The truth (and the costs) behind public payment for private surgeries

Posted on February 21, 2023 in Health Debates

Source: — Authors: – Opinion/Contributors
Feb. 21, 2023.   By David R. Urbach, Contributor

As the head of a department of surgery in a public hospital, I worry about the corrosive effects of diverting resources to a private delivery sector.

To address long wait times for surgery, several provinces — most recently Ontario — have introduced projects to increase the supply of surgical services by delivering them in private facilities, outside a public hospital.

These initiatives do not explicitly violate the Canada Health Act, because they do not permit private payment for insured health services. Instead, they seek to foster a market for private clinics to perform publicly insured surgical procedures. As Premier Doug Ford emphasized, people will pay for surgery in private facilities “with their OHIP cards, not with their credit cards.”

Whether private delivery is helpful depends entirely on what problem we think we are trying to solve. There is no dispute that adding additional capacity outside public hospitals will permit some people to access care faster. There are very legitimate questions, however, about the impact on people who cannot access services in private facilities and the sustainability of already-stressed public hospitals forced to compete with private clinics for nurses, anesthetists, and provincial funding for surgical services.

As the head of a department of surgery in a public hospital, I worry about the corrosive effects of diverting resources to a private delivery sector, and the escape of public dollars intended for providing health services. Private delivery in Canada is, and always will be, heavily subsidized by the public sector.

The shortage of nurses and other skilled workers from the pandemic is the major barrier to increasing capacity right now. Many nurses working in private clinics are also full-time employees of public hospitals, which provide competitive wages, benefits, and pensions. A ready-made workforce that can pick up casual shifts in private clinics is possible only because of the human resources investment made by public hospitals.

Public hospitals not only serve as the safety net for complications of care provided in private clinics, but also ensure that surgeons and other providers are available to provide emergency care. Surgeons work in hospitals not necessarily because they want to, but because they have to. An implicit social contract provides surgeons “privileges” to operate on their patients in public hospitals; in return, surgeons provide on-call coverage to emergency departments. If orthopedic surgeons only work in private facilities, who will be left in hospitals to treat bone fractures and other orthopedic emergencies?

An often-overlooked irony is that the wait times problem — where the demand for surgical services exceeds the supply — is largely a manufactured crisis, caused by lack of system co-ordination and chronic underfunding of surgical care. The province pays hospitals for many procedures using “activity-based funding,” where payment for each procedure is fixed, but so is the number of procedures each hospital will be paid for. It should surprise nobody that waits are long for knee replacements, for example, if the province funds only 30,000 or so procedures each year but 35,000 people need them.

While the provinces should be applauded for funding more surgical procedures, why restrict new funding solely to private enterprises, when many public hospitals have capacity to provide more surgery with additional funding? There is no compelling business reason, especially if both private and public facilities will be paid at the same rate.

Surgery is not hugely profitable at current provincial funding rates. For example, Ontario pays hospitals just over $8,000 for the entire episode of care for a knee replacement, which includes an implantable prosthesis costing more than $2,500. These margins could not possibly excite potential investors in private clinics, unless the business model includes upselling and additional fees, as often occurs with cataract surgery.

By all means, the provinces should fund additional surgical services to meet the needs of the population. But barring public hospitals from competing with private businesses to deliver additional services feels unfairly punitive to institutions that are otherwise shining examples of effective public infrastructure in Canada.

Dr. David R. Urbach is a professor of surgery and health policy, management and evaluation at the University of Toronto and head of the department of surgery at Women’s College Hospital.

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