The Fraser Institute think it knows how to improve health care in Canada and it involves how hospitals are funded. It recommends paying hospitals based on services provided to patients, instead of allocating pre-defined annual budgets. The institute says that could improve the quantity and quality of health care services while reducing wait times or Canadians.

Nadeem Esmail is a senior fellow at the Fraser Institute and author of the health care reform study. She says, “The way we fund hospitals in Canada matters a great deal when it comes to how many patients are treated, and how we either encourage or discourage hospitals to be more efficient and productive.” The study highlights the potential improvements in health care when hospitals are funded on a per patient service basis – also known as activity-based funding.

The Institute says the current system actually incentivizes hospitals to treat fewer patients to avoid exceeding budgets. But the alternative method creates powerful incentives to treat more patients.

The Institute says, nearly every other developed country with a universal health-care system has moved towards activity-based funding, whereas Canada is among the last to continue to use lump sum payments.

And the Fraser Institute says, among those that have switched, activity-based funding has been found to improve access to services, improve cost efficiency and increase transparency all without necessarily increasing total expenditures.