Earlier this month, I participated in an event hosted by the Canadian Foundation for Healthcare Improvement. The goal of the event was to bring together thought leaders from seven countries to discuss and debate Canada’s Healthcare Strategy. Paul Martin, Deb Matthews, Don Drummond and Michael Guerriere were all there and it was an excellent discussion. Details of the event can be found here. Below are some of the ideas that caught my attention.
Startling facts from Ontario
15% of prescriptions are not filled in Ontario because the patient can’t afford the medication.
20% of hospital beds in the province are occupied by someone who shouldn’t be in a hospital. (This problem is often called the “ALC” problem – Alternate Level of Care.) Hospital beds are the most expensive beds in our healthcare system.
How Sweden fixed ALC
Sweden had the same chronic ALC problem as Ontario until a couple of years ago when they introduced an innovative solution. A problem that they couldn’t solve for decades suddenly disappeared within three months. What Sweden did is split the jurisdictional responsibility of hospital care from long term care: The province kept the responsibility for acute care, but they moved responsibility for long term care (along with the funding) to the municipality. And then, and here’s the genius, the province charged the municipality a high daily hospital bed fee for every day a person was left waiting to be transferred from a hospital bed out to a long term care facility. Since the cost of the long term care bed was so much lower than the cost of the hospital bed, the problem resolved itself very quickly. Now this is easier for Sweden to do because municipalities have income tax revenue, but I thought the idea of splitting responsibility to force efficiency was brilliant. (As an aside, in the Swedish tax model, 15% of income tax goes to the federal government, 10% goes to the province, and 20% to municipalities. No wonder they have such great transit over there!)
How the Germans do it
Here in Ontario, OHIP is managed like a Big Government Program, with a heavy bureaucracy managing a lumbering public claims system funded by taxes. In Germany, it is managed more like a tightly efficient, regulated crown corporation. Patients pay their health insurance premiums directly to the insurer. The government subsidizes these premiums for low wage earners, and a salary-based sliding scale higher premium paid by higher wage earners. Because it’s managed as a separate financial institution (and because it’s German) there is a tireless focus on efficiency and effectiveness, managed by teams of heavyweight quants. People are categorized into 38 different groups, with compensation to providers based on the representation of these groups in their roster. (Compare this to Ontario’s roster compensation that has 2 categories: “normal” and “old.”) Treatment outcomes are measured and a national drug formulary establishes best practices to manage costs. The Germans approach health insurance like a multi-billion dollar industry and run it like a bank.
What accounts for rising healthcare costs?
What surprised me about rising healthcare costs was how little of the increase was due to the ageing population we hear so much about. 10% of the increase can be accounted for by an ageing population. The lion’s share of increased cost is the increase of volume of activity. More medications and more tests. The consensus at the event was that the solution is to stop compensating providers for services and start compensating providers based on who’s in their roster, and to reward outcomes; move to a capitation model.
What can business do?
Michael Guerriere (Telus Health) made a number of insightful observations about the role of business in improving Canada’s healthcare landscape.
Different sectors respond to failure differently. In the private sector, if a project is failing, the business will kill it quickly and decisively. Whereas in the public sector, when a project is failing, governments have a tendency to, as Michael put it, “double down,” throwing good money after bad. His recommendation: Rely more on private sector capital to solve healthcare problems.
The challenge with this in Canada, however, is that we have 14 little healthcare markets. These little markets behave too differently from one another for a vendor to build a coherent national strategy, which explains why so few American healthcare vendors have much of a presence in Canada. I’m painfully aware of this problem in my standards work. It astounds me that every Canadian province feels the need to define different message formats for exchanging healthcare data. Yes you read that right, Canadian provinces are each defining different, incompatible technical specifications for exchanging healthcare data.
Primary care EMRs need better communication with the rest of the care community. This is a topic near and dear to my heart and I will be writing a separate blog post on this topic.