Will more finance reform improve quality in Ontario’s hospitals?

After a decade of focusing on access to health care services, the Ontario government appears to be turning its attention to improving the quality and costs of these services.

At the moment, there is considerable variation in how health care is delivered in Ontario’s hospitals, so patients with the same diseases are receiving different qualtiy of care depending on where they are treated.

To address this, the Ministry of Health and Long Term Care has embarked on a massive restructuring of how hospital are paid, with the next stage set to roll out on April 1st.

The goal of Ontario’s new approach is to improve standardization of care across the province, to ensure all hospitals are following evidence-informed best practices. In an attempt to accomplish this, the Ministry of Health is in the process of replacing a large share of hospitals’ global budgets with standardized bundled payments for what it is calling Quality Based Procedures (QBPs).

Quality Based Procedures

The idea behind QBPs is to identify certain conditions where there is currently wide variation in clinical practice, contributing to both uneven quality and costs, and to carve these out from hospitals’ base budgets. Hospitals will then receive funding to treat these conditions through a separate mechanism that ties funding to the implementation of best practices and improved quality.

Four QBPs were rolled out last year (hip replacement, knee replacement, cataract surgery and dialysis); with another six set to roll out on April 1st (congestive heart failure, stroke, chronic obstructive pulmonary disease, elective vascular surgery, chemotherapy and colonoscopy).

QBPs are not a new idea in health care. They are a variation of what some jurisdictions call activity based funding, payment by results, or bundled payments.

Here in Ontario, the Ministry has struck an expert panel for each of the QBP conditions, which are tasked with developing best-practices for treating these conditions. “The focus of these panels is exclusively on quality,” says Chaim Bell, co-chair of the Chronic Obstructive Pulmonary Disease (COPD) panel, “we were not asked to look at costs.”

These panels are made up of health care professionals from both academic and community hospitals. They have been asked to review the best available international evidence, along with data from Ontario’s Institute for Clinical Evaluative Sciences, in order to develop standardized care pathways based on best clinical practice.

Care pathways are tools used in health care to improve standardization. They are a sort of map, which plot out a patient’s journey through the health care system. A care pathway for COPD, for example, would determine whether a patient’s condition should be considered mild, moderate or severe, based on the patients’ specific symptoms. Then, based on this initial classification, the pathway would further define which treatments should be used, as well as criteria to evaluate whether a treatment was successful, and if treatment was unsuccessful, which treatment should be offered next.

Creating care pathways does not mean that all patients must be treated the same. Doctors can deviate from a pathway if a patient’s specific condition requires it, but existence of a pathway and accompanying checklists requires that this variation be documented, which helps ensure that the variation is for a good reason.

Bob Howard, CEO of St. Michael’s Hospital believes this approach to standardization is an important step in the right direction, saying “when you improve standardization, you instantly improve quality. Everyone on the care team, including the patient, knows what’s supposed to happen.” When everyone on the team knows what the best practice is, it’s easy to spot and correct deviations from the pathway.

“The devil is in the details”

Improving quality through the development of care pathways based on best-evidence has broad support within the health care system. Where the road begins to get rocky is the effort to connect hospital funding to quality outcomes. “Everyone supports the goals of QBP,” says Ken Tremblay, CEO of Peterborough Regional Health Centre, “but the devil is in the details.”

These details include a deficit of measurable quality indicators and limited evidence on best practices for some procedures.

For payments to be effectively tied to quality, both processes and outcomes must be continuously measured in Ontario’s hospitals. But in many cases hospitals are not measuring relevant quality indicators. According to the clinical QBP guidebook from the COPD expert panel, the indicators of patient outcomes currently measured by hospitals, which include COPD admission rates and length of stay, “do not measure the quality of care provided.”

Further, according to the expert panel, process indicators that could potentially be developed using existing data, such as use of noninvasive ventilation for COPD patients, have not been validated. Validated process measures from other jurisdictions, such as spirometry testing and access to pulmonary rehabilitation, have not been developed in Ontario and would require entirely new data collection systems.

