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The Fraser Institute, Better Treatment, Better Care (4)

Better Treatment, Better Care (4)

hospitals that deliver private care or for profit anyway i mean the mayo clinic

is not for profit john hopkins university is not-for-profit cleveland

clinic i think is not-for-profit as well and so that's also another another model

that could be built in to the system do you how common is that to have a

not-for-profit model as an alternative to publicly delivered

uh very common and private not-for-profit and private for-profit

the meaningful distinction is who is the residual claimant of the profit in a

for-profit obviously is the shareholder the owner

the shareholders plural whereas in a not-for-profit it's the entity because

there's no ability to redistribute that profit it doesn't mean that in a private

organization a not-for-profit isn't seeking to have a surplus or a residual

because that does allow them then to fund things like research to fund all

the things that create that prestige around a facility like johns hopkins or

mayo that's distinctly different from a government business enterprise where the

residual simply goes back to government the incentive is to ensure that all of

the money is consumed in whatever manner not necessarily in a patient-focused

manner depending on the incentives of the payment system um one of the

interesting arguments that we often here in canada is well if we if we allow

private hospitals to exist in canada the americans would immediately come up and

create an american health care system but i think you make the exact right

point so we're afraid of the mayo clinic coming to toronto we're afraid of johns

hopkins setting up in downtown calgary uh we're afraid of cedar sinai coming to

downtown vancouver what are we afraid of when we have world-class healthcare

facilities delivering some of the best healthcare in the world south of the

border yes there are issues in the american universal the american system

and i think people who are very focused on universality don't entirely

understand the issues that are happening south of the border but there is some

incredible care down there and some incredible knowledge and wouldn't it be

wonderful if we had the opportunity to access some of that in this country i

love the way you described this though as we're not talking about taking money

off the top it's what happens to the residual so in a for-profit model

residual from delivering good service at a better cost and attracting more

patients delivers that residual that goes to

shareholders the residual in a non-profit would again go back to

reinvestment in the nonprofit and the residual in the public sector would go

back to government but wouldn't that be the solution wouldn't it be telling the

hospital system hey if you get some residual you can buy that fancy new

equipment you can expand that wing of the hospital you can hire more staff

could you could you create a model within our public system that would give

the incentive for efficiency knowing that the reward of that would stay

within the hospital i think changing the way we fund

hospital characters in a manner create that approach so activity-based funding

currently in canada we fund hospitals largely on global grants there's a small

portion of activity activity-based funding in ontario but that's kind of it

right now and so every year hospitals get a great big bag of money and they're

told go look after people and the incentives are fairly clear then we want

to treat as few patients as possible fill the hospital with reasonably

healthy patients because they don't cost very much to care for bed blocking is a

very interesting activity in that approach

inefficiency in the use of or is actually beneficial to the hospital from

a budgetary perspective because every patient is a drain on the budget

if we turn that around and have money follow patients to hospitals instead of

the hospital we'll have some fun for you to exist

because obviously there are things that occur that really can't be actively

funded but generally speaking every patient is going to bring to the door a

small bag of money with them based on the medical condition they're presenting

with and certain unique characteristics that will

impact the cost of their care and the more patients you treat the more you

will earn hospital and the more patients you'll be able to treat the more you'll

have this residual to do whatever you want with internally within your

facility that turns the system entirely on its head and also you do have a

system very much like this where hospitals now if they were to expand

invest in new medical technologies invest in better use of their or better

scheduling systems uh change the way they're you're operating services so

that they're reducing costs where it doesn't make sense to patients and

focusing on patients attracting patients to the hospital shorter waiting times

would be one of the options in there we're creating that effective market

system with government-owned hospitals having private for-profit and

not-for-profit delivery private competitive delivery inside that

construct further enhances that because of the incentives that are associated

with private ownership both for and not for profit relative to government i

think the current system is a great example of how not to do it exactly

though we have any number of investments that have been made where the hospital's

gone raised the money charitably created and built a new wing but it doesn't open

