Global Budget For Health Care Essay

Spurred by the global recession, governments implemented austerity measures to reduce budget deficits. In Canada, the impact of these measures are particularly evident at the hospital level. Hospitals have seen their operating budgets reduced from previous years.
The most common public funding method used in Canada is the “global budget” method. Under this model, hospitals are provided a fixed budget to cover operating costs during a fixed period. The budgets are based on historical figures, impact of inflation and projected changes to the type and level of service offered. An advantage of the global budget method is that it provides administrators an effective means of expenditure control. This is achieved simply by lowering the hospital’s …show more content…
One of these models is Activity Based Funding (ABF). Unlike the global budget model, ABF is applied by categorizing care services into clinically similar groups (case-mix), determining average costs per group to define a reimbursement amount by case-mix (payment price). Hospitals are then reimbursed based on the quantity of service offered (payment per patient). ABF models can be used fully or in part to subsidize hospitals. For example, certain types of care services can be reimbursed by ABF while global budget method is applied for the remainder of the hospital’s operational …show more content…
However, the tradeoff of restricting budgets is the challenge this poses on hospital administrators to maintain services and provide adequate care. Services that go beyond the limits of the hospital budget are either delayed till the next financial period, or simply not offered unless supplementary budget can somehow be secured through alternate funding sources. Faced with this reality, hospital administrators have had to implement a number of measures to reduce their operating costs and put in place strategies to maintain services within the imposed financial