Health — Issue No. 3 — Friday, November 8, 2013 (HTML)

370 HSBC Executive Meeting Room, Morris J. Wosk Centre for Dialogue
580 West Hastings Street, Vancouver, B.C.

Present: Norm Letnick, MLA (Chair); Judy Darcy, MLA (Deputy Chair); Donna Barnett, MLA; Dr. Doug Bing, MLA; Sue Hammell, MLA; Linda Larson, MLA; Richard T. Lee, MLA; Michelle Stilwell, MLA

1. The Chair called the Committee to order at 9:01 a.m. and made opening remarks.

2. The following witnesses appeared before the Committee and made a presentation titled Health Care in Canada and British Columbia — History and Overview and answered questions:

4. The following witness appeared before the Committee and made a presentation titled Health System Structure and Delivery and answered questions:

6. The following witness appeared before the Committee and made a presentation titled Health System Structure and Financing and answered questions:

8. The following witness appeared before the Committee and made a presentation titled Outcomes, Comparisons and Change Methods and answered questions:

10. The following witness appeared before the Committee and made a presentation titled Seeking Solutions Within Complex Systems and answered questions:

The following electronic version is for informational purposes only.
The printed version remains the official version.

REPORT OF PROCEEDINGS
(Hansard)

SELECT STANDING COMMITTEE ON
HEALTH


CONTENTS
Page
Briefings: Public Health Researchers	24
D. Finegood
S. Morgan
L. Goldsmith
A. Anis
Committee Discussion	84

N. Letnick (Chair): Thank you, ladies and gentlemen. I'll call to order the meeting of the Select Standing Committee on Health for Friday, November 8, 2013.

As you may see in front of you, we have a full agenda going till four o'clock. I understand it's a long weekend, so what I will do is try to facilitate that we do finish on time, which means we'll have to finish every section on time if we want to finish the actual day on time. Please help me in doing that.

My first privilege is to thank all of you for coming, as well as the staff that are here, and, of course, the Michael Smith Foundation, who have been so generous with their time to help us, as the Standing Committee on Health, understand a lot of the nuances that are happening in our health care system both locally in British Columbia and in Canada — and in systems around the world — so that as we proceed with the mandate that's been given to us by the Legislature….

It is a three-part mandate. Part 1 is to look at what has happened before from the committee's perspective. Part 2 is to identify different strategies or alternatives to continue to sustain a publicly funded health care system and improve it over the next 25 years, which is basically, roughly, the time period that the boomers will be aging their way through the system.

Then part 3 is to go back to the public, after we've looked at the different strategies and alternatives to sustaining the system and improving it. Part 3 is to go back to the public and ask them again, "Which ones do you like more than others?" so that we have a good political sense as to where the public is on these different strategies, and then present our report to the Legislature.

There is no specific timeline attached to the committee, but it is our hope that we can have our work done within a year and a half, two years maximum, and present that and then go on to something else as tasked to us by the Legislature.

That's broadly where we are with the Standing Committee on Health. We're right at the beginning of a new, exciting, dynamic process. We thought it would be best if we could get Michael Smith to come in with their resources to help us understand some of the nuances of health care and answer some questions that we may have.

We're not trying to find the solution today — solutions. Please, that's not the goal. The goal is so that we have the questions that we need to ask others as we move through the process over the next series of months.

I'd like to thank Dr. Finegood for leading the team. I really appreciate all that — and, of course, for your presentation today. I thank David Plug and Isabelle Linden for all the work that you've done. I really appreciate that. And Marty, as always — Dr. Schechter — thank you very much for your work in this process.

Thank you in advance for all the work. I understand that a lot of you took time away from your classes that you're teaching, or other work, to put this together in the middle of the night or early in the morning. I really, really appreciate all that.

Given that it is now 9:04, and we're starting at 9:05, to keep with the goal today of being on time, I will stop there and just take 30 seconds to allow the members of the standing committee to introduce themselves — name, rank and serial number, and probably their ridings, where they come from — and then we'll start the presentations. Either way, left or right. It doesn't matter — whoever wants to start first.

M. Stilwell: I'm Michelle Stilwell, MLA for Parksville-Qualicum and the Parliamentary Secretary for Healthy Living to the Minister of Health.

L. Larson: I'm Linda Larson. I'm the MLA for Boundary-Similkameen. I am the Parliamentary Secretary for Seniors under the Minister of Health.

D. Bing: I'm Doug Bing, the MLA for Maple Ridge–Pitt Meadows. I was a wet-fingered dentist for 36 years.

S. Hammell: Hi. My name is Sue Hammell, and I'm the MLA for Surrey–Green Timbers and the critic for mental health.

R. Lee: I'm Richard Lee, MLA for Burnaby North and Parliamentary Secretary for Asia Pacific Strategy.

D. Barnett: Good morning. I'm Donna Barnett. I'm the MLA for Cariboo-Chilcotin, and I'm the Parliamentary Secretary for Rural Economic Development to the Minister of Forests, Lands and Natural Resource Operations. I'm also chair of the rural caucus, and I come from the heart of rural British Columbia, where it all happens.

As you can see — something different here. The MLAs are not sequestered from one party on one side and one party on the other side, as is typical for standing committees. We've taken the approach that this issue is so important across all party lines and the whole province that we have to put this together as a team. That's why we mix up. That's the kind of character that this committee is trying to achieve and is achieving so far.
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With that, I'd like to start with No. 2, health care in Canada and B.C — history and overview.

D. Finegood: Thank you, Mr. Letnick. I'm very pleased to be here and very pleased to help support our legislators to understand, get the foundation that's required to do your work. So I'm really pleased that we could organize this on short notice.

I'll just briefly remind those of you who don't know about the Michael Smith Foundation who we are and what we do. We were created in 2001, and we're there to support and connect the health research community.

We think of our work in three domains. We support discovery of solutions to our biggest health problems and challenges through supporting individuals, like the one sitting to my left here. Earlier in his career he received a scholar award from the Michael Smith Foundation to do his work. We also work to connect knowledge with its action and use, and that's kind of what we're here to do today — to help impart what we do know to you in a way that will help you do your work. And of course, we want to engage with partners to address priorities as we do our work.

I just want to make a quick comment about how today is kind of a microcosm of some of the work that we do, and that is that you are part of the health system — one piece of it, right? There's a whole bunch of other things in the health system going on. My colleagues here who are coming to speak to you today are part of the research system. That includes the universities and colleges. It includes lots of different components, right? Their incentives and their world are in that domain.

Michael Smith is kind of at that intersection. We're there to help knit together those two different cultures and timelines and imperatives and incentives and all the things that are interesting. Just even today…. It was a very short timeline, and as Mr. Letnick said, some of my colleagues, although they are used to doing this, were up in the middle of the night doing work, in a sense, as we always say, "off the side of the desk." But I think they're also quite happy to be able to be here, so I'll say that on their behalf.

We've broken up the conversation today into five topic areas. You have it on your agenda. I don't need to speak about it. They're big areas, clearly a lot more than one can cover in a day. We'll do the best we can to get the match between your needs and the information available just right. Hopefully, that will work out.

I'm pleased to introduce my colleagues here. Dr. Morgan, sitting to my left, is the associate director for the Centre for Health Services and Policy Research at UBC, a longstanding organization that has done considerable work in this area. Behind me, I know, my colleagues Laurie Goldsmith from SFU and Aslam Anis from UBC's Centre for Health Evaluation and Outcome Science — CHEOS, as we fondly call them.