because the government won't fund it they bought a new mri and it goes in a

closet because the government won't fund it activity-based funding now changes

that system entirely and leaves it up to the hospital to

decide what investments make sense and what don't

maybe aside from capital but certainly on the operating side you know it

doesn't make the health administrators look very good the way you've described

this it to to because you think that people

get into the caring profession because they want to deliver the best possible

care to as many patients as possible and make sure that they have as many great

outcomes as possible it seems bizarre that someone would go into that

caring profession with the idea of not using the resources to full capacity and

not getting the best equipment and reducing the amount of operating room

room space i there's there's something that i think i'm kind of missing about

what what an administrator is trying to achieve with that

i don't think it's about the people i think it's about the incentives that are

so that are ingrained in the system for those people we have some of the best

medical practitioners in the world we know this but when you have a physician

who has a limit on how much operating time they can receive when you have

young physicians who can't get jobs and accessing operating rooms

it's not about the physician that we have a long waiting list it's because

the system isn't allowing them to operate

we may have very well intentioned hospital administrators who want to do

the very best for patients but they know every year they get a budget and they

can't exceed that budget or if they do there will be some difficult

conversations and ultimately you'll be funded in but they won't be fun

conversations and so the incentive for them is to ensure that

they don't exceed that budget which means the summer slowdown for surgical

services the christmas slowdown it assists them on a budgetary basis it's

about the incentives in the system it's not about the people we have great

people in the health care system they just need the right incentives

you know i think this became tragically apparent in the last year as we were

dealing with the coveted pandemic because we had no capacity in our our

hospital beds our acute care beds and no real capacity in our icu and you

mentioned this that there's an incentive for

hospitals to keep relatively low-cost

patients in the system so you mentioned the term

bed blockers so is that what's happening is that to have the bed full

it at least allows for some just i'm trying to understand it i'm trying to

i'm really struggling just to see this through because it would seem to me

you'd want to have that patient in an appropriate

facility in a long-term care facility as quickly as possible to open up that bed

so that you could treat more patients so i'm i'm trying to understand why the

incentive is to keep those beds blocked with patients who shouldn't be there

if you think from a budgetary perspective every patient who comes to

the door increases the cost of the hospital and a patient with a higher

level of acuity or more serious condition will increase cost more than a

patient who is reasonably healthy so a person who's coming in and being treated

now is in a bed in the hospital which is limiting access to that particular bed

and if that patient is in reasonably good shape we're now basically providing

hospital hotel services for that individual so the medical care

requirements quite low which makes them less costly than clearing that bed and

allowing the next difficult patient in i think a lot of what we're suffering

though is years of chronic underfunding or years of what might be coined

political intended politically intended funding

we did an analysis in british columbia a number of years ago now looking at

non-medical workers in the hospital system and found pay differentials of 20

or 30 percent more in a hospital for services that in many ways are not

different from hotel services when a hospital is in some ways a giant hotel

for sick people it still needs bakers there's no reason they should make

thirty or forty percent more than a basement at a downtown hotel but

apparently the bread is very good at the hospital

there's cleaning services those are a little more difficult but the pay

differential was only about 17 18 percent payroll were making 30 or 40

percent more chefs were making more it's interesting where the money is gone

and you can sort of follow the political will on it and we've got a health care

system i recall and we have to rewind a little bit there was a westjet flight

that was coming in it had an event in the air it had to land in calgary on an

emergency and one of the news reports that came out shortly afterwards was if

this plane had had a serious event and we had a large number of injuries we

actually don't have enough emergency space in the city of calgary a city of

over a million people to look after one plane of individuals 150 200 people

in serious medical distress this is in a modern advanced economy and one of the

best funded universal access healthcare systems in the developed world to put a

point on it in one of the best funded systems in the country alberta is a

reasonably wealthy province and we couldn't deal with an airplane landing

at the calgary airport with a serious number of injured individuals because of

a serious turbulence event we're now going through a pandemic with this same

health care system it's years of underfunding that have brought us to

this point it's well time we fix this thing just in case this happens again

let's be ready and prepared with a better health care system so when you

see years of underfunding do you mean funding the wrong way or do you mean

actually not enough dollars funding the wrong way we've got more


Better Treatment, Better Care (4) Mejor tratamiento, mejor atención (4) Meilleur traitement, meilleurs soins (4) Melhor tratamento, melhores cuidados (4) 更好的治疗,更好的护理 (4)

