Activity based funding (ABF) is an approach which seeks to incentivise providers to be as efficient as possible by funding them for the activity that they are asked to deliver, rather than funding them by way of block budgets regardless of activity levels. In the hospital scenario, prices are set for a combination of diagnoses and procedures which occur in a patient episode based on the actual cost of the care provided, with the complexity of care factored into the cost, as more complex care involves more staff, more time, more medical and surgical supplies, etc. The same fundamental principles apply in the community scenario, for example, residential care of differing complexity and cost can be funded using ABF. The goal of ABF is to increase insight and transparency around relative cost utilisation and funding and to encourage the efficient and effective allocation and use of resources, so that the maximum number of patients and service users can benefit from the funds the state entrusts on behalf of its citizens to the health service.

This Plan, when implemented, will represent an important step forward in increasing transparency in funding, encouraging efficiency, value for money and sustainability, and ultimately providing greater accountability for the way resources are allocated in the Irish healthcare system. This Plan signals a shift from the necessary foundational and technical work around the costing and pricing of services towards creating a more holistic healthcare resourcing and purchasing process that links insights from key clinical, operational and patient stakeholders, with the core Sláintecare intent around integrated care, in the least complex setting appropriate, as close to home as practical.