Also challenging is that not all of the conditions identified as QBPs have the same quality of evidence available upon which to base best practice care pathways. According to David Alter, co-chair of the Congestive Heart Failure expert panel, there is significantly less definitive evidence for standardized treatment of congestive heart failure than for cataract surgery or hip replacement.

However, as significant as these challenges are, Alter emphasizes that these are not deal-breakers. “Getting to this stage, where we have evidence-based recommendations, wasn’t easy – there were a lot of challenges, but nothing valuable is easy. We can meet these challenges if we keep working at them,” he says.

Could cost control trump quality improvement?

Using QBPs to standardize quality across the province is challenging enough, but they are also meant to standardize costs.

Originally, the plan for QBPs was to determine the price of providing the best practice care pathway, and to pay hospitals for each patient they treat through this pathway. Thus all relevant costs required to provide the best practice care pathway (nursing costs, imaging, food, laboratory work, etc.) would be calculated and bundled so that hospitals would receive an appropriate payment for providing standardized, high-quality care.

However, despite the scheduled April 1st roll-out for the six new QBPs, the quality based pricing is not in place for all of them, admits Susan Fitzpatrick, the Assistant Deputy Minister at the Ministry of Health responsible for QBPs. “Currently the six expert panels are all at slightly different stages of execution,” she says, “we thought we’d get their best practice guidelines in time to do micro-costing on the care pathways. That has not been able to be done in every case.”

Nevertheless, the carve-out of hospitals’ global budgets is set to go ahead. While hospitals will receive bundled payments for QBP services, the prices for these bundled payments will be based on the average cost of providing a QBP service in Ontario at the present time, rather than on the price of following best practice.

Fitzpatrick believes that the combination of being paid the average price along with monitoring of quality indicators identified by the expert panels will prompt hospitals to start looking at how they can implement best practices.

However, others worry that until payments are tied to actually providing best practices and improving quality, it is unclear whether these new bundled payments will successfully promote quality, or whether they will simply promote cost control as some hospitals struggle to get their costs down to the average.

QBPs the first of many steps – process will be “hard, but necessary”

Changing the ways hospitals are financed is only one step on the path of improving quality in a health care system. “This is a first step,” says Fitzpatrick, “the expert panels are still constituted and one of the next steps for them is to look beyond hospitals to how care is provided in the community.”

“In order to truly transform the system, we have to be bold” says Garth Matheson, a Vice President at Cancer Care Ontario which is responsible for three QBPs. “Look, this is going to be a bumpy road, and things aren’t going to change overnight… but this is how we actually improve the whole system.”

Bob Howard agrees. “The bottom line,” he says, “is that hospitals know this process is going to be hard, but also know that it is necessary.”

The comments section is closed.

  • Dr P says:

    What about finance reform for admin/executives?

  • Dynae Finley says:

    QBP procedure needs to implemented in the delivery of mental health programs. With hospitals laying off psychologists in hospitals in recent months, hospitals are changing programs from group therapy to educational sessions to buttress their numbers to secure funding. The number of patients ‘treated’ using the latter approach will increase but the quality and effectiveness of treatment is suspect.

  • Sam Vaillancourt says:

    Jeremy and Andreas, thanks for an interesting piece. The QBPs are a significant step forward, but the real goal should be to focus on outcomes, rather than processes of care. To do that, primary care and acute care need to work more tightly together. The other large missing piece of the puzzle in this reform is integrating physicians’ work more coherently within these strategies and payment systems.

  • Jason Malinowski says:

    %featured%I too am eager to see how this will transform the way we do things – as a rural and isolated hospital.%featured% We have been independently nibbling at the edges of this, with our own initiatives regarding standardized order sets, among others.

  • George F. says:

    I’m just a bit confused on how the implementation of a QBP will tie into hospital funding… will it be used to budget (i.e. X hospital sees 400 CHF patients a year and should get $__ based on the QBP for this) or incentives (i.e. X hospital used the QBP for 300/400 patients and gets the appropriate level of funding for those 300 patients)?