hospitals that deliver private care or for profit anyway i mean the mayo clinic hospitals that deliver private care or for profit anyway i mean the mayo clinic

is not for profit john hopkins university is not-for-profit cleveland is not for profit john hopkins university is not-for-profit cleveland

clinic i think is not-for-profit as well and so that's also another another model cli nic i think is not-for-profit as well and so that's also another another model

that could be built in to the system do you how common is that to have a that could be built in to the system do you how common is that to have a

not-for-profit model as an alternative to publicly delivered not-for-profit model as an alternative to publicly delivered

uh very common and private not-for-profit and private for-profit uh very common and private not-for-profit and private for-profit

the meaningful distinction is who is the residual claimant of the profit in a the meaningful distinction is who is the residual claimant of the profit in a

for-profit obviously is the shareholder the owner for-profit obviously is the shareholder the owner

the shareholders plural whereas in a not-for-profit it's the entity because the shareholders plural whereas in a not-for-profit it's the entity because

there's no ability to redistribute that profit it doesn't mean that in a private there's no ability to redistribute that profit it doesn't mean that in a private

organization a not-for-profit isn't seeking to have a surplus or a residual organization a not-for-profit isn't seeking to have a surplus or a residual

because that does allow them then to fund things like research to fund all because that does allow them then to fund things like research to fund all

the things that create that prestige around a facility like johns hopkins or the things that create that prestige around a facility like johns hopkins or

mayo that's distinctly different from a government business enterprise where the mayo that's distinctly different from a government business enterprise where the

residual simply goes back to government the incentive is to ensure that all of residual simply goes back to government the incentive is to ensure that all of

the money is consumed in whatever manner not necessarily in a patient-focused the money is consumed in whatever manner not nece ssarily in a patient-focused

manner depending on the incentives of the payment system um one of the manner depending on the incentives of the payment system um one of the

interesting arguments that we often here in canada is well if we if we allow interesting arguments that we often here in canada is well if we if we allow

private hospitals to exist in canada the americans would immediately come up and private hospitals to exist in canada the americans would immediately come up and

create an american health care system but i think you make the exact right create an american health care system but i think you make the exact right

point so we're afraid of the mayo clinic coming to toronto we're afraid of johns point so we're afraid of the mayo clinic coming to toronto we're afraid of johns

hopkins setting up in downtown calgary uh we're afraid of cedar sinai coming to hopkins setting up in downtown calgary uh we're afraid of cedar sinai coming to

downtown vancouver what are we afraid of when we have world-class healthcare downtown vancouver what are we afraid of when we have world-class healthcare

facilities delivering some of the best healthcare in the world south of the facilities delivering some of the best healthcare in the world south of the

border yes there are issues in the american universal the american system border yes there are issues in the american universal the american system

and i think people who are very focused on universality don't entirely and i think people who are very focused on universality don't entirely

understand the issues that are happening south of the border but there is some understand the issues that are happening south of the border but there is some

incredible care down there and some incredible knowledge and wouldn't it be incredible care down there and some incredible knowledge and wouldn't it be

wonderful if we had the opportunity to access some of that in this country i wonderful if we had the opportunity to access some of that in this country i

love the way you described this though as we're not talking about taking money love the way you described this though as we're not talking about taking money

off the top it's what happens to the residual so in a for-profit model off the top it's what happens to the residual so in a for-profit model

residual from delivering good service at a better cost and attracting more residual from delivering good service at a better cost and attracting more

patients delivers that residual that goes to patients delivers that residual that goes to

shareholders the residual in a non-profit would again go back to shareholders the residual in a non-profit would again go back to

reinvestment in the nonprofit and the residual in the public sector would go reinvestment in the nonprofit and the residual in the public sector would go

