where) there’s a disincentive to treat patients.”

Murphy has said although he likes the idea of changing the funding formula, it won’t be possible to implement for at least a couple of years.

In the meantime, the department needs to determine how much it costs to pay for an individual procedure.

Right now, officials can only say how much it costs to run an orthopedic unit for a year, but not the cost of a particular surgery.

Once that’s determined, a hospital would receive a set amount of funding based on the sort of procedures it performs. For example, a heart surgery might be worth several thousand dollars, while fixing a broken arm could see a hospital receive a smaller amount of money from the province.

However he stressed smaller hospitals would need to receive additional funding.

“That would essentially eliminate small-town New Brunswick hospitals and you’d end up with two or three major competing hospitals. That’s not going to happen,” he said. “A mixture is something I’ll look at, but we’re a ways down the road on that.”

Opposition leader Jeannot Volpé said the former government changed the financing rules a few years ago so that regional health authorities are required to create monthly budgets.

Moving to activity-based funding would make it impossible to predict how much money a health authority needs in advance, he said.

“To say this is how much money you’ll get for broken legs next year and this is what you’ll get for broken arms, I don’t think they can do it.”

With files from Canadaeast News Service.