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WHY COMPETITION IS
ESSENTIAL IN THE DELIVERY OF
PUBLICLY FUNDED HEALTH
CARE SERVICES
Michael Kirby and Wilbert Keon
In this excerpt from a Policy Matters released this month by the IRPP, Senators Michael
Kirby and Wilbert Keon argue forcefully that Canada's publicly funded health care
system needs competition if it is to achieve efficiencies and productivity gains that are
essential “to make Canada's publicly funded, single-payer health care system more
productive and financially sustainable over the long term.” The current fix of throwing
billions of dollars at the problem “neither works nor is financially sustainable.”
Dans cet extrait tiré d’une étude lancée ce mois-ci par l’IRPP, les sénateurs Michael
Kirby et Wilbert Keon soutiennent qu’un système de santé public à payeur unique
comme celui du Canada doit s’ouvrir à la concurrence pour accroître son efficacité
et améliorer sa productivité, deux changements indispensables à sa viabilité à long
terme. Car la solution retenue jusqu’ici, qui consiste à y injecter des milliards de
dollars ne résout rien et n’est pas viable financièrement, affirment-ils.
T
he latest taboo in Canada’s publicly funded health Improvements in productivity are the key to making
care system is not the creation of a parallel private the health care delivery system more cost-effective and to
health care insurance system — this would be unac- reducing the rate of growth of health care expenditures. In
ceptable to a majority of Canadians — but rather the intro- other fields of endeavour, competition among providers has
duction of greater competition within the existing health been shown to be the best way — indeed, perhaps the only
care delivery system. way — to drive improvements in productivity. Competition
Various groups in Canada have been largely successful in health care delivery is not an end in itself, but it is a valu-
in asserting — without any supporting argument or evi- able tool, the means of achieving improvements in produc-
dence — that competition among providers would put tivity that will lead to a much more efficient and
Canada on a slippery slope to an American-style system. cost-effective delivery system.
The irony of this position is that without increased produc- We can achieve competition among providers while
tivity, for which competition provides a powerful incentive, preserving the single-payer, publicly funded system and
timely access to medically necessary treatment in Canada upholding the principles of the Canada Health Act. In its
will be inhibited further. This would, in turn, increase report The Health of Canadians, released in October 2002,
demand for a parallel, private, for-profit tier of health care the Standing Senate Committee on Social Affairs, Science
services (which would violate the Canada Health Act). and Technology strongly supported the single-payer model,
We propose a framework for reforms that would gener- both because it assures all Canadians of equitable treatment
ate increased efficiency and make Canada’s publicly funded, and because it is the most efficient way to pay for health
single-payer health care system more productive and finan- care services.
cially sustainable. In this article, we explain why improved productivity
The current habit of governments of promising billions of resulting from competition in the delivery of health care
additional dollars to “cure the problems” of the health care sys- services is essential if the health care system that is cher-
tem is not the answer. To date, by adding money, governments ished by Canadians is to be fiscally sustainable.
(and those within the system) have simply managed to avoid
confronting the most important structural weakness of Canada’s
existing system: its lack of incentive to increase productivity. C anadian health care is based on a single public insurer
for the buying/funding of medically necessary health
POLICY OPTIONS 103
SEPTEMBER 2004
Michael Kirby and Wilbert Keon
services (there being but a single buyer provided in most provinces by private administering health insurance claims.
is referred to in the economic literature for-profit companies. Laundry services,For example, in a 2004 study (using 1999
as a “monopsony”). Although there meal preparation and other support or figures, in US dollars) Woolhandler,
are many providers of health services ancillary services in publicly funded Campbell and Himmelstein concluded
in Canada, they can be thought of col- that overall administrative costs (includ-
hospitals are often delivered by private
lectively as a monopoly provider companies operating on a for-profit ing hospitals and doctors’ offices)
because they all operate according to a basis. Thus, Canada has a mixed pub- accounted for 31 percent of total health
set of rules and a financing system that care expenditures in the US ($1,059 per
lic-private delivery system. It is simply
effectively preclude their competing not true that the delivery system is capita), compared to 16.7 percent in
with one another. In particular, public. Nor is it true that the Canada Canada ($307 per capita). If its admin-
istrative costs were the
same as Canada’s, then the
That government is the sole participant in the field of United States would save
insuring medically necessary services provided by hospitals $209 billion per year, more
and physicians is often wrongly interpreted to mean that than enough to insure the
government is also responsible for the delivery of the services 40 million Americans who
it funds. In fact, the delivery of publicly funded health care in currently have no health insurance.
