Frontier Centre: You believe that Canadians should stop regarding Medicare as an economic burden and start thinking of its potential to generate economic growth. Could you summarize that argument?
Henry Friesen: The health system constitutes 10% of our economy but we view the health care system as an economic burden instead of a national asset. The question then becomes, “How can we take advantage of this asset or opportunity?” For example, are Canadian companies producing the health products and services that Canada and the world needs, such as imaging equipment and diagnostic tools, or are we in fact buying these products and services from other countries, often at high prices and importing them into Canada? The answer, unfortunately, is that we spend about $8 billion more a year importing our health products and services than we export. Canadian firms are not as successful as we should be in capturing a reasonable share of the trillion-dollar health product and service markets worldwide.
FC: You said earlier that we generate 3% of healthcare knowledge in the world every year yet we produce only 1.5% of health-related services. What does this mean?
HF: We generate 3% of the world’s healthcare knowledge in terms of scientific publications of new information and new ideas. But Canada’s share of the global trillion-dollar market in health products and services is only 1.5%. In other words we have a significant commercialization gap. Capturing even 3% of that market would represent an additional $15 billion of commercial activity selling Canadian health products globally. This is a minimum goal and, in my view, we should double it to 6%, which means a $60-billion Canadian healthcare products and services industry.
FC: Can we put a job creation figure to that gap at all?
HF: Economists roughly use a billion dollars per 10,000 jobs. As we have an $8-billion balance of payments deficit currently, it means this would create 60–70,000 new jobs for Canada. This is almost the same as the 80,000 jobs that our health tax dollars currently support as private sector jobs in foreign countries. This is not good stewardship and it is not good public policy.
FC: We can also assume these are very high value jobs?
HF: Absolutely. If we get it right, if we align our social and economic agendas appropriately, we would be able to build in Canada a health industry sector, generating health products and services for the global market, that is bigger than the auto sector. And unlike the auto sector, it need not be centralized in Ontario.
FC: Have you calculated what tax revenues that extra activity would generate?
HF: We have some preliminary figures that show for a modest initial investment there is a significant accrual of revenue both to federal and provincial governments.
FC: How do we need to change the rules of the game to make our healthcare system a big economic driver? In particular, are there structural and regulatory issues in the current Medicare system that stand in the way?
HF: The proposal we put forward requires a cultural shift in thinking that is deep and systemic. At its core it is about change management of the highest order. There are many constituencies and forces that make up the health system and each of them is pre-occupied with their own agendas. To move forward there has to be a fundamental call to leadership, to entrepreneurship and to innovation in the system. Incentives would have to be properly aligned to reward those who are truly imaginative and innovative. We would have to put in place assistance to Canadian companies to enter the global market more quickly with products that have been properly evaluated, so that over time the Canadian brand would be known for quality and efficacy. The dream of building a health sector bigger than the auto sector is not too dissimilar to the situation that occurred in Finland under the leadership of the Finnish prime minister at the time of the collapse of the Soviet Union. Under his leadership agreement was reached among the big sectors of the economy — labour, the private sector, government and academe — to pursue three priorities focusing on information technology, bio-technology and advanced materials. The first great triumph that was the result is Nokia. Today it has 40% of the world’s cell phone market.
FC: You spoke about how the monopoly forces providers to buy “off the rack”. What does that mean and how does it handicap us?
HF: It means that the health system currently is focused on cost containment. It means that the healthcare system is a demanding but not a sophisticated customer. It has a single goal which is to try and buy the least expensive products. The health system has immense purchasing power that is multiples larger than the defense industry. Think of the extensive procurement procedures that exist in purchasing a helicopter. On-time delivery and sophisticated management of the supply chain that many other industrial sectors now use does not exist within the health system.
FC: If the country adopted your view of Medicare as a tool of economic growth, how long would it take for the sector to generate returns and how long would it take to catch up with the most modern technologies and methods out there?
HF: It is a process that would take time but I think, if you identified a small number of priorities, one should see some early wins within the first year or two. We are calling for a major structural change in viewing our health system not as a cost to be endured, but as a tremendous opportunity to be explored and to be examined at every level. The health system then becomes not only a provider of health for all Canadians but a generator of wealth for Canada.
FC: What about altering the five principles of the Canada Health Act, in particular the one that mandates monopoly public provision of medical services? If we were to redefine the principle of public administration to allow a more innovative model, how would you do that?
HF: We are not calling for any change in the Canada Health Act. We believe it is possible to see the health system as an economic opportunity and an economic platform within the framework of the Canada Health Act. An innovative health system would require a fundamental change in management, incentives, procurement and approach to healthcare delivery. And the national laboratory system, which is the health system, needs to be linked more appropriately and productively with the private sector for developing, testing and building health products.
FC: How do you change the incentives, though? It’s the “$64,000 question.”
HF: Entrepreneurial activity and innovation would have to be rewarded. The goal is to position the Canadian health system as the global pace-setter for health innovation and then market the know-how, products, and services around the world.
FC: One symptom of Canada’s intransigence over health care is the loss of many of best and brightest doctors and nurses into the American market. How do we convince more of them to stay?
HF: The issue of movement of professionals is complex. People who have a commitment to excellence want to have access to an operating environment that is the very best and to be rewarded for being the very best. We need to create this type of environment and provide incentives to keep people in place and to encourage more to come. We should leverage our assets more effectively so that even more professionals would choose Canada as the destination of choice.
FC: Why did you stay?
HF: I chose to stay because the country is small enough and open enough to new ideas, if a persuasive, compelling case is made. That has been my experience. I am passionate to see our prized social program become a global pacesetter for innovation, developing tools and services that lead to improved health globally and a robust competitive health industry sector at home. At times I have quoted Margaret Mead: ”Never underestimate the ability of a small group of people to change the world. Indeed it is the only thing that ever has.” I would say the same is true of changing the world of the health sector in Canada.
FC: A recent newspaper story quotes you as saying that in the future medicine will become more predictive, preventive and personal. What is the difference between now and then?
HF: The difference is that the health profession today usually assesses the condition of the patient when they present with disease. With the advance in knowledge and understanding, particularly of genomics, your genetic fingerprint will predict your future health or health risk decades out with amazing accuracy. So, in the world of the future as I see it, at birth the newborn will have their genetic fingerprint identified and that will allow the practitioner to offer advice to the parents. “You should know that given your child’s genetic endowment, there are certain interventions that should be noted and acted upon beginning now.” For example, if you modify the diet appropriately you can delay or prevent certain disease risks. Therapeutic interventions may be started long before the burden of disease presents itself. That’s what we mean by personal – it is your genetic fingerprint that personalizes the counseling. It is now more predictive because it is based on sound knowledge and it is preventative because interventions occur earlier.
FC: In recent years both federal and provincial governments have expanded health care budgets quite dramatically but outputs have expanded at a much slower rate. Why do you think that is so?
HF: I suppose there may well be a lag between inputs and outputs. That is often inevitable in big and complex systems, but nevertheless I think the measure of what is effective in impacting health is often imperfect and too many times decisions are still taken on the basis of dated knowledge or current imperfect information.
FC: Most of the European welfare states have a single-tier model where the funding is public but the services are provided by a mix of public and private suppliers. Why has it been so hard for our politicians to copy places like Sweden?
HF: First of all, the reality is that many health services are delivered by a mix of public and private services. It is the hospital care system which is largely publicly delivered. There is a long history of social and political forces that have brought the current state into being. I would guess there is room, even within the Canada Health Act, for substantial experimentation and change. Again, as I said earlier, I think changes in programs should be made on the basis of evidence whenever possible.