Myth Busting Activity Based Funding

Activity Based Funding (ABF) is a benign sounding name for fee-for-service financing of hospitals and other health care organizations. It is usually advocated by fee market supporters as giving patients more choice and rejected by pubic health care proponents as the gateway to more private health care.

The Canadian Health Services Research Foundation (CHSRF) recently published a new myth-busters fact sheet: “Myth: Activity-based Funding Leads to For-profit Hospital Care.”  Defending AFB seems anomalous because CHSFR has often taken positions that support more public health care.  Previous myth buster fact sheets have challenged assertions that “a parallel private system would reduce waiting times in the public system”; “bigger is always better when it comes to hospital mergers”: “user fees would stop waste and ensure better use of the health care system”: and “Canada’s system of healthcare financing is unsustainable.”

The CHSRF argues that “ABF can be employed in ways that benefit patients, increase transparency and lead to more efficient use of hospital resources”. These are all valuable goals but solutions cannot be implemented without consideration of the current political and economic context. Specifically, we have many private interests wanting to make money from publicly paid health care and government’s wishing to aid them.

The left has often avoided discussions on efficiency due to fears that they reinforce pro-market forces who want to dismantle public services.  At the same time, our public institutions have grown up within a doctor dominated medical system favoring undemocratic structures and high tech solutions.  The systems developed often do not  provide the best care nor are they the most responsive to health needs and resource imitations: limitations made more serious when the goals of equal world wide access to care and minimizing environmental impacts are considered.  To avoid these realities decreases the relevance of the lefts concerns.

Any possible advantages of ABF, and abstractly ABF does not necessarily mean for-profit health care, are mitigated by the fact that private providers prefer to deliver health services that are turned into commodities, that is, services that are standardized and individually priced.  ABF does this by delimitating a service and then placing a price on it.  ABF facilitates, even if it does not require, for private delivery.  This is why pro-market advocates want more ABF.

How to have the debate on the most efficient way to deliver public health care?  A few steps that would help are: create strong boundaries around public non-profit services which keep out corporate profit; focus on improving democracy that makes health care accountable to communities and prioritizes meeting community health needs; and, include in this discussion the needs of a community for a clean environment, worldwide justice and greater equality.

It is naïve to think that standardizing the definition and price of a service, and making the payment transferable, will not help private firms. The focus on standardization also undercuts the individual reality of patients care requirements. It is naïve to think that for-profit interests are not influencing, and benefitting from, the discussion to promote ABF.

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