Alberta Shifts to ‘Activity-Based’ Health-Care Funding, Paying for Services Rather Than Targets

An adult acute care hospital in Calgary in a file photo. The Canadian Press/Jeff McIntosh

The Alberta government plans to change its acute care funding model, moving from a system that allocates funds based on surgery targets, which the province says are not always met, to an “activity-based” approach that would pay health-care facilities for the services they deliver.

The new “activity-based” model, also called “patient-focused funding,” would encourage competition among medical centres, including chartered surgical facilities and hospitals, offering built-in incentives to increase surgeries while decreasing wait times, Alberta Premier Danielle Smith said in a video posted on April 7.

Under the current model, Alberta Health Services (AHS), the province’s health agency, allocates provincial health funding to hospitals based on expected outcomes. The premier said the system lacks accountability, as hospitals miss their targets and “often stall on surgical procedures so they can use their global funding in another way.”

“The current global budgeting model has no incentives to increase volume, no accountability and no cost predictability for taxpayers,” Smith said in an April 7 press release.

“By switching to an activity-based funding model, our health care system will have built-in incentives to increase volume with high quality, cost predictability for taxpayers and accountability for all providers.”

The province expects the new funding model to pay hospitals based on the number of patients they treat and the complexity of their care, ensuring that “money follows patients.”

Sarah Hoffman, Opposition NDP health critic, said the new funding model “isn’t about better patient care.”

“It’s about creating more privatization–more private hospitals and more private surgical centres,” Hoffman said in an April 7 social media post. “Albertans deserve better. Patients should be the priority, not profits for corporations.”

The move to a new funding model is part of an overhaul of the health system the province has been working on since 2023 that will establish four agencies, each focused on a specific health sector: primary care, acute care, assisted living, and recovery.

The new system will also see AHS transition from a provincial health authority to a hospital service provider.

Acute Care Alberta will be responsible for overseeing and arranging the delivery of surgeries and other acute care services typically managed by AHS.

By adopting an “activity-based” funding model, Alberta is following the example of other countries, such as Australia, Sweden, and Norway, where wait times have been reduced and access to health care increased, officials said.

The province funded 304,595 surgeries in the 2023–24 year, and expects 310,000 surgeries to be performed in 2024-25.

This year’s provincial budget earmarked $28 billion in operating expenses to health care, including $4.6 billion to improve access to acute care services.

An Alberta health ministry and Acute Care Alberta working group will evaluate the model and provide final recommendations to Health Minister Adriana LaGrange later this year, according to the province. The group will also run a pilot project to determine how the new approach could be implemented this fiscal year.

The new funding model will be adopted for select procedures across the system in 2026.