back to government but wouldn't that be the solution wouldn't it be telling the back to government but wouldn't that be the solution wouldn't it be telling the

hospital system hey if you get some residual you can buy that fancy new hospital system hey if you get some residual you can buy that fancy new

equipment you can expand that wing of the hospital you can hire more staff equipment you can expand that wing of the hospital you can hire more staff

could you could you create a model within our public system that would give could you could you create a model within our public system that would give

the incentive for efficiency knowing that the reward of that would stay the incentive for efficiency knowing that the reward of that would stay

within the hospital i think changing the way we fund within the hospital i think changing the way we fund

hospital characters in a manner create that approach so activity-based funding hospital characters in a manner create that approach so activity-based funding

currently in canada we fund hospitals largely on global grants there's a small currently in canada we fund hospitals largely on global g rants there's a small

portion of activity activity-based funding in ontario but that's kind of it portion of activity activity-based funding in ontario but that's kind of it

right now and so every year hospitals get a great big bag of money and they're right now and so every year hospitals get a great big bag of money and they're

told go look after people and the incentives are fairly clear then we want told go look after people and the incentives are fairly clear then we want

to treat as few patients as possible fill the hospital with reasonably to treat as few patients as possible fill the hospital with reasonably

healthy patients because they don't cost very much to care for bed blocking is a healthy patients because they don't cost very much to care for bed blocking is a

very interesting activity in that approach very interesting activity in that approach

inefficiency in the use of or is actually beneficial to the hospital from inefficiency in the use of or is actually beneficial to the hospital from

a budgetary perspective because every patient is a drain on the budget a budgetary perspective because every patient is a drain on the budget

if we turn that around and have money follow patients to hospitals instead of if we turn that around and have money follow patients to hospitals instead of

the hospital we'll have some fun for you to exist the hospital we'll have some fun for you to exist

because obviously there are things that occur that really can't be actively because obviously there are things that occur that really can't be actively

funded but generally speaking every patient is going to bring to the door a funded but generally speaking every patient is going to bring to the door a

small bag of money with them based on the medical condition they're presenting small bag of money with them based on the medical condition they're presenting

with and certain unique characteristics that will with and certain unique characteristics that will

impact the cost of their care and the more patients you treat the more you impact the cost of their care and the more patients you treat the more you

will earn hospital and the more patients you'll be able to treat the more you'll will earn hospital and the more patients you'll be able to treat the more you'll

have this residual to do whatever you want with internally within your have this residual to do whatever you want with internally within your

facility that turns the system entirely on its head and also you do have a facility that turns the system entirely on its head and also you do have a

system very much like this where hospitals now if they were to expand system very much like this where hospitals now if they were to expand

invest in new medical technologies invest in better use of their or better invest in new medical technologies invest in better use of their or better

scheduling systems uh change the way they're you're operating services so scheduling systems uh change the way they're you're operating services so

that they're reducing costs where it doesn't make sense to patients and that they're reducing costs where it doesn't make sense to patients and

focusing on patients attracting patients to the hospital shorter waiting times focusing on patients attracting patients to the hospital shorter waiting times

would be one of the options in there we're creating that effective market would be one of the options in there we're creating that effective market

system with government-owned hospitals having private for-profit and system with government-owned hospitals having private for-profit and

not-for-profit delivery private competitive delivery inside that not-for-profit delivery private competitive delivery inside that

construct further enhances that because of the incentives that are associated construct further enhances that because of the incentives that are associated

with private ownership both for and not for profit relative to government i with private ownership both for and not f or profit relative to government i

think the current system is a great example of how not to do it exactly think the current system is a great example of how not to do it exactly

though we have any number of investments that have been made where the hospital's though we have any number of investments that have been made where the hospital's

gone raised the money charitably created and built a new wing but it doesn't open gone raised the money charitably created and built a new wing but it doesn't open

because the government won't fund it they bought a new mri and it goes in a because the government won't fund it they bought a new mri and it goes in a