Canada currently is almost entirely in the hands of the Examining insurance
private sector. overhead only, the over-
head cost per capita for
Canada’s many hospitals and doctors Health Act requires publicly insured health care insurance was $259 in the
do not compete on the basis of price or services to be provided by public sector US, compared with $47 in Canada,
quality of service. institutions or employees. representing 5.9 percent and 1.9 per-
The single public insurer (buyer/ To repeat, we feel strongly that the cent of total health care expenditures,
funder) model for health care derives single public funder system must be respectively. It is very clear that, in
from the public administration criteri- preserved. The Senate committee addition to its cherished egalitarian
on of the Canada Health Act, which established clearly that the single pub- attribute, the single-funder model is
stipulates that provincial/territorial lic insurer for health care yields con- also the more administratively effi-
health care insurance plans must be siderably more administrative cient by far.
administered on a not-for-profit basis efficiencies than any multi-funder However, while the single-payer
by a public agency. This model essen- arrangement. More importantly, a sin- model is administratively more effi-
tially precludes the operation of a par- gle public funder ensures that no one cient, it is also prone to certain sys-
allel private insurance sector in will be denied necessary care due to an temic problems that can drive up
competition with public insurance for inability to pay. It is this universal fea- operational costs. Within the publicly
the funding of services provided by ture of the system that is most cher- funded system, a monopoly situation
hospitals and doctors and covered by ished by Canadians. (in which competition among sellers
the Canada Health Act. The single-payer system is more
That government is the sole par- efficient than multiple-payer models TABLE 1. INSURANCE OVERHEAD AS A
ticipant in the field of insuring med- because it covers all Canadians and PERCENTAGE OF TOTAL HEALTH CARE
ically necessary services provided by thus spreads the cost of insuring EXPENDITURES (1999 FIGURES)
hospitals and physicians is often against ill health across the widest pos-
wrongly interpreted to mean that gov- sible pool of people: the entire popula- United
ernment is also responsible for the tion. It also eliminates the inequities Canada States
delivery of the services it funds. In fact, and inefficiencies related to adverse
Private
the delivery of publicly funded health selection — competing voluntary
insurance 13.2 11.7
care in Canada currently is almost insurance plans may refuse to insure
entirely in the hands of the private high-risk patients and/or charge every- Public 1.3 Medicare 3.6
sector: most doctors are in private one higher premiums to compensate insurance Medicaid 6.8
practice (they operate like small busi- for the fact that more people at higher
Total 1.9 5.9
nesses or self-employed professionals) risk of ill health will buy insurance
and the great majority of hospitals are than people at lower risk. Source: S. Woolhandler, T. Campbell and D.U.
private nonprofit organizations. The single payer system also sub- Himmelstein, “Health Care Administration in the
United States and Canada: Micromanagement,
Laboratory and diagnostic services stantially reduces the administrative Macro Costs,” International Journal of Health
paid for by the single public insurer are cost to hospitals of processing and Sciences 34, no. 1 (2004).
104 OPTIONS POLITIQUES
SEPTEMBRE 2004
Why competition is essential in the delivery of publicly funded health care services
The Gazette, Montreal
The introduction of competition among hospitals would help drive down
costs and favour productivity gains, argue Kirby and Keon.
of health care services is precluded) however, that this power is unbal- savings are then shared by the employ-
occurs in the provision of health serv- anced; it tends to rest almost entirely ees (through higher wages and bene-
ices at two different levels: health care with professional associations, in part fits) and the employer (through higher
professionals and hospitals. We treat because of the justifiable fear that gov- profits).
each of these separately below. ernments have of confronting strikes Unfortunately, in health care
by health care providers, and in part negotiations, changes to work rules are
W ithin each province, associa-
tions representing health care
professionals hold monopoly power
because of major flaws in the existing
structure of negotiations.
