Thoughtful and principled policy reforms will require substantial changes for doctors, hospitals, and pharmaceutical spending.
With the release of economist Don Drummond’s recommendations for government reform around the corner, it’s clear that Ontario’s public sector is headed for belt-tightening times. While reasonable people disagree about how much we should prioritize deficit elimination, Premier Dalton McGuinty is sending clear signals that the government intends to make fiscal restraint its main concern. In a speech on Jan. 24, McGuinty emphasized that a key element of reform will be an “exciting plan for health care transformation.” Given that Ontario currently spends nearly 45 cents of every dollar on health care and Ontarians have no appetite for brutal cuts or privatization, creative and evidence-based health-care policy seems more crucial than ever.
Governments the world over are struggling to control health-care budgets. No jurisdiction has cracked the health-care nut yet. But health-care spending is not a black box: One can begin by understanding where the money is spent (and where it might be saved) in Ontario. While the three biggest budget items are doctors, hospitals, and drugs, controlling spending growth in each of these areas without sacrificing quality or equity is a tall order.
One of the biggest tests of the government’s ability to control physician costs will be its upcoming negotiations with the Ontario Medical Association (OMA). Canadian physicians, including those from Ontario, are paid more than their counterparts in most other high-income countries, and, in the last decade, total spending on physicians in Canada has doubled. The government will want the overall budget for doctors’ services to remain close to flat, which may mean redistributing income from some specialties to others, which could cause divisions within the medical profession.
But equally important is the reality that physician behaviour drives most other health-system costs: Doctors write the prescriptions, order the tests, and admit patients to hospitals – or keep them well in the community. The OMA and the government will need to work together to make physician care more evidence-based and outcome-driven. With few sticks, and even fewer carrots, available, this will involve some hard negotiating on the part of the province, and will likely only be successful if physicians also champion the goals themselves. The outcome of these negotiations will be an early signal of whether Ontario can make a serious dent in the growth of health-care costs.
Hospital spending in Ontario is primed for reform. To make hospitals more responsive to patient needs, Ontario is pinning its hopes on activity-based funding, in which hospitals get paid per patient instead of on a global budget. While many jurisdictions around the world have moved to this, and Ontario is well on its way, such a funding model could backfire if not implemented properly. If the prices are set too high or quantities are open-ended, activity-based funding may lead to increased volumes and higher expenditures. And if hospitals have to compete against each other for scarce funds, all the work being done to increase integration and collaboration across the system may be threatened. That said, there is still time to reconsider how prices are set and which hospitals should be performing which types of procedures. If the government is able to use this reform to extract more of the value created through innovation in our public hospitals, and to improve efficiency and collaboration, this would be positive change.
Successive governments have been promising for decades to do a better job of caring for patients, aiming to keep them in the community and out of hospital. But home care and other community-based services have not emerged to take the place of expensive hospital care. Caring for our elders in the community is only better and cheaper if we do it well. In order to beef up that capacity, some other parts of the system may lose out – and no community wants to be the one to lose its emergency room, its dialysis unit, or its MRI machine. The government will need to convince these communities that the way forward involves trade-offs, not simply additions, and it will need to make good on its promises to replace inappropriate hospital services with community-based services that actually meet the needs of those communities.
Finally, Canadians are slowly waking up to the fact that we have a serious problem when it comes to drugs. Pharmaceutical spending has grown rapidly over the past decade, and as a nation we have no coherent plan in place for getting sufficient value for the money we spend. Ontario has made substantial progress in reducing the costs of generic drugs, but national progress in this area will require co-operation among the provinces. While it would have been wonderful, and appropriate, for the federal government to take the lead on a national strategy, it is well within the provinces’ ability to perform these functions together, and to push for further cost control. Of course, access to prescription drugs remains a serious concern for many Canadians, and extending coverage while reducing costs overall would put further strain on government budgets in the short term.
The good news is that if thoughtful and principled policy directions drive reform, quality will improve and savings are bound to follow. But, as with all economic issues, there will be winners and losers as the government tries to wrestle health-system costs to the ground.
Original Article
Source: the Mark
Author: Mark Stabile, Danielle Martin
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