Community consensus on a new financing model to meet the rising cost of health care remains a distant prospect. The burden on the taxpayer and the government's budget continues to rise. Getting fair value for money out of the existing system is therefore important. Reforms to the basis on which more than HK$30 billion is distributed among our hospitals each year to make it fairer and more efficient are to be welcomed. It sounds common sense to allocate financial resources to geographical clusters of our 40 hospitals and institutions mainly on the basis of population. You would expect this to be reflected in the number of patients seen and operations performed. The Hospital Authority, however, has found that this approach does not necessarily reflect the value of a hospital's 'output' in terms of services to the patient. Some hospitals provide more expensive services and procedures than others, often in response to demand that is not related to where someone lives. This has led to complaints about unequal shares of resources. From next year, as we report today, the authority will begin adopting a more sophisticated model of resource allocation that reflects workloads and performance at different institutions. Patients will now be classified into more than 1,000 groups related to diagnosis and resource requirements. A heart patient who needs surgery, for example, will consume more resources than another who does not. Hospital clusters will be given a score on a case-mix index that will help determine funding. The case-mix approach to allocation of resources has been increasingly adopted in other developed countries. This should go some way towards addressing flaws in the historic approach, which does not necessarily reflect the current composition or mobility of local populations. Some contain more elderly people, some more children. Local populations may also be more prone to different kinds of illnesses. Given that the city is small and compact, people tend to be mobile, often working and living in quite different localities and seeking medical treatment where they work. Fair distribution of resources, including specialist clinics and services, is important to discussion of reform of health care financing. It is unhelpful to rational debate if people feel discriminated against on the basis of where they live. A difference of nearly one year in waiting times at surgery outpatient clinics in Hong Kong West and Kowloon East is a case in point. That said, overseas experience shows that case-mix-based funding will need careful auditing to maintain quality of service. Hospitals have been known to inflate their medical 'output' to boost their funding entitlement, for example by supplying unnecessary services, or by counting pre-operative check-ups as separate admissions, or by raising patient turnover through substituting day surgery for longer admissions. The leader of the Public Doctors' Association has suggested an independent watchdog to ensure that hospitals do not abuse the system. Health care costs will continue to rise as an ageing population demands access to advances in diagnosis and treatment. In his policy address last week, the chief executive acknowledged that the public expects the government to continue to be the primary source of funding even if financing reform is introduced. The Hospital Authority's plan should help ensure that taxpayers get value for their money.