The imbalance of power between
virtually never negotiated. All that is
negotiated are wages or salaries. Thus,
that which is crucial to the funder (the
in that each is the sole source of the funder and provider groups stems government) — how to improve the
health care providers in its respective from the fact that work rules — dictat- productivity of the system — is not on
area of expertise (doctors, nurses and ing which employees will do what, and the table. All that is subject to bargain-
so on). This, combined with the sin- under what conditions — are virtually ing are the issues that potentially bene-
gle public insurer model, leads de never part of the negotiations, as they fit the providers — namely, wages and
facto to a bilateral monopoly in are in other industries. Typically, in the incomes. Therefore, the critical trade-
which the insurer and provider nego- course of negotiations, labour will seek offs involved in balancing wage
tiate uniform province-wide reim- higher wages while management will increases against productivity improve-
bursement rates or salaries. seek changes to the working environ- ments are not even addressed at the
The outcome of these negotiations ment that will foster greater productiv- bargaining table, let alone resolved.
depends on the relative power of the ity and lead to a decrease in per-unit In recent years, the excessive
bargaining parties. Experience shows, production costs. These productivity power wielded by associations of
POLICY OPTIONS 105
SEPTEMBER 2004
Michael Kirby and Wilbert Keon
health care providers has secured pay infusions of new federal health care ble deal they can get. What is wrong
increases that have surpassed those funds into provincial treasuries. A few is an arrangement that gives them a
bargained in other industries. Thus, pertinent examples include: lopsided advantage in negotiations.
according to the Conference Board, q In 2002-03, the average annual At the heart of the problem is a sys-
“during the 1990s, health workers, in fee-for-service payment to Alberta tem that does not permit a proper
general, saw their median annual physicians increased by 12 percent balance between providers’ desire
earnings rise twice as much as non- compared to the previous year; for wage/salary increases and gov-
health workers (6.4 percent versus those to specialist physicians ernment’s objective, in its role as
3.1 percent) and health professionals increased by 14.3 percent. This, in funder of the system, of increased
experienced a 15.1 percent increase.” turn, forced less-well-off provinces productivity.
Moreover, these increases have been to give large wage increases to It is clear that there are significant
secured without much, if any, con- avoid losing their professionals to barriers to cost adjustment in health
sideration for increases in productiv- Alberta. care service delivery compared with
ity or differences in the quality of q A year ago, Saskatchewan physi- that in other service industries. The
services delivered by individual cians rejected a pay increase of 20 issue is therefore how best to remove
providers. percent over three years, claiming these barriers and expose health care
This cannot continue. We are not that it did not go far enough to delivery to the same type of pressures
suggesting that reform should that help generate productivity
be accomplished on the backs Because health care is so labour- increases elsewhere. In our
of those who deliver health care view, the introduction of com-
services. Nor are we suggesting
intensive, resolving the current petition among health care
that the ability of various imbalance in negotiating power is providers offers the greatest
providers to secure the best pos- critical...there is nothing wrong promise.
sible return for their services be with people using their bargaining
unduly restricted. Rather, what
concerns us is a situation in
which a truly essential service
power to seek the best possible deal W
they can get. What is wrong is an provincial governments pro-
ith regard to hospitals,
the way in which
(health care) is provided by arrangement that gives them a vide their funding is a source
groups of workers whose lopsided advantage in negotiations. of inefficiency. For the most
monopoly position is not effec- part, hospitals receive a budg-
tively counterbalanced in the
At the heart of the problem is a et — in the form of block
course of their negotiations system that does not permit a funding whether directly from
with government (the single proper balance between providers’ the provincial government or
payer) or with employers (for desire for wage/salary increases and via the intermediary of region-
example, hospitals, whose
funding is determined almost
government’s objective, in its role al health authorities (RHAs) —
which is based on historical
entirely by the single payer). as funder of the system, of service delivery patterns
Because health care is so increased productivity. rather than on the number
labour-intensive, resolving the and type of services actually
current imbalance in negotiating close the gap between their rates being provided. That is, the services a
power is critical. For example, the min- of pay and those of their counter- hospital actually provides during the
ister of health planning in British parts in British Columbia and year are not taken into account in
Columbia estimates that approximate- Alberta. determining its revenue. Not only are
ly 80 percent of total acute care costs q In 2001, Manitoba doctors led the annual budgets not based directly on
in that province are labour costs. Thus, pack in pay increases. The average the volume and type of procedures
of the $1.1 billion that was added to was 9 percent; family physicians performed in a given year, but they
BC’s health care budget in 2002, $685 received an increase of 11 percent. also fail to reflect the actual cost of
million went to increases in the wages, The biggest problem that govern- providing such services.
