Alberta’s innovative approach to paying for long-term care

Alberta’s provincial health authority has recently come under fire by opposition party MLAs and activists alike for closing 77 long-term care beds in Calgary damaged by the June floods. The angry reaction demonstrates the common misperception that a shortage of beds is the major cause of persistent waiting lists for long-term care.

Like other provincial governments, Alberta’s has faced very public calls to build more long-term care beds for several years. Instead of bending to these expensive demands, Alberta is overhauling the long-term care system to try and use its existing beds better – a wise and financially prudent decision.

It’s doing this by changing the way it pays long-term care homes, shifting to a new payment model called patient/care-based funding, or PCBF. PCBF provides more money to homes that care for sicker, more complex residents.

This is a sharp break with the past, where long-term care homes were given a flat rate based on historical trends and inflation. The old model ignored differences in health needs between residents. Consequently, homes had little reason to take more complex residents, who also tend to be the most costly to care for. Many of these individuals languished in hospital beds, waiting for long-term care placement, even though they no longer required the level of care hospitals provide.

If the Alberta government sticks to its guns and fully implements the new PCBF model, it should help reduce wait lists and improve financial accountability in long-term care.

Why is this the case? The reality is that wait lists for long-term care have less to do with the number of beds available and more to do with how these beds are filled. Long-term care homes are intended to provide support to residents who require 24-hour nursing care, not to act as an alternative living facility for the elderly.

An example of this played out in Ontario in the early 2000s, when the provincial government funded the creation of more than 20,000 new long-term care beds. After a short-lived dip in wait times for long-term care, the waiting lists quickly returned. With residents funded at the same rate, many homes filled the new beds with those that were healthier and less complex – residents that could have been cared for just as effectively in less care-intensive settings, like assisted living.

Alberta’s PCBF model reduces long-term care homes’ financial incentive to cherry pick healthier residents by tying payments to the medical and physical needs of each resident. Payment rates for healthier residents are set at a lower level than those who are sicker. It also creates an incentive for homes to discharge healthier residents into less intense settings since the payments are lower. Healthier residents can be discharged into assisted living settings, for example, freeing up long-term care beds and reducing the need to build more beds.

Alberta isn’t the first province to move in this direction. Stung by their costly experience in the early 2000s, Ontario began rolling out a similar patient-based funding model for long-term care homes several years ago. The new funding model has been implemented in tandem with new legislation that takes the primary responsibility for placing residents away from the homes and hands it to Ontario’s 14 regional Community Care Access Centres. Recent reports suggest that the complexity of residents being admitted to Ontario homes has indeed increased. Homes now have financial incentives to offer beds providing a higher intensity of care. Wait lists have decreased and the number of patients waiting in hospital beds for long-term care placement has fallen.

Alberta’s PCBF model also has risks that need to be watched carefully. In order to get their costs below the amount paid by PCBF, long-term care homes might skimp on services, potentially jeopardizing residents’ safety or reducing their quality of life. Some might even try to alter residents’ clinical data in order to make them seem more complex (and hence better-funded) than they really are – a process commonly known as ‘gaming’. In the United States, this practice is considered fraud and offenders can go to prison.

Despite these pitfalls, Alberta’s ambitious effort to match payments with the needs of residents is a step in the right direction – helping to reduce wait times and ensure the sickest patients get appropriate care. In the meantime, Alberta should resist popular pressures to adopt simplistic solutions like building new beds, which evidence shows does little by itself to solve the problem.

Other provinces with similar wait list issues will be watching from the sidelines to see if Alberta can maintain its course. Alberta has never been afraid to pioneer new methods in the past. In this instance, they should be applauded.

This blog is reprinted with the permission of the EvidenceNetwork.ca

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1 Comment
  • Robert Bear says:

    %featured%Thank you for this highly educational post. AHS has been in receipt of much criticism recently; useful accomplishments should be acknowledged%featured%.


Trafford Crump


Trafford Crump is a post-doctoral fellow at the University of British Columbia’s Centre for Health Services and Policy Research.

Erik Hellsten


Erik Hellsten is a graduate student at the University of Toronto’s Institute for Health Policy, Management and Evaluation.

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