The Future of Health Care
Romanow Commission Presentation

Halifax, Nova Scotia
April 17, 2002

COMMISSIONER ROMANOW – I would now like to call on the Atlantic Institute for Market Studies. I have listed two presenters, Brian Lee Crowley and Dr. David Zitner. I hope I’ve pronounced the names, maybe three or are there two? I have those names identified correctly?


COMMISSIONER ROMANOW – And thank you very much for coming. Thank you for the wait and the floor is yours. Welcome.

BRIAN CROWLEY – Mr. Commissioner, thank you so much for the kind invitation to be here today. Given the shortness of the time we have available, we would like to move directly into our presentation.

I am Brian Crowley. I am the president of the Atlantic Institute for Market Studies, which is a public policy think tank. The Atlantic Institute for Market Studies is a public policy think tank based here in Halifax.

I am also a member of the Premier’s Advisory Council on Health in Alberta, the Mazankowski Commission.

My colleague, Davit Zitner, is an MD, Director of Medical Informatics at Dalhousie University and Fellow in Health Care Policy at my Institute.

So much of the current debate, Mr. Commissioner, about health care focuses on the question of the role of the private sector. And just judging by some media reports I saw earlier today, you for instance are reported to have made some comments recently on what the private sector needs to do in order to earn a place within public health care provision in Canada. That is the area that we thought we would focus our comments on today.

COMMISSIONER ROMANOW – I didn’t meant it only private sector, but anybody who advocates it, yes.

BRIAN CROWLEY – Well, and that’s exactly the part that we are going to come to.

The private sector, if we could talk about that for a moment, the private sector is subject to government regulation where it is thought that competition alone may not be sufficient to guarantee high quality goods and services, where consumers may be thought to lack the knowledge to make fully informed choices.

For example, governments regulate many aspects of the production quality and safety of food. They set minimum standards which providers are, of course, generally allowed to exceed, on hygiene, freshness, quality of raw materials, working conditions, use of therapeutic agents, pesticides, many other factors.

They have to keep meticulous records. And they are often able to respond to government and other organizations with large quantities of up-to-date and comprehensive information supplied by farmers, ranchers, veterinarians and others. They require manufacturers to disclose ingredients, and even the age of product on sale to the public.

But where the government is regulating itself, Mr. Commissioner, in this particular instance, in its provision of health care services, the picture is actually quite different.

Government health authorities, for instance, have failed to set standards for appropriate waiting times. I am just picking one example here. No one knows, no one knows in Canada how long the health care system thinks people should wait for particular treatments. There are no official standards. So no one can be held accountable for failing to meet the standard.

And in any case most publicly financed health organizations are not required to disclose to the public pertinent information about access and results or health outcomes. Not that it would do any good to require them to disclose it, because by and large they don’t collect it. I’m going to let David Zitner speak to that point in a moment.

In summary, an unregulated monopoly occurs when a particular group captures a market, has no competitors and is able to assess or judge its own performance without the need to comply with an external set of regulations.

Health Care in Canada, public health care, is largely an unregulated monopoly along these lines because: government defines what constitutes a medically necessary service: pays for all such services offered in Canada; forbids by law the provision of private insurance for these services; prevents, again by law, Canadians obtaining such services outside the government sanctioned channels; directly or indirectly administers and governs health care; and is responsible for defining, collecting and reviewing information on its own performance.

Now, fortunately, there are ways that we can improve this system. There are two ways that you can curb monopoly power. One is to inject competition. And the other is to regulate the monopoly. These are not mutually exclusive. You can inject some competition and you can inject some regulation.

In Canada the provincial governments in terms of health care provision are the monopoly. Provincial governments not only pay for necessary care, but they also govern, administer and evaluate the services they, themselves, provide.

Self-regulation in most fields has not worked and I don’t think it has worked well for Canadians in the health care field. And I think that’s demonstrated by the lack of meaningful information about the effectiveness and the efficiency of the Canadian health care system.

To inject the needed degree of competition while maintaining the valuable aspects of the single payer health insurance system – and I want to underline, Mr. Commissioner, that both David Zitner and I are very much in favour of the single-payer system that we have in Canada. But we think that we can inject into a single- payer system some degree of competition in the provision of health care services.

To do so, it is essential to unbundle the payment, the administration, the delivery and the evaluation functions. These are four separate functions: payment; administration; delivery; and evaluation.