fees and benefits paid to health care ments, and hence taxpayers, face as Because hospitals and other
workers. funders of the system is meeting the providers do not have to compete on
Elsewhere, professional associa- fee and wage demands of the various the basis of either quality or price in
tions of health care workers have groups of health care workers. order to attract funding, they have lit-
either already secured pay increases As we have said, there is nothing tle incentive to enhance the quality
significantly greater than inflation or wrong with people using their bar- and/or accessibility of their services,
are preparing to take advantage of the gaining power to seek the best possi- to contain or reduce costs, or to
106 OPTIONS POLITIQUES
SEPTEMBRE 2004
Why competition is essential in the delivery of publicly funded health care services
improve their efficiency or effective- emergency room is understaffed funding levels.” Among the factors
ness. In others words, there are very and the collective agreement that compelled the committee to
few incentives for them to improve restricts the hospital’s ability to reach this conclusion were the impact
their productivity. bring in nurses from elsewhere in of the aging population, rising drug
Without competition the monop- the hospital, a de facto nursing costs and the need to invest in expen-
oly provider of hospital services shortage is created that diminishes sive new technologies.
drives up costs and constrains pro- the hospital’s productivity. The Conference Board, in its
ductivity gains: q In many regions of Canada, no March 2004 study of health care cost
q Large, complex institutions, particu- alternatives to the emergency drivers, reached the same conclusion as
larly tertiary-level teaching hospi- room are available. Overcrowding the committee had two years earlier.
tals, perform many simple and long waits are the result. This For example, it estimated that one-
medical/surgical pro-
cedures that could be Because hospitals and other providers do not have to compete
done much more on the basis of either quality or price in order to attract
cost-effectively in
community hospitals
funding, they have little incentive to enhance the quality
with lower overhead and/or accessibility of their services, to contain or reduce costs,
costs. For example, a or to improve their efficiency or effectiveness. In others words,
normal birth/delivery there are very few incentives for them to improve their
costs on average
$1,418 at a tertiary
productivity.
care hospital, about $1,000 more problem could be alleviated, if not third of projected real health care
than at a community hospital. solved, by establishing small expenditure growth could be attributed
q Large community hospitals and urgent care clinics (UCCs). In to the aging population. The report
teaching hospitals deliver many Ontario, a number of UCCs pro- stressed that this represented a heavier
services that smaller, specialized vide fast, one-stop emergency burden than that imposed by other
clinics and other health care facil- services for urgent or acute med- cost pressures, such as population
ities could provide just as well and ical problems such as cuts, sprains, growth, because, “unlike the other cost
more cheaply. An example is fractures, asthma, bronchitis, pressures aging comes with no offset-
Toronto’s Shouldice Clinic, which severe allergic reactions and ting increase in income or wealth that
performs only hernia repairs at a arrhythmias, as well as laboratory, can finance additional cost increases.”
much lower cost than even a gen- X-ray and pharmacy services and The aging population also com-
eral-purpose community hospital referrals to specialists and hospi- pounds the pressures caused by rising
could. tals. Not only do they provide prescription drug prices. Public spend-
q Cataract surgery, many orthopaedic services faster, but they are also ing on drugs has doubled over the past
procedures and other procedures significantly less expensive than 20 years; those over 65 years of age
are performed by large institutions, hospital-based emergency depart- accounted for 64.5 percent of all
whereas they could be undertaken ments, mainly because of their provincial/territorial spending on drugs
in a more cost-effective manner by lower overhead costs. in 2000, while representing just over 12
specialized health care clinics. Due percent of the population. The unend-
to their lower overhead, and partic-
ularly to their more flexible work
rules for the range of health care
W e cannot stress strongly
enough that in our view, and
in the view of the Senate committee,
ing stream of new technologies that
expand the capacity of the health care
system to serve Canadians is another
professionals they employ, special- failure to improve the productivity of important source of escalating costs.
