Donaldson's second question asks how we would expect to achieve benefits from the merger. There are three main types of changes that should lead to benefits over time.
First is intraprovincial equity. The previous regional health authorities made local decisions, reflecting local priorities. Inevitably, the decisions differed. In turn, this meant different services were expanded (or existed) in different regions, and Albertans had differential access to services depending on where they lived. Cataract surgery is a case in point. The former Calgary Health Region funded fewer cataract operations than the former Capital Health Region. The consequence was longer wait times in Calgary compared to Edmonton. It is now the job of AHS to iron out these differences.
The second benefit is improved intraprovincial learning. The previous entities had national reputations for innovation in many fields, but these innovations often did not flow across the province. If a good idea is generated and implemented in Grande Prairie, it should be implemented in Medicine Hat, and so on. The demise of regional rivalries helps here, but so too does AHS's new structures (e.g., in two cases senior vice-presidents are responsible for hospitals in both Edmonton and Calgary, and one senior vice-president is responsible for all regional hospitals). AHS has also established clinical networks to take a provincial perspective.
The third benefit relates to efficiencies and economies of scale. AHS has already accrued significant benefits from the merger in procurement savings, and Table displays the benefits of scale economies in terms of leadership positions. The larger scale also allows AHS to do things that no other health authority in Canada can do.
- Alberta Health Services is moving to introduce activity-based funding in a number of areas. Activity-based funding (erroneously described by Donaldson as “case-based costing”) involves developing a formula to take account of the different needs of a patient or resident and then funding the service or hospital according to those needs. The cost for a hospital patient who has a transplant is obviously more than the cost for removing an appendix, and the hospital that does more of the former should have a larger budget for treating those patients. Activity-based funding works best when there are multiple organizations to compare and contrast. You need a largish number of organizations to participate in activity-based funding to develop a sensible system and effective funding formulæ, with appropriate comparisons and benchmarks.
- A second example is the creation of a single acute care provincial drug formulary. The previous nine health regions and the Alberta Cancer Board each maintained separate drug formularies for use within its own area of control. This approach resulted in significant duplication of effort related to the evaluation and addition of drugs to the formulary, and to maintenance of systems associated with drug use. Alberta is now the only province with a single acute care formulary. Having a single provincial drug formulary improves patient care and safety by ensuring that optimal drug therapies are utilized. It also reduces safety risks associated with employees who work for more than one health service (each with a different formulary), minimizes duplication and realizes financial savings from contract consolidation.
- Analysis and promotion of safety is yet another example. AHS can now compare safety performance across a number of hospitals using statistical process-control approaches. Again, this strategy relies on having enough information from a larger number of hospitals to provide robust benchmarks.