Better Treatment, Better Care (5)

than enough money we've been one of the developer world's best funded healthcare

systems for many many years but they're not going where they need to be they're

they're directed into the wrong areas all right let's then talk a little bit

more about some of the other systems because i want

to see where the similarities are you went through in detail talking about

sweden one other aspect i wanted to ask you about though was

why is a private company incentivized to recapitalize was sort of interesting the

way you worded that as they were quite excited for this private hospital to

come in because then they went and fixed everything up

you just challenge those who think that that

is not what happens there's a i think many people have a misconception about

what it is that once you've made a profit what it is that owners do with

that profit um but why why would a private hospital rather than pay that

out as a dividend to a shareholder why would they recapitalize what would be

the point of that the perspective is on the long term

as the private operator is running the facility what they want to do is find

ways to get more patients through the facility efficiently at a high quality

so that they can see more patients and increase the resources available to the

hospitals money's following patients in the health care system i think one of

the best examples in sweden actually comes from nursing care

the nurses when the hospital was run by the government had often gone to the

administrators and said well if we make this change or that change we can see

patients more efficiently we can see more patients through the facility and

the administrators said well we'll kick it up the chain and we'll see what what

the chain brings down and eventually we'll make the change post privatization

the nurses would go to the administrator say well if you move this over there and

