Alternative funding plans: is there a place in academic medicine?

Because of shrinking resources and the resulting threat to its academic vitality the Department of Paediatrics, Hospital for Sick Children, University of Toronto, entered into an agreement on alternative funding with the Ontario Ministry of Health in 1990. The department developed a set of principles that guided the negotiations, which ultimately led to a budget that formed the basis of the agreement. The contract with the ministry provides a global budget to the department; this budget funds faculty members, administrative staff and the educational and research programs formerly supported by fee-for-service billing to the Ontario Health Insurance Plan. The alternative funding plan has provided financial stability to the department and affords an opportunity to develop innovative and cost-effective models of pediatric care.