Alberta unveils new funding model linking hospital funds to patient care; NDP decry ‘American-style privatization’

Alberta is rolling out a new funding model that connects hospital funding to patient care.

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At a Monday press conference, the province announced that 12 hospitals are currently operating under phase one of the new patient-focused funding (PFF) model, which is an activity based funding formula where health services providers will be funded depending on the care it delivers. Phase one applies to four surgeries — hip replacements, knee replacements, cataract surgery, and shoulder rotator cuff repair.

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Hospital and Surgical Health Services Minister Adriana LaGrange said hospitals that treat more patients will receive more funding under the new funding model. It moves away from the traditional funding model where hospitals would receive a fixed block budget, regardless of how many patients were treated or surgeries performed.

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“Funding follows the patient,” LaGrange said.

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“That (traditional) model doesn’t align incentives the right way. It can actually discourage hospitals from doing more.”

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Officials said of the 12 hospitals in the province operating under the PFF, nine are operated by Alberta Health Services (AHS), and three operated by Covenant Health. Three Edmonton hospitals are among the list — Royal Alexandra Hospital, Grey Nuns Community Hospital and Misericordia Community Hospital.

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The province says the new model will increase efficiency and transparency. There are 26,000 procedures funded under the PFF model in 2026-27.

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The cost of each surgery varies under the new model depending on how it is classified.

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Hip replacements range from $8,900 to $33,440; knee replacements range from $8,530 to $24,790; cataract surgery ranges from $880 to $1,600; and rotator cuff repairs cost $6,800.

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Alberta Premier Danielle Smith anticipates the model will drive the cost of surgeries down. She said more surgeries will be done within a surgical block, which can reduce overall costs. She said chartered surgical facility operators will likely bid to do a certain block of surgeries for a lower price, which will help drive prices down.

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“You have to start by what it’s currently costing for each of these types of surgeries and encourage your public hospitals to be able to do more of them, and then we’ll see what develops from the private sector,” Smith said.

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Interim Acute Care Alberta (ACA) CEO David Diamond said the first phase will exclusively focus on procedures performed in public facilities, which could later be implemented in chartered surgical facilities.

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He called the first year a “learning year.”

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“Over time, patient-focused funding will become one input to gradually align with other service delivery models, including terms of surgical facilities, and improve value for Albertans,” Diamond said.

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Acute Care Alberta chief medical officer Dr. Aaron Low said the province will continue to monitor surgical quality using patient experience scores, 30-day unplanned surgical readmission rates and average stay.

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The province said additional procedures could be added over time.

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“This ensures that any emerging quality concerns with this new model are identified early and addressed proactively to get the most value from our patient-focused funding model,” Low said.

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Opposition hospitals and surgical services critic Sarah Hoffman called the announcement a move to further “American-style privatization.”

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Hoffman said the new funding model pushes hospitals towards quicker and less complex procedures.

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“If this government truly wanted to fix health care, it would invest in public surgical capacity, address bottlenecks across the system, and work with patients, providers and communities on real solutions,” Hoffman said.

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Alberta is committing $809 million to improve surgical services. According to Smith, last fiscal year more than 330,000 surgeries were completed. In March 2026, 24,676 were performed.