I feel a little bit of a fake to stick myself up on there, but I will talk to you a little bit later. I'm not an expert in the health system, but I've done a lot of work in thinking about complex problems. Hopefully, I can bring you just a few ideas to make you feel less overwhelmed at the end of the day, after you've had all that information.

Without further ado, I'd like to turn the microphone over to my colleague Dr. Morgan.

We'll adjust the slides, and while we're doing so, I just want to thank you for the opportunity to present here today. It's a privilege to be able to share some of the information we have about the health system with people who are tasked with developing health policy.

I'll begin with just a quick declaration of, I guess, conflicts of interest or objectives and background. I am a PhD in economics, have studied traditional economics throughout most of my formal university training and transitioned into a health policy analyst over the course of post-doctoral training and my subsequent career as an academic.

Perhaps paradoxically, I'm actually going to give the historical context of the health system in Canada and how it affects the health system here in British Columbia. There will be some economics. I'm going to start off with a little bit of that. But I'm going to take this opportunity to go back and see how the system that we have today is structured, how it compares to systems around the world and, most importantly, how it's shaped by our history. Understanding that, I think, is one of the most important insights into understanding how we can move forward and make change.

It's important to understand that there are institutional legacies of decisions that were taken, in some cases, over 100 years ago and, in many cases, approximately 60 years ago that have profound effects on what you can do as the people who develop and produce legislation concerning our health care system.

Dr. Finegood made mention of health system versus health research. I want to just make a distinction between health care policy and the broader context of health policy. Most of the comments today, I think, are going to relate to health care policy — the policy that concerns the organization, finance and delivery of health care services. But I don't want to pretend that that is, in fact, the whole of health policy.

In fact, many would argue it is the narrow edge of the wedge insofar as it, obviously, is critically important for the health of individual patients. But as a determinant of
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population health, broader societal investments in education, housing, career development, community services, public health interventions and health promotion initiatives actually can have greater impact on the health of the population than reorganizing delivery of health care services.

But we're here to talk about health care services, and we'll come back from time to time about how population health, public health and health promotion, in essence, may actually be an important ingredient in health care system sustainability because in essence, those other factors of the broader health policy file can actually take some pressure off what is the far more costly health care delivery system.

I want to put our system in context right from the very beginning, just to help get us a sense of how British Columbia's health care system — and ultimately, actually, how Canada's health care system or systems — relates in comparison to systems around the world. I'm going to make the case that there are four general types of health care systems, and of course, some countries, including Canada, actually use a mix of these four types for different components of health care delivery.

The first is what you would consider true public health care. Some people refer to this as the Beveridge model, owing to the important role of the Beveridge report in the U.K., which gave the blueprint for the British National Health Service.

What this is, ultimately, is health care that is provided and financed by government. Government is both the payer and, ultimately, the deliverer of health care. In a true public health care system all people who provide health care services ultimately might be considered employees of the state, public servants. Up until Wal-Mart grew in size, the NHS was referred to as the biggest employer in the world. Unfortunately, perhaps, that title is now owned by Wal-Mart.

Social health insurance, which is an important concept for us to wrap our minds around, is a model that is fairly common in Europe and has some roots in some Asian countries as well — a model in which care is provided by private or public organizations. It can be provided by a mix of public actors as well as private organizations, but it is financed by mandated and regulated insurance plans.

Ultimately, by law, under a social health insurance system people are obligated to participate in the universal system of financing, but they participate by purchasing insurance, usually by way of occupation group or perhaps by way of geographic area. They buy into what might be called a sickness fund or a social health insurance plan, which then provides the financing for the care that they would need across a spectrum of services. But those services may actually be delivered by organizations that are independent from that sickness fund.

This gets us to the comparison to the American model, which is sometimes referred to as a market model for health care. This would be the American model prior to, I think, January of 2014. When Obamacare kicks in, the U.S. model will look a little bit more like a social health insurance model than it does today. Under a market model, or the U.S. model of health care, health care is provided by private organizations and sometimes also provided by public organizations, but it's financed by out-of-pocket payments by patients or by voluntary private insurance.

Pre-Obamacare United States had a considerable amount of true market health care. Ultimately, Obamacare, the universal system of insuring Americans against their health care needs, was a 100-year struggle, and it was a 100-year struggle to get it in place because true market models of health insurance fail. The people who most need health care are those that are most costly to insure. Therefore, without some system of regulation, insurers are not wont to insure those populations.

A structure like social health insurance mandates that everybody be covered, and behind the scenes it also mandates that insurers provide coverage. That kind of structure gives an opportunity for everybody to be covered regardless of, in particular, their health care needs.

The last kind of quintessential model is actually ours. In the world of health care systems, Canada is probably the archetype of what is referred to as a public health insurance system. In this kind of model — and we're familiar with it — care is provided by private organizations or some public bodies, but it is financed by a universal government plan.

The distinction between this and, say, social health insurance is that the insurer is the government. The insurer is public financing. In essence it's universal, because these plans typically are described, in the Canadian context in particular, as covering all persons' needs, regardless of where they live or what their ability to pay is. It's important to note the distinction between that and social health insurance — where you might have multiple insurers as opposed to a single, say, provincial insurer — and also the distinction between our public health insurance model and a public health care model such as in the United Kingdom.

In Canada the people who provide services in our health care system by and large are independent of the people who pay for them. The practitioners in hospitals and, in particular, in the community setting — medical professionals who run their private practices — are not public servants. They are independent businesses. We'll talk more about that.

I'll use the four models that kind of describe those systems again to just get a sense of where money comes from for funding health care. These four dots represent the spending on health care services in the United Kingdom, Germany, Canada and the United States. The different colours give you an indication of the extent to
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which health care is financed through public funding — basically financed through the tax system, through various taxes and revenue streams for government — versus financed through social insurance.

Social insurance differs from tax because it is premiums or payroll taxes collected and specifically earmarked into the fund that is to be used to pay for health care. We'll talk a little bit more about that this afternoon. The analogy in our context would be things like workers compensation boards or unemployment insurance. Once the contributions go into the fund for that use, they cannot be used for other purposes. That's different, as you know, from general revenues for government, which can be moved around program by program, depending on the needs of the day. Social health insurance money cannot be moved around. It has to be used for health care.

It's important to note that even in a country like Germany, which is a quintessential social insurance health system, there is a reasonably considerable amount of public financing that's used to help people who cannot afford to participate in programs because they don't have the means to pay the social insurance premiums, etc.

The United States market. Even though it's kind of a market model prior to 2014 — this data is from 2011 — you'll also note that there's a considerable amount of public funding. Depending on the database, that is plus or minus around 50 percent. It ranges, depending on what types of information you're including, between 55 percent public funding and 45 percent public funding — depending on what you look at.

Approximately half, surprisingly, of U.S. health spending is actually funded through government. That is, again, because even prior to Obamacare the public had to step in to help those who could not afford insurance to actually get access to care — most notably those with the lowest incomes and also those with the highest needs, specifically persons over the age of 65 — through what is the U.S. Medicare system.

Finally, Canada. Even though it's a universal public financing system, public insurance system, it is surprising for many — particularly around the world, when we talk to our international colleagues — to know that approximately 30 percent of health spending in Canada is actually spent through private means, whether it's out-of-pocket payment or through voluntary private insurance. We'll talk a little bit more about that on this next slide, just to get an idea of where that private funding is focused.

Medicare as we know it is actually quite comprehensive and quite deep in terms of its coverage of specific services that are determined to be matters of our universal health insurance system under the Canada Health Act and the prior legislation that led to that. Those services are medical care — medically necessary physician services and medically necessary hospital care. Overwhelming shares of those services are blue on this slide, which means funded by the public purse.

