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Even in health care, incentives matter

Appeared in the Guelph Mercury and Waterloo Region Record
Authors:
Release Date: April 24, 2012

As those who have ever endured painful months, or even years, waiting for medically necessary treatment have discovered, all the new cash poured into Canada’s health care system in recent years has made little difference.

Last month the Canadian Institute of Health Information [CIHI] released a report indicating that about 80 per cent of patients received treatment in priority clinical areas (cancer, heart, diagnostic imaging, joint replacement and sight restoration) within targeted benchmarks. But a closer examination suggests that it is certainly no reason for celebration.

First, flip that figure over: it means about 20 per cent of patients do not get access within these target times. That is a troubling proportion, given the length of some of the benchmarks touted as "acceptable." For example: 182 days (six months) for hip and knee replacement, and 112 days (almost four months) for cataract surgery.

This reality is not entirely lost in the CIHI report, where it was noted that "few improvements were observed compared with previous years" and that "few provinces completed 90 per cent or more of procedures within a clinically appropriate time frame."

Second, according to CIHI’s previous reports, the surgical procedures included in the priority areas only represent about one-eighth of all surgeries those performed in Canada. That omits the wait Canadians face for the other 88 per cent of surgeries.

The report also does not factor in the wait to see a general practitioner, the wait between a general practitioner’s referral and a specialist consultation, or the wait for any diagnostic test that may be required before patients can even be put on a waiting list in the first place. Importantly, 15 per cent of Canadians aged 12 or older did not have access to a regular family doctor in 2010.

The simple fact is that wait times in Canada are remarkably long, both in absolute terms and historically. Data collected by the Fraser Institute show a total wait time in 2011 of 19 weeks between referral from a general practitioner to treatment by a specialist for Canada as a whole (among 12 medical specialties). That was the longest total wait time recorded since the Institute began measuring wait times nationally in 1993. Further, wait times for diagnostic technologies average nearly one month for CT scans and more than two months for MRI scans while the wait to see a specialist is, on average, as long as the wait to receive treatment after specialist consultation.

At the same time, another recent study estimates that since 2004-05 (the year in which the 10-Year Plan to Strengthen Health Care was announced), the federal government has provided the provinces with $154.4 billion in cash transfers for health spending - $6.4 billion beyond that necessary to keep pace with population growth and inflation. Importantly, the study shows that the billions in federal transfers did not result in significant improvements in access to health care areas focused by governments; and that access to areas of health care outside of government focus has actually deteriorated.

The lesson here is obvious: simply pouring more money into our health care system and/or targeting specific medical treatments through politically charged ‘wait times strategies’ will not provide Canadians with better access to health care.

It’s time to look to other countries for alternative ways of achieving universal health care with superior results for patients.

Critically, the key difference between Canada and the rest of the developed world with universal health care—think Europe—is the lack of appropriate economic incentives faced by both patients and providers. Nearly every other country with a universal health care system has some type of patient cost-sharing for medically necessary services.

Indeed, research shows that patient cost-sharing reduces demand for unnecessary and some necessary care, however it does so without producing negative health outcomes for most of the population. That said, there is no reason to suggest that patients with chronic health conditions such as diabetes and high blood pressure, and those with low incomes, couldn’t be exempt from co-payments.

It is also important to align provider incentives with patient needs. International experience shows that moving away from fixed-budget hospital financing to ‘activity-based’ funding increases efficiency, ultimately improving patient flow and reducing wait times.

Canada has the opportunity to provide the best universal health care in world without spending more to do so. However, to get there, we must and recognize that even in healthcare, incentives matter.



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