Hospital-based decision making raises privatization fears, hope for efficiencies

The Alberta premier's announcement of her intent to restore local decision making to public health facilities is highlighting a philosophical divide in how to best manage the province's stretched health budget.

Premier Danielle Smith published a video online Tuesday, saying decisions about hiring health-care workers or replacing hospital furniture belong with individual health centres, not Alberta Health Services (AHS) managers.

"Soon, each facility will have an empowered leadership team supporting our sites, responsible for hiring, managing resources, and solving problems without sending every request into the vortex," Smith said in the video.

The shift is part of a massive restructuring of health-care in the province, in which the government has broken the oversight of care into four new agencies and stripped AHS of decision-making power.

A government news release Tuesday afternoon said the change will go hand-in-hand with a provincial shift to "activity based funding," beginning next year.

The government will fund some facilities based on the number of procedures they complete along with safety measures, such as readmission rates, instead of allotting a global annual budget.

Although the premier said the shifts will lead to faster patient care, health policy experts say they have looming questions about how it will work, and warn the transition further opens the door to private, for-profit companies running public hospitals.

"They're trying to create some sort of a market — a competitive market to provide acute care services, and … arguably have different providers compete with each other," said John Church, professor emeritus of political science at the University of Alberta.

Church, who has authored books on the creation of Alberta Health Services and evolution of health administration in the province, says the announcement could herald a shift to the way Alberta's health system was run before amalgamation into health regions, and then a single health services provider.

In an interview Tuesday, Church said the government moved away from local hospital control in the 1990s because facilities were frequently running out of money and returning to the government to ask for more. The fragmented system was time consuming and expensive, he said.

Church said the province may try to control those costs by either selling off individual health facilities or contracting private operators to run them, assigning a fixed contracting cost and giving the operators the flexibility to run them as they wish.

Handing control of critical public services to the private sector is risky, he said. Church pointed to a private surgical centre in Calgary that faced bankruptcy in 2010, prompting the province to swoop in to prevent mass cancellations.

In 2023, the Alberta government rapidly reversed course on privatizing lab services when private operator Dynalife was on the brink of insolvency.

Krystle Wittevrongel, director of research at MEI, an independent public policy think tank, is more hopeful about the potential of site-based decision making in combination with activity-based funding.

"I think we're going to see some actual change," she said on Wednesday. "I'm very excited about the fact that these two things are happening together."

MEI believes competition incentivizes adaptability and innovation, Wittevrongel said.

She pointed to health systems in Quebec and Australia using activity-based funding that had decreased wait times for diagnostic imaging and colonoscopies, and reduced some procedure costs.

University of Calgary medicine and health economics professor Dr. Braden Manns is more skeptical. The former senior AHS administrator said Alberta moved away from local hospital control because facilities were competing for a fixed number of health professionals working in the province, which drove up costs.

Manns said there was also inconsistency in medical treatments across the province, which meant not all patients were getting the best evidence-based care..

He said despite the premier's statements, local hospitals did have the ability to make hiring decisions — until the government froze health spending and AHS was forced to centrally approve all hiring decisions to control costs.

Although competition and free markets may generate cheaper and better laptop computers, it doesn't make better medicine, Manns said.

"It's different in health care, where you have to provide coverage for everybody and you're not paying out of your pocket, you're paying out of the taxpayers' funds," he said. "We need to make sure that everybody gets care."

Privatized, competitive care in the U.S. is among the most expensive in the world with worse patient outcomes, he said.

"That's not the system we should be trying to emulate," he said.

Steven Lewis, a health policy consultant and adjunct professor at Simon Fraser University in B.C., says it's unclear from the government's announcement what new decision-making authority a hospital will have.

"It's always politically attractive to say to local communities 'You're going to have more power now,'" Lewis said.

The test of that purported autonomy will come when a facility leader wants to add or eliminate a program that the oversight body, Acute Care Alberta, wouldn't have chosen to do, he said.

Lewis questioned whether health facilities will now hire CEOs, or have new local boards governing decision making.

"It's kind of like reading hieroglyphics," he said about the lack of details.

In a Wednesday email, Kyle Warner, press secretary for the minister of hospital and surgical health services, said there are no plans to add administrator positions at hospital sites — but he didn't answer questions about local boards or the scope of facilities' decision making power.

Warner said hospital-based leadership will be piloted at a single site to start, but the government hasn't yet chosen where.

He said the government has no plans to lease or sell AHS facilities to private operators.

"Private hospitals are illegal to own and operate in Alberta, and Alberta's government has no plans to change that," Warner wrote.

"No Albertan will ever pay out of pocket for medically necessary services like seeing a family doctor or receiving hospital care — full stop."