But hospital's funding has remained stable so far
The reason, say Health Sciences North officials, is the model doesn't account for the rising cost of caring for seniors in the North.
The model separates hospital budgets into three categories: bulk funding, with no strings attached; funding linked to population growth; and funding that allocates specific amounts for certain procedures.
However, while cities in southern Ontario will get more funding as their population grows, communities in Northern Ontario will be forced to care for a growing seniors population without the same budget increase.
Dr. Samir Sinha, the provincial lead for Ontario’s seniors strategy, said older adults make up around 14.6 per cent of the province's population, but account for nearly half of the health care spending.
And Joe Pilon, Health Sciences North's chief operating officer, said the new funding model “doesn't particularly identify that seniors necessarily need that much more care.”
Instead, the model has focused on the growing communities in Southern Ontario, where hospitals need more money to service a growing population.
“The pie, the funding from the province, isn't increasing,” Pilon told media after a hospital board meeting Tuesday. “We want to make sure we get our share, and evidently we are because we're providing the right level of service at the right cost.”
The model poses a challenge for Northeastern Ontario, where the seniors population is higher than the provincial average, and continues to grow, while the overall population remains stagnant.
In 2011, the Ministry of Health and Long-Term Care introduced the health-based allocation model, which took a region's demographics and demand for health care services into account when allocating funding.
Two years ago, the province also added a quality-based procedures model to the mix. That model looks at individual medical procedures across the province, and determines how much they should cost under best practices.
Using those numbers, hospitals are funded for the amount of each procedure – like a hip replacement for instance – they are expected to perform each year.
Pilon said the funding model forces hospitals to conform to best practices – in other words, most efficient and cost-effective – so they fall in line with the funding allocation.
“If you're willing to do best practice, you're going to do well,” he said.
Over the past three years Health Sciences North's funding has remained stable, as the province introduced the two new funding models.
The hospital received around $432 million in 2013, and $428 million in 2012. Pilon said the hospital has planned for their budget to remain the same as previous years, apart from added inflation, in 2014.
Because the province is transitioning to the new funding models, funding for each hospital can only go up or down by 1.5 per cent compared to the previous year. Hospitals that meet their best practices requirements, could in theory be rewarded with a 1.5 per cent funding boost.
But those that fail to adapt could lose up to 1.5 per cent in funding, compared to the previous year.
After full implementation, 30 per cent of hospital revenues will be generated through global funding, 30 per cent will be under the quality-based procedures model, and the remaining 40 per cent will be through the health-based allocation model.
The full implementation is expected to be completed by 2015 or 2016. Pilon said once the new model is fully in place, hospitals could face greater deductions, or funding gains, if they do not follow best practices.
As for the demographic element, if Northeastern Ontario's population does not grow, more health care dollars could flow south instead.