The key is to realize that saying government should ensure that no one goes without medically necessary services, a sentiment with which David Zitner and I certainly agree, is not the same thing as saying only governments should provide those services.

In fact, as we are arguing in this presentation, when government is both the payer and the provider, the evaluator and the regulator of health care services, service to the public suffers. A proper separation of the payment from the service provision would allow provincial governments to set strict performance requirements like the appropriate waiting times that I mentioned, put the actual services out to tender.

Since the provinces would no longer be evaluating the performance of its own employees but the performance of competing arms-length providers, the cost of getting rid of poor performers is significantly reduced. Because what we want is to put resources in the hand of high quality, low-cost providers and move resources away from poor quality high-cost providers.

The principle, in fact, that we’re suggesting here is a principle of neutrality on the part of the public organization that is purchasing health care services on behalf of the public. It should be neutral between all providers of health care services and they should purchase health care services from those people who are providing the best quality at the lowest cost.

To win a contract, bidders would have to undertake to meet the performance criteria that are set for access and results as well as meeting cost targets.

The insurer, that is to say the public organization doing the contracting, would include the usual commercial penalties for non-performance in the contract. And as Sweden and other countries have shown, this approach can result in significant cost savings and increased efficiencies while improving patient satisfaction.

Additionally, because I talked about several functions that needed to be unbundled, an independent evaluator, possibly as part of the Auditor General’s office, could be responsibility for evaluation and providing a regular report to the public about access and outcomes.

Increasing competition by unbundling the insurance, the governance, the administration, the health services delivery and the evaluation functions will significantly alter the incentives within the health care system. It will become more worthwhile to collect information about the performance of various health care institutions and providers.

Government regulators will be better able to set appropriate yardsticks for performance in the health care system. Consumers will be better informed about the costs and the benefits of both their individual health care choices and the value that they’re getting for the billions of tax dollars now being devoted to health care.

By the way, I believe that these recommendations are quite consistent with the recommendations of the Mazankowski Commission, of which I have the honour to be a member. But I want to make it clear that I am not here in any way as an official spokesman for that group.

I would now like to ask my colleague, David Zitner, Director of Medical Informatics at Dalhousie to add a few comments on some aspects of our presentation.

DAVID ZITNER – Thank you, Brian. Thank you for hearing us today.

The majority of Canadians feel that fixing health system management will dramatically improve the system. But improving the system by improving management is virtually impossible, because we don’t collect the information that we need in order to manage.

No health jurisdiction in Canada routinely collects information about access to care. We don’t know how long people are waiting, who’s waiting, what the consequences are. Although some groups like cardiology, for example, do a very good job at doing it. But as a system, we don’t do it.

Partly, we believe it’s not available because we’re in a circumstance where government does actually evaluate and regulate itself and hasn’t insisted that proper information be available.

In fact, the Canadian Institute for Health Information in their technical notes says that the information in the discharge abstract database, which is one of their largest productions for Canada, they say that the information in the database might not be accurate. This is the information which people are using to manage and monitor our health care system.

So we have two recommendations related to information. One is that as a first priority, health jurisdictions develop and implement appropriate information systems to measure access and results and use the new data to build consensus towards other health system changes.

And the second information recommendation is that proposals to change health care delivery including those produced by your own Commission should only be considered if they are accompanied by a testable estimate of how the new structures and processes will influence access to care or patient or population health.

In fact, this recommendation is really not particularly radical, since in 1994 the Federal Provincial Territorial Deputy Ministers of Health unanimously committed to provide to Canadians information about access and results as changes are implemented to the health care system. This hasn’t happened. Thank you.

COMMISSIONER ROMANOW – Thank you very much, both of you, for coming and I very much appreciate it. I know the Atlantic Institute has done a lot of good studies and they have been very interesting. I haven’t read them all, but ones that I have certainly have been helpful to the Canadian debate on general issues. This is no exception.

If I may start with Dr. Zitner first, only because he was last in the presentation, may I ask this. Is it possible, Doctor, and Mr. Crowley, if you want to amend or agree or however you would like to comment, fair enough. If we could get information systems and the measurement of outcomes based on the information goal-setting put into place in order to get proper management. I agree with you, as a general proposition, you cannot manage something if you don’t know where your head is. They say if you don’t know which way you’re going any old road will do. So you got to know what road.

