Long-term care funding model a deeply-flawed mess

Alberta is shifting to a patient/care-based funding model to reduce waiting lists but it won’t work

CALGARY, AB, Jan 14, 2014/ Troy Media/ – Provincial governments across Canada are facing increasing public demands for more long-term care beds. Alberta is resisting these demands. Instead, it’s overhauling the long-term care system and making better use of existing beds.

“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.” says Dr. Trafford Camp, co-author of The Alberta Health Services Patient/Care-Based Funding Model for Long Term Care: A Review and Analysis (Review). “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.”

This is complete nonsense. System capacity is defined by Little’s Law. The amount of work any system can do (capacity) is equal to the amount of work the system can hold, divided by the average time required to do the work. The long term care translation-capacity equals the number of beds divided by resident’s average length of stay. Increasing capacity, therefore, requires increasing the number of beds or decreasing the length of stay.

This is simple arithmetic – number of beds divided by length of stay. If the demand for long-term care is greater than this, then long waiting lists will result – no matter how the numbers are crunched at head office.

Camp says a shortage of beds leading to persistent waiting lists is a “common misperception”. That’s in the same way the impossibility of perpetual motion machines is a common misperception. Perpetual motion, getting something from nothing, is an enticing idea, but a suckers bet. Newton’s Second Law of Motion tells us it can’t be done. People keep trying because there’s money to be made in finding some billionaire gullible enough to finance the effort.

No problem there with healthcare. Unlike flu vaccine, we got oodles of gullibility. Camp’s PCBF model is the healthcare version of a perpetual motion machine, a junk-science fantasy promising expanded capacity without additional beds, conveniently achieved, by simply changing how money is allocated. It too, is a suckers bet because Little’s Law tells us it won’t work. The PCBF model is capacity improvement as only academics, accountants, and the Red Queen, who made a habit of believing six impossible things before breakfast, could conceive it.

While a PCBF funding model can’t add capacity or shorten wait lists, it’s still a worthwhile idea. In theory, PCBF provides for better alignment between the level of care required by residents and the money provided to care for them – sicker people get more money. But does the Alberta Health Services (AHS) PCBF model actually achieve this?

The Review tested the model by examining the correlation between the assessed level of care and the frequency with which residents were transferred to acute care settings. As lead author Jason Sutherland put it, “If a facility has sicker patients, you would expect they would end up in acute care or an ER more often, but they don’t.” In other words, no correlation. The obvious conclusion, the funding model doesn’t work.

Rather than admitting to the obvious, however, Review authors blame facility operators and staff instead. The lack of correlation is attributed to fraudulent data submissions, rating people sicker than they really are, to get more funding. This is called upcoding. A massive and expensive audit program is recommended to rein this in. That’s what AHS staff need, more auditors.

But the upcoding accusation is also nonsense. Even if upcoding were occurring, it wouldn’t affect the correlation between acute care visits and level of care. Upcoding is clearly a fabricated excuse and not a very good one. The reputations of front line workers are being unfairly tarnished to cover-up for an incompetently designed, technically corrupt, funding model.

The AHS long-term care funding allocation model, and Dr. Sutherland’s analysis of it, are a deeply flawed mess, based on faulty assumptions, bungling and self-serving statistical analysis, and pseudo-scientific inquiry in pursuit of pre-ordained conclusions.

Troy Media columnist Robert Gerst is a Partner in Charge of Operational Excellence and Performance Analytics at Converge Consulting Group Inc. He is author of The Performance Improvement Toolkit and numerous peer-reviewed articles.

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