HBAM in Ontario – The road to a sustainable, more efficient health care system?

Many physicians in Ontario are scratching their heads about HBAM (Health Based Allocation Model). Will it help enhance access to care for our patients? Will it introduce some predictability in funding of hospitals and community programs? Will it discourage inefficient and inappropriate system practices?

The short answer to all these questions is, “We don’t know yet”.

HBAM is a made-in-Ontario plan. It’s never been tried anywhere else before. It is a new funding model for health care; one that is being touted as a solution to rescue us from our current, unsustainable trajectory.

The current plan is to begin partially funding hospitals and home care through the new funding model, and then have it expand to other sectors of the health care system in the coming years.

For hospitals, the new model represents a whole new way of doing business. Currently, hospitals engage in a form of lobbying for more funded “volumes” for procedures, surgeries, and other services (“volumes” is a term that always makes me cringe because these de-personalized numbers that are bandied about represent real people with real needs. But I digress….).  Under HBAM, though, hospitals will be funded based on need and their ability to deliver services – like hip and knee replacements, cataract surgery, cardiac procedures and MRIs – efficiently and appropriately. It replaces a small-p political process with one that is based on evidence and merit.

Sounds good. But how does it work?

Essentially, HBAM has two parts. The first is a service component and the second is a case-cost component.

The service component borrows principles from the insurance industry. Just as your insurance company “profiles” you according to your age, your smoking status, your medical history, the medications you’re on, etc, HBAM aims to build individual profiles for all Ontarians based on these and other demographic characteristics. Based on this profile, the model will predict your expected use of health care services.

HBAM will also build community or regional profiles. Based on historic utilization patterns, expected population growth and population health demographics, it will be possible to paint a picture of what a region, and by extension the region’s hospitals, will need.

The case-costing component will calculate what any particular service (for example, a hip replacement) should cost – based on the creation of a target calculated from averaged data. The idea is that if your hospital performs these services for patients – “cases” – at a higher cost than other hospitals can do it for, then your hospital is inefficient, by definition. By paying your hospital only what an efficient hospital needs to perform that service, the model will provide incentive for your hospital to achieve that same degree of efficiency in order to avoid operating at a loss.

The model promises to allow some adjustments to the calculation based on degree of academic activity, remoteness, size (recognizing economy-of-scale limitations), etc.

All sound principles – but the devil, as always, is in the details. Whether or not this project is ultimately successful will depend critically on how it is implemented and how the unintended consequences (that are sure to come) are mitigated.

This is not to say that the status quo should be maintained. The current state is one where managers and directors typically only learn of their funded “volumes” mid-way through the fiscal year, making it extremely difficult to manage costs and waiting lists. The story from Chatham this week shows how this model totally fails patients – the funding runs out so the procedures stop until April 1. (http://www.chathamdailynews.ca/2012/12/14/c-k-health-alliance-says-funding-for-orthopedic-surgery-runs-out-at-end-of-the-month). In addition, boom-and-bust activity cycles are inherently inefficient.

So we do need change. But as physicians, we have to watch the roll-out of this new model carefully. What will this “race to the bottom” in the search for low case costs do to quality and safety? What will happen to access and equity if some hospitals decide that they can no longer afford to be in the hip replacement business, or the cataract business? What will happen to innovation and new technologies – typically more expensive at the outset?

It is the job of every Ontario physician to help lead the transformation of health care in this province. We can do this by being informed, by being thoughtful with our commentary, by being supportive of good ideas, and most importantly, by being faithful to our fiduciary duty to our patients.

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