By NextBestFitFixed budgets can ration care
Global budgets cap spending, but if demand exceeds what the budget pays for, hospitals may limit operating-room time or slow elective work near the end of the budget year.
Evidence
- Canadian hospitals on global budgets have long elective-surgery queues.Sources: Fraser Institute (2025)
Who's affected
- People with ongoing or specialist care needs: Hospitals may slow elective procedures when demand exceeds fixed budgets.
- Taxpayers and public budgets: Global budgets cap spending.
Under your mix of paths
- Payment not tied to volume
Open questions
- How should budgets adjust when demand rises?
Caused or worsened by these paths
This problem only matters if one of these paths is chosen.
Fixed annual rural hospital budgets may fail to adjust to changing needs.
Annual hospital budgets create an incentive to do less or delay elective care, and the budgets can become outdated.
Setting the health budget annually can leave funding behind demand, with longer waits for care.
A separate capital budget is vulnerable to cuts when budgets are tight.
Solution paths (3)
Open a path for what it fixes, what it creates or worsens, who gains and who loses, precedents, and how it connects to other paths. See all paths as a decision tree.
Each year's budget is recalculated for population growth, aging, and unexpected volume, so demand growth doesn't produce queues.
- +Fixed budgets can ration care
- +Longer waits if demand grows faster than capacity
- −Raises spending or loosens control over it
- −Depends on uncertain evidence or judgments
A budget covers fixed costs; extra procedures above a baseline are paid per case to reward throughput.
- +Fixed budgets can ration care
- +Longer waits if demand grows faster than capacity
- −Raises spending or loosens control over it
- −About $1 trillion a year in administrative cost
Budgets are fixed, but if a hospital exceeds a maximum wait, the patient can be treated elsewhere and the cost is charged to the original hospital's budget.
- +Fixed budgets can ration care
- +Longer waits if demand grows faster than capacity
- −Depends on other changes to work
- −Adds paperwork, coordination, or complexity