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By: Imtiaz Daniel, Chief, Research and Analysis, Ontario Hospital Association 

Over the past two decades, funding methodologies have been a driving force to incentivize change and improve quality of care in Ontario's health system. In hospitals, the journey began with the movement from global funding, to using activity-based funding models that compensate service providers based on the volume of services they deliver, and more recently toward patient- or valued-based funding systems that incentivize efficiency and better outcomes. Models like the Emergency Department Pay-for-Results (ED-P4R) program, bundled care, and quality-based procedures compensate providers based on the quality of service delivered to patients and the health system, and therefore encourage continuous improvement.

Challenges of Funding Mental Health and Addictions

Unfortunately, when it comes to mental health and addictions services, we are still at the starting line with respect to funding models. For over a decade, efforts to integrate mental health and addictions into patient-based funding have been stymied because mental illness resource use is more difficult to quantify and classify than other types of care, and because variation in practice and standards and data limitations make implementation challenging.

Given these limitations and the absence of an approved patient classification system with an appropriate weighting approach that allows us to effectively categorize patients for health care management and planning, little meaningful progress has been made to develop new approaches for funding, despite the best efforts of many dedicated experts and advocates. Inpatient mental health services are still run out of hospitals' global funding, which hasn't grown significantly in years. Occasional one-time funding for new inpatient mental health beds hasn't kept up with inflation nor demand, and hospitals have had no choice but to close beds or keep patients waiting longer for treatment.

Building Momentum to Improve Quality of Care

At the same time, there is widespread agreement at the federal and provincial levels on the need to improve mental health and addictions care. In 2016, Health Quality Ontario (HQO) launched its first quality standard in mental health, clear recognition of the need to improve quality and standardize care. Ontario's Roadmap to Wellness, launched in 2020, outlines the government's plan to improve quality and access to services, and make targeted investments to fill gaps in the system. People with mental health and addictions issues have also been identified as one of the priority populations to be served by Ontario Health Teams under the government's integrated care agenda.

The key question is: how do we turn this vision of transforming mental health and addictions care into a reality? A big part of the answer – as we've seen in other parts of the health system – must be a new approach to funding to incentivize value and ensure providers are appropriately funded for high-quality mental health and addictions services.

In 2017, the Inpatient Mental Health Funding Task Group provided four recommendations that would help overcome these challenges:

1. Partnering with various subject matter experts within the health system, develop a strategy to create an appropriate mental health case-mix system and its associated weights.
2. Develop a strategy to improve data quality and reporting of Ontario Mental Health Reporting System (OMHRS) and patient-level costing data for mental health.
3. In the short-term, focus on the field's adoption of Health Quality Ontario's quality standards for mental health and explore potential future use for funding.
4. To ensure continued progress and accountability, link the oversight of a mental health funding strategy to the mandate of a provincial council such as the OHA's Mental Health and Addiction Provincial Leadership Council.

In October 2018, the OHA, in partnership with Patient Classification Systems International and the Canadian Institute for Health Information (CIHI), convened thought leaders from around the world to discuss models of care, data requirements, and funding methodologies aimed at improving the quality of care for mental health patients. The program brought together top thought leaders from Germany, Australia, the Netherlands and England – as well as Canada and Ontario – to begin to articulate a vision for a new approach to mental health funding for our province – one that incentivizes quality, not just quantity.

Introducing the Mental Health and Addictions Funding Initiative

Recently, the reconvened Hospital Advisory Committee (HAC) decided to move forward with the 2017 recommendations. On behalf of its Patient-Based Funding Secretariat, the OHA is coordinating an initiative to explore funding approaches that support and incentivize improved quality of mental health and addictions care for Ontarians. In July 2020, and advisory committee and three working groups began convening, with participating members from over twenty hospitals, the Ministry of Health, Ontario Health and its Mental Health and Addictions Centre of Excellence, academic and research institutions and the community mental health and addictions sector.

This new initiative will provide advice on both short and long-term strategies to incorporate clinical activity in mental health and addictions into patient-based funding models, with two initial priorities. First, given the high volume of inpatient activity related to patients with schizophrenia, they will explore approaches to linking its hospital-based quality standard to funding. Second, they will develop a strategy to improve data quality and reporting for mental health and addictions services. To make the project manageable, it will take a phased approach, focusing first on inpatient mental health services, and then building on that momentum to expand into community-based services.

According to the Schizophrenia Society of Canada, schizophrenia affects 1 in 100 Canadians and their families. Because nearly 50% of costs from mental health hospital stays are related to patients with schizophrenia and other psychotic disorders, an initial focus on this cohort will be high-high impact and offer learnings that can be applied to other conditions. While this initiative focuses on exploring funding approaches, we will also be working closely with clinicians and community providers, and considering performance measurement, quality improvement and population health and system reconfiguration. It is our hope that this project will help us catch up with the rest of the health care system by finally implementing funding methodologies that will drive improvement and ensure high-quality care for Ontarians.

Learn more about the Mental Health and Addictions Funding Initiative. Read a February 2022 update on the initative's progress.