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An Unwelcome Prescription for Canada's Aging Health System

Federal health panel chair on what's wrong, how to fix it and why Harper didn't want to hear it.

By Andrew MacLeod 10 Sep 2015 |

Andrew MacLeod is The Tyee's Legislative bureau chief in Victoria and the author of A Better Place on Earth: The Search for Fairness in Super Unequal British Columbia (Harbour Publishing, April 2015). Find him on Twitter or reach him here.

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David Naylor's pre-election innovation report strongly endorsed universal coverage of pharmaceuticals.

On a Friday afternoon in July, two weeks before Prime Minister Stephen Harper called the federal election, his government quietly dumped out a report that it had commissioned a year earlier on ways to improve Canadian health care.

David Naylor, who chaired the advisory panel on health care innovation, told The Tyee he disagrees with observers who've suggested the government was dismayed by the cost of recommendations in the panel's report.

Instead, he said, he believes it was the panel's call for federal leadership that rankled.

"We ultimately concluded that a new model of federal engagement was needed and well worth trying," Naylor said in response to emailed questions. "That core concept of engagement is the real sticking point, not the mechanisms or the moderate and gradual investment we proposed."

Provinces and territories deliver health care in Canada, while Ottawa has tried to limit its role to providing funding. "Like it or not, Ottawa can't simply throw money over the wall and walk away," said Naylor, a physician and medical researcher who served as president of the University of Toronto until 2013.

After its year of consultation, discussion and reflection, the panel suggested the federal government re-engage itself in health care in various ways, including working towards building a national pharmacare program and creating a fund that would support and spread new initiatives aimed at improving the delivery of health care services in Canada.

While Harper and the Conservative government may have disliked the panel's perspective, Naylor said he remains hopeful the work will in time make a difference. "These issues aren't going away," he said. "Governments change their minds and today's heresies become tomorrow's orthodoxy. I would not be surprised to see many of our recommendations put into motion no matter who forms the next government."

The Tyee reached Naylor to ask about the symptoms of an aging system, his prescription for change, and the federal government's role in facilitating those changes.

The panel refers to the "ills of Canadian health care" and says medicare is aging badly. What's the evidence for that?

An overview of the OECD indicators on health care spending and performance suggests that, on a value-for-money basis, Canada is not where it should be. One of the more unsettling assessments comes from the Commonwealth Fund, a very credible foundation in the United States that has done many international comparisons of health care systems. Reporting in 2014, they assessed health care in eleven peer nations on multiple dimensions. Canada came 10th overall. Only the U.S. fared worse, and with the Obamacare reforms, our American neighbours are actually making much faster strides than we are.

What are the symptoms? Where can people and patients observe those weaknesses?

The weaknesses crop up in different ways. Poor integration of services, leading to problems with continuity of care and sharing of information. Continued challenges with waiting times for a range of specialist services. A low proportion of Canadians who can see their family doctor within 24 hours as compared to sister nations. Underuse of health information technology and virtual care. And a lack of coverage of services for a wide range of professionals other than physicians. We're also just about the only country with universal health care that doesn't also have universal coverage for prescribed pharmaceuticals.

At the same time, the panel recognized that polls suggest Canadians cherish the medicare system and that it's become an iconic social program. Are they deluded? Or are there things the system does well?

Our system has notable strengths, starting with an absence of financial barriers for medical and hospital services. That makes fairness a big plus in our ledger. We also have low administrative costs, capable managers, and thousands of outstanding health professionals.

Unfortunately, Canadians are often distracted by self-congratulatory comparisons with the expensive chaos in health care south of the border. What we could have done instead was to cherry-pick the best ideas from the non-profit health care sector in the U.S. If we had reached across the border, and borrowed integrated delivery systems and bundled funding for a wide range of our services, Canada would be still a world leader in universal health care today.

The panel described a "fundamental need for change" in the way health care is financed, organized and delivered. What's preventing that change from happening now?

A big part of the problem is that budgets are very tight in every province and territory. That means there is no working capital to scale up proven innovations, and little or no funding to implement and evaluate new models of health care delivery.

We were really encouraged by the fact that great ideas and initiatives have sprung up everywhere despite a lack of incentives and in some cases, actual impediments to innovation. But time after time, we found that these ideas had not been scaled up even to the provincial level, let alone adopted nationally.

