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While this approach to budgeting severely restricted administrative flexibility, since managers had to get ministry approval to shift funds from one line to another, it was accompanied by a significant escalation in hospital costs.
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When universal hospital insurance (Medicare) was first implemented in Ontario, the Ministry of Health (MOH) engaged in an extensive line by line review of each hospital's budget.
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We conclude with a discussion on the implications of the revised approach to global budgeting in the context of Canadian and the United States funding system differences. We note that while the process may be particular to Ontario, the problems that were addressed were universal. We describe some of the particular problems that led to the 1988 speech by the Minister of Health, the process that was put in place to develop the new system, the basic decisions that were taken the first year, and some of the modifications that were made in the second year. In this article, we describe the Ontario global budgeting system as it existed through most of the 1980s, with particular emphasis on how the budgets were adjusted to take into account changes in inflation, volume, and new services. An examination of how American-style hospital incentives are being tied into a Canadian-style system is of interest in the United States in that it may lead to the answer of whether and how a happy medium incorporating both fiscal restraint and sound economic incentives might be achieved.
#Toronto 1985 and the style council how to#
Thus, while some Americans were expressing an interest in a Canadian-style single payer system to replace their fragmented and inflationary funding mechanism ( Himmelstein and Woolhandler, 1989), Canadians were looking to the United States for ideas on how to revamp their global budget system in order to increase equity and efficiency. There they found methods for classifying patients into groups and assigning cost weight factors to those groups. In revising the hospital budgeting system, the people in Ontario looked to the United States for some of the tools to be used in the new process.
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The dissatisfaction with the budget allocation rules found public expression when the Minister of Health indicated at the Ontario Hospital Association (OHA) convention in October 1988 that her ministry would undertake a comprehensive review of hospital funding with the objective of making “… the hospital funding process in this province as fair and equitable as we possibly can.” The new budgeting system that developed is called transitional funding. While that funding mechanism has been attributed with considerable success in containing hospital costs ( Detsky, Stacey, and Bombardier, 1983 and Detsky et al., 1990), the particular method used to establish the global budgets was increasingly criticized within the province (Ontario Hospital Association, 1988). 3 Ontario, Canada's most populous province, implemented a hospital global budgeting system in 1969. Since almost 50 percent of Canadian health care expenditures are made for services provided by hospitals, hospital financing is of critical importance. 2 Policy analysts have been particularly interested in the methods that Canadians use to pay for health care services because it is largely through these methods that costs are controlled and access to services determined. Indeed polls in the United States find that many Americans would prefer such a system to their own ( Blendon and Taylor, 1989). In recent years, Americans have been looking at Canada's health care system 1 with increasing interest because it has managed to assure universal access at a per capita cost appreciably lower than that in the United States ( Iglehart, 1989 Relman, 1989 Fuchs and Hahn, 1990).