closet because the government won't fund it activity-based funding now changes closet because the government won't fund it activity-based funding now changes

that system entirely and leaves it up to the hospital to that system entirely and leaves it up to the hospital to

decide what investments make sense and what don't decide what investments make sense and what don't

maybe aside from capital but certainly on the operating side you know it maybe aside from capital but certainly on the operating side you know it

doesn't make the health administrators look very good the way you've described doesn't make the health administrators look very good the way you've described

this it to to because you think that people this it to to because you think that people

get into the caring profession because they want to deliver the best possible get into the caring profession because they want to deliver the best possible

care to as many patients as possible and make sure that they have as many great care to as many patients as possible and make sure that they have as many great

outcomes as possible it seems bizarre that someone would go into that outcomes as possible it seems bizarre that someone would go into that

caring profession with the idea of not using the resources to full capacity and caring profession with the idea of not usin g the resources to full capacity and

not getting the best equipment and reducing the amount of operating room not getting the best equipment and reducing the amount of operating room

room space i there's there's something that i think i'm kind of missing about room space i there's there's something that i think i'm kind of missing about

what what an administrator is trying to achieve with that what what an administrator is trying to achieve with that

i don't think it's about the people i think it's about the incentives that are i don't think it's about the people i think it's about the incentives that are

so that are ingrained in the system for those people we have some of the best so that are ingrained in the system for those people we have some of the best

medical practitioners in the world we know this but when you have a physician medical practitioners in the world we know this but when you have a physician

who has a limit on how much operating time they can receive when you have who has a limit on how much operating time they can receive when you have

young physicians who can't get jobs and accessing operating rooms young physicians who can't get jobs and accessing operating rooms

it's not about the physician that we have a long waiting list it's because it's not about the physician that we have a long waiting list it's because

the system isn't allowing them to operate the system isn't allowing them to operate

we may have very well intentioned hospital administrators who want to do we may have very well intentioned hospital administrators who want to do

the very best for patients but they know every year they get a budget and they the very best for patients but they know every year they get a budget and they

can't exceed that budget or if they do there will be some difficult can't exceed that budget or if they do there will be some difficult

conversations and ultimately you'll be funded in but they won't be fun conversations and ultimately you'll be fun ded in but they won't be fun

conversations and so the incentive for them is to ensure that conversations and so the incentive for them is to ensure that

they don't exceed that budget which means the summer slowdown for surgical they don't exceed that budget which means the summer slowdown for surgical

services the christmas slowdown it assists them on a budgetary basis it's services the christmas slowdown it assists them on a budgetary basis it's

about the incentives in the system it's not about the people we have great about the incentives in the system it's not about the people we have great

people in the health care system they just need the right incentives people in the health care system they just need the right incentives

you know i think this became tragically apparent in the last year as we were you know i think this became tragically apparent in the last year as we were

dealing with the coveted pandemic because we had no capacity in our our dealing with the coveted pandemic because we had no capacity in our our

hospital beds our acute care beds and no real capacity in our icu and you hospital beds our acute care beds and no real capacity in our icu and you

mentioned this that there's an incentive for mentioned this that there's an incentive for

hospitals to keep relatively low-cost hospitals to keep relatively low-cost

patients in the system so you mentioned the term patients in the system so you mentioned the term

bed blockers so is that what's happening is that to have the bed full bed blockers so is that what's happening is that to have the bed full

it at least allows for some just i'm trying to understand it i'm trying to it at least allows for some just i'm trying to understand it i'm trying to

i'm really struggling just to see this through because it would seem to me i'm really struggling just to see this through because it would seem to me

you'd want to have that patient in an appropriate you'd want to have that patient in an app ropriate

facility in a long-term care facility as quickly as possible to open up that bed facility in a long-term care facility as quickly as possible to open up that bed

so that you could treat more patients so i'm i'm trying to understand why the so that you could treat more patients so i'm i'm trying to understand why the

incentive is to keep those beds blocked with patients who shouldn't be there incentive is to keep those beds blocked with patients who shouldn't be there