As we move towards services that start to get outside the Canada Health Act, gradually you see more and more private financing for health care. A significant percentage of long-term care in Canada is funded through the public purse, but there is also a fair amount of out-of-pocket payment for long-term care as well.

Then, when you move to other major components of the health care system like prescription drugs, dental care or therapeutic devices, you begin to realize that actually, the public payer is the minority payer in our health care system in Canada. Particularly around prescription drugs and therapeutic devices, that's an anomaly around the world.

If you looked at the other countries on my prior slide, at least as it's related to prescription drugs, therapeutic devices and home care — which I don't have good financing data for, for this slide — those things are typically part of the health systems, whether it's the public health system of the U.K., the social insurance systems of Europe. Those services are typically less privately financed and more publicly financed or financed through social insurance.

We'll come back to this a little bit later, but this is where the private payment, the red and pink, really comes into Canada's health care system.

Now I'm going to step back, and I apologize for having to go through these slides quickly. I teach this historical content on the health care system over a nine-hour component of my course that I teach every fall. I'm going to do it in 30 minutes, so it'll be a bit like drinking water from a firehose. I hope to get the key points across.

Probably one of the most important ones is this bit of jurisdictional divide that is a legacy of the 1867 British North America Act — or, since the 1980s, our Constitution Act in Canada, when we repatriated it.

Important to know that the federal government…. This slide is divided. There is lots in the Constitution Act that's not here on this slide. What I've divided it by is revenue sources and responsibilities as they relate to key issues concerning health care.

The revenue sources are broad. The federal government has revenue powers and taxation of any form for any purpose. That's an important clause in our Constitution Act — the "for any purpose." That'll come back in the history of our health care system in a few slides. It also has powers over currency, trade, etc., that are important in terms of the possibilities of that branch of government actually having revenue tools — an important part of Canada's history.

In contrast, provincial revenue sources are via direct taxation, licences and natural resources, and it's specific in the Constitution Act that it's for provincial purposes only. Again, that'll come back later in the history.

I underlined licences because it's actually by way of
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the fact that provinces are responsible for or at least have the opportunity to collect licences from such things as barbershops, as is mentioned in the British North America Act of 1867. But it's by way of that authority that, implicitly, provinces have responsibility for licensing health professionals.

So it's a very indirect jurisdictional allocation. It's sort of a constitutional convention rather than explicit statement about the role and responsibility as it relates to health professionals, in part because in 1867 we didn't have what we would deem to be close to modern medicine at the time.

In terms of health care responsibilities — below that red line on the slide — very quickly, the federal government had responsibility for quarantine and issues related to such things as naval hospitals — important in terms of thinking through Canada's federal government's role, protecting its borders, etc. This, of course, then, implicitly provides the federal government some responsibility for public health in this country.

It has responsibility for Indians on reserves, which, although there have been different levels of government having different takes on who is ultimately responsible for aboriginal health, does have some implications for the federal government having some responsibility for health services for aboriginal populations.

It has responsibility for defence and immigration and regulation. These things have importance in terms of our health system, which I will not talk about today for lack of time.

The provinces, importantly, are explicitly responsible, according to the Constitution Act of Canada, for hospital care. That is in the Constitution Act. It's stated quite clearly, with the exception of naval hospitals as it relates to quarantine and outbreak.

Health care, more generally, is actually implicitly the responsibility of the provinces by way of a clause that says that the provinces are responsible for all matters of a merely local or private nature. Of course, you can think of few things that are more local and private than the delivery of health care services to individual patients. So as it relates to that edge of the health spectrum, when patients meet practitioners, the constitutional convention has been that the provinces are responsible. That is an important part of our history, and we'll talk a little bit about it.

Early history on the health system, just worth noting, in terms of what happened around World War I, when the federal government was trying to get men, in particular, to enlist in the army. They had to administer physical exams in large numbers and were discovering that the health of the Canadian population was perhaps not as good as it should have been. So early on there was a sense that we could do better for the health of our population.

There was also an historic legacy of the federal government passing legislation to allow them to conscript men into service. The compromise at the federal level at the time was that conscription could be brought in under the condition that the federal government would provide health care services for veterans and that the federal government would create a department of health — which would ultimately become Health Canada.

So early history around the wartime need for healthy men, in essence, to enter into service at World War I began an infrastructure of actually creating federal capacity on health, which was perhaps dabbling a little bit into provincial jurisdiction at the time, but important to note.

The second part of this slide alludes to what is a famous portrait concerning the Depression era in the United States but also around the world. That part of our history actually caused considerable strife in this country and elsewhere, particularly affected rural populations and provinces that were more rural and more reliant on agriculture than others, and it did a few things that were important in terms of health care services.

It actually drove down incomes of the population, for certain, and that also drove down their ability to purchase what little health care services were available at the time. That caused some concerns about people being able to access the care they might need. It also caused a bit of a mobilization amongst the medical profession to say: "Maybe it would be a good idea for there to be a public insurance system in some way to help people afford the care that they might need."

And lastly, importantly, it put considerable strains on the provinces, which were responsible for so many social programs that were increasing in demand at the time, and yet provinces as per the constitution didn't quite have as many revenue-generating powers as the federal government did. That was quite problematic. It's the early days of what we often talk about in terms of fiscal imbalance.

In 1940 a very important federal-provincial or Dominion-provincial commission was held to look at issues around revenues for the provinces and the federal government, the federal-provincial imbalance in terms of revenue sources and responsibilities and, finally, issues concerning provincial disparities, which had become exacerbated during the Depression era.

This report called for federal income security, equalization and, importantly — this third button — national standards for programs under provincial jurisdiction. This is where the constitution rules concerning the federal revenue powers being for any purpose are important. Ultimately, what this commission in 1940 recommended was that the federal government provide conditional grants to the provinces to help them maintain national standards on programs that were considered essential for the nation. We will find that health care will be one of those early programs for such spending power, as we
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know it.

Planning for postwar reconstruction in the 1940s was an important aspect of government responsibility — thinking about what would happen after the war. I talk to my students about this idea that these are important points in any country's history because the countries are ultimately asking themselves: "What are we fighting for? What are we defending? How do we define ourselves as a nation?"

In the United Kingdom in 1942 they released the Beveridge report, which was a very grand, widely read plan for broad social security in the United Kingdom. There's a variety of sort of sociological and other political factors that led to the appetite for that in the United Kingdom in particular.

It provided a blueprint for what was their public health service that was established in 1948 — the National Health Service of the United Kingdom. It was a cradle-to-grave, comprehensive, public health care system where medical, hospital, pharmaceutical, dental, nursing care, etc. would all be funded on a universal basis, on equal terms and conditions and, ultimately, all be administered by some level of public body.

In Canada at the time, perhaps because of our distance from the war, there was not quite the same appetite for a centralized involvement in the health system. Perhaps also because of our proximity to the United States, the appetite for a centralized but government-run system might not have been high. Nevertheless, there were proposals by the federal government to actually have a federal plan for health care, and those were discussed from '43 to '46.

Willing provinces might have wanted to participate in such a plan — that is, to cede the responsibility for health care over to the federal government. But some provinces — notably, Ontario — were not willing. I'll talk later, but those that might have wanted this to happen might not have been able to do an NHS-like system on their own because of their limited revenue powers.

Negotiations during Canada's wartime, then, turned ultimately to developing our national health insurance system in stages. This was very explicit language that began to surface in 1943, certainly, in important reports that came out at the end of the war concerning Canada's national policy development plans.

