Alberta’s government is launching a major overhaul of how it funds acute care services, introducing a new patient-focused funding model aimed at slashing surgical wait times, boosting efficiency, and increasing accountability in the health care system.
The new approach, also known as activity-based funding, moves away from the traditional lump-sum grant model previously used to fund Alberta Health Services (AHS).
Instead, hospitals will now be paid based on the number and complexity of patients they treat. Officials say the model will tie funding directly to services delivered, incentivize faster and higher-quality care, and provide better cost predictability for taxpayers.
“The current global budgeting model has no incentives to increase volume, no accountability and no cost predictability for taxpayers,” said Premier Danielle Smith.
“By switching to an activity-based funding model, our health care system will have built-in incentives to increase volume with high quality, cost predictability for taxpayers and accountability for all providers.”
Under the new structure, Acute Care Alberta — now fully operational — will take over responsibility for coordinating and funding acute care, including surgeries, while AHS transitions into a hospital-based services provider.
The shift comes amid growing pressure to improve health care access.
Despite a $3.4 billion increase in health funding since 2018-19 and 20,000 more surgeries being performed annually, officials say results have not kept pace with expectations.
In 2023-24, Alberta performed a record 304,595 surgeries, with 310,000 expected this year — but wait times remain a concern.
Health Minister Adriana LaGrange said the new funding approach will ensure care is delivered when and where it’s needed most.
“Exploring innovative ways to allocate funding within our health care system will ensure that Albertans receive the care they need, when they need it most,” she said.
Other jurisdictions, including British Columbia, Ontario, and countries such as Sweden, Norway, and Australia, have adopted similar models to address long wait times and improve system performance.
“This is a bold and necessary step,” said Dr. Chris Eagle, interim president and CEO of Acute Care Alberta.
“Patient-focused funding will bring greater accountability to how health care dollars are being spent while also providing an incentive for quality care.”
The transition to the new model will begin with a pilot project this year.
A working group is currently reviewing international examples, engaging stakeholders, and customizing the model for Alberta.
Final recommendations will be presented to the minister of health later in 2025, with implementation of patient-focused funding for select procedures set to begin in 2026.
