"We are proposing the elimination of global budgets for hospitals," he said, noting that the majority of member countries in the Organisation for Economic Co-operation and Development have already implemented some form of patient-based funding.

Castonguay also claimed that introducing competition to the health care system would be good for patients, offering them more choice. He said that global funding doesn't reward hospitals performing at a high level nor give poorer performing hospitals incentive to improve. Private clinics must also play a bigger role in creating a sustainable health care system, he said. "We can see the private sector as playing an important but complementary role."

Canadian hospitals currently receive money via a block-funding model, which grants annual lump sums. But many other countries - such as the United States and England - have implemented funding systems in which hospitals are rewarded on the basis of patient outcomes (called payment by results or pay for performance) or patient throughput (called activity-based funding).

Advocates of market-oriented funding believe it increases efficiency and reduces wait times. Critics believe it could lead doctors to focus on earnings instead of quality of care, and to the adoption of practices such as "cream skimming" (where easier-to-treat patients are given priority) or "upcoding" (where patients are falsely placed in more lucrative payment categories).

Following Castonguay's address, CMA general council delegates passed a pair of patient-based funding motions. One stated that CMA supports the new funding model, the other called on CMA is to produce a primer about patient-based funding.

But Canadian Doctors for Medicare Chair Dr. Danielle Martin says the motions are far too broad. "Do we interpret that as opening up the health care system to private competition?"

Early release, published at www.cmaj.ca on August 20, 2008. Subject to revision.

Tying funding to patients may help in some areas, Martin says. But it comes with risks, including lower quality, reduced accessibility, reduced efficiency and higher costs. "To imply it will solve all the problems in Canada's health care system is stretching."

From their booth at the general council, members of Canadian Doctors for Medicare handed out a press release to CMA delegates stating that, "Doctors from across Canada today called on the Canadian Medical Association and politicians to support reforms to the health care system that focus on equity and quality rather than promoting private insurance and the creation of markets for buying and selling health care."

Outgoing CMA President Dr. Brian Day, an orthopedic surgeon who owns a private surgical facility in British Columbia, earlier told delegates that the introduction of competition, consumer choice and market principles would be good for Canada's health care system.

Some health care finance experts claim a hybrid model - part block funding, part patient-based funding - would be ideal. It would allow hospitals to steer their resources to meet targets and have the benefit of pay for performance, while still controlling costs, which is the primary benefit of block funding.

Activity-based funding can be part of a effective health system, claimed Ida Goodreau, president and chief executive officer of Vancouver Coastal Health. "When you tie funding with certain deliverables, it can certainly improve overall delivery of care," she told an information session on Aug. 18, 2008.

"The money is the mechanism to motivate people. … But the amount of money isn't the most important driver of change. … The important lesson is money can be part of a system or approach that aligns the objectives of the system with the values of the people working in the system." - Roger Collier, CMAJ

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