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The collapse of the Canadian health care system continues apace. Wait times for surgeries have reached 28 weeks, from referral to treatment – three times as high as 30 years ago, when wait times were already considered a crisis. Crowded emergency rooms; doctors, nurses and other staff worked to exhaustion; a parade of physicians leaving the public health care system altogether, or charging user fees for medically necessary care in defiance of both federal and provincial law: The cliché is to say something’s got to give, but in truth something gave long ago.

And overarching all, a shortage of family doctors, or general practitioners: the first line of defence, providers of primary care and gatekeepers to the rest of the health care system. If too many people are showing up in emergency rooms who might better have been treated elsewhere, it is in part for lack of an elsewhere to go to. Without access to timely primary care, too many go undiagnosed for too long, or leave nagging conditions untreated that, besides the damage to their own health, end up costing the system more in the end.

Nearly seven million Canadians are reported to have no doctor or other source of primary care. The situation has gotten so bad in Quebec, where nearly one in three are without a primary care provider, that the provincial government briefly floated the idea of restricting access to family doctors to people who are already ill, before retreating under a hail of fire. That such crude rationing is even being discussed, however, shows how far things have deteriorated. And things are only going to get worse, as the population continues to age.

Many people will have been cheered, then, to hear of the Ontario government’s appointment of Jane Philpott, the former federal minister of health, to lead a new “primary care action team,” with a mandate to ensure that every Ontarian has access to primary care within five years.

Dr. Philpott, who is a former family physician herself, has lately written a book on this very topic, Health for All: A Doctor’s Prescription for a Healthier Canada. There can be few people in Canada more qualified to tackle the subject.

Her “prescription” sounds appealing enough, as far as it goes. It is in keeping with much expert advice on how to reform primary care: merge doctors, who now often work as sole practitioners, into multidisciplinary health care teams – Dr. Philpott calls them primary-care “homes” – employing not only other doctors but nurse practitioners, pharmacists and even social workers, providing a comprehensive range of services to everyone within a defined geographic area. Instead of receiving a fee for each service, they would be paid a fixed amount per patient, known as a capitation payment, or even a salary.

As I say, fair enough, as far as it goes. Team practices would take the strain off of overtaxed private practices, providing much-needed logistical support as well as allowing doctors to focus on the most difficult cases, leaving the rest to less intensive, or expensive, forms of care. Replacing fee-for-service with capitation and other alternative payment systems should reduce the incentive to load patients up with unneeded care, emphasizing the ounce of prevention over the pound of cure.

Implementation may, nevertheless, prove elusive. Governments have made similar promises in the past – the current government of Quebec, for example, which came to power on a pledge of doctors for all – without much success. It’s one thing, after all, to declare “everyone get into teams,” and quite another to persuade them to do it. Doctors have resisted being collectivized to date, and will no doubt continue to do so. Giving up fee-for-service has likewise proved a hard sell, though some provinces have made more headway than others – mostly by paying doctors a lot more.

But that’s not the real point. The point is that even if you could pull it off, this sort of primary care reform on its own will not fix what is wrong with the health care system. It can, however, lay the foundation for a much broader reform. The key is to make these “teams” not just the delivery points for primary care, but the drivers of greater efficiency throughout the system, as purchasers of care from other providers.

The system has not seized up for lack of funds. In the same 30-year period that wait times have tripled, public spending per capita on health care has more than doubled, after inflation. We now spend almost 9 per cent of GDP on health care, higher than most other developed countries, but with distinctly middling results. We don’t need to spend more: We need to spend smarter.

We spend relatively stupidly now for two reasons: because no one in the system knows what things cost, and because even if they did know what things cost they would have no particular reason to make use of that knowledge. In short, the system lacks both information and incentives. The problem is particularly acute in the hospitals, the source of most of the system’s costs and most of its delays. But it does not begin with them.