At the time, important provincial innovations took place that helped shape the stages that would come. Tommy Douglas was elected Premier of Saskatchewan in 1947, and Saskatchewan was probably one of the willing provinces, a province that would have liked to have seen a British NHS–like system established in Canada but may not have been able, owing to its particular fiscal circumstance of the time. Douglas, therefore, started to build his provincial system incrementally, with a grand vision that it would grow over time. He started with universal public insurance for hospital services.

British Columbia and Alberta followed very shortly after that, in 1949 and 1950. It's important to note that this is not copycat legislation. The provinces saw that there was public need and demand for universal insurance for hospital care at the time.

Ottawa picked up on this, noting that a number of provinces were actually on board, developing these programs. Therefore, in essence, Ottawa created a cost-sharing program where, through the Hospital Insurance and Diagnostic Services Act, the federal government would pay 50 percent of the cost of insurance programs that met standards of universal public insurance for medically necessary hospital care and diagnostic services.

The diagnostic services part of that is a bit of an historic legacy as well. At the time diagnostic services for populations in the 1950s were more or less X-rays, not a significant amount of modern diagnostic technology that we would look at today.

But interestingly, as an accident of history, Canada got diagnostic services into its universal health insurance plan by way of that most of the diagnostic technology of the day was in hospital.

All provinces were on board with this by 1961. André Picard has a recent book out through the Conference Board of Canada, and he makes the note that this was probably the grandest piece of legislation that passed with the least fanfare in Canada, because it was almost inevitable that this was going to happen, and the federal government probably seized on an opportunity to be part of the credit for developing these systems that were, ultimately, provincial.

It's important to note that even the way this legislation works today, the provinces run the systems and the federal government is, in essence, a co-funder, at least in this era, with some strengths in terms of conditions that needed to be met for that funding.

Associations for medical professions at the time actually insisted that the physicians that were providing services in hospital have the opportunity, at least, to be paid on a fee-for-service basis. That was a compromise made even by Douglas in terms of the universal insurance for hospital services in Saskatchewan.

That compromise got repeated again a decade later. In 1961 Douglas introduced the medical care act of Saskatchewan. This is, basically, universal coverage of medical services by the province. Douglas had original vision of actually having physicians more or less become employees of the state — have them on some kind of financial arrangement, whether it's salary or capitation, that would make them public servants rather than independent practitioners.

This was not popular to the medical association and the medical professions in Saskatchewan. In fact, the politics of this is that all over North America medical associations were opposed to this small Canadian province doing this to physicians in that jurisdiction. The fear was
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that if it did, the idea might spread.

As a compromise, in order to get universal insurance for medical care passed and to overcome the opposition from the interests of the health professions, Douglas made the grand compromise that we will leave our physicians in Canada in a state of being independent private businesspersons who are subject, ultimately, to a public fee schedule. And you're very familiar with the sound of that, because ultimately, that's how primary health care services in Canada are delivered still today.

Canada's equivalent of the Beveridge report, one could argue, was the Royal Commission on Health Services chaired by Justice Emmett Hall, a Conservative chief justice from Saskatchewan who chaired this commission from 1961 to '64. This is a fascinating report, and if you have days necessary to wade through this report, it is still interesting reading. Even though it's from '61 to '64 — this commission's hearings — many of the themes, even many of the stories and testimonials of providers and patients, sound like they would be repeated today if we had the same commission over again.

Despite being a Conservative justice, Hall actually came out with very strong recommendations for universal access without any financial barriers through a publicly administered system. Hall at that time weighed the pros and cons of having, in essence, a social insurance system, a system where you'd have multiple insurers providing the population access by way of social insurance or perhaps even Obamacare-styled mandatory private insurance. Hall made the decision that that would just have been administratively inefficient, and ultimately, it would be more appropriate for Canada to do it through a public system.

In essence, Douglas endorsed the Saskatchewan medicare model. The report contains a lot of other important elements to Canadian health policy, but the endorsement of the Saskatchewan medicare model led to the 1966 federal Medical Care Act — an important piece of legislation because it's the second stage of Canada's national health insurance system to be developed.

Again, if you think about the wartime-era language of developing national health insurance in stages, you begin with hospital care, perhaps because that's where costs are highest and, frankly, the health circumstances of the patients are most dire. Then you move to medical services as the next essential service to be insured. They did this through an act that looked very similar to the Hospital Insurance and Diagnostic Services Act. Fifty percent of the costs would be paid for by the federal government, subject to standards of universality, portability, public administration and comprehensiveness.

Accessibility was in this legislation as an essential element but didn't have the weighty status of a principle. That'll come back in the 1980s again for us in terms of the history of our system.

It is true and important to note that all provinces faced bitter opposition to implementing public health insurance for medical services from the medical professions in the era. Nevertheless, by 1971 all provinces had joined medicare.

The big compromise, as I've alluded to — and, in fact, the title of David Naylor's book on the history of Canada's health care system — was that Canada ultimately embraced the model of public payment but private practice. We have a system where we still today have a universal public insurance for medical services and hospital care, but particularly as it relates to medical services, the practitioners ultimately are private businesses, not employees of the state.

So the 1970s, moving right along in this compressed history of our system, were an important era for health policy in Canada, because this would be the era that you'd expect the next essential stages to be developed.

The Hall Commission of 1964 strongly endorsed the sequence of stages that would include prescription drugs and dental and home care among the essential services to be funded through the universal public health insurance system in Canada. We didn't get there.

The 1970s were an era of tremendous fiscal constraint for governments, and so you might have given governments of Canada a free pass for a decade. This owes to the oil crisis, which began, ultimately, with the significant embargo in 1973 and repeated again later in the decade.

So though we expected that we might have greater development of our national health insurance system in this decade, the fiscal realities of governments were challenged. Secondly — and importantly to note, and I'll discuss a bit later — some of those components, most notably prescription drugs, were actually taking off in terms of being a revenue stream or an expenditure stream, and governments may have been a little bit reluctant to take on the burden of what was then seen to be exploding prescription drug costs as the postwar therapeutic revolution was underway.

For whatever the reason — whether it's fiscal constraints or the cost of the new services to be insured — in essence, little was done in terms of expanding Canada's national health insurance system. Instead, there were significant changes to the transfers from the federal government.

In 1975 it is noted that Trudeau actually threatened to scrap the Medical Care Act and the Hospital Insurance and Diagnostic Services Act. It's important to note that this was probably a bluff, but it was a bluff meant to force the federal and provincial governments to sit down and negotiate over what were health system transfers. And so by 1977 the agreement had been made, and the federal government passed what is now referred to as the established programs financing act. It replaced the 50-50 cost-sharing with a block transfer that was tied to GDP for the province.
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This was regarded at the time and still today as being a reasonably generous health transfer. Nevertheless, it bundled health and education together, and if you took the sum of the transfers, it would have actually been smaller than the total of those two components individually.

This forced the provinces, ultimately, to be responsible for deciding: is it health or education that will take the cuts in the 1970s and through the 1980s? And it included cash transfers and tax points — so a beginning of the rebalancing of Canada's fiscal imbalance.

The federal government reduced its federal income tax by 13.5 percent and its corporate taxes by 1 percent, specifically so provinces could increase their taxes by commensurate amounts and the Canadian taxpayer would know no different, other than the fact that the level of government now collecting the money would, in essence, be closer to the taxpayer.

This is a rebalancing of our fiscal imbalance and perhaps a good idea and certainly was, I think, what Trudeau put on the table to get the provinces to buy into this new transfer, which ultimately would no longer pay 50 percent of the costs, no matter what they were.

