The Canadian healthcare system is predominately public, with 70% of healthcare funding coming from the public-sector and the remaining 30% from the private-sector (Canadian Institute for Health Information, 2016). It is estimated that health spending in Canada will be $228.1 billion in 2016, or approximately 11.1% of GDP, the majority of which goes to hospitals (29.5%), drugs (16%) and physicians (15.3%) (Canadian Institute for Health Information, 2016). Since 2005, physician compensation as a portion of total health spending has increased but since 2014, the share has slowed and is now maintaining levels comparable to those of the late 1980s (Canadian Institute for Health Information, 2016).
Spending on healthcare varies across Canada, but on average provinces spend approximately 38% of their total budgets on healthcare (Canadian Institute for Health Information, 2016). Per capita spending in 2016 for all of Canada is projected to be $6,299, but spending by province ranges from $5,822 in Québec to a high of $7,256 in Newfoundland and Labrador (Canadian Institute for Health Information, 2016).
Global Budget is the most common healthcare funding in Canada, where a fixed amount of payment is allocated to a provider (such as the health authority or hospital), which covers the operating expenses for a period of time, usually a year. Most Canadian provinces have their healthcare regionalized-the local or regional health authorities are responsible for the delivery of primary health services. In most province, the government allocates funding to health authorities through a global budget and many health authorities, in turn, use global budgets to fund specific groups of services. In Canada, most hospitals, long-term care facilities, publicly-funded rehabilitation facilities and
mental and public health programs are funded under global budgets (Sutherland et al., 2013). Funding amounts are typically based on factors such as historical budgets, inflation and politics, and are provided irrespective of the number of patients or levels of demands on resources (Sutherland & Repin, 2012).
Global budget is an effective means of controlling healthcare expenditure growth by the use of spending "caps". It provides financial predictability for administrators and policy makers (Wolfe & Moran, 1993; Antioch & Walsh, 2004). Its only weakness is the impetus to meet the budget target. Providers may restrict the access to services or limit the number of hospital admissions. Global budgets covers little incentive for innovation or improve the healthcare efficiency (Sutherland & Crump, 2011), since global budgets do not provide opportunities for increased revenue of patient, healthcare providers have no incentive to shorten patient lengths of stay or to discharge patients to lower cost healthcare settings (Sutherland et al., 2013). Global budgets do not promote coordination across service providers in acute and post-acute settings, creating a fragmented healthcare system that is often associated with inefficiencies and reduced quality of care (Sutherland & Crump, 2011; Sutherland & Repin, 2012).