Capitalism touted as health care’s saviour

Posted on February 3, 2011 in Health Debates

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Wednesday, Feb. 2, 2011.   Tom Blackwell, National Post

Canadian hospitals will continue to be plagued by over-crowding and other problems unless the current system of funding them with annual, no-strings-attached grants is tossed out and replaced with payments that specifically reward safe, effective and efficient care, says the head of one of the country’s biggest hospitals.

In a major speech this week, Dr. Arthur Porter of Montreal’s McGill University Health Centre called for government funding that is tied to specific services and harnesses free-market principles to prod institutions to treat patients better and more quickly. It is an idea sometimes advocated by think-tanks and physician groups, and that some provinces are experimenting with in limited projects, but Dr. Porter is among the first hospital administrators to publicly endorse a concept that would dramatically change the way they do business.

“Our current publicly funded, publicly delivered system creates little incentive to truly innovate. Hospital budgets are managed by limiting care, rather than increasing or improving care. We close beds when we lack resources,” he told the Economic Club of Canada. “We need to embrace the capitalism that helped build Canada whilst preserving the social values we have come to hold dearly.”

Some critics, though, suggest the idea would create “perverse” inducements, turning hospitals’ focus to the treatments that were easiest to deliver and generated the most lucrative fees, while more complex cases got shorter shrift.

Dr. Porter, who ran the Detroit Medical Center before taking over the MUHC in 2004, said he was compelled to think about the kind of “profound change” he is proposing as he oversaw a major new development project at the centre. His fear, he said, is that the state-of-the-art facility will open in 2014 and still have patients lined up in the hallways. That, said the administrator, “would be more than an embarrassment; it would be a failure.”

Hospitals now generally receive a global budget based on the experience of the previous fiscal year, which tends not to respond to fluctuating needs or encourage better performance and innovation, Dr. Porter said. Instead, he is proposing payments that are tied to services actually provided, and that offer incentives to hospitals for such goals as curbing re-admission of patients and medical errors, increasing efficiency and boosting patient satisfaction.

It would be similar, he said, to the fee-for-service system used to pay most doctors in Canada.

The overall thrust would be putting the interests of patients first, which is not always the case now, said Dr. Porter. He noted that when he first arrived at MUHC, the parking spaces closest to his centre’s buildings were reserved for doctors, not patients, the opposite of the practice in Detroit.

But one advocacy group argued Wednesday that experience in Europe and elsewhere has shown incentive funding to be deeply flawed. It encourages hospitals to focus on what benefits their bottom line, not what is necessarily best for patients, said Michael McBane of the union-backed Canadian Health Coalition.

“They will do what they are financially rewarded to do,” he said. “It fragments the system and skews it to things that pay well and not things that don’t pay well.”

Mr. McBane noted that there has been a push in the last decade to move doctors away from a fee-for-service system that some see as motivating assembly-line care, and into group practices where physicians get block funding – the opposite of what Dr. Porter is proposing for hospitals.

The idea he proposes is sometimes called activity-based funding or pay for performance and provinces such as B.C., Alberta and Ontario have dabbled in it in recent years.

The Canadian Healthcare Association, which represents most of the country’s hospitals, nursing homes and other health-care facilities, actually ended its long-standing endorsement of block funding two years ago, said Pamela Fralick, the group’s president. A recent task force of experts set up by the association failed to agree on a model to replace it, however, coming up instead with a list of principles that reformers should follow.

Among the reservations is that performance-linked funding is effective in providing relatively straightforward, stand-alone services, like cataract surgery, but would not work well with patients who require complex care and suffer from a number of serious maladies at once, she said.

“A concern rises from the very blunt interpretation of incentive-based funding: ‘Do more and we’ll give you more money,’ ” she said. “We have some of that in our (doctor) fee-for-service approach already, and that doesn’t encourage looking at complex cases.”

National Post

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