To improve value and spur innovation, we need to change the way we pay for health care

By Alexis Wise

A version of this commentary appeared in the Toronto Star

To improve value and spur innovation, we need to change the way we pay for health care

Health care costs the public sector about $160 billion a year in Canada, a higher per capita cost than most industrialized nations.  Yet Canadians are not markedly healthier nor do we receive better care.

The Commonwealth Fund has ranked Canada 10th out of 11 developed nations for the efficiency of our healthcare system (only the United States was worse). We came at or close to the bottom of the list in access to care, timeliness of care and overall quality of care and didn’t rank in the top three in any of the metrics reviewed.

Maybe our healthcare system isn’t as great as we like to think it is. How can Canadian health care move to the front of the pack relative to its peers?

Part of what is holding us back is how public health care spending is allocated.  For example, the way we spend health care dollars is often process rather than outcomes-oriented.  Most provincial governments pay healthcare providers, at least in part, according to the tasks they’ve performed rather than the health outcomes they’ve achieved.  Doctors, too, are often paid, at least in part, by the number of patients they see or activities they perform with little consideration given to the quality or appropriateness of care delivered.

A system that encourages improved quality and access to care, providing the best possible value for public spending, and rewards innovation may be what’s needed.

The outcomes that matter to many patients — a good care experience, the highest quality of life for the longest time possible — could be how success is judged.  Financial incentives that reward care providers for helping to keep their patients healthy would encourage innovation in valuable areas of health that historically have been difficult to build a business case around, such as health promotion and disease management and prevention.

How do we get there?

Governments can’t mandate innovation, but they do have a variety of levers they can maneuver to encourage those that want to experiment and innovate. Setting a forward-looking national vision for change would provide a powerful signal that the status quo is not in the best interests of Canadians.

Some interesting funding experimentation is already taking place in Canada.

In Mississauga, hospital provider, Trillium Health Partners and Saint Elizabeth home care have agreed to be paid jointly by the province based on how well cardiac patients do after leaving hospital. Linking their funding has incentivized the two organizations to collaborate more closely and ensure patients receive smooth transitions between care while also reducing associated costs. After a year, the results are promising.  Patients are being discharged sooner and post-op readmissions to hospital and emergency department visits are down.

New Brunswick is implementing new approaches to deliver better healthcare in the community.  Medavie Health Services, a private provider of emergency medical and community care services, will soon enter into a performance based contract with the province.  Their reimbursement will be linked to metrics related to increased system capacity, improved patient experience and improved population health outcomes.

Meanwhile, the federal government recently unveiled Canada’s first social impact bond in health to pay for a blood pressure control program run by the Heart and Stroke Foundation with support from MaRS Discovery District and its Centre for Impact Investing. The payments Heart and Stroke will receive from the federal government will vary according to how well it can control participants’ blood pressure.

These experiments are vital first steps, but the scale of ambition needs to be much greater for meaningful transformation.

Canada needs a national outcomes measurement and health funding strategy, in partnership with the provinces and territories, with a substantial commitment to test new approaches and adopt those that work.  A federal support and evidence collection unit could provide expertise in funding innovation for provinces and health care providers seeking to test new payment approaches and allow others to learn from those who have already done so within Canada and internationally.

We need to shift our focus to understand how to drive the best health outcomes and get better value from our limited health dollars. To do this, governments and care providers must intentionally and strategically experiment with ways to pay for care that align health stakeholders to seek better quality and value. This is the future of healthcare.

 

Alexis Wise, MBA, is a Contributor with EvidenceNetwork.ca and a senior manager at MaRS Discovery District, where she works on impact investing strategies and health system innovation.

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