Moving from Volume to Value with Hospital Funding Policies in Canada

Canada's two most populous provinces are moving toward activity-based funding (ABF) of hospitals. Although ABF may encourage greater value by improving cost-efficiency, it may decrease value in other respects. To address this trade-off, many jurisdictions have implemented value-based payment programs that modify ABF payments based on hospital performance on other aspects of value, such as outcomes and patient experience. In this article, the design and implementation of two value-based programs are reviewed: Australia's Pricing for Safety and Quality Program and Medicare's Hospital Value-Based Purchasing Program. The contrasts of these programs highlight key questions facing provincial payers in Canada to increase value from hospital spending.