OP-ED: Taking the politics out of the public vs private health care debate

"Faced with unprecedented waiting lists, provincial governments are increasingly turning towards private clinics to deliver publicly-funded health care."

Source: Rawpixel

Author: Bacchus Barua

Faced with unprecedented waiting lists, provincial governments are increasingly turning towards private clinics to deliver publicly-funded health care. While this is a proven strategy used by more successful universal health care systems around the world, it’s important to ensure that these clinics operate on a level playing field that is depoliticized, prioritizing patients over politics. A critical step toward achieving this is reforming how all hospitals – government and non-government – are funded.

Let’s be clear – Canada’s current approach to universal health care is little more than a lofty promise that is increasingly at odds with the reality on the ground.

Recent data from SecondStreet.org reveals that at least 3.7 million (likely much higher - as many as 5.8 million) Canadians are waiting for surgery, a diagnostic scan, or specialist appointments. Even emergency rooms, once a reliable fail-safe, are failing. The Montreal Economic Institute found nearly eight per cent of the patients left the ER without being treated – a 35 per cent increase since pre-pandemic levels in 2019.

Unsurprisingly, the majority of Canadians (64 per cent) believe the system needs major change. While the road to reform may be long and winding (cue Paul McCartney), an obvious first step is increased collaboration with third-party clinics to deliver publicly-funded care. This would mean an immediate boost in capacity without expensive capital investments.

Canadians understand this approach makes sense. A recent IPSOS poll found that most respondents support increased access via “independent entrepreneurs”, and almost two-thirds favour allowing private entrepreneurs to manage some public hospitals (so long as medically necessary care is fully reimbursed by the government).

This approach also aligns with our international peers. A new report examined eight universal health care countries that outperform Canada, with notably shorter wait times for elective surgery. All eight rely on a larger proportion of non-government hospitals than Canada (one per cent), as defined by the OECD. This ranges from seven per cent in Sweden, to over 75 per cent in Germany, Switzerland and the Netherlands. These facilities serve as both pressure-valves for the public system as well as partners within the universal health care framework.

Consider St. Göran’s Hospital in Sweden, owned by the government, but managed by Capio – a private, for-profit company. Consistently ranked as Stockholm’s top emergency hospital for quality, St Göran’s provides care to patients in the public system and reported the shortest wait time (31 minutes) to see a doctor among emergency hospitals in the region in 2019. Remarkably, this high level of quality is achieved at about 15-30 per cent lower cost to the public purse compared to publicly managed hospitals.

In Australia and France – both primarily tax-funded universal health care systems – about half of all hospitals are non-government. In the Netherlands, all major hospitals are non-government institutions that negotiate prices with insurers and compete within a regulated framework.

However, the study also found another key difference – the widespread adoption of patient-focused financing, specifically activity-based funding (ABF) to compensate both government and non-government providers. Under ABF, governments set a rate for specific services (e.g. $10,000 for child birth, $20,000 for knee surgery) regardless of where they are provided. Government hospitals, non-profit or for-profit clinics will then receive those amounts after delivering care to patients.

This contrasts sharply with Canada’s outdated global funding model. Most provincial governments tend to provide annual lump-sum transfers to public hospitals based on historical trends. Not only does this model ignore the true demand for services in real time, but it treats patients as costs – chipping away at a predefined budget with each visit.

Worse, many of the governments that do contract non-government clinics (Alberta, Saskatchewan, and Ontario for example) have become embroiled in allegations of sweetheart deals – lobbying, improperly awarded contracts, and inflated fees. Whether the allegations are true or not, these issues can arise because contracts for private clinics are individually negotiated and renewed, with the volumes and compensation determined by politicians.

A shift towards ABF offers a potential solution for both issues. By paying all providers – government and non-government – the same rate per procedure every time a patient walks through the door, ABF incentivizes care, encourages transparency, and eliminates politicized contract negotiations. Money follows the patient, not the politician.

It’s no coincidence that Switzerland, the Netherlands and Germany – the three countries with the shortest wait times for elective surgery and highest levels of collaboration with non-government health care providers – primarily use ABF to fund them. These systems suggest it’s the combination of reforms – collaboration and compensation – that delivers results.

Quebec has had some success with moving in this direction and it’s encouraging to see Alberta announce that it will embrace this approach in the future. As provincial governments across Canada increasingly partner with the non-government sector to deliver publicly funded care, they should embrace the opportunity to reform how healthcare is funded. A shift towards ABF would incentivize higher output and transparency, create a level playing field, and depoliticize health care decisions – a winning combination for patients and taxpayers.

Bacchus Barua is Research Director at SecondStreet.org