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Government and Policy

Ontario announces $469.5 million in new funding for hospitals

TORONTO The provincial government is supporting quality healthcare in Ontario by investing an additional $469.5 million to operate Ontario's hospitals an increase of 4.3 per cent over last year, Health and Long-Term Care Minister George Smitherman (pictured at left) announced. Hospitals will receive a total of $11.3 billion in 2004/05.

"We are strengthening the financial stability of our hospitals and enhancing care in priority areas, including shorter wait times for cardiac care, cancer care, hip & knee replacements and cataract surgery," Smitherman said. "At the same time, we are building effective community services and promoting prevention and healthy living. This will relieve stress on hospitals, which have been asked to do too much, for too long, and will free them up to provide the acute care services they are built to provide."

The McGuinty government's recent investments in community-based services are key parts of its plan to transform the healthcare system in Ontario. Smitherman recently announced significant investments in five key areas:

$103 million new dollars for home care during 2004/2005 and another $29.2 million in new funding for community support services to assist people to live independently at home;

$273 million to increase the provincial share of public health care costs and a further $41.7 million to launch a three-year action plan Operation Health Protection to restore public health;

$406 million in new funding for long-term care homes, which will grow to $531 million annually;

$65 million in new funding in community mental health services;

$111 million to enhance front-line primary care and create Family Health Teams.

"This new funding represents a significant investment in the hospitals of Ontario and will go a long way to support patient care services in communities throughout Ontario," said Tony Dagnone, Board Chair for the Ontario Hospital Association. "Ontario hospitals will continue to work collaboratively with the Ontario government and other health care providers to ensure that patients have timely access to health care services when and where they need them."

This year will also see a new funding formula developed by the Joint Policy and Planning Committee (JPPC), a partnership between the ministry and the Ontario Hospital Association.

"The new funding formula advances the manner in which hospitals are funded, and responds to the needs of all Ontario hospitals for a more objective, equitable and transparent funding method," said Ken Deane, Chair, JPPC Funding Formula Committee, and President and CEO of Hotel Dieu Grace Hospital in Windsor. "The formula is another key element in an accountability-based system."

This year new funding will be allocated using a new more equitable, transparent funding model. The Hospital Funding Method, also known as IPBA (which stands for Integrated Population-Based Allocation Model), has been painstakingly developed over the past 14 years by the Ontario Hospital Association (OHA) in partnership with the Ministry of Health and Long-Term Care. This year, this model will be used to allocate approximately 50% of the new operating funding for 2004/2005.

IPBA considers the characteristics of a hospital and the populations that it serves in calculating the appropriate level of funding for that hospital.

Unlike methods that provide hospitals with "across the board" funding increases, IPBA rewards hospitals for efficiency and compensates them fairly for the needs of the populations they serve and services they provide.

IPBA takes into account the unique characteristics of a particular hospital, such as whether or not it is a teaching hospital, whether it is geographically isolated, whether it provides more or less complex services than its peers and whether it is large or small. IPBA also looks at the characteristics of local populations to determine the types and numbers of services that each hospital ought to be providing. These characteristics include age, gender, population growth rates, income, mortality, aboriginal population, geographic isolation and fertility rates.

IPBA ensures that hospitals with similar characteristics will be compensated at the same cost per unit of service, and expects hospitals with similar populations to provide comparable amounts of services. If similar hospitals do not receive the same level of funding, the discrepancy can often be attributed to inefficiencies.

IPBA will lead to a more equitable and transparent method of allocating funding than the historic "global" funding method, which did not reward efficiency, respond to changes in the needs of communities or hospitals. IPBA promotes hospital accountability by establishing target rates and volumes.

IPBA was reviewed and approved in 2003 by an international panel of hospital funding experts from across Canada and Europe, who agreed that it is an equitable and transparent funding model. Similar models are being developed and implemented in other jurisdictions, including the UK and Alberta.