Here's an analysis of activity-based funding (ABF) in Sweden and Finland, compared to the Canadian healthcare model, focusing on pros, cons, and waitlist deaths, with data current as of July 10, 2025.

Activity-based funding (ABF) in healthcare, also known as Diagnosis-Related Groups (DRGs), is a payment system where hospitals and clinics are reimbursed based on the volume and type of services they provide. This contrasts with global budgets or other funding models. Sweden and Finland have implemented ABF to varying degrees, and their experiences offer insights when compared to Canada's healthcare system, which is primarily based on a single-payer model with provincial/territorial responsibility for healthcare delivery. Canada's system generally uses global budgets and block funding, though some provinces have experimented with activity-based funding for specific services.

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Pros and Cons of Activity-Based Funding in Sweden and Finland

Pros:

• Increased Efficiency and Productivity: ABF can incentivize hospitals to increase efficiency and productivity by providing financial rewards for treating more patients and performing more procedures. Studies in Sweden have shown that ABF can lead to shorter hospital stays and increased throughput for certain procedures.[1]
• Improved Resource Allocation: ABF can potentially lead to better resource allocation by directing funds towards services with higher demand and efficiency. This can help to reduce wait times for certain procedures.[2]
• Transparency and Accountability: ABF systems often involve detailed data collection and reporting, which can increase transparency and accountability in healthcare spending. This allows for better monitoring of performance and identification of areas for improvement.[3]
• Focus on Outcomes: ABF can encourage hospitals to focus on patient outcomes, as they are often linked to the types of services provided and the efficiency with which they are delivered. This can lead to improvements in the quality of care.[4]

Cons:

• Risk of "Gaming the System": Hospitals may be incentivized to "game the system" by upcoding diagnoses, selecting patients with less complex conditions, or providing unnecessary services to maximize reimbursement. This can lead to increased costs and potentially lower quality of care for some patients.[5]
• Focus on Volume over Value: ABF can prioritize the volume of services over the value of care, potentially leading to a focus on quantity rather than quality. This can be detrimental to patients with complex needs or chronic conditions.[6]
• Underfunding of Certain Services: ABF may not adequately fund services that are not easily quantifiable or that do not generate high revenue, such as mental health services, primary care, and preventative care. This can lead to underinvestment in these crucial areas.[7]
• Administrative Complexity: Implementing and managing ABF systems can be complex and require significant administrative resources. This can increase costs and divert resources from patient care.[8]

Comparison with the Canadian Healthcare Model

• Funding Models: Canada's healthcare system primarily relies on a single-payer model with provincial/territorial responsibility for healthcare delivery. Funding is typically provided through global budgets or block funding, which allocates a fixed amount of money to hospitals and other healthcare providers. ABF, as implemented in Sweden and Finland, provides a different approach, linking funding to the volume and type of services provided.
• Wait Times: Canada has historically struggled with wait times for certain procedures and specialist appointments. ABF in Sweden and Finland has, in some cases, been associated with shorter wait times for specific procedures, although this is not always the case and depends on the specific implementation and context.[9]
• Efficiency and Productivity: ABF can incentivize efficiency and productivity, which may be less pronounced in Canada's global budget model. However, Canada's system may be better at controlling overall healthcare costs.[10]
• Equity: Canada's single-payer system aims to provide equitable access to healthcare for all citizens, regardless of their ability to pay. ABF systems may pose a risk to equity if they incentivize hospitals to focus on profitable services or patients.[11]

Waitlist Deaths

Data on waitlist deaths is difficult to obtain and compare directly across countries due to differences in data collection and reporting. However, studies have shown that long wait times for certain procedures can lead to adverse health outcomes, including increased mortality. Both Canada and the ABF countries have faced challenges in managing wait times, and the impact on mortality is an ongoing area of research. There is no definitive data available as of July 10, 2025, to provide a direct comparison of waitlist deaths between the two models. However, it is generally accepted that long wait times can contribute to increased mortality rates.[12]