So in the 1980s we would still again be expecting that there might be a new stage of Canada's national health insurance system to be developed. Again, to be very clear, the grand vision for our national health insurance system would be that it was not going to be limited specifically to hospital and medical care but that one day it would include pharmaceuticals, dental care, home care or other services.

We didn't get anything in the 1980s. The 1980s was, again, an era of looking back at the system that we already had and, in essence, stitching some of the gaps.

Notably, the federal government dusted off old Emmett Hall and brought him back to do a second report on the health care system, Canada's National-Provincial Health Program for the 1980's. This report actually came in with very strong language condemning the extra billing and user charges that were being passed on to patients who entered hospitals or visited doctors in Canada, on top of the fees that were paid by the public insurance system in the provinces, in every province.

This was a tough era in terms of federal-provincial politics, because in essence, the Hall report actually also condemned the provinces for allowing this to happen. There were a variety of programs and white papers developed very shortly thereafter.

The Canada Health Act was passed in 1984. This act actually consolidated the two prior acts. It consolidated the Hospital Insurance and Diagnostic Services Act as well as the Medical Care Act into a single act, and it added accessibility as a principle of the system.

This was an important moment. Ultimately, what it said was that no Canadian should be barred access to necessary services as a function of their ability to pay. The way to do that was actually, through this act, to impose penalties on any extra billing and user charges that was known to be occurring in the provinces. It did not, importantly, add new services to what we know as medicare.

This was, quite literally, stitching the gaps or patching the concerns of our universal system for ensuring hospital and medical care, but it was not ambitious in the sense of trying to expand to new services.

It was tough times at the provincial level because provinces had to enable provincial legislation that would ensure that practitioners were not levying charges to patients. The terms of this act meant that for every dollar that a practitioner collected from a patient for a service that was supposed to be ensured under the Canada Health Act, the province would be penalized by a $1 reduction in federal transfers. Notably, when an independent private practitioner collects the dollar of extra billing or user charges, that's not revenue to the province; that's just revenue to that independent private practitioner.

The provinces were in this awkward scenario where money might be collected by the practitioners that they pay through the public system, but they're not getting any of that revenue themselves. Yet at the same time, the provinces ultimately pay the fine in terms of reduced federal transfers.

A variety of pieces of legislation were passed in all provinces, in essence to try to control the extent to which practitioners would charge patients for services otherwise paid for through the public system. This is typically kind of summarized in language that says: "In Canada a practitioner who wants to be paid through the public insurance system for medical services has to choose to be all in or all out."

If they want to receive funding through our provincial health insurance systems — the Medical Services Plan here in British Columbia, through the Medical Services Commission — they in essence have to agree that they will fully participate in the public plan and not charge patients extra for the services that are covered under the plan. If they wish to charge for services covered under the plan, legislation in British Columbia and in other provinces in essence requires those practitioners to fully opt out of the plan and therefore no longer be eligible for public payment.

This is an interesting incentive scheme, and up until recently I think it has been rather effective at making sure that practitioners see the value in playing in the public system and not dabbling in the private. But as you know, over the last ten years an increasing number of practitioners have gone towards the latter — which is a new challenge for our health system which we can talk about throughout today.

I think a key compromise for the Canada Health Act, if I was to summarize it — and I'm playing on, I think, an excellent paper by Brian Hutchison and colleagues that was published in 2011 on the legacy of past decisions as
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it relates to our primary health care system — is that the Canada Health Act, actually, is very much focused on physicians' services. Hospital care, predominately, is care directed by physicians, obviously, provided by a team of health professionals. But in the community, as it relates to medical services, the language of the act is "medically necessary physician services."

We actually have, through our federal legislation, put physicians at the very centre of our national health insurance system. Yet as mentioned before, the provincial legislation that works to finance those systems, in essence, has embraced a compromise from the '60s that said they'll be independent professionals subject to a fee schedule.

This has important implications in terms of challenges for primary health care reform — if you have a piece of national legislation that is physician-centric and yet even since the 1970s we've known that team-based, multiprofessional primary health care, for instance, would be the best thing for a population.

Moving along to the 1990s. I keep going back to this question: what would be the next stage of medicare? We had not in the 1980s expanded medicare. We had, in essence, just patched up one of the gaps perceived to be in it. Would we expand in the 1990s? The unfortunate answer is no.

Canada was slow in some ways in actually addressing its fiscal challenges and its fiscal deficit relative to its peers in the United Kingdom and the United States. Although Mulroney won what were unprecedented majorities at the federal level in Canada and did begin to put the brakes on federal spending in a variety of ways, it wasn't until the 1990s that the cuts actually were manifest in the health care system. Paradoxically perhaps, this was under a Liberal government where the deepest cuts were made.

The Conservatives had frozen the established program financing cash transfers to the provinces in 1990. This, in essence, means that the federal transfers for health and education were being held constant and the provinces were responsible for finding ways to try to keep costs constant in those programs or to have to finance a greater proportion of those services through their own revenue sources.

But importantly in 1995, in terms of legacy of the Canadian health care system, the federal government created a new transfer: the Canada health and social transfer. It took the EPF components of health and education and added social services to them into a very large new block transfer that included cash and those historic tax points from health, education and social services.

In real terms, over the course of the 1990s this actually represented a 10 percent decline in transfers to the provinces. This is phenomenal in terms of decline in spending transfers for programs for which the costs were increasing.

I'll just give you this slide, which is the historic rate of spending at the national level — British Columbia's would look very similar — in terms of hospital spending per capita after adjusting for inflation. That very deep dip is the mid-1990s in this country. It began slightly before the CHST in 1995, in part because provinces were preparing themselves for those cuts.

Ultimately, the provinces were left responsible for making these decisions, and these were very difficult times in terms of the health system in Canada. Any of you who may have been practitioners in that system — even just citizens in any province in this country — certainly know that there were dire times and a lot of front-page stories about the cuts, the closures, what was going on in the system.

It's important to note that some of these cuts were quite prudent. In fact, we had known for a long time that Canada had longer lengths of stay in its hospitals than perhaps was optimal. It was also known for a long time that we could have made better use of day procedures as opposed to admitting people overnight for a variety of procedures.

So despite the cuts in spending, interestingly enough, trends in the procedures provided in Canadian hospitals were relatively constant. Most of these cuts were made by way of rationalization — closing hospitals, closing beds, shortening lengths of stay and using more out-patient services.

It's also important to note, in terms of the politics of health professionals, that when you cut spending and yet continue the throughput of procedures, albeit with shorter lengths of stay, the overall acuity of health care need per patient per day in the hospitals goes up considerably. So for health care workers in hospitals, this was a considerable squeeze. There were smaller numbers of them in the system, and yet the patients they were treating, on average, per length of stay, were sicker. Not surprising there was considerable grief in the system at the time.

I just want to highlight one of the innovations, perhaps, that occurred in the 1980s and '90s, because it will come back, I think, again this afternoon or later today when we talk about medical care delivery and primary health care.

In the 1990s one of the innovations that took off, in part because of commissions of inquiry into the health care system at the provincial level during the late 1980s, was the creation of regional boards — the creation, in essence, of the trend toward regionalization of health services and health funding decisions. I think this ultimately had in its kernel some really insightful ideas about making decisions at a level of community that's more responsive to the population's needs.

However, it's important to know that because of the silos created by those legacy decisions in the 1950s and '60s, our regional health authorities in British Columbia or regional boards in different provinces were, in essence,
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challenged with tasks or problems that they were probably not equipped to solve.