You recommended creating a new innovation agency and fund that would be the tool for bringing that change, rather than the change itself. Why?

A national innovation agency and a substantial innovation fund are not cure-alls in themselves. The drive for reform must come from provinces and territories, from health care leaders in a range of sectors, and from innovators of all stripes, especially health professionals. What we found, however, was a growing appetite for fundamental change. We saw lots of creativity and entrepreneurship in the system, and therefore ample opportunity to make strides now on a number of fronts.

Canada's health care systems are poorly integrated. We don't have systems so much as a set of service silos in each province and territory. Lack of integration in turn has led to underdevelopment of interoperable information systems, and is a barrier to innovation in all aspects of health care. A health care innovation fund could help cover the costs of designing, launching and evaluating various models of better-integrated care.

What kinds of changes might it result in?

The [current] system has only weak incentives for teamwork. In some cases, there are financial barriers to delegation of services to the most cost-effective provider. Physicians are not rewarded for prudent prescribing and careful use of diagnostic tests, or if they provide excellent ambulatory care that keeps patients with chronic illnesses out of hospital. The incentives reward volumes, not value. We need to reimburse professionals based on some mix of outputs and outcomes. Again, why not have a national fund that would help a province or territory to take and assess some pioneering reforms on those fronts?

Many patients don't have access to their own health records, and in many provinces, those records aren't readily available when patients move from one hospital or clinic to another. Virtual care, using information technology, is grossly underdeveloped. That's partly because our systems pay professionals on a piecework basis, and health ministries don't want a blizzard of bills for digital consultations. Shifting payment modes would let physicians in particular get off the fee-for-service treadmill, and allow teamwork and virtual care to flourish.

The panel says the medicare system's scope is narrow. Where do you see need and room for it to broaden?

The panel strongly endorsed universal coverage of pharmaceuticals. Debate continues about whether that should be done by adding to existing plans, or superimposing a single-payer plan. A single national plan is very appealing as an end-state, but getting there is a massive political and operational challenge.

Canada's high per-capita spending on pharmaceuticals is not just a function of high prices, although that is definitely an issue. Our spending is also driven by the volumes of prescribing and the drugs being prescribed. If a new drug saves costs elsewhere in the system, or has broader economic benefits by keeping people healthier and more productive, those considerations are not always fairly reflected in decisions about its adoption. Thus, we not only need to get tough on prices and procurement. We also need to align incentives in support of prudent prescribing, including faster uptake of those new drugs that actually add value to the system.

Where else could the system expand?

One of the reasons why the panel proposed a new refundable health tax credit was to help deal with the growing burden of out-of-pocket spending. That burden is a direct function of medicare's narrow scope of coverage, and it hits lower-income and older Canadians hardest. As we said in the report, the tax credit approach is partly about buying time until we figure out how to modernize medicare. But realistically, there will always be some services that are not covered by the public purse. The tax credit proposed by the panel explicitly aims to provide some support to lower income Canadians.

With the provinces managing health care delivery, what do you see as the role of the federal government? How much potential is there for change to flow from that level?

We were surprised in our travels that a lot of stakeholders wanted to see Ottawa play more of a national brokering role. Of course, Quebec wasn't keen. And we certainly didn't hear calls for the federal government to act as an overseer or use its spending power to impose new conditions on provincial and territorial systems. But health care leaders in smaller jurisdictions made it clear that they could do with some working capital and support from a national centre of excellence in health care transformation. Even in the larger provinces, we heard lots of support for an innovation fund, and calls for Ottawa to facilitate national collaboration in areas such as payment reforms and procurement.

But hasn't the federal government been going the other direction, getting less involved?

Looking at things from a federal perspective, the panel understood why Ottawa had stepped back from trying to impose conditions on its health care transfers... In effect, Ottawa gets blamed for problems in health care but doesn't have constitutional authority to make changes.

The reality, however, is that Conservative and Liberal governments in Ottawa created medicare in three key legislative steps: Cost-sharing for universal hospitalization insurance in the 1950s; cost-sharing for medical services insurance in the 1960s; and consolidation of cost-sharing conditions under the Canada Health Act of 1984. Canada is still one country, and the world looks at medicare as a national program. Like it or not, Ottawa can't simply throw money over the wall and walk away.

