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Fraser Institute

Enough talk, we need to actually do something about Canadian health care

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12 minute read

From the Macdonald Laurier Institute

By J. Edward Les for Inside Policy

Canada spends more on health care as a percentage of GDP than almost all other OECD countries, yet we rank behind most of them when it comes to outcomes that matter.

I drove a stretch of road near Calgary’s South Health Campus the other day, a section with a series of three intersections in a span of less than a few hundred metres. That is, I tried to drive it – but spent far more time idling than moving.

At each intersection, after an interminable wait, the light turned green just as the next one flipped to red, grinding traffic to a halt just after it got rolling. It was excruciating; I’m quite sure I spied a snail on crutches racing by – no doubt making a beeline (snail-line?) for the ER a stone’s throw away.

The street’s sluggishness is perhaps reflective of the hospital next to it, given that our once-cherished universal health care system has crumbled into a universal waiting system – a system seemingly crafted (like that road) to obstruct flow rather than enable it. In fact, the pace of medical care delivery in this country has become so glacial that even a parking lot by comparison feels like the Indianapolis Speedway.

The health care crisis grows more dire by the day. Reforms are long overdue. Canada spends more on health care as a percentage of GDP than almost all other OECD countries, yet we rank behind most of them when it comes to outcomes that matter.

And we’re paying with our lives: according to the Canadian Institute for Health Information, thousands of Canadians die each and every year because of the inefficiencies of our system.

Yet for all that we are paralyzed by the enormity and complexity of the mushrooming disaster. We talk about solutions – and then we talk and talk some more. But for all the talking, precious little action is taken.

I’m reminded of an Anne Lamotte vignette, related in her bestselling book Bird By Bird:

Thirty years ago my older brother, who was ten years old at the time, was trying to get a report written on birds that he’d had three months to write, which was due the next day. We were out at our family cabin in Bolinas, and he was at the kitchen table close to tears, surrounded by binder paper and pencils and unopened books about birds, immobilized by the hugeness of the task ahead. Then my father sat down beside him, put his arm around my brother’s shoulder, and said, “Bird by bird, buddy. Just take it bird by bird.”

So it is with Canadian health care: we’ve wasted years wringing our hands about the woeful state of affairs, while doing precious little about it.

Enough procrastinating. It’s time to tackle the crisis, bird by bird.

One thing we can do is to let doctors be doctors.  A few weeks ago, in a piece titled “Should Doctors Mind Their Own Business?”, I questioned the customary habit of doctors hanging out their shingles in small independent community practices. Physicians spend long years of training to master their craft, years during which they receive no training in business methods whatsoever, and then we expect them to master those skills off to the side of their exam rooms. Some do it well, but many do not – and it detracts from their attention to patients.

We don’t install newly minted teachers in classrooms and at the same time task them with the keeping the lights on, managing the supply chain, overseeing staffing and payroll, and all the other mechanics of running schools. Why do we expect that of doctors?

Keeping doctors embedded within large, expensive, inefficient, bureaucracy-choked hospitals isn’t the solution, either.

There’s a better way, I argued in my essay: regional medical centres – centres built and administered in partnership with the private sector.

Such centres would allow practitioners currently practicing in the community to ply their trade unencumbered by the nuts and bolts of running a business; and they would allow us to decant a host of services from hospitals, which should be reserved for what only hospitals can do: emergency services, inpatient care, surgeries, and the like.

In short, we should let doctors be doctors, and hospitals be hospitals.

To garner feedback, I dumped my musings into a couple of online physician forums to which I belong, tagged with the query: “Food for thought, or fodder for the compost bin?”

The verdict? Hands down, the compost bin.

I was a bit taken aback, initially. Offended, even – because who among us isn’t in love with their own ideas?

But it quickly became evident from my peers’ comments that I’d been misunderstood. Not because my doctor friends are dim, but because I hadn’t been clear.

When I proposed in my essay that we “leave the administration and day-to-day tasks of running those centres to business folks who know what they’re doing,” my colleagues took that to mean that doctors would be serving at the beck and call of a tranche of ill-informed government-enabled administrators – and they reacted to the notion with anaphylactic derision. And understandably so: too many of us have long and painful experience with thick layers of health care bureaucracy seemingly organized according to the Peter Principle, with people promoted to – and permanently stuck at – the level of their incompetence.

But I didn’t mean to suggest – not for a minute – that doctors shouldn’t be engaged in running these centres. I also wrote: “None of which is to suggest that doctors shouldn’t be involved, by aptitude and inclination, in influencing the set-up and management of regional centres – of course, they should.”

