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The Fundamental Flaws in the Canadian Healthcare Delivery System

Posted Oct 09 2009 10:03pm

I recently attended the Executive Edge conference in Toronto that focused on various aspects of clinical lab management in Canada. For me, one of the most impressive lectures was delivered by Nadeem Esmail, Director of Health System Performance Studies at The Fraser Institute (see: Demographics, New Technologies, and Health Care ). He presented a critique of the Canadian healthcare delivery system from the perspective of an economist and healthcare analyst. Given that the U.S. is now enmeshed in a prolonged debate about how to improve our own system, I thought that it would be useful to present the key points of his analysis of a system admired by many in the U.S.:

  • Canada lags behind most other countries with similar universal healthcare systems in terms of capital expenditures for expensive diagnostic and therapeutic devices such as MRI, CT, and PET scanners as well as lithotriptors (see, for example, slides 4, 6, 7, and 8).
  • Canadian physicians, when polled, express the belief that their ability to deliver care has gotten worse in the past five years (slide 13). If the physicians concede this, I suspect most patients would hold the same opinion.
  • Wait-times in Canada for MRI studies for 1994 to 2008 have have varied from eight to ten weeks (slide 37). I don't know the comparable figure for the U.S. as a whole but I suspect that its about one quarter to one third of that in Canada. One of the debates here is whether we have too many MRI devices with some then underutilized.
  • These problems in Canada cannot be attributed to any lag in per capita spending. Slide 40 shows age-adjusted health spending as a percentage of GDP in the 28 OCED (Organization for Economic and Co-operative Development) countries. Canada ranks second from the top, next to Iceland in terms of its spending for healthcare.

Nadeem explained the essence of the Canadian healthcare problem in the following way:

  • Canadian politicians at the provincial and national level, much like their colleagues south of the border, are most interested in getting re-elected. Laboratory analyzers and radiology imaging devices don't vote but nurses and other hospital employees do have this privilege. Healthcare expenditures by the government are thus primarily directed toward salary increases, particularly to workers represented by politically strong labor unions. Nadeem illustrated this fact by saying that a hospital cook in Vancouver makes more than a chef working in the finest restaurant.
  • This problem is compounded by the fact that hospital executives work with what Nadeem called "soft" budgets. They generally receive the same budget allocation for their hospital as the previous year plus some modest percentage increase in good years. They thus "sit" on their resources and resist large capital expenditures that might be necessary to stay abreast of new technology. Canadian patients have little recourse but to utilize the hospitals in their neighborhood because the healthcare delivery system is a national monopoly. Of course, they can always play the "medical tourism card" if the queues are too long in Canada or they absolutely require more sophisticated imaging technology quickly.
  • Nadeem favors conversion to "activity-based" healthcare funding model such as that used in Switzerland. Hospital budgets there are based on the number of patients treated during the year, which focuses the attention of hospital executives on delivering quality care and competing with other hospitals. In other words, the Swiss system tends to be more patient-centric rather than budget-centric. The federal funds to support the universal healthcare system are allocated to the health insurance companies which, in turn, favor those hospitals that provide the highest quality care.
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