Complete guide to Canadian hospital revenue cycle management — global funding models, provincial Medicare billing, case costing, CIHI cost data, private/Third Party billing, and revenue cycle software.
Canadian hospitals are primarily globally funded by provinces. Activity-based funding is increasing. Case costing uses CIHI methodology. This guide covers Canadian revenue cycle.
Revenue Cycle Components
| Component | Description | Funding Source |
|---|---|---|
| Global budget | Annual lump sum from province | Provincial government |
| Activity-based funding | Funding per case (ABF) | Provincial government (some) |
| Physician billing | Physician services via Medicare | Provincial Medicare (OHIP, MSP) |
| Third Party billing | WSIB, MV insurance, Veterans | Third Party payers |
| Private billing | Uninsured services, cosmetic | Patient or private insurance |
| International patients | Non-resident patients | Patient self-pay or insurance |
| Research funding | Research grants and contracts | CIHR, industry, foundations |
Case Costing
- Direct cost capture: Capture direct costs (labour, supplies, pharmacy) per case
- Indirect cost allocation: Allocate indirect costs (overhead, admin) per case
- Capital cost allocation: Allocate capital costs (depreciation) per case
- CIHI reporting: Report case cost data to CIHI
- Benchmarking: Benchmark costs against peer hospitals
- Efficiency improvement: Identify cost reduction opportunities
- Funding negotiation: Use case cost data for funding negotiation
Revenue KPIs
| KPI | Target | Canadian Average |
|---|---|---|
| Cost per case | Benchmark | Varies by province |
| Cost per patient day | Benchmark | Varies by province |
| OR cost per minute | Benchmark | $30-$50/min |
| ED cost per visit | Benchmark | $300-$600 |
| Third Party revenue | Growing | 5-10% of total |
| Budget variance | < 2% | 2-5% |
| DSO (Third Party) | < 30 days | 30-45 days |
Frequently Asked Questions
- How are Canadian hospitals funded?
- Canadian hospitals are primarily funded through global budgets from provincial governments. Funding models: 1) Global budget — lump sum annual budget (traditional), 2. Activity-based funding (ABF) — funding per case (increasing in some provinces), 3. Quality-based funding — bonus for quality metrics, 4. Wait times funding — targeted funding for wait time reduction. Physicians bill separately through provincial Medicare (OHIP, MSP, etc.).
- What is case costing in Canadian hospitals?
- Case costing is the process of calculating the actual cost of each patient case. Canadian hospitals use CIHI's Case Costing methodology. Case costing includes: 1) Direct costs (labour, supplies, pharmacy), 2. Indirect costs (overhead, administration), 3. Capital costs (depreciation). Case costing helps hospitals understand true costs, improve efficiency, and negotiate funding. CIHI publishes national case cost data.
- What private/Third Party billing do Canadian hospitals do?
- Canadian hospitals bill Third Parties for non-Medicare services: 1) Workers' compensation (WSIB in Ontario, WorkSafeBC), 2. Motor vehicle insurance, 3. Veterans Affairs, 4. RCMP and military, 5. International patients, 6. Cosmetic procedures, 7. Uninsured services. Third Party billing is separate from provincial Medicare and generates additional revenue.