if you think from a budgetary perspective every patient who comes to if you think from a budgetary perspective every patient who comes to

the door increases the cost of the hospital and a patient with a higher the door increases the cost of the hospital and a patient with a higher

level of acuity or more serious condition will increase cost more than a level of acuity or more serious condition will increase cost more than a

patient who is reasonably healthy so a person who's coming in and being treated patient who is reasonably healthy so a person who's coming in and being treated

now is in a bed in the hospital which is limiting access to that particular bed now is in a bed in the hospital which is limiting access to that particular bed

and if that patient is in reasonably good shape we're now basically providing and if that patient is in reasonably good shape we're now basically providing

hospital hotel services for that individual so the medical care hospital hotel services for that individual so the medical care

requirements quite low which makes them less costly than clearing that bed and requirements quite low which makes them less costly than clearing that bed and

allowing the next difficult patient in i think a lot of what we're suffering allowing the next difficult patient in i think a lot of what we're suffering

though is years of chronic underfunding or years of what might be coined though is years of chronic underfunding or years of what might be coined

political intended politically intended funding political intended politically intended funding

we did an analysis in british columbia a number of years ago now looking at we did an analysis in british columbia a number of years ago now looking at

non-medical workers in the hospital system and found pay differentials of 20 non-medical workers in the hospital system and found pay differentials of 20

or 30 percent more in a hospital for services that in many ways are not or 30 percent more in a hospital for services that in many ways are not

different from hotel services when a hospital is in some ways a giant hotel different from hotel services when a hospital is in some ways a giant hotel

for sick people it still needs bakers there's no reason they should make for sick people it still needs bakers there's no reason they should make

thirty or forty percent more than a basement at a downtown hotel but thirty or forty percent more than a basement at a downtown hotel but

apparently the bread is very good at the hospital apparently the bread is very good at the hospital

there's cleaning services those are a little more difficult but the pay there's cleaning services those are a little more difficult but the pay

differential was only about 17 18 percent payroll were making 30 or 40 differential was only about 17 18 percent payroll were making 30 or 40

percent more chefs were making more it's interesting where the money is gone percent more chefs were making more it's interesting where the money is gone

and you can sort of follow the political will on it and we've got a health care and you can sort of follow the political will on it and we've got a health care

system i recall and we have to rewind a little bit there was a westjet flight system i recall and we have to rewind a little bit there was a westjet flight

that was coming in it had an event in the air it had to land in calgary on an that was coming in it had an event in the air it had to land in calgary on an

emergency and one of the news reports that came out shortly afterwards was if emergency and one of the news reports that came out shortly afterwards was if

this plane had had a serious event and we had a large number of injuries we this plane had had a serious event and we had a large number of injuries we

actually don't have enough emergency space in the city of calgary a city of actually don't have enough emergency space in the city of calgary a city of

over a million people to look after one plane of individuals 150 200 people over a million people to look after one plane of individuals 150 200 people

in serious medical distress this is in a modern advanced economy and one of the in serious medical distress this is in a modern advanced economy and one of the

best funded universal access healthcare systems in the developed world to put a best funded universal access healthcare systems in the developed world to put a

point on it in one of the best funded systems in the country alberta is a point on it in one of the best funded systems in the country alberta is a

reasonably wealthy province and we couldn't deal with an airplane landing reasonably wealthy province and we couldn't deal with an airplane landing

at the calgary airport with a serious number of injured individuals because of at the calgary airport with a serious number of injured individuals because of

a serious turbulence event we're now going through a pandemic with this same a serious turbulence event we're now going through a pandemic with this same

health care system it's years of underfunding that have brought us to health care system it's years of underfunding that have brought us to

this point it's well time we fix this thing just in case this happens again this point it's well time we fix this thing just in case this happens again

let's be ready and prepared with a better health care system so when you let's be ready and prepared with a better health care system so when you

see years of underfunding do you mean funding the wrong way or do you mean see years of underfundin g do you mean funding the wrong way or do you mean

actually not enough dollars funding the wrong way we've got more actually not enough dollars funding the wrong way we've got more