did that thing over there all of a sudden we could increase the number of

patients through the award the administrator went great that's more

patients through the facility that's an increase in revenues an increase in

profit let's make that change let's get it done

right now the nurses are more satisfied they're getting to do they have more

control they're getting to do the things they want the owner is more satisfied

because their profitability has gone up as a result of reinvesting that profit

for the long term for creating a business that has sustainability that

can see more patients ultimately eventually and why wouldn't that happen

in the public sector like you would think that there would be some incentive

if you do if you are doing all this rationing you're keeping the low-cost

bed blockers in place you're reducing the amount of operating room

time you'd think there'd be a surplus at the end that you would then be able to

to spend on the diagnostic equipment and improving the facility

why doesn't that happen in the public sector

again i think it comes back to the incentives if you go up to the hospital

administrator today said okay hospital administrator if we spend 200 000 over

here we can see 200 more patients next year the administrator will go okay so

now i'm going to take 200 000 from the budget i get every to look after people

to look after more people and i don't get any more money

that doesn't make any sense let's just keep doing things the way we are

it's fine that we don't have great patient throughput we could change the

way we fund the hospital now have activity-based funding

and that changes the incentives for the hospital administrator and brings in a

lot of that a lot of the incentives that are associated with private sector

activity because money is following patients changing the way we pay for

hospital care has a meaningful impact on how hospitals behave and how they react

to changes like this because it changes the reception of a patient from a cost

to someone bringing resources to the hospital and that is enhanced with

private competition but it's not actually a concert component

i know that this is such a central element to reforming the system that i

want to look at just a couple more jurisdictions to understand if it's

implemented in a different way let's talk a bit about australia and and i i

like talking about australia because they sort of have a similar history to

canada and so you'd think have we followed a similar route when it

when it comes to structuring our public services so tell us what happens there

australia is a very interesting country they've actually gone the direction of

encouraging high-income individuals to have private parallel healthcare

insurance so that they don't put a burden on the universal access

healthcare system so in australia there are there is cost

sharing for uh for services so there are some fees to be paid there is a top-up

system physicians can opt out of direct billing to government they can build

patients directly and ask patients to top up over the government fee or in

exchange for building government directly they only charge the government

fee when it comes to surgical services it

can be done in the private sector then in the public sector there's a sharing

of services there's a sharing of physicians there are some very

interesting tweaks to that what's fascinating about australia is there are

inducements to go into private healthcare insurance those inducements

were created uh in order to encourage people off the public waiting list into

the public hospital uh and ian harper from the university school of melbourne

at the time that actually looked at what happened to public hospital spending

what he found is that as these incentives were created for people to

privately insure for medically necessary services

the growth rate of public hospital spending capped off and so the

government was effectively saving itself money every year by encouraging people

to private insurance with subsidies because they didn't have to pay for the

public hospital care and there's a substantial amount of care in australia

that actually happens in the private parallel system and let's step back for

a minute and remember this is a universally accessible system access to

care regardless of ability to pay with shorter waiting lists than we have in

canada with lower expenditures as a share of gdp than we have in canada they

spend less they wait less and they encourage private sector insurance so

the idea being once you reach a certain level of income we don't want to

subsidize you anymore you should pay for it yourself that's that's the prevailing

attitude correct but you're also still paying

your taxes as a high income earner it is a

country not the center for canada so you're paying for the care of those in a

lower state of income for those in a higher state of at least an income terms

needs but as a high income individual we expect or encourage you to have a

private insurance construct and we expect you to do that at a fairly young

age so that there's also cross-subsidization from younger

high-income individuals older high-income individuals

so then how do how do they deal with this question of activity-based funding

do do private hospitals with private insurance patients get funded one way

and public hospitals get funded on the same block funding model as we do or is

it all activity based it's activity-based funding within the

universal access construct so as far as the public system is concerned when

patients are going to a hospital be that a public hospital or private registered

hospital that's included in the scheme the dollar amount that follows the

patient same as in sweden is fixed it gets looked after and the patient

gets to choose their facility so the patient can choose to go to the

government facility they can choose to go to the private non-profit or the

private for-profit they take their money with them the dollar amount is fixed

when we go into the private system there's a cost share that comes in so

the public system still pays a little bit into the private care alongside the

subsidy but then the individuals expected to top up well once again that

also underscores your point about the importance of activity-based funding

because if you're a public hospital and you're able to deliver great service and

great care and have a good reputation and attract some of those private

patients then that gives you more money into your into the system to treat them

doesn't it well absolutely and i think one of the things that happens as well

over time is we find as activity-based funding takes hold as these

opportunities open up the private sector tends to specialize towards routine care

or care that might be considered almost an assembly line type of care hip

surgeries knee replacements counteract surgeries things that can be done in a

fairly predictable sense with a fairly predictable cost base with a fairly

predictable outcome as long as care is delivered well that actually turns

public hospitals into centers of excellence for very advanced care where

the outcomes are a little more difficult to understand where the cost base is

less predictable there may be more consequences and so the profitability is

not easily understood out front and that is actually not a bad thing if

you think we take all the lower acuity patients who really don't need to be in

a giant tertiary facility who really don't need to be in a complex medical

facility with all of the things that entails including all the negative

things that entails they can be in a place that suits their particular

medical condition and now we can focus in the public hospital on those patients

who really do need that level of intensity and care okay i have to get

you then to myth bust on another misconception or preconception because

oftentimes you'll hear critics of of establishing this parallel private or

establishing private hospitals is that it will just cream off the top of the

very best practitioners and you'll end up with the best surgeons and the best

cancer doctors and the best heart surgeons in the private facilities which

will deprive those who who need to have the public

service of the very best medical care what happens in practice in australia

in practice the surgeon splits our time between the public and private system

there is a prestige associated with being in the hospital that delivers the

most complex tertiary care surgeons don't always want to be doing the

routine medicine they want to be doing something that challenges their skills

and needs in australia the private surgeon is actually able to see private

patients in the public hospital office and that means they're accessible to the

public hospital when they're required to be there and it encourages them to stay

there is a policy construct that has been proposed by those who make this

claim that would actually create that to be a reality in canada those who say the

best surgeons will leave the public system they're

also argued therefore we should have surgeons either in or out of the public

system and mandate that that would create exactly the problem

they're wanting what we should allow is dual practice for physicians let them be

in the public system and the private system we know from international

experience that the number of surgeons who could move exclusively into the

private setting is actually not very high it will be a percentage as a small