That's why we felt there had to be a new model. And that's where a national innovation centre and innovation fund come into play. Set up arm's-length from the political apparatus in Ottawa, those linked initiatives could have a nation-wide impact.

Ottawa has tried to buy change in the past with a variety of federal-provincial accords and with earmarked funds targeting reforms. All those funds, however, were ultimately passed on to the provinces and territories on a formulaic basis. That's simply not an effective way to speed up innovation in any system.

The main political debate seems to be about whether increasing transfers at the greater of the rate of GDP growth or three per cent is enough. To what degree is the solution a matter of putting in more money? Politicians are often looking for improvements that don't cost anything. Is that realistic?

Champions of provincial autonomy want Ottawa to boost transfers and stay out of the way. It's pretty hard, however, to insist that the federal government should keep growing transfers at six per cent compounded annually, when the economy is growing at a much slower rate, and when Canadian health care spending is well above the OECD average. At the same time, it's hard to imagine that some of the smaller provinces are going to be able to manage the impact of population aging on their finances and on their health and social programs. That's why, no matter who wins the election, political and fiscal pressures may force the next federal government to try out a health care innovation fund and national innovation centre.

We believe, as do many stakeholders, that a federal innovation fund could be a very cost-effective investment, no matter what happens with transfers. This isn't some instant billion-dollar cash call. We proposed gradual growth of spending to a $1 billion level, depending on fiscal circumstances, and depending also on whether the fund was having a measurable impact. Remember that even $1 billion is under one-half of one per cent of the current federal budget. In short, getting started on an innovation fund doesn't depend on growth in revenues or a budget surplus. It just requires some political courage to reallocate a very small fraction of existing commitments.

How would you say the panel's work has been received?

In our consultations and again after the report's release, we've heard a lot of support for a national innovation fund and agency. Some fans have mixed feelings, because they'd like any new money to go first to new programs, like pharmacare. But it's been an interesting groundswell, driven, I think, by a sense everywhere that we have to break the gridlock in Canadian health care.

Some observers noted the panel's report was released with little fanfare. What did you make of that?

We had excellent collaborations with Health Canada and the minister was principled in our dealings with her. Although the report didn't receive a warm welcome from the powers that be, it has taken on a life of its own, and been widely endorsed by key stakeholder groups. We're also relieved that, unlike Roy Romanow's 2002 report [on The Royal Commission on the Future of Health Care in Canada], ours was not immediately criticized by the provinces and territories.

I've read some speculation that our call for new spending explains why the report got a chilly reception. That's simplistic. We'd been talking about an innovation fund with the government for months. Furthermore, Mr. Harper and his team are seasoned strategists. If an innovation fund was the only problem, government spokespeople could have finessed that away in thirty seconds.

In my view, any official unhappiness with our report had less to do with money and machinery, and much more to do with a question of principle: Should Ottawa re-engage with provincial and territorial health care in some way?

With a federal election on, have you seen any of the parties or leaders embrace the changes the panel called for? What questions do you think reporters should be asking the politicians?

Leaders should be asked if they are prepared to have the federal government play any role in national health care apart from joining procurement consortia and haggling over the level of transfers. If the answer is "No," please give that leader some points for honesty and clarity, even if you believe, as do I, that it's the wrong answer. If the answer is "Yes," then please follow up with questions to determine how they intend to collaborate with the provinces and territories, and what goals they have for a renewed national partnership in health care. Assign points based on the quality of the answers.

You note there have been many, many panels and experts offering advice on health care in the past. Why in your view is it so hard to make changes to the system? Do the politicians have good reason to be wary?

Health care has always been a political minefield, in Canada and elsewhere. People all over the planet put a huge premium on their health. That means doctors and nurses in particular are tough political opponents. They are linked to something essential to everyone. They interact with millions of Canadians each year. And they are credible in ways that politicians will never be. Making change is also hard because, in the broad public sector, each health care institution and agency aggressively promotes and defends its indefinite existence.

Above all, we have a worrisome deficit of long-term thinking in business and government alike... One indicator of the problem is the growing number of government relations consultants. I'm sure that some of those consultants care passionately about the broad public interest. However, their job is ultimately to advance each client's agenda on a short-term basis. As such, they are not just a symptom; they are also vectors who spread short-termism as a political disease.  [Tyee]

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