They could make decisions about allocation of funding concerning hospitals and sometimes long-term-care decisions and sometimes decisions concerning community health services. But they were not in any way equipped to deal with and to manage the challenges concerning the delivery of primary health care in the country or in the regions. That's because of the compromise, again, from the 1960s that primary health care, ultimately, was basically a provincial insurance system for private practice, without any sense in which the private practitioners were actually brought into the system as employees of it.

So although we devolve responsibility to the regional boards of various sorts across this country for hospital and some long-term-care decisions, we didn't devolve responsibility to them, nor could we, as it related to managing primary health care delivery, which is critically important in terms of thinking about the performance of a health care system.

Any of you who may have sat on a regional board in the 1990s probably also realized that this creation of boards, the creation of regions, may have also had some political advantage to provinces, ultimately because it deferred the responsibility for figuring out where to make the cuts, the deep cuts in spending that I showed in those last slides. It devolved that responsibility to a regional level and made decision-makers at the regions responsible for finding out what would be cut.

Ontario was the only province in the country, ultimately, that didn't devolve and, in essence, had a one-person task force at the provincial level chaired by Duncan Sinclair from Queen's University, who ultimately decided, as a single-person task force, almost — I mean, obviously, with a staff — what would be cut, what hospitals would be downsized, in Ontario. In other provinces it was devolved to these regional boards.

The 2000s — next stage of medicare. I ask the question again — and I will continue asking this, I'm afraid, for the rest of my career: where were we? Would we expand? Was the time right for expansion in terms of new services, new components of our national health insurance system?

At the beginning of that decade it looked like there was an opportunity to do so. The National Forum on Health — which was ostensibly chaired by the Prime Minister, Jean Chrétien, at the time — was a commission comprised of experts and representatives from across the country that came down with a report that was remarkably strong in its language around expanding, in essence, Canada's medicare system to include things like home care and prescription drugs. It was very powerful in its language around calling on the federal government to put more cash into the programs.

The historic transfer of money to the provinces by way of tax points was continuing to be a bone of contention at the federal-provincial table in terms of health negotiations, because the feds would continue to argue that they are actually contributing the equivalent of those percentage points of taxable income to the provinces year after year, because they transferred those revenue-generating powers back in the 1970s.

Unfortunately, of course, for the provinces, particularly in the fiscal realities and the fiscal priorities of the late 1990s and early 2000s, they had all cut taxes. They'd cut taxes quite substantially, and so their argument might have been, and perhaps soundly, that those tax points weren't worth face value anymore and they were worth something less.

In 2002 the Romanow commission called for exactly the same thing — called for more cash in terms of federal transfers, also called for expansion of the health care system and, interestingly, called for a variety of other transformations to the health care system, some of which would be incremental and some of which would have been significant. Only a few of the recommendations of that era can one say actually occurred at the federal level or were devolved across the provinces.

The most significant, I think, impact of these national commissions was the change in the federal transfers for health care. Perhaps as a mea culpa by Paul Martin, then Minister of Finance — and eventually Prime Minister, briefly — the federal government started to inject significant real new money into the health care system — starting with the health accord of 1999 but subsequently through the health accords to 2003 and then, finally, the 2004 ten-year health accord, which was supposed to be a deal that would transform the health care system for a generation.

These new transfers put real money on the table, which is important in terms of reinjecting federal cash. Importantly, they created the Canada health transfer. They actually pulled the Canada health transfer out of the bundle that also transferred funding for education and social services. This is important in terms of clarity and transparency around what the federal government is paying towards provincial programs for health care.

Provinces of this time, of course, had a variety of priorities, some of which were a continued trend in terms of fiscal priority toward tax cuts. Most provinces in the country over this era actually cut taxes. Some of this increased federal cash transfer for health may have made that a little bit more affordable.

Another important point from that 2004 accord is that the federal and provincial governments agreed to, ultimately, what was the three-year plan for dramatic reductions in wait times for procedures around six health care services. And it's arguable that, in fact, over the three-year period, most provinces did a reasonably good job of moving towards the targets, if not surpassing them, on six priority areas.
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Subsequent to that, of course, from 2007 to 2013, it has been difficult to maintain or advance progress on wait times in Canada. Part of that may be because — and I think it's true — it's difficult to actually do a health accord that lasts for ten years. It's like signing a deal that lasts ten years and expecting there to be accountability over such a period.

We also, as you know, had a change in government at the federal level in 2006, which changed the dynamic in terms of federal-provincial relationships. In some sense, it actually ultimately shut down FPT tables as it related to discussions around the health care system.

I have a couple of final slides before we open it up, I think, for discussion. I think I'm on time for delivering nine hours of material in 30 minutes.

S. Morgan: I think, ultimately, we have a few major challenges in the health care system which I look forward to talking to you about today and perhaps over the course of your work over the next 18 months or two years.

We have this interesting paradox of undersupply and yet underemployment of physicians in this country. There's an entire week's worth of work to discuss health human resources strategies in this country.

We have very, very quickly — I think probably in a matter of three or four years — gone from a situation where medical professionals in Canada were saying that we had a shortage of doctors to a situation where, if you read the papers today, if you read the reports of the College of Physicians and Surgeons, they are arguing that we have an oversupply of physicians in this country.

The correct statement is that we have maldistribution of physicians in this country. The absolute numbers are perhaps not in gross excess, but the problem is that we have a maldistribution across subspecialties of the profession. So we've had an increasing trend towards specialty types that perhaps we don't have a high demand for.

We've had an increasing trend towards physicians working in Canada's major urban centres. Although we're a highly urban country in terms of the location of our population mass, that's not where the greatest need for both primary and specialist services are in this country. There's a real challenge now for Canadian policy-makers.

This, ultimately, is your responsibility as provincial policy-makers, because it's very clearly in your jurisdiction to figure out how to have a meaningful health human resources strategy and plan — both for production of new professionals coming into the workforce…. How do we make sure that our medical schools, including the one that I ultimately am a member of, are training the kind of specialties that the system needs? How do you cooperate with other provinces in this country to ensure that they, too, are training the specialists that the system needs?

To think that a graduate in British Columbia always stays in British Columbia or that a graduate in Ontario always stays in Ontario is a myth. We need interprovincial cooperation on that front — the production of health professionals.

We also need some pretty creative solutions to making sure that the distribution geographically is appropriate to making sure that we can locate professionals in the places where the need is the greatest. I think some of the instruments that we've used in the past — incentive schemes to get new graduates out into rural and remote areas — have had temporary effects and positive impacts.

There are some newer creative tools, such as British Columbia's distributed medical education model, where you literally begin to train health professionals closer to the geographic regions in which you want them to practise. That also has some real promise, as do the practices of actually privileging applicants to medical schools who come from regions that need the medical professions the most, because they tend to be the ones that are most likely to return and, importantly, to stay in the regions where you need professionals the most.

I'm not going to go over the second little graphic here about prescription drugs much now, because I will talk about that in more detail after the break this afternoon. But it's important to know that this is the second-largest component of health care spending in this country, bigger than medical care provided by physicians. Yet it's uninsured, and in the Canadian context, it's unquestionably grossly overpriced. We pay among the highest prices for medicines in the world, and this is a problem that's costing us literally billions.

Insurance and preparing for the demographic change that people talk about in our health care system. We do know…. There's been study after study — I must confess that I've written at least three of them — that shows that the cost impact of the aging of the boomers is not dramatic on hospital care or medical services. It's not even dramatic on prescription drugs. But it does have important implications in terms of our system's needs for home care and long-term care in this province.

Some of the things that are concerning is that we're not prepared at this point yet, both in British Columbia and nationally, for the increase in demand in these particular types of services. I argue that it's a little bit unsettling insofar as we really need to start thinking about the system of acute home and long-term care together and have some system-level planning.

