The Drummond Report was commissioned for the purpose of addressing the rising costs of health care in the provincial budget and gave a series of recommendations in a variety of areas related to the health care system. One such area under review was hospitals, which the report argued was not being incentivized to increase efficiency due to a funding model based on average costs across the province. The report goes on to state that there is little understanding of the true costs of procedures and that in order to ensure Ontario is getting the best value for its money, the costs incurred by hospital procedures needs to be examined from region to region and hospital to hospital (Ministry of Finance, 2012). The Drummond Report makes six recommendations in this area related to changing how hospitals are funded, operated, and administrated. Almost 3 years after the release of the report it is clear that Ontario has made great strides towards achieving many of the recommendations outlined in the report pertaining to hospitals.
Recommendation 5-50 proposes the use of the Health-Based Allocation Model (HBAM) system to set appropriate compensation for procedures (Ministry of Finance, 2012). This proposed change would represent a shift from the use of the prevailing global funding model, in which every hospital received lump-sum funding, to HBAM which estimates expected health care expenses based on demographics and clinical data on complexity of care and type of care (Ministry of Health and Long-Term Care, 2012). This recommendation has been realized to some extent in Ontario through the introduction of the Health System Funding Reform (HSFR). By 2015/2016 the HSFR will represent 70% of the funding envelope provided to hospitals, while global funding will represent the remaining 30% (Ministry of Health and Long-Term Care, 2015). The organizational-level funding component representing 40% of the HSFR allocation will be determined using the Health Based Allocation Model, while the quality-based procedures component will see specific procedures funded based on a “price x volume approach” meant to incentivize providers for delivering high-quality care.
Recommendation 5-51 was aimed at creating a blend of activity-based funding and base funding managed through accountability agreements. Ontario has begun the shift towards activity-based funding also known as patient-based funding, by categorizing hip replacement, knee replacement, dialysis and other treatments for chronic kidney disease and cataract surgery as quality-based procedures in which outcome is used to help determine payment (MOHLTC, 2012). The province plans to add to the list of procedures classified as quality-based procedures in the coming years in the hopes that it will maximize efficiency and incentivize providers to increase the quality of care they deliver to patients receiving these procedures.
The introduction of the HSFR in the funding model can also be seen as helping to facilitate recommendation 5-53 of the Drummond Report, which pushed for a new funding model that would incentivize hospitals to specialize so that not all were trying to provide all services regardless of comparative advantage (Ministry of Finance, 2012). By tying the performance outcomes of procedures to payment, it encourages hospitals to specialize in procedures for which they can deliver high-quality outcomes in order to maximize the level of funding they receive. This change to the funding model follows the logic proposed by the Drummond report, which believed that the way to encourage hospitals to cut costs and provide better quality care was to incentivize them to specialize (Ministry of Finance, 2012). Specifically the report stated that if a certain reimbursement rate were set for an activity, hospitals that could not provide the service within that rate would gravitate away from it. The quality-based procedures component of the HSFR model is meant to achieve the goal of better quality and system efficiencies by basing payment on outcome. Ontario has decided to continue down this route with the planned addition of other procedures in coming years (MOHLTC, 2012). In 2013, six other procedures were added as quality-based procedures which included: chronic obstructive pulmonary disease, congestive heart failure, vascular, stroke, chemotherapy, and endoscopy (South West LHIN, 2014).
Recommendation 5-52 encouraged the creation of policies to move people away from inpatient acute care settings by shifting access from emergency rooms and toward community care, home-care, and long-term care (Ministry of Finance, 2012). Currently in Ontario over 184 family health teams have been operationalized with the purpose of expanding access to comprehensive family health services across Ontario by ensuring teams are set-up based on local health and community needs (MOHLTC, 2014). Family Health Teams in the province are community-centered and have been established in traditionally underserved rural and northern communities with unique populations and specialized health needs. By virtue of the many different types of health care professionals that comprise a Family Health Team including family physicians, nurses, social workers, and dieticians, Family Health Teams are meant to facilitate a more comprehensive and coordinated level of care for patients. The broad range of services they can provide are expected to help decrease reliance on the more costly and overburdened emergency departments in part by helping to prevent and treat chronic disease.
Recommendation 5-55 highlights a huge problem that has plagued the Ontario health care system, which is the lack of coordination between the different health care professionals including hospitals, Family Health Teams, and long-term cares facilities. In order to facilitate the discharge of patients and reduce costs there needs to be coordination with other health care professionals to optimize patient outcomes. Recommendation 5-55 proposed the use of hospitalist physicians to co-ordinate inpatient care from admission to discharge and follow a patient as they move through the health care continuum (Ministry of Finance, 2012). Increasing health care costs and chronic illness have led to a need for better coordination of care and the creation of hospitalists, the fastest growing medical specialty in North America with more than 300 practitioners and 62 programs operating in Ontario hospitals today., who are defined as physicians who spend the majority of their professional time providing general medical care to hospitalized patients (White, 2011). However, there are concerns as to the financial sustainability of hospitalist programs, satisfaction amongst patients and providers and perhaps most importantly, whether patient outcomes are adversely affected by the transfer of responsibility between providers.
The province of Ontario has restructured the funding model for hospitals in recent years from the traditional global health model towards the Health-Based Allocation Model and activity-based funding in the hopes of cutting costs and increasing efficiency and quality of care. This restructuring addressed many of the concerns in the Drummond Report about the way hospitals are funded, in particular the lack of incentives the old model contained for to specialize based on comparative advantages. The province continues to head in the direction proposed by the report by decreasing the portion of the payment that is under the Global Health Model and is expected to continue to do so in the upcoming years. The province also continues to employ hospitalists with the hopes of increasing coordination of care to ensure better health outcomes and cutting costs. The controversy surrounding the profession of hospitalists indicates more research should be done into the cost effectiveness, financial sustainability, and impact on patient outcomes to determine whether the profession is attaining the goals it set out to. This also highlights the importance of remaining critical of the recommendations in the report as they are implemented, and the need to ensure that there are not unintended consequences stemming from these changes to the system.
Ministry of Finance. (2012). The commission on ontario’s public services. Retrieved from http://www.fin.gov.on.ca/en/reformcommission/chapters/report.pdf
Ministry of Health and Long-Term Care (2015). Health system funding reform (HSFR). Retrieved from http://www.health.gov.on.ca/en/pro/programs/ecfa/funding/hs_funding.aspx
Ministry of Health and Long-Term Care (2014). Family health teams. Retrieved from http://www.health.gov.on.ca/en/pro/programs/fht/
Ministry of Health and Long-Term Care (2012). Patient-based funding overview. Retrieved from http://www.lhsc.on.ca/About_Us/LHSC/Corporate_Information/Board_of_Directors/Meetings/201204ptbsdfund.pdf
South West LHIN (2014). Health system funding reform update. Retrieved from http://southwestlhin.on.ca/Page.aspx?id=8496
White, Heather L. (2011). Assessing the prevalence, penetration and performance of hospitalist physicians in Ontario: implications for the quality and efficiency of inpatient care. Retrieved from http://rorrhs-ohhrrn.ca/index.php?option=com_content&view=article&id=350%3Aassessing-the-prevalence-penetration-and-performance-of-hospitalist-physicians-in-ontario&catid=10%3Alatest-news&Itemid=8&lang=en