The Problem

Each province deploying Health Authorities spends over 40% of provincial public spending on health care[i]. Healthcare costs are set to rise due to an aging population, greater incidence of chronic health conditions and greater longevity. The capability of the economy to support public healthcare is in jeopardy because of the current economic crisis, its aging demographics and the long-term decline in competitiveness of Western economies. Meanwhile the discussion surrounding health care reform in Canada is bogged down in the debate over public vs. private health care delivery and insured services. Within the boundaries of a single payer, government-run health insurance scheme the issue of public vs. private delivery is a red herring. The reality is that neither private nor public health care providers are the enemy of efficiency, quality and innovation.

The enemy of the public interest is in fact monopoly providers, whether they are public or private. By definition they limit consumer choice leaving the patient without scarcity power and the providers setting the rules and rates. There is no reason why public providers cannot be as efficient, or more-so, than private providers within a system that provides incentives for them to readily adopt technology and innovation and ensure the responsible transfer of function between health professions. The solution is to create a regulated marketplace and require public providers to compete with each other on the basis of cost, quality, and innovation rather than for jurisdictional control of bureaucratic territories. Regulated public sector competition will liberate the system from the inefficiencies of monopoly providers without necessarily having to leap to privatization.

The Cause of the Problem

The current healthcare system is characterized by large bureaucratic structures (health authorities) which compete with one another for jurisdictional control of programs ("turf battles"), while patients compete for quick access to services using personal connections and occasionally an 'under the table" cash inducement. In Jane Jacob's lexicon Health Authorities and hospitals with overlapping geographic or programmatic mandates exhibit classical "Guardian" behavior, which is specifically, the work of protecting, acquiring, administering or controlling territories. This is antithetical to efficiency, innovation and the capitalization of new ideas. Essentially, the health system is without a vision for health and illness control, devoid of strategy to achieve a vision, and steeped in micro-management, administrative 'layering' and inefficiency.

The Characteristics of the Current Health System

Healthcare delivery is organized inefficiently and reflects the outcome of Guardian institutional behavior rather than the best interests of patients.

Health Authorities have an ambiguous role as both the provider and the purchaser of care. At best this creates ambiguity and at worst direct conflicts of interest within the healthcare system.

Accounting and financing within the system reflects a traditional view of annualized government spending and does not match the activities required to provide excellent healthcare.

The ad hoc nature of the system means that spending and outcomes are difficult to monitor. A plethora of minor, local decisions compound to create excessive costs and to prevent any achievement of the necessary economies of scale.

Ontario, to its credit, has not "put all its eggs" in the health authority basket. Health Authorities are structures, not strategies. Instead Ontario established Local Health Integration Networks (LHINs) which do not own and operate hospitals and other providers of care. They are well positioned to play an effective role in the transformation of health care delivery if deployed as purchasers which provide incentives to guide provider and institutional activity in line with achieving better health outcomes. To be fair to the Health Authority concept (and Ontario hospitals) the global budget funding model also mitigates against transparency and accountability for health outcomes.

The losers in this system are:

Patients - whose best interests are marginalized in the very system intended to provide them with excellent care and

The general public - who pay for a system which lacks efficiency, transparency and accountability.

The system must be re-organized for the interests of patients to provide excellent care, good value for money and direct, measurable relationships between inputs and patient outcomes.

Characteristics of a 'new' Health System: Managed competition enabled by patient centered funding

The inefficiencies in the delivery system can be rooted out by transforming Health Authorities (and LHINs) into 'purchasers' of health services through definition of population needs, comprehensive service programs, standards for service delivery (including quality and safety), care paths (evidence based management guidelines), reportable outcomes and improvement targets.

• These "expert purchasers" will create and issue a range of specifications for integrated health care delivery and patient support, and then buy these packages of services from cost-effective vendors (public hospitals, physician groups, agencies, clinics etc) who can meet these specifications either independently or in partnership with other vendors. Interconnectedness will become the standard so that continuity and integration of care becomes the performance expectation rather than a hit or miss occurrence.
   
• Requiring the providers of care (physicians, agencies, provincial programs, hospitals, clinics) to sell their services to the buyer groups through activity and outcome-based funding contracts with defined terms.
   
• Patient-centered care will be assured through patient-centered funding. Specifically, global budgets will give way to vendor funding/payment models based on activity and measured outcomes linked to objectives. Funding contracts should be multi-year in nature to support the implementation of strategies for the reduction and management of chronic diseases such as diabetes.
   
• Managing drug purchasing and selection on an inter-provincial basis to obtain larger economies of scale and greater congruence on formularies across provinces.
  
  Canadians have consistently affirmed a desire to have a publicly funded, universal healthcare system, and there is no reason that this should not be fully achievable. Margaret Thatcher and Milton Friedman - the 20th century's champions of privatization - did the world a great disservice when their support for privatization was framed in ideological terms that suggested only the private sector can operate efficiently. The public sector can and does perform to deliver the services, quality, efficiency and effectiveness we ask of it. The problem is that the behaviors we encourage and support in our health care system today - through current accounting, information, incentive and reward systems - are ineffective and must be reformed. Like our American neighbours to the south we are too often buying the wrong things and not making the best use of our well trained people, intellectual capacity and technological innovation. The system must be re-organized functionally as well as structurally, for the interests of patients to provide excellent care, good value for money and direct, measurable relationships between inputs and patient outcomes.

Additional Considerations

In addition to these changes governments should review and develop action plans for:

• Areas where greater economies of scale (and best practice models) can readily be achieved (i.e. inter-provincial purchasing of drugs and technology.)
   
• Areas of highest spending in the system to identify new efficiencies - for example, patient compliance in taking prescribed drugs ranges between 20-80%, which suggests that at least half of provincial spending on provincial drug plans is being wasted.
   
• Incenting the implementation of best practice models for better management of the five most expensive chronic disease groups (diabetes, congestive heart failure, coronary insufficiency, asthma and depression). This includes identifying preventative and educational measures which can reduce the incidence of these conditions and best practices in treatment which should be adopted across the country.
   
• Incenting better use of technology in healthcare to create savings and access to high quality care. (I.e. Telehealth).
   
• Creating strategies for health information, population based prevention and early detection and internet-based resources to provide better care and outcomes for people living in remote communities.

Conclusion

Ultimately, providing sustainable public healthcare must include a comprehensive approach to wellness and chronic disease prevention, as well as efficient delivery of excellent care. But first, the existing system must begin to work more transparently and more efficiently by establishing a regulated marketplace for health care based on cost, quality and innovative ideas.

Canada can improve patient care and health outcomes and gain greater control over health spending without the polarization over privatization we see in the US. Presently individual patients (consumers) have little or no information, ability or incentive to differentiate between providers on the basis of cost or quality, and providers have no need to compete for their patronage due to the perverse incentives inherent in global budget funding. A regulated marketplace for public health care delivery based on cost, quality and the effective adoption of innovative ideas will revolutionize the delivery of health care in this country by focusing on the interests of the payor and patient.

Comments

Be the first to comment on this!