Patient focused health care requires new funding model

Canadian health care delivery system is an unsustainable, failed system

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Over the last 25 years, I have been involved in Manitoba’s health care delivery. I have served as Chair of the University of Manitoba’s Board of Governors, thus observing the roles of its medical school, the College of Physicians and Surgeons, and the Manitoba Department of Health. Furthermore, I have served as Chair of the Board of St. Boniface Hospital and participated in the provincial government’s Manitoba Healthcare Task Force.

This experience has led me to conclude that the Canadian health care delivery system is an unsustainable, failed system. Real reform would involve true competition, patient choice, patient focus, and sustainability. This cannot be achieved by tinkering around the edges of a failed system.

The Canadian health care delivery system is a government-created monopoly, both government-funded and operated. The most comparable system was the USSR’s old system of producing and delivering food, one wherein the government planned, controlled and operated. With it, one of the most agriculturally fertile areas in the world could not feed its people.

Almost all Canadian health care funding is based on a block funding model, bringing negative counterproductive results. Funding, usually based on last year’s budget plus some inflationary component, is subject to political interference, influence and bias. This leads to an environment of spend it or lose it, discouraging efficiency and innovation. The current negative economic outcomes in the block funding model are the direct result of the absence of prices and price signals. Nobel laureate economist Friedrich Hayek would predict that the absence of price signals would doom our current system to inefficiency and unsustainability.

Tinkering around the edges of Canada’s failed system will not transform it into an efficient, innovative, patient-centred system. How can our current system be reformed to an efficient, innovative, patient-centred system? Hayek is right; we need to introduce prices and price signals. But, given that health care delivery is within provincial jurisdictions, it would take genuine courage to change, and embark on an activity-based funding model.

Activity-based funding is a system in which hospitals and programs are not funded based on last year’s budget but by their actual level of activity, the complexity of those activities, and the quality of the outcomes. A price list for health care activities would need to be developed (think of the delivery of dental care).

This could be achieved in parallel with the authorization of private clinics and hospitals using the same prices, which would effectively honour the single pay, public-funded component of the Canada Health Act. The change would enhance patient choice for most procedures and, because the funding follows the patient, it becomes a totally patient-focused system.

This topic is critically important to the future of health care in Canada. Patient choice is successfully used in other comparable industrialized nations such as Sweden, Norway, the Netherlands and Australia. The Commonwealth Fund provides detailed comparisons of costs and outcomes of Health Care delivery systems of industrialized nations. A further transformation would be to introduce Medical Savings Accounts similar to the Singapore model. As a percentage of GDP, Singapore spends 41 per cent of what Canada spends ((4.46 per cent of Singapore GDP compared to 10.79 per cent in Canada using 2018 World Bank stats) and achieves vastly better outcomes.

Canada spends more and gets among the worst outcomes of industrialized nations providing universal access delivery systems. We now have a highly rationed system without choice and with multiple gatekeepers.

An opportunity to benchmark systems and cherry-pick best practices is available if only our governments would take the initiative.

Wayne Anderson is Chair of the Frontier Centre for Public Policy.

Wayne is a Troy Media contributor. For interview requests, click here.


The opinions expressed by our columnists and contributors are theirs alone and do not inherently or expressly reflect the views of our publication.

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