Of course they should. There are plenty of physicians equipped with both the skills and interest needed to administer these centres; and they should absolutely be front and centre in leading them.

But more than that: everyone should have skin in the game. All workers have the right to share in the success of an enterprise; and when they do, everybody wins.  When everyone is pulling in the same direction because everyone shares in the wins, waste and inefficiencies are rooted out like magic.

Contrast that to how hospitals are run, with scarcely anyone aware of the actual cost of the blood tests or CT scans they order or the packets of suture and gauze they rip open, and with the motivations of administrative staff, nurses, doctors, and other personnel running off in more directions than a flock of headless chickens. The capacity for waste and inefficiencies is almost limitless.

I don’t mean to suggest that the goal of regional medical centres should be to turn a profit; but fiscal prudence and economic accountability are to be celebrated, because money not wasted is money that can be allocated to enhancing patient care.

Nor do I mean to intimate that sensible resource management should be the only parameter tracked; patient outcomes and patient satisfaction are paramount.

What should government’s role be in all this? Initially, to incentivize the creation of these centres via public-private partnerships; and then, crucially, to encourage competition among them and to reward innovation and performance, with optimization of the three key metrics – patient outcomes, patient satisfaction, and economic accountability – always in focus.

No one should be mandated to work in non-hospital regional medical centres. It’s a free country (or it should be): doctors should be free to hang out their own community shingles if they wish. But if we build the model correctly, my contention is that most medical professionals will prefer to work collaboratively under one roof with a diverse group of colleagues, unencumbered by the mundanities of running a business, but also free of choking hospital bureaucracy.

I connected a couple weeks ago with the always insightful economist Jack Mintz (who is also a distinguished fellow at the Macdonald-Laurier Institute). Mintz sits on the board of a Toronto-area hospital and sees first-hand “the problems with the lack of supply, population growth, long wait times between admission and getting a bed, emergency room overuse,” and so on.

“Something has to give,” he said. “Probably more resources but better managed. We really need major reform.”

On that we can all agree. We can’t carry on this way.

So, let’s stop idling; and let’s green-light some fixes.

As Samwise Gamgee said in The Lord of the Rings, “It’s the job that’s never started as takes longest to finish.”


Dr. J. Edward Les is a pediatrician in Calgary who writes on politics, social issues, and other matters.

Business

Fuelled by federalism—America’s economically freest states come out on top

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From the Fraser Institute

By Matthew D. Mitchell

Do economic rivalries between Texas and California or New York and Florida feel like yet another sign that America has become hopelessly divided? There’s a bright side to their disagreements, and a new ranking of economic freedom across the states helps explain why.

As a popular bumper sticker among economists proclaims: “I heart federalism (for the natural experiments).” In a federal system, states have wide latitude to set priorities and to choose their own strategies to achieve them. It’s messy, but informative.

New York and California, along with other states like New Mexico, have long pursued a government-centric approach to economic policy. They tax a lot. They spend a lot. Their governments employ a large fraction of the workforce and set a high minimum wage.

They aren’t socialist by any means; most property is still in private hands. Consumers, workers and businesses still make most of their own decisions. But these states control more resources than other states do through taxes and regulation, so their governments play a larger role in economic life.

At the other end of the spectrum, New Hampshire, Tennessee, Florida and South Dakota allow citizens to make more of their own economic choices, keep more of their own money, and set more of their own terms of trade and work.

They aren’t free-market utopias; they impose plenty of regulatory burdens. But they are economically freer than other states.

These two groups have, in other words, been experimenting with different approaches to economic policy. Does one approach lead to higher incomes or faster growth? Greater economic equality or more upward mobility? What about other aspects of a good society like tolerance, generosity, or life satisfaction?

For two decades now, we’ve had a handy tool to assess these questions: The Fraser Institute’s annual “Economic Freedom of North America” index uses 10 variables in three broad areas—government spending, taxation, and labor regulation—to assess the degree of economic freedom in each of the 50 states and the territory of Puerto Rico, as well as in Canadian provinces and Mexican states.

It’s an objective measurement that allows economists to take stock of federalism’s natural experiments. Independent scholars have done just that, having now conducted over 250 studies using the index. With careful statistical analyses that control for the important differences among states—possibly confounding factors such as geography, climate, and historical development—the vast majority of these studies associate greater economic freedom with greater prosperity.

In fact, freedom’s payoffs are astounding.