Is there anything in your judgement, Doctor, that prohibits a publicly-funded, publicly-administered system from being properly managed with information and outcomes?

DAVID ZITNER – No, there isn’t anything that prevents it from happening. However, Canadians have invested millions and maybe billions of dollars in information systems yet no Canadian jurisdiction gives us the information that we need. In Canada today the chart of every patient discharged from a hospital goes through a detailed review. Somebody goes through each page of your chart and then sends that detailed abstracted information to Ottawa.

They don’t bother to ask how long did you wait for care, did you get better or worse? At one of the hospitals within Nova Scotia, a 400-bed hospital, it costs about a million and a half dollars. The Canadian Institute for Health Information has received two transits of $95-million. We still don’t have that information.

So while it’s clearly possible to get the information, we haven’t been getting it. And part of it is, I think, a discussion between federal and provincial governments. But that’s another piece.

BRIAN CROWLEY – With your permission, Mr. Commissioner, I’d add a further comment to that. The burden of our presentation today has been that not that it is impossible for the public sector to gather and use this information, but rather that the incentives within the public system militate against them doing so.

So as my colleague, David Zitner, often says, no good deed in the Canadian health care system goes unpunished. It may be that there are a lot of people with good intentions trying to do a good job who are gathering all kinds of information. But they have not yet, in spite of millions of dollars spent and a lot of effort, produced anything that is useable in terms of hard information that would guide good decision-making within the health care system. And we think that that’s due to the incentives within the health care system.

COMMISSIONER ROMANOW – Now I agree also on the incentives. I think proper incentives, and if I may say so, proper disincentives working in concert would make it efficient. But again, not to be argumentive but so that I understand, and I do this with every presenter so sometimes you know you’re not being singled out.

Is there anything in your judgment in the Atlantic Institute which inherently prohibits the — we’ve talked about information and outcomes, but let’s add into that incentives, as well. On the assumption that one was to put aside for the moment the competition factor, which I know that you advocate or is it your view that it’s only through competition with such incentives and such information data and outcomes be finally collected and measured.

BRIAN CROWLEY – Well, it would be our view, Mr. Commissioner, that it would only be when we get a kind of separation between the people evaluating the outcomes and the people providing the services that we will get the health information that we need.

In other words, the argument that we’ve made today is that the people who provide health care services in the public sector are in a conflict of interest, because they are being asked to evaluate their own work. And as long as that’s the case, you know, we can put all kinds of pressures on them and so on. But the incentives against them gathering information that will be used to hold them accountable for the results they produce I think is an insurmountable obstacle.

COMMISSIONER ROMANOW – Well, just on the argument of insurmountability, because it’s an interesting discussion and debate, what if there was the establishment of something, for the lack of a better name and it’s not quite well defined, but I throw it out, it as a Canadian Quality Council which would be appointed in sight of the Swedish model. Sweden has a Swedish Board of Health and Social Services which tries to take into account quality assessments much like CIHI but expanded beyond CIHI.

So here we have an arms-length — I know there’s always the argument about who the appointer is, and the like. But in Sweden, they’ve been able to do it and it’s established over a long period of time and this is now viewed as a body of experts and public, as well. And they’re being able to say to, in our case a province, you’re not succeeding on wait list because the goals set with respect to cardiac care or ophthalmology, you name it, elsewhere, you’re not following.

Is it possible to get the debundling in a way which falls short of a complete unbundling, my words, which I think is implied in your views by something like a Canadian Quality Council? Or are we back fundamentally to the point of view that you have to have in effect a separate apparatuses for delivery and administration and the like?

BRIAN CROWLEY – Well, you’ve raised a number of points there. Let me see if I can unbundle them a bit, if I may. If you go back to our remarks, one of the things we said was an independent evaluator, perhaps, we said as part of the Auditor General’s office, but Canadian Quality Council could be responsible for evaluation and providing regular reports to the public about access and outcomes.

The more we can do to put in place a strict division between the people doing the evaluation and the people providing the services, the better off we’ll be. If in addition to that we can introduce an element of competition, and I want to make it very clear, Mr. Chairman, that the principle that we underlined in the presentation was one of neutrality. It’s not anti-public sector provision or pro-private sector provision. It is pro top quality provision to Canadians.

What we want to do is focus on the quality of the outcomes for Canadians. And to an extent that we can introduce that level or degree of competition, plus an arms-length evaluator, I think we will have moved a tremendous distance to where we want to go.