It begins, rather, with the way in which they are funded. If you want to understand how any system works, follow the money – how funds flow through it, from whom to whom and on what basis. Most Canadian hospitals, even today, are funded based on “global” or lump-sum budgets, regardless of how many patients they see or what treatments they perform. Nothing in how they are paid encourages them to figure out how to do what they do – treat patients – at less cost, or even to calculate it.

Change how they are funded, however – pay them a fixed amount to provide a patient with a particular course of treatment, a system known as service- or activity-based funding, among its many advocates – and suddenly the incentives change. Not only do hospitals have an incentive to gather that information, but to use it: for once a price has been attached to a treatment, you can open it up to competition. Maybe Hospital A says it can perform a tracheotomy for X dollars, but Hospital B can do it for X dollars minus some percentage.

In short you have made a market, only a market of a special kind: an internal market, in which participants compete for public funds, rather than consumer dollars. The prices, that is, are charged not to consumers – patients – but to the public treasury. But they perform the same essential service of signalling the relative costs of different things, and encouraging everyone involved to think of ways to make more efficient use of resources.

Who should compete? So long as the funding is public – nobody pays out of pocket – there would seem to be no particular reason to restrict the competition to public hospitals. Open it up, rather, to new entrants, private clinics and the like. Public funding need not mean public provision.

But to make competition work you need more than prices and competition: You need an informed, aggressive purchaser, with its own incentives to get the best value for money – which is not always the same as the lowest price.

Who should that be? Patients themselves, as in the proposals sometimes heard for individual, publicly funded “medical savings accounts”? That would overcome the usual objection to user fees, that they impose undue hardships on the poor.

But the more fundamental case against user fees is that they impose undue informational requirements on everybody. Patients are simply not in a position to second-guess their doctors’ recommendations for treatment, even at the best of times – least of all when their health is on the line.

What is needed, then, is somebody to act as the patients’ surrogate, purchasing care on their behalf. Should that be American-styled health maintenance organizations (HMOs)? But they are arguably too profit-focused, too willing to sacrifice quality to save costs.

Or Canadian-style regional health authorities, the public agencies to which many provinces have devolved spending authority? But they are not profit-focused enough: too large, too bureaucratic, with no fixed bottom line and no competitive discipline. If an RHA spends too much or treats patients poorly, what consequence follows?

Competition, in other words, needs to apply on both the provider and the purchaser side of the internal market. Who could act as those competitive purchasers, with the right mix of incentives: driving a hard bargain, but without compromising patient health? Why not Dr. Philpott’s provider teams?

Pay them a fixed amount per patient, with top-ups for higher-risk groups (and, for extra insurance against screening out hard cases, a requirement to take all comers). Give them a mandate to purchase care from hospitals and other providers – and keep whatever revenues they don’t spend.

As profit-making businesses – in effect, if not in name – their incentive would be to keep costs down. But as licensed professionals, sworn to uphold the Hippocratic Oath, they would retain a strong, offsetting, what’s-best-for-the-patient ethic. Getting the incentives right is tricky in any system – no country has the perfect model – but this would seem to strike as good a balance as any.

Alas, that does not seem to be quite what Dr. Philpott has in mind. Dispiritingly, she has proposed as her model the public-school system: Just as children are “assigned” to their local school, so patients would be “assigned” to their local primary-care unit. The results, one fears, would be much the same: stupefied mediocrity.

Let primary-care teams compete, then, to enroll patients, with the appropriate safeguards against “gaming,” and you put the final piece of the internal-markets model in place.

This was the system proposed by the Kirby Commission, led by senator Michael Kirby, in 2002 – one of three great inquiries into the Canadian health care system that year (see also: the Romanow and Mazankowski commissions) and the one whose recommendations have best stood the test of time.

It’s a much broader, more vigorous reform than just forcing doctors to merge their practices. The cure for what ails Canadian health care isn’t better central planning, any more than it is more money – or, to take the right’s favourite shibboleths, user fees and private insurance.

Rather, it is a system of internal markets, with primary-care groups at its heart: not just the gatekeepers, but the patient’s surrogates, advocates and guides.

Editor’s note: This article has been updated to use the Dr. honorific in references to Jane Philpott.

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