Public-Private Health Partnerships Can Help, But Do Them Right

Street Sign the Direction Way to Hospital
  • New report examines how governments can structure arrangements with non-government health providers to avoid potential conflicts, politicization, “sweetheart deals”

 BRITISH COLUMBIA: In light of concerns raised over contracts between governments and third party health care providers in Canada, SecondStreet.org released a new report today that examines how better-performing universal health systems avoid such potential problems.

The report examines eight universal healthcare countries that outperform Canada and have notably shorter wait times for elective surgery. It finds that all eight have a relatively larger presence of non-government hospitals than Canada (one percent), as defined by the OECD: ranging from seven percent in Sweden, to 100 percent in the Netherlands.

However, these countries and many others also use a different approach to funding hospital care, known as “activity-based funding.” This model is transparent, creates a level playing field and avoids the politicization that comes with politicians approving contracts. Under activity-based funding, governments establish a compensation rate for different health services (e.g. $10,000 for child birth, $20,000 for knee surgery) regardless of where they are provided. Government hospitals, non-profit or for-profit clinics will then receive those amounts after providing care to patients.

“Sweden, Australia, France and many other countries have worked with non-profit and for-profit clinics to deliver faster, quality treatment to patients in their universal health systems,” said Bacchus Barua, Research Director at SecondStreet.org. “They avoid allegations of sweetheart contracts by simply paying health providers the same amount per knee operation, MRI scan, etc. This makes things transparent, creates a level playing field and avoids politicization of contracts.”

The activity-based funding approach is completely different from what is done in most parts of Canada. Provincial governments typically fund hospitals with a large annual cheque and then hope the hospital helps a lot of patients. Sometimes governments contract third party clinics to provide surgeries, diagnostic scans, etc. However, this can sometimes lead to allegations of improperly awarded contracts with inflated rates of compensation.

 “Quebec has had some success with moving in this direction and it’s encouraging to see Alberta announce that it will embrace this approach too,” added Barua. “More provinces should be embracing this type of reform as it can incentivize higher output while depoliticizing health care decisions.”

 To see Policy Brief: Health Care Partnerships and Hospital Funding click here.

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Prevention – reduce demand in the first place

If Canadians lived healthier lives, we could reduce demand for emergency services, orthopaedic surgeries, primary care and more. 

For instance, if you visit the Canadian Cancer Society’s website, you’ll read that “about four in ten” cancer cases are preventable. The Heart and Stroke Foundation notes that “almost 80 percent of premature heart disease and stroke can be prevented through healthy behaviours.” A similar number of Diabetes cases are also preventable. 

Many joint replacements and visits to ERs and walk-in clinics could also be avoided through healthy living. 

To be sure, not all health problems can be avoided through healthy living – everyday the system treats Canadians with genetic conditions, helps those injured in unavoidable accidents and more.  

But there is an opportunity to reduce pressure on the health care system through Canadians shifting to healthier lifestyles – better diets, more exercise, etc. 

To learn more, watch our Health Reform Now documentary (scroll up) or see this column. 

Partner with non-profits and for-profit clinics

European countries will partner with anyone who can help patients. 

It doesn’t matter if it’s a non-profit, a government entity or a private clinic. What matters is that patients receive quality treatment, in a timely manner and for a competitive price.  

In Canada, governments often delivery services using government-run hospitals instead of seeing if non-profit or private clinics could deliver the services more effectively. 

When governments have partnered with non-profit and private clinics, the results have often been quite good – Saskatchewan, Ontario and British Columbia are just a few examples of where partnerships have worked well. 

Canada should pursue more of these partnerships to reduce wait times and increase the volume of services provided to patients.  

To learn more, watch our Health Reform Now documentary (scroll up) or see the links above. 

Make cross border care more accessible

In Canada, citizens pay high taxes each year and we’re promised universal health care services in return. The problem is, wait times are often extremely long in our health system – sometimes patients have to wait years to see a specialist or receive surgery. 

If patients don’t want to wait long periods, they often have to reach into their own pocket and pay for treatment outside the province or country. 

Throughout the European Union, we also find universal health care systems. But a key difference is that EU patients have the right to go to other EU countries, pay for surgery and then be reimbursed by their home government. Reimbursements cover up to what the patient’s home government would have spent to provide the treatment locally. 

If Canada copied this approach, a patient waiting a year to get their hip operation could instead receive treatment next week in one of thousands of surgical clinics throughout the developed world. 

Governments benefit too as the patient is now back on their feet and avoiding complications that sometimes come with long wait times – meaning the government doesn’t have to treat those complications on top of the initial health problem. 

To learn more, watch our Health Reform Now documentary (scroll up) or this shorter video. 

Legalize access to non-government providers

Canada is the only country in the world that puts up barriers, or outright bans patients from paying for health services locally. 

For instance, a patient in Toronto cannot pay for a hip operation at a private clinic in Toronto. Their only option is to wait for the government to eventually provide treatment or leave the province and pay elsewhere. 

Countries with better-performing universal health care systems do not have such bans. They allow patients a choice – use the public system or pay privately for treatment. Sweden, France, Australia and more – they all allow choice. 

Why? One reason is that allowing choice means some patients will decide to pay privately. This takes pressure off the public system. For instance, in Sweden, 87% of patients use the public system, but 13% purchase private health insurance. 

Ultimately, more choice improves access for patients. 

To learn more, watch our Health Reform Now documentary (scroll up) or watch this short clip on this topic. 

Shift to funding services for patients, not bureaucracies

In Canada, most hospitals receive a cheque from the government each year and are then asked to do their best to help patients. This approach is known as “block funding”. 

Under this model, a patient walking in the door represents a drain on the hospital’s budget. Over the course of a year, hospital administrators have to make sure the budget stretches out so services are rationed. This is why you might have to wait until next year or the year after for a hip operation, knee operation, etc. 

In better-performing universal health systems, they take the opposite approach – hospitals receive money from the government each time they help a patient. If a hospital completes a knee operation, it might receive, say, $10,000. If it completes a knee operation on another patient, it receives another $10,000. 

This model incentivizes hospitals to help more patients – to help more patients with knee operations, cataract surgery, etc. This approach also incentivizes hospitals to spend money on expenses that help patients (e.g. more doctors, nurses, equipment, etc.) rather than using the money on expenses that don’t help patients (e.g. more admin staff). 

To learn more about this policy option, please watch our Health Reform Now documentary (scroll up) or see this post by MEI.