Any one of you who has ever looked at acute care planning in British Columbia or anywhere else in this country will know that we have a significant number of patients in what's referred to as alternate levels of care, ALC patients. The nickname for these people is bed-blockers. They are patients that ultimately don't belong in acute care hospitals, but we have no place to put them. We have insuffi-
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cient supports, perhaps, to have them live in their homes or to live in assisted-living centres, or we don't have the long-term-care beds prepared for them.

I think that this is a challenge that we will have to grapple with and that your committee, perhaps over the next 18 months or two years, will also have to look at carefully. It's the component of our health care system where a demographic change really matters. The rest of it is rhetoric, as it relates to the aging of the boomers. But as it relates to aging and the impact on long-term care, it's quite real.

Lastly, I'll just put these two bottom slide things here, that historic legacy of public payment and private practice as the major challenge for us in this country. It's amazing. You hear people like Don Drummond in Ontario and other fairly prominent thinkers from across the spectrum in terms of political bent arguing that, ironically, in order to make Canada's health care system perform more efficiently and perhaps even to lower the public spending of our health care system in the short term, we may have to make that system bigger.

We may have to actually expand our efforts in terms of spending and also in terms of bringing professionals into the system to make the system more public in the short term in order that we can save public dollars in the long term.

Drummond and others used the expression for Ontario, and they said that we need an HMO for Ontario. We need a system where physicians are actually working for the system, not the system working for physicians. That language, I think, is important. I think it's the grandest political challenge in health policy development for our generation, and I'll leave it at that.

The last one is this bit about pieces of the puzzle fitting together. Part of that HMO for British Columbia perhaps will be making sure that we actually have a system where we are looking at the total cost impact of decisions as it relates to long-term care or home care — how that affects our acute system — and really being creative about knowing that sometimes investing in those programs will actually free up resources elsewhere.

I'll argue later this afternoon that the same can be said for prescription drugs. Better spending in that component of the system can actually save us money both elsewhere in the system and also public money in the long run.

I have two last slides I put on because I read those interesting reports that were circulated for your committee. I applaud that the committee had a great deal of interesting stuff to read. I wanted to make one note about being careful when you read report cards. How does the Conference Board of Canada assign grades in the report card that you read?

It actually takes the difference between the top performer on any measure and the bottom performer on the same measure and divides that difference into four and then assigns you into your A, B, C or D category based on whether you're in any quarter of that difference, no matter how meaningful that difference is and no matter how small a difference is. This means that there's a single outlier on the low side or a single outlier on the high side. You can have a measure where all provinces but one are getting an A or all provinces but one are getting a D, even though all provinces may be performing 95 percent or better on the measure. So be very careful when reading these things.

The other thing that this Conference Board of Canada does when it sums up the tallies by province or by country across its different categories is sum them without reference to how important individual measures are.

I've used this particular one as an example — the health care system performance as it relates to appropriateness — of where you've got situations where you may be summing across things that don't necessarily make sense to give equal weight to. I'd argue that some of these things are the equivalent of me, as a professor, taking the top and bottom score of my classroom. Even though everyone got between 85 and 95 percent on the exam, if I did what the Conference Board did in their report, a third of my students would get Ds, because I have a few outliers that score 95 and most of my students score between 85 and 90.

The second thing the Conference Board of Canada did in these reports is, in essence, the equivalent of me saying: "I'm going to give everyone a score for their exam performance and for their attendance in the classroom, and I'm going to give each of those scores an equal weight." It's probably not the right thing to do for performance reporting.

I think that the CIHI report you were sent was actually a good report, because it was very cautionary about how you interpret results. It gave an opportunity to see how Canada might sit in international ranges without putting too much value statement on the importance of those ranges, because that does require considerable insight and clinical expertise.

The last bit — and I can't resist — is an advertisement. Our centre is hosting a conference on performance reporting called Performance Anxiety in the Canadian Health Care System. We're hosting it on February 25 this year here in Vancouver. I hope that some of you will attend or perhaps send people from your constituency offices to it.

N. Letnick (Chair): I feel like applauding. Excellent. Thank you very much, Steve. If you don't mind, it's 12 after ten. We'll start with the questions right away, and we'll go until 10:45.

Just a little housekeeping for members. We are in these
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chairs all day, so don't feel shy to get up or roll out to the washrooms or get a beverage or whatever. Feel free to do so. It's perfectly fine. Obviously, we can't stick in these chairs all day except for the 15 minutes we have at lunch, which is just basically go get the lunch, come back and eat it while we're listening to the next presenter, right?

With that, and given that we do have a limited amount of time for questions for Dr. Morgan, I ask you to keep your questions succinct. How about we just start with one and maybe a follow-up if you need to, and then that way everybody gets a chance? Then we can come back to you after that if you have more than one with the follow-up.

J. Darcy (Deputy Chair): Yes, thank you very much. I'd love the whole nine hours. Maybe we'll have to take your class or something.

You have some stats there about coverage of drugs, long-term care, hospital stocks and then other health services. Do you have figures…? I didn't see in any of the reports that we've read so far about other countries and their coverage of some of those other health service areas. You touched on it quickly, but I wonder if there's any hard stuff available.

S. Morgan: There are. If the foundation or the committee…. You can send a note. We can dig them up. The OECD has a reasonable health database from which most organizations that do comparative work draw information about financing.

The people reading Hansard won't know what I'm talking about here, but if I go back to the slide for Canada, where I have the bullets for each of the major components for Canada….

At two o'clock in the morning a few nights ago I produced this and other slides.

Interestingly enough, we can do this for several countries — Australia, New Zealand, the Netherlands — I believe correctly, and then, paradoxically, for some countries the national accounts don't provide the detail by type.

For instance, the NHS, which is a fascinating country to look at…. In essence, they basically only provide you with one statistic: how much of its health care is funded by the public purse versus private or voluntary insurance. Perhaps that's because the NHS is ultimately funded as a single integrated system. So you can infer that long-term care, hospital care, medical care are all similarly funded.

But I can do something equivalent to this for a number of countries from the OECD database. The fact is that if you look at total spending by country, medical, hospital and pharmaceutical typically are all funded fairly similarly because they're fairly integrated, as would be long-term care.

Dental care is interesting, and we can talk about that on some other occasion. Canada is pretty low in terms of public coverage of dental care, but it's difficult to find comparable countries to us where you actually have very, very high public coverage. It's an interesting outlier in those systems.

L. Larson: Is there a short explanation as to why we pay more for drugs than the rest of the world?

L. Larson: If you're covering it later, that's fine. It just was the first thing that flagged up. Thank you.

R. Lee: Thank you, Dr. Morgan, for this seminar. You talk about the report cards and how difficult it is to rank and that this doesn't give us the whole picture. I believe some of the data is actually available in detail. Could someone just compile the data and give us a clearer picture than the ranking A, B, C, D?

S. Morgan: Yeah, one could. Interestingly enough, to plug the Canadian Institute for Health Information, CIHI released yesterday…. I think it's called ourhealthsystem.ca. I might have the web address wrong. But it's a new information source that allows the public to look at data depending on the jurisdiction in the country all the way down to your local health authority levels and look at data on a number of performance measures.

CIHI, because they're like us, is very careful academically in terms of thinking about not putting too many value judgments on the data. They don't report-card it. They don't give you A, B, C or D. But they give you performance measures, and they give you ranges for your comparable countries or health authorities. That's available, and it's a useful resource. Someone could easily compile from it.