ized clinics can carry out many health care delivery will result in the In its report, the Senate commit-
straightforward, routine procedures system, as it is presently structured, tee stressed that the “increase in the
at substantially lower cost than becoming financially unsustainable in percentage of government spending
most hospitals. the reasonably near future. In its devoted to health care provides the
q Typically, because of their rigid report, the Senate committee conclud- clearest indication of the financial
collective agreements, hospitals ed that “there are real, continuing pressures felt by governments
cannot deploy their human upward pressures on Canada’s health charged with funding health care.”
resources in an optimally efficient care costs,” and that, therefore, In this regard, the Conference Board
manner. For example, the number “Canada’s publicly funded health care pointed out that “without structural
of nurses may be adequate overall, system, as it is currently operated, is change in how health care is deliv-
but if, for whatever reason, the not fiscally sustainable given current ered, the current systems will grow
POLICY OPTIONS 107
SEPTEMBER 2004
Michael Kirby and Wilbert Keon
from consuming about 32 percent of be achieved by putting in place a set of So how would competition in serv-
total provincial/territorial revenues incentives for individuals and institu- ice delivery address the problems of the
to 44 percent in 2020,” and that tions, acting in their own self-interest,present system? Let us take the hospital
“some provinces could spend in to make the required changes. In system as an example. In order to intro-
excess of 50 percent of their budgets essence, the committee argued that duce competition in the institutional
on health care by 2020, just as the the introduction of what are usually health care delivery system and
demographic bulge of Canadian sen- called “market forces” would be the enhance its productivity, it is necessary
iors starts to pass through the sys- only effective way to change the to change the way in which hospitals
are funded. The Senate com-
mittee recommended serv-
Competition among health care institutions and providers is ice-based funding. That is,
essential to break the present monopolistic stranglehold of hospitals should be paid an
provider groups and to ensure that Canadian taxpayers get agreed fee for each service
full value for every dollar spent on health care. they deliver, after it has
been performed. It is the
change from global budgets
tems.” The 2004 report of the Alberta health care delivery system, to make it to this funding mechanism that makes
Task Force on Health Care Funding more efficient and to make its possible a competitive market.
and Revenue Generation indicated providers more productive. Once fully established, the incen-
that since 1997, provincial health Competition among health care tives built into service-based funding
spending has increased by 10.4 per- institutions and providers is essential would generate a number of signifi-
cent per year, while provincial rev- to break the present monopolistic cant benefits. They would:
enues have only grown at a rate of stranglehold of provider groups and to q encourage hospitals to improve their
about 4 percent per year. ensure that Canadian taxpayers get full operating efficiencies, since they
Clearly, compounded year after value for every dollar spent on health would get to keep any money saved;
year, such increases are not sustainable care. We believe strongly that competi- q enhance the ability of managers to
over the longer term. Indeed, some tion will also lead to the development manage effectively, given that,
provinces could hit the fiscal brick wall of new and innovative forms of health under service-based funding, they
in a very few years. This bleak picture care delivery, substantially improving would be required to know how
implies that productivity increases are productivity. Furthermore, we believe well and efficiently the institution
essential if our publicly funded health that competition is in everybody’s best is performing every procedure
care system is to survive. Therefore, interest — the insurer, the hospital, the (something that, in general, they
the key question is: How can the sys- physician and other health profession- do not know today);
tem be changed to eliminate excess als. Ultimately, though, the patient and q create competition among hospi-
costs and improve productivity in taxpayer will benefit the most. tals themselves, and between hospi-
delivering health care services? Canada is not the only OECD tals and other, smaller, more highly
country struggling with health care specialized clinics and facilities;
T ypically, in Canada, the problem
has been addressed using a top-
down command-and-control approach,
costs, as a special supplement to the
July 17, 2004 issue of The Economist on
health care finance amply illustrates. In
q help develop highly specialized
health care teams, achieving better
outcomes for patients and making
with health department bureaucrats particular, The Economist emphasizes optimal use of costly equipment;
instructing service providers on what to that “governments’ attempts to contain q stimulate the development of cen-
do. This is the approach embodied, for health care costs have come in many tres of excellence for complex sur-
example, in Ontario’s recently enacted forms including budget caps, usually in gical procedures (such as
Bill 8, The Commitment to the Future of the hospital sector; wage controls; price paediatric heart surgery);
Medicare Act. limits on medical fees and prescription q improve quality, since evidence
The Senate committee recom- drugs; restrictions on the flow of new shows a clear relationship between
mended a different approach. It con- medical students; and delays in the volume and patient outcomes (for
cluded that in a system as complex introduction of new technologies.” All example, hip and knee replace-
and multifaceted as the health care of these have been tried in Canada, and ment and hernia repairs); and
system, a top-down command-and- they have failed, just as they have failed q encourage hospitals to improve
control model would not work — it in other OECD countries. According to patient service and drive out ineffi-
would almost certainly lead to even The Economist, “the underlying reason ciencies, since revenue depends on
greater inefficiency. Effective reform, why these methods fail is that they do the number of patients treated.