    Ultimately, how much of an impact will this have on hospital budgets and is it feasible to micro-manage healthcare at this level for all conditions with variation in quality/evidence/costs? Also, how does this tie into HBAM?



    • Jeremy Petch says:

      Hi George – thank you for your question.

      I can answer part of your questions. QBPs and HBAM are two separate reforms to how hospitals are financed. Where at one time nearly 100% of hospital budgets were ‘global’, the goal is that within a couple of years, only 30% of payments to hospitals will be ‘global’, with 40% being administered through HBAM and 30% through QBPs. You can read a bit more about HBAM here:

      I can’t comment with any certainty about your budgeting question – hopefully someone from the MOHLTC is following and would be able to answer that for you.



  • Norm says:

    Wondering what the integration with community care and primary care will look like? %featured%Hips and knees can be thought of as more discrete instances, whereas heart failure and copd are chronic diseases where home based self-management and primary care are key to preserving the rescue work done at the hospital. %featured%This is probably the best place where patient input is required. Not sure what percentage of the expert panels have community experience.

  • Steve says:

    The idea of QBP makes good sense in theory. Standardization of practices and procedures would make it more cost efficient.%featured% I am a little concerned about the outliers of the system. Your 89 year old patient who has a long-standing Parkinson’s disease and a history of stroke, admitted for rehabilitation post total hip replacement can’t be compared with a 60 years old healthy guy for has an elective hip replacement.%featured%

  • Barb says:

    T%featured%hank you for this informative article.
    I think it is critical for patients to be involved in the development of QBPs and also for them to be transparent an%featured%d readily available for patients/families. Once a procedure is developed, it seems to me that there is an opportunity to review the patient journey looking for areas where there can be breakdowns and failures.- for example, in transitions. These risks could be minimized through patient education and checklists.

  • Chris Carruthers says:

    The initial plans, metrics, and funding will not be perfect. But the process, particularly where actual costs exceed expected costs, ensures hospital administration and physicians will drill down quickly to find the reasons. This is a burning platform that will show positive change. These approaches change the mindset from previous years where an empty bed was seen as a money saver till now where it is seen as revenue lost. Tough changes but in the right direction.

  • Rick Edwards says:

    My comment is about patient involvement as well. As far as ‘best practice’ is concerned, the expert panels should be including patients/family members, and more than one. See the Saskatchewan Surgical Care Initiative as an example of including patient/family perspectives in process design, as well as the more general principles of experience-based co-design.

  • Ron Worton says:

    I have been out of the health care field (research) for close to 6 years but have waited a long time for this type of initiative. There are 3 elements that are critical to its success. (1) the targeted QBPs are manageable in scope so that experts have a realistic chance of identifying best practice, (2) the government is utilizing the knowledge of true experts to identify best practices and develop the standardized care pathway and (3) the determination of cost is separated from the determination of best practice, so that in theory cost containment should not inhibit the implementation of improved quality care. All 3 of these elements seem to be upheld, and wise people are moving the process forward. It is imperative to get the costing models in place quickly, otherwise the whole process will be in jeopardy. Thanks to Jeremy and Andreas for a well written summary.

  • Kate says:

    Does anyone know if patients/family members are part of these expert panels?

    • Jeremy Petch says:

      Hi Kate, thank you for your question.

      From the documents I reviewed as part of the research for this story, it appears that both the COPD and CHF expert panels included a patient representative each. The stroke group did identify one of their members as both an internist and a stroke survivor. I could not find reference to patient representation on the other three.


      Jeremy Petch


Jeremy Petch


Jeremy is an Assistant Professor at the University of Toronto’s Institute of Health Policy, Management and Evaluation, and has a PhD in Philosophy (Health Policy Ethics) from York University. He is the former managing editor of Healthy Debate and co-founded Faces of Healthcare

Andreas Laupacis

Editor-in-chief Emeritus

Andreas founded Healthy Debate in 2011. He is currently the editor-in-chief of the Canadian Medical Association Journal (CMAJ)

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