Patient Focused Healthcare Requires New Funding Model

Over the last 25 years, I have been involved in Manitoba’s healthcare delivery. I have served as Chair of the University of Manitoba’s Board of Governors, thus observing the roles […]
Published on February 9, 2022

Over the last 25 years, I have been involved in Manitoba’s healthcare 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.

All of this experience has led me to conclude that Canadian healthcare 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 healthcare 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 healthcare funding is based on a block funding model, bringing negative counterproductive results. Funding, which is usually based on last year’s budget plus some inflationary component, is subject to political interference, influence and bias. This brings 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 healthcare delivery is within provincial jurisdictions, it would take true 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 healthcare activities would need to be developed (think of the delivery of dental care).

This could be achieved in parallel with the authorizing of private clinics and hospitals, thus using the same prices. This 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 in common use successfully 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. Further transformation would be to introduce “Medical Savings Accounts” similar to the Singapore model. As a percent of GDP Singapore spends 41% of what Canada spends ((4.46% of Singapore GDP compared to 10.79% in Canada using 2018 World Bank stats) and achieves vastly better outcomes.

Now, 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 there, if only our governments would take the initiative.


Wayne Anderson is Chair, Frontier Centre for Public Policy

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