States with high and increasing levels of economic freedom tend to see higher incomesmore entrepreneurial activity and more net in-migration. Their people tend to experience greater income mobility, and more income growth at both the top and bottom of the income distribution. They have less poverty, less homelessness and lower levels of food insecurity. People there even seem to be more philanthropic, more tolerant and more satisfied with their lives.

New Hampshire, Tennessee, and South Dakota topped the latest edition of the report while Puerto Rico, New Mexico, and New York rounded out the bottom. New Mexico displaced New York as the least economically free state in the union for the first time in 20 years, but it had always been near the bottom.

The bigger stories are the major movers. The last 10 years’ worth of available data show South Carolina, Ohio, Wisconsin, Idaho, Iowa and Utah moving up at least 10 places. Arizona, Virginia, Nebraska, and Maryland have all slid down 10 spots.

Over that same decade, those states that were among the freest 25 per cent on average saw their populations grow nearly 18 times faster than those in the bottom 25 per cent. Statewide personal income grew nine times as fast.

Economic freedom isn’t a panacea. Nor is it the only thing that matters. Geography, culture, and even luck can influence a state’s prosperity. But while policymakers can’t move mountains or rewrite cultures, they can look at the data, heed the lessons of our federalist experiment, and permit their citizens more economic freedom.

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Business

Brutal economic numbers need more course corrections from Ottawa

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From the Fraser Institute

By Matthew Lau

Canada’s lagging productivity growth has been widely discussed, especially after Bank of Canada senior deputy governor Carolyn Rogers last year declared it “an emergency” and said “it’s time to break the glass.” The federal Liberal government, now entering its eleventh year in office, admitted in its recent budget that “productivity remains weak, limiting wage gains for workers.”

Numerous recent reports show just how weak Canada’s productivity has been. A recent study published by the Fraser Institute shows that since 2001, labour productivity has increased only 16.5 per cent in Canada vs. 54.7 per cent in the United States, with our underperformance especially notable after 2017. Weak business investment is a primary reason for Canada’s continued poor economic outcomes.

A recent McKinsey study provides worrying details about how the productivity crisis pervades almost all sectors of the economy. Relative to the U.S., our labour productivity underperforms in: mining, quarrying, and oil and gas extraction; construction; manufacturing; transportation and warehousing; retail trade; professional, scientific, and technical services; real estate and rental leasing; wholesale trade; finance and insurance; information and cultural industries; accommodation and food services; utilities; arts, entertainment and recreation; and administrative and support, waste management and remediation services.

Canada has relatively higher labour productivity in just one area: agriculture, forestry, fishing and hunting. To make matters worse, in most areas where Canada’s labour productivity is less than American, McKinsey found we had fallen further behind from 2014 to 2023. In addition to doing poorly, Canada is trending in the wrong direction.

Broadening the comparison to include other OECD countries does not make the picture any rosier—Canada “is growing more slowly and from a lower base,” as McKinsey put it. This underperformance relative to other countries shows Canada’s economic productivity crisis is not the result of external factors but homemade.

The federal Liberals have done little to reverse our relative decline. The Carney government’s proposed increased spending on artificial intelligence (AI) may or may not help. But its first budget missed a clear opportunity to implement tax reform and cuts. As analyses from the Fraser InstituteUniversity of CalgaryC.D. Howe InstituteTD Economics and others have argued, fixing Canada’s uncompetitive tax regime would help lift productivity.

Regulatory expansion has also driven Canada’s relative economic decline but the federal budget did not reduce the red tape burden. Instead, the Carney government empowered cabinet to decide which large natural resource and infrastructure projects are in the “national interest”—meaning that instead of predictable transparent rules, businesses must answer to the whims of politicians.

The government has also left in place many of its Trudeau-era environmental regulations, which have helped push pipeline investors away for years. It is encouraging that a new “memorandum of understanding” between Ottawa and Alberta may pave the way for a new oil pipeline. A memorandum of undertaking would have been better.

Although the government paused its phased-in ban on conventionally-powered vehicle sales in the face of heavy tariff-related headwinds to Canada’s automobile sector, it still insists that all new light-duty vehicle sales by 2035 must be electric. Liberal MPs on the House of Commons Industry Committee recently voted against a Conservative motion calling for repeal of the EV mandate. Meanwhile, Canadian consumers are voting with their wallets. In September, only 10.2 per cent of new motor vehicle sales were “zero-emission,” an ominous18.2 per cent decline from last year.

If the Carney government continues down its current path, it will only make productivity and consumer welfare worse. It should change course to reverse Canada’s economic underperformance and help give living standards a much-needed boost.

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