Health System Funding Reform

Health System Funding Reform (HSFR) is an evidence-based funding model with incentives to deliver the highest quality and most efficient care. Prior to March 2012, health service providers, including hospitals and Community Care Access Centres (CCACs), received an annual ‘base budget increase.’

The HSFR model replaces base funding increases with funding that is based on efficiency and volumes (note: small community hospitals are not part of the HSFR model).

HSFR is based on:

  • the number of patients served and the needs of the broader population served; and, 
  • services delivered and the evidence-based quality of those services. 

The shift from global funding to HSFR intends to: 

  • better reflect the needs of patients and the community; 
  • create a fairer system for the allocation of health care dollars; 
  • lead to better quality care and improved patient outcomes; 
  • help moderate spending growth to a sustainable level; and, 
  • learn from and adopt successful approaches used in other jurisdictions. 

For hospitals, funding is allocated in three components:

  • Base (Global): This covers utilities, food and other fixed costs that are required to keep a hospital operating (e.g. heat, electricity and general repairs). 
  • Health Based Allocation Model (HBAM): This is based on hospital programs and how they perform compared to how they were expected to perform. This takes into account the population that the hospital serves, including the health of the population. 
  • Quality-Based Procedures (QBPs): This is designated for specific groups of patient services Quality-Based Procedures that are based on volume and quality and are adjusted for specific patient population characteristics. 

This funding shift aligns with the HNHB LHIN’s strategic direction which is to dramatically improve the patient experience through quality, integration and value. 

Learn More