Alberta shifts hospital funding to reward patient volume
Under a new model, hospitals get paid based on procedures performed—not a fixed budget. Three Edmonton hospitals are in the first phase.
Alberta is rolling out a new hospital funding model that ties money directly to patient care, moving away from fixed budgets that don't incentivize hospitals to perform more surgeries.
The patient-focused funding (PFF) model launched Monday with 12 hospitals across the province operating under phase one. The formula funds hospitals based on the number of procedures they deliver rather than a static annual block budget.
"Funding follows the patient," said Hospital and Surgical Health Services Minister Adriana LaGrange. "That model doesn't align incentives the right way. It can actually discourage hospitals from doing more."
Three Edmonton hospitals are among the 12 participating: Royal Alexandra Hospital, Grey Nuns Community Hospital, and Misericordia Community Hospital. Nine are operated by Alberta Health Services; three by Covenant Health.
Phase one covers four surgeries: hip replacements ($8,900 to $33,440), knee replacements ($8,530 to $24,790), cataract surgery ($880 to $1,600), and rotator cuff repairs ($6,800). The province says 26,000 procedures are funded under PFF in 2026-27.
Premier Danielle Smith expects the model will drive down surgical costs by encouraging public hospitals to perform more procedures, which may prompt private surgical facilities to bid lower prices. Acute Care Alberta CEO David Diamond called this first year a "learning year." Officials will monitor quality using patient experience scores, 30-day unplanned readmission rates, and average hospital stays.