Sovietizing Our Public Sector

Commentary, Healthcare & Welfare, Frontier Centre

What do TV dinners have in common with modern public sector management? Not much, unless you are an observer of Manitoba’s curious health-care reforms.

The government recently announced that it would produce all hospital meals in Winnipeg, flash-frozen, at a 20 million dollar, 34,000 square-foot factory. From there it will arrange to transport these TV dinners to Winnipeg hospitals where they will be "re-thermalized" before patients eat them.

The plan is supposed to save a few million dollars. Hospital kitchens become redundant in this centralized system, so they will close to "eliminate unnecessary duplication and overlap". These words are red flags for observers of large, under-performing public institutions. They featured prominently in the Soviet central planning model where large organizations dominated all sectors of the economy. However, the planners who ostensibly ran that bleak, egalitarian society had some familiar rationalizations for the ponderous bureaucratic systems that produced the community’s goods and services.

It was all about efficiency. Unsurprisingly, the economic landscape sagged with gargantuan production facilities that pumped out piles of solitary, one-off products. For months on end a monster shoe factory might patch together thousands of size 10, 1953-style, black shoes as managers struggled heroically to meet expanded shoe production targets for the five-year plan.

Of course, the system was a botch. Each service and product was made by a monopoly that had no competition. This was grossly inefficient and slipshod. Many people were stuck without shoes if the planners were not making their size that year.

A lesson? Though the people in charge tried hard and meant well, centralization did not deliver. Yet, ominously, the centralization of hospital laundries is next on the health-care system’s restructuring agenda. So why is the Soviet "economies of scale" model creeping into different aspects of our health-care system?

In our heavily regulated health-care monopoly, decisions flow from a small group of officials who advise the minister. After years of growth, the system is large, dispersed and difficult to manage. As they struggle to maintain control, the small group on top naturally embraces organizational changes that centralize activities and management. Thus, some of us observe, with awe, the arrival of the health-care superboard in Winnipeg; the big TV-dinner factory; and soon, one big laundry that, like the Soviet model, will "eliminate duplication and overlap" and "increase economies of scale".

The collapse of the other system showed that concentrating planning and resource allocation powers into the hands of small administrative groups does not work. That system became so wasteful and so expensive it went bankrupt, eventually seizing up in bureaucratic gridlock as the planners were overwhelmed by their vain attempt to manage the diverse needs and desires of millions of citizens.

Our policy makers need desperately to break out of the box. We have ample evidence that the ever more centralized, closed monopoly model is a dead end that cuts service as its costs rise. It also becomes increasingly less responsive to society’s needs. Gargantuan, top-down models rarely accomplish what they promise in the closed framework. It becomes all too complicated and costly. There are too many layers and too many systems feebly trying to reach up to a few souls at the top who are overrun by reams of information that can never be read. It is why our hospitals, public schools, and even Winnipeg’s creaking Unicity amalgamation now wreak so much financial carnage on taxpayers.

There are easier and less complicated ways to save the public purse money. Why not disperse decision-making powers away from the centre, move control back to the community level, and embrace competition throughout the system? Save millions by allowing hospitals to buy laundry and kitchen services outside the closed shop. In other words, de-constipate the system by replacing the centralized monopoly framework with one that features competitive tendering at the local level.

The Soviet model fell apart. Why do we still bother with it here?