the committee maintained, could only nothing to provide greater efficiency.” A specific and highly desirable
108 OPTIONS POLITIQUES
SEPTEMBRE 2004
Why competition is essential in the delivery of publicly funded health care services
benefit of service-based funding resources is a very compelling factor It is important to note that all the
would be its ability to demonstrate in support of specialized health care benefits described here could be
clearly to the public the relative effi- clinics. Efficiencies and productivity achieved regardless of whether service
ciencies of hospitals offering compa- improvements could also be gained delivery facilities are publicly or pri-
rable services. Because hospitals if people were encouraged to rely on vately owned, for-profit or not-for-
would be competing with each other 24-hour community clinics for profit. Nothing in our proposals for
to serve patients, the inefficient hos- many of the primary care services generating competition in health
pitals would either lose business they currently receive in hospital services delivery requires, or even pro-
(because the price they bid would be emergency rooms. vides an incentive for, the introduc-
too high), or they would lose money Competition would encourage tion of for-profit delivery facilities.
(because they were unable to perform hospitals to contract out nonmedical Publicly owned institutions can com-
the service at the price they bid). services in order to improve produc- pete with one another, just as private-
The government, the insurer (fun- tivity and reduce costs. Using a ten- ly owned institutions do in any
der), would choose to buy insured dering process, hospitals would competitive marketplace. Therefore,
services from the lowest-cost provider procure these services from the low- our proposals do not depend in any
who meets specified quality condi- est-cost provider, subject only to the way on the specific ownership struc-
tions. Providing the opportuni- ture of the health care delivery
ty for institutions to bid to system. In this regard, we
provide specific services would
It is important to note that all the should note that in its report
create an environment in benefits described here could be the Senate committee argued
which those patients requiring achieved regardless of whether that government, as the insur-
relatively simple procedures service delivery facilities are publicly er (funder) of the system,
would be drawn away from
teaching hospitals to commu-
or privately owned, for-profit or not- should be a service delivery
who owns
indifferent as to
nity hospitals, with their lower for-profit. Nothing in our proposals institution and on what basis
cost structure. Such competi- for generating competition in health it operates as long as compara-
tion would force large teaching services delivery requires, or even bly high-quality outcomes are
hospitals to examine closely achieved by the organizations
the spectrum of services they
provides an incentive for, the and institutions offering serv-
offer and to redefine their introduction of for-profit delivery ices at the lowest price.
roles. facilities. Publicly owned institutions
can compete with one another, just
Competition would also
lead to the establishment of
specialized, standalone facili-
S ince the inception of
as privately owned institutions do in careCanada’s national of gov-
program, the role
health
ties (or clinics) able to offer any competitive marketplace. ernment has been as a funder,
the lowest price for procedures Therefore, our proposals do not not a provider, of health care.
