Healthcare Funding Policies for Reducing Fragmentation and Improving Health Outcomes

This policy paper examines potential roles of ‘funding policy’ to address yawning gaps in continuity of healthcare delivery and inequality in health outcomes across Canada. Funding policy is but one tool available to healthcare decision makers to affect the volume, type, timeliness and cost of healthcare services, products and devices provided to a country’s residents. Healthcare funding policies involve trade-offs and conflicts that may drive the ‘price’ of change to be too high. As Canada exits the COVID-related healthcare crises, the price of healthcare reform may be changing which may cause provinces and territories to consider new healthcare funding policies. The paper begins with a brief background outlining the utility of funding policies to affect the cost-efficiency, effectiveness and equity of healthcare delivered in provinces and territories. Two complementary policy options are proposed that show considerable promise to improve value from healthcare funding. The paper is written from the perspective of the role of the federal government and highlights possible strategies for the federal government to remove barriers to support funding policy reforms in provinces and territories. The federal government is not responsible, nor does it play a meaningful role, in developing, implementing or monitoring funding policy for healthcare organizations or individual providers. This role rests with the respective provinces and territories with the exceptions of federally-insured populations. Nonetheless, the federal government could show leadership in the domain of funding policy by removing provinces’ and territories’ barriers to policy reforms. To bridge the federal government’s strengths with provinces’ and territories’ barriers, a number of specific recommendations are offered to the federal government for its consideration. First, this policy paper recommends that substantive and meaningful funding policy reform should not consist of solely of paying organizations or people differently. There should be commensurate advancements in: national standards for new streams of data and reporting, organization-building and skills development, and robust risk adjustment. These barriers are not show-stoppers, and activities to remove many barriers are fairly straightforward. Second, the federal government could take a leadership role in immediately supporting episode-based payments. These activities could include national efforts to define episodes of care, link data, establish non-binding payment amounts, and publish health outcome performance measures. Third, deliberate federal leadership is needed to establish and grow new streams of data critical to measuring value – including patient-reported outcomes and non-insured health services, such as physiotherapies and mental health services. These activities will be ground-breaking in Canada from the perspective of measuring health and population outcomes. Fourth, the federal government could lead efforts to link social care data with healthcare data. The measurement and analyses of this data will create a roadmap for future interventions to improve population health. The policies proposed in this paper are based on the federal government ‘nudging’ provinces and territories to make changes in funding policy by removing barriers. The policies are incremental from an international perspective, though have important consequences for healthcare organizations and individual providers if they were to be implemented and transformational to healthcare performance were the policies proven to be successful in the long-term.

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