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August 26, 2004

Private Clinics and Public Dollars

On Tuesday, August 24th, Global TV continued with coverage on the Campbell government's use of private surgery centres. Their story included an interview with medical ethicist Professor Eike-Henner W. Kluge from the University of Victoria who said that of over 149 studies, 131 show that publicly funded institutions are more efficient and cheaper than private institutions.

Professor Kluge provided me with the following citations to support what he said on Global.

Vaillancourt Rosenau P and Linder SH. 2003 "Two decades of research comparing for-profit and nonprofit health provider performance in the United States." Social Science Quarterly; 84(2):219-241, http://www.blackwell-synergy.com/links/doi/10.1111/1540-6237.8402001/abs/;

Vaillancourt Rosenau P and Linder SH. 2003. "A comparison of the performance of for-profit and nonprofit U.S. psychiatric inpatient care providers since 1980," Psychiatric Services; 54(2): 183-187, http://intl-psychservices.psychiatryonline.org/cgi/content/full/54/2/183;

Silverman et al. 1999. "The association between for-profit hospital ownership and increased Medicare spending." New England Journal of Medicine; 341(6): 1523-1528, http://content.nejm.org/cgi/content/abstract/341/6/420.

I also discovered the following article.

Woolhandler Steffie and Himmelstein David J. 2004 "The high costs of for-profit care" Can. Med. Assoc. J., Jun 2004; 170: 1814 - 1815, http://www.cmaj.ca/cgi/content/full/170/12/1814. See the excellent references at the end of that article, complete with links when the references are available online.

The research cited here supports a simple point; if government has a choice between allocating dollars to private surgery centres or to public facilities, it should decide on the facility that is most effective and efficient. The evidence suggests that public facilities have the advantage. Instead of siphoning off scarce dollars to private surgery centres, government could re-open closed beds and operating rooms in public hospitals. It could also look at establishing new types of specialized public facilities that specialize in particular procedures.


August 25, 2004

Private Clinics and Wait Lists

On August 23rd Global TV broke the story that the government is using private clinics, and it is claiming that the contracting out is necessary because of the growth in wait lists that followed HEU job action. Premier Campbell and Health Minister Hansen are playing politics with patients on the waiting lists; they've moved just far enough to create a debate, but not far enough so that the market can expand and eliminate the waiting lists.

Someone who is in pain or disabled is not likely to have the patience to argue over the subtleties of health economics. It is understandable that they want their procedure and they want it now; they want Campbell to keep his promise to make health care available when and where people need it. From that point of view, no one is going to object to the use of private surgery centres to shorten waiting lists, but was it the best way to shorten them?

The story on contracting surgeries to private clinics is well timed with respect to the September 13th first ministers' meeting on health care. Federal Health Minister Ujjal Dosanjh started his term saying that his government would "stem the growth" of private clinics. In subsequent interviews he backed down and admitted that there are no plans for the federal government to do anything about private clinics. That is why it is a waste of time for NDP leader Carole James to ask what the federal position is on the use of the private clinics. Dosanjh has already indicated that he won't use the Canada Health Act to punish provinces that contract with private clinics.

We don't get the best decisions when we aren't offered alternatives. The Minister of Health is not saying whether, if given the funds, public hospitals could have performed the procedures he allowed to be contracted to private clinics. Claims have been made that money was saved by the contracting out, but was that because the clinics decided to set a precedent and offer a loss leader, or was it because the public facilities weren't allowed to bid on a level playing field. Were the operating rooms in public hospitals functioning at capacity so that an escape valve was necessary, or was a political decision made to force a debate on the role of private clinics?

Hospitals perform hundreds of procedures, and it is impossible to allocate costs precisely. Should the cost of security, fixing the roof, cleaning the hallways and paying the light bill be allocated equally across all procedures, in proportion to the costs that can be accurately attributed to each procedure or on the basis of some idea of what has to be done and what is extra or marginal? There is no right answer, which is one reason why there is some room to maneuver on pricing. It is unfair to say that hospitals don't know the cost of any procedure, when the truth is that there is no precise answer because arbitrary decisions have to be made on allocating overhead.

If the Campbell government is prepared to contract with private clinics, why can't anyone on the wait list go to any private clinic and have the bill paid by simply presenting their CareCard? The clinics have been taking WCB and ICBC patients for almost a decade. Why should there be any limits on the number of MSP patients they take? Government continues to ration the number of procedures that can be performed. It is doubtful whether the clinics could have survived without the work they received from WCB and ICBC. Government's lastest contracts with the clinics help them grow, and they make it possible for private paying patients with fat wallets to pay to go to the front of the line. That doesn't shorten the queue, it just takes off the pressure to improve the public system.

Doctors, dentists, pharmacies and most laboratories have been private components in a predominately publicly financed health care system for over 35 years. The issue is not whether there should be some private element in our publicly financed system; it is whether government should shift work from public hospitals to private clinics, and if so, what criteria should be used for making those decisions. Hansen needs to say whether he turned to the private clinics because there was no alternative, whether he did so because they were cheaper, or whether he has started a process of shifting where care is provided at the same time he continues to ration how much care is offered. How many procedures have been contracted, and who determines who gets a procedure paid for publicly at a private clinic? A week before the Global TV story, Hansen announced $5 million more for heart surgeries. Why didn't he further shorten the list by announcing $7 million, and why didn't he make his announcement six months or maybe a year ago? The answer is because government rations access to health care whether it is provided in a public hospital or in a private clinic.

 

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