such as cataract operations, depend in any way on the specific As the Senate committee docu-
some orthopaedic surgeries, ments in its report, one of the
various diagnostic tests and
ownership structure of the health great myths about Canada’s
hernia repair. Not only would care delivery system. “public” heath care system is
such specialized facilities, con- that it includes public delivery
centrating on a limited range of pro- provider’s meeting appropriate and as well as public funding. This has
cedures, be less expensive, but they closely monitored quality standards. never been the case. Beginning with
would also be expected to achieve Such changes in the delivery sys- hospital insurance in 1957 and con-
better results as a consequence of tem would, in turn, prompt all serv- tinuing with the creation of medicare
higher volumes. In medicine, the ice providers to find ways to improve in 1966 and the enactment of the
more frequently the same procedure the quality and cost-effectiveness of Canada Health Act in 1984, the central
is performed, the higher the quality their services in order to avoid losing objective has always been to insure
of the outcomes. work to more cost-effective institu- Canadians against hospital and doctor
Thus, specialized facilities would tions or providers. In this way, reform costs and improve their access to med-
both improve quality and reduce of the system would occur gradually, ically necessary health care services.
cost. The smaller the institution, the driven by incentives rather than by No legislation restricts the ownership
more flexible the job descriptions of the top-down command-and-control of health care institutions.
its various staff members. Greater approach that has been so clearly Therefore, it is difficult to under-
flexibility in utilizing human demonstrated to be ineffective. stand the rationale for the recent deci-
POLICY OPTIONS 109
SEPTEMBER 2004
Michael Kirby and Wilbert Keon
sions by the Manitoba NDP govern- also the resulting higher operating costs of competition into the delivery of health
ment to purchase a for-profit will further deplete health care budgets. services in the ways we have described.
orthopaedic clinic in Winnipeg and In addition, moving these facili- We conclude, however, on a cautionary
by the Ontario Liberal government to ties to the public sector will strength- note. In a system as complex as health
purchase three for-profit MRI clinics en the monopoly bargaining position care, one cannot know in advance the
in the province as well as to require of the health care workers involved. full impact of any particular reform.
four others to convert to not-for-prof- As we have explained, this is precise- However, we can be certain that the jour-
it status. The purchase of these facili- ly the wrong direction for public pol- ney down the road to reform must begin
ties in Manitoba and Ontario simply icy to move in if our objective is to with the measures we have outlined.
means that money will have been make the health care system finan-
taken out of cash-strapped health care cially sustainable. Senator Michael Kirby was chair of the
budgets and spent in a way that pro- Canada’s health care system, with its Standing Senate Committee on Social
vides no added benefits to patients unique single public insurer model, not Affairs, Science and Technology when it
and does nothing to shorten a single only must be preserved but also must be released The Health of Canadians, a
waiting line. made more cost-effective, more efficient major study on the state of health care in
Moreover, past experience indicates and more productive. We believe that Canada, in October 2002. Senator
that public ownership of these facilities these results can only be achieved Wilbert Keon was a member of the
will not ease the burden of the rigid through the introduction of competition Standing Senate Committee on Social
work rules of publicly owned hospitals into the delivery of health services. In Affairs and recently retired as founder
and of the higher salary scales of public this article, we have described some of and CEO of the Ottawa Heart Institute.
institutions as compared to clinics. the ways in which this needs to happen. The paper from which this excerpt is
Thus, not only will capital funds have to We believe that these results can be taken is available in full at
be spent with no patient benefit, but achieved only through the introduction www.irpp.org.
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www.irpp.org s 74.85$ (GST included)
s 80.46$ (Quebec taxes incl.)
s 84.95$ (US)
s 89.95$ (Other countries)
PAYABLE IN CANADIAN FUNDS ONLY
Name _________________________________________________________________________________________
Company ___________________________________________________________________________________
1470 Peel Street Address _____________________________________________________________________________________
Bureau 200 City _______________________________________________________________ Province _______________
Montreal, Quebec Postal code _____________________ Telephone _________________________________________________
Canada H3A 1T1
s Payment enclosed s VISA s MasterCard s Amex
Card no. ___________________________________________________________
Card expiry date ____________________________________________________
Signature ___________________________________________________________
110 OPTIONS POLITIQUES
SEPTEMBRE 2004
