Among the Organization for Economic Cooperation and Development (OECD) countries, Canada is unique in having no private-sector involvement in the hospital sector. It is then no surprise that according to OECD health data published in 2001 we fall behind other OECD countries in many key efficiency indicators. We spend more than average on health care; the percentage spent on hospitals is greater; acute-care hospital cost per day is larger; acute-care hospital staff-to-bed ratio is greater and the average length of acute-care hospital stay is longer.
Beyond this, the World Health Organization (WHO) has noted that the skills and strategies that have traditionally controlled public bureaucracies are inadequate for stewardship of contemporary health-care systems. Bureaucracies in the health-care industry are noted for overspecialization, being slow to adjust to changing demands and new technologies, and having lower productivity and quality of care.
In Manitoba, the ultimate consumer is the patient, but the patient has little or no say in what types of services are purchased. The government is the only major health insurer, purchaser and provider of hospital services. This creates a conflict of interest that would be unacceptable in almost any other service industry.
Manitoba’s hospital funding is not based on the population served, nor is it dependent on the number of services provided. Instead, hospital funding is generally calculated on the basis of the previous year’s funding by a system known as global budgeting, which does not take into account usual market factors such as the number, type and quality of service provided. There is a negotiation around whether the previous year’s budget should be increased, decreased, or maintained — hence the name “global” budgeting.
With little or no discussion regarding the number of services of each type to be provided, nor regarding quality of care, our health-care system continues to slip in comparison to the rest of the developed world. There are no incentives to reduce excessive lengths of stay in hospital, reduce staff-to-bed ratios or reduce the time a patient spends on a waiting list. We rate very poorly on all of these indicators. With no financial incentives to reduce costs or to increase quality, it is no wonder that we rate 30th in the world. The European experience has demonstrated that entrepreneurialism can be a powerful lever to induce institutional restructuring in the health-care sector. Entrepreneurial behaviour has long been recognized as the central catalytic element in stimulating industrial innovation, defined as the process of identifying, developing, introducing and commercializing a new product or service. The European Observatory on Health Care Systems provides this information in a meta-analysis of changes that occurred in Europe over the 1990s.
The study noted that European national policy-makers broadly agree on the core objective that their health-care system should pursue. The list is strikingly straightforward: Universal access for all citizens, effective care for better health outcomes, efficient use of resources, high-quality services and responsiveness to patient concerns. It is a formula that resonates across the political spectrum and which, in various, sometimes inventive configurations, has played a role in the most recent European elections (health care is political everywhere).
This study and others like it, seek to contribute to the evolution of a more evidence-based approach to policy formulation in the health sector. The study avoids fear-mongering. In most European countries, health-care coverage is universal. The countries then use both private companies and internal markets to promote competition among health-care providers and reduce costs. The result has been an improvement in health-care efficiency. For example, the Swedish government spends less on health care, as a percentage of GDP, than Canada, yet has a much better record in measures such as infant mortality and hospital beds and physicians per 1,000 population.
Competitive production by small producing units works best when there are no benefits from economies of scale. Since this is the case in much of health care, a successful approach has been to establish a contractual relationship that relies on professional reputation, and a strong sense of commitment and responsibility. Such contractual relationships have a long history of success in countries such as Denmark and Norway, according to the World Health Report 2000. By aligning incentives with health-care needs, governments can achieve health-care goals. This gives service providers the needed flexibility to achieve those goals and financial rewards when these goals are reached.
Health-care resources are not infinite — just ask anyone who is sitting on one of the numerous waiting lists. Reduction of costs in spending on our current services allows for those resources to be transferred to new services. The valued end we could achieve through efficiency is an increase in the number of health services for all without an increase in cost.