R. Lee: Also, if the variables and the items they look at are not mutually exclusive…. There is some correlation there. So are there any graduate students or researchers going to do the correlations and find out some of the underlying reasons?

S. Morgan: Yeah, both reports that you were given alluded to the fact that you had to be careful when you look at a number of these things, because things are correlated. Our health care system in British Columbia, for instance, can only account for a very slim minority of our health advantage in British Columbia. Our lifestyles, our other determinants of health and, frankly, even our immigration patterns are factors that contribute to the health of this population in ways probably more than health system.
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But someone could do the analysis. If there are specific questions, people can look into them and work on them if you've got particular concerns around different things being correlated. For sure.

N. Letnick (Chair): Okay, I've inserted myself into the list. Near the beginning you said something to the effect…. I'm not quoting you, just paraphrasing. Determinants of health can have a greater impact on the health system than changes to the health system itself.

Can you talk a little bit about compression of morbidity, then — the theory that we can have a healthier population and spend a lot of money on determinants of health and help people keep themselves healthy, but at the end of their life, the last six months or two years when they end up in the hospital under physician care, they end up using as much in resources as they would otherwise if they spread it out over their lifetime. In part, as the theory goes, we don't have hospital employees, doctors….

As you said, they don't work for us. They work within the system, but they're independent. So how do we…?

I'm not asking for the solution here. I just want to flesh out that idea a little bit, I guess just on the issue of compression of morbidity. Is it proving itself true as a theory? Or is it not?

S. Morgan: Two things. I think there are three related theories that I'll just discuss around keeping people healthier as a mechanism for reducing health costs.

The first, which you allude to, is this idea that most of our health spending at an individual level occurs in the last months of life. You know, whatever it is that takes our lives in the end tends to be something that might require fairly significant health services, health care interventions, and sometimes very costly ones.

So imagine — heart attack, stroke, cancer, what have you — as that befalls any one of us, if it's the final episode of illness in our lives, it can be a very costly one. Some people refer to this just simply as the cost of dying — the cost of care provided to people in the last year of their life.

The compression of morbidity thesis, in essence, which dates back to the 1960s — all this really good stuff about the role of the determinants of health as a saviour of the health care system — is old stuff. But that thesis says that if we keep people reasonably healthy longer, the cost of that last episode of health care paradoxically, actually, goes down.

The reasons are twofold. One is that as you get older, there is a natural kind of expiry date for our bodies and our cells. Whether it's telemetric, dated, where there's a certain amount of time which our cells will divide and fold and our genes will stay stable, we don't know. But let's pretend it's a hundred years. It's the natural limit on human life.

If you stay healthy long enough that you're close to that hundred years and then you experience a potentially life-ending episode like a stroke, a heart attack, cancer, etc., your body may not fight it as quickly or as strongly, and your body may give in to it more quickly. In essence, you might naturally die quicker.

Secondly, the system is less likely to try to be heroic for you if you are 92 years old and you've had that stroke or heart attack, as opposed to if you were 42 years old. Practitioners probably have every good reason, when you are a young person suffering a potentially life-ending disease, to try to throw the book at you — or throw the entire arsenal of what they can do to try to keep you alive. But as you get older, they'll do less and less. In fact, families will demand less and less as people get older.

The compression of morbidity story is we can actually keep our hospital costs in check, probably not dramatically reduce them, but we can keep them relatively stable if we can keep people, in essence, away from or prevent people from having those life-ending episodes of illness until they get very old. The healthier we live for longer, we actually die quicker, and we consume fewer resources in that year.

That thesis also goes up against a contrary thesis about what's sometimes referred to as the salvage hypothesis of health intervention. We have new technologies that help people stay alive — whether it's from heart attack, stroke or other conditions — earlier on in their lives and that are actually reasonably effective. We have medicines that can keep people alive in ways that may not have been the case 20, 30 years ago.

The salvage hypothesis is the concern that perhaps more people are living less healthfully and requiring more care over time because, in essence, in a historic sense, they would not have survived to be as complex a burden on the system as they are.

We did a paper a couple of years ago — again, a conflict of interest, but we produced the paper with B.C. data — looking at those hypotheses, the salvage hypothesis and compression of morbidity, as it related to hospital, medical and pharmaceutical care in B.C. We actually detected real, positive results as it related to hospital care — that the longer people in British Columbia are living, the less we are spending per person, per age group, on their care as a function of dying. That's a good-news story for British Columbia, I think.

The better we can do on palliative care, even more so, and the more we can remove people out of these ALC beds in the acute system, even more so. There's more savings to be had.

As it relates to medical and pharmaceutical care, there's no impact on compression of morbidity, and there may be a little bit of a salvage hypothesis as it relates to medicines — that when people do have early life significant health problems, they tend to need medicines over a long period to keep them out of hospital, ultimately.

D. Barnett: Thank you for the presentation. What I find very interesting is your discussion around the regionalization of health care back in the '80s and '90s. I happen to be old enough that I had the privilege of sitting on one of those boards for a while. I do, as I said before, come from rural B.C.

This has caused a lot of silos in the health care system that were there before, and it certainly has not made it any better. I find that one of the big issues — and I'm very happy to hear what you had to say — is that our health care system is in silos.

This is my personal opinion. I believe that until we come to grips that we have to integrate all of our health care systems greater, particularly in the rural areas, where certain components of your health care system are the delivery agents — which really haven't been recognized, in my opinion, that well over the past few years — I don't think we're going to have many savings or great changes in health care out there in rural B.C. It's just my opinion.

S. Morgan: Yeah, thanks. I would share that opinion. I think it's consistent with this idea that to sustain the system and actually to control public spending, paradoxically, you need to expand the system in the short term, make it more integrated.

If I can go back again to my…. I don't treat this lightly. The big political challenge is to win the professions, to win providers.

I think you've got the hearts and minds of British Columbians. If they see integrated systems of care, true integrated primary health care with multidisciplinary teams and case coordinators that can help families when they transition from home to needing home care, to assisted living, etc. — a true holistic system — British Columbians will support what we need to do.

I think we can. Particularly with new generations of professionals coming on board, we need to bring on the profession in that meaningful way.

Maybe rural British Columbia is the place to start because maybe there's less competition in terms of this issue around: down the street there's a fee-for-service practice as opposed to the integrated primary care centre right here.

D. Bing: I was very interested in your introduction when you brought in the four general systems. It was very interesting how these four different countries have evolved four different systems.

It seems to me that our evolution of the Canadian system is the typical Canadian compromise, and this may have led to this muddled system that we have there. It seems like the federal government and the provincial government have had these little to-dos about what to do, and whenever they make a major decision, of course, it has consequences, some of them unintentional.

One of them, I was thinking, is the effect on the physicians and the decisions they make because of the decisions made for them by the federal and provincial governments. Although the federal and the provincial governments think they are doing the right thing for the system, as the people on the ground, the physicians — as you say, it's a physician-centric organization — feel like they weren't consulted or they're under attack.

I'm thinking of this idea where you said that you're either all in or all out. So you're making a stark choice for the physician: "Either you go along with what we want, or you have to get out of the system."

I recall a year ago the radiologists were going to go on strike. I don't know if you recall that, but they were going to withdraw services unless they got what they wanted. They had certain demands, and they were going to withdraw that. I was thinking that this is one of the negatives of our system. We have a lot of specialists who are very small groups, but they have a lot of power, because if they did that, if they withdrew services, then it puts society at great risk.

It's really hard to keep everybody on board and to keep the system going. I can see we're going to have more problems in the future.

S. Morgan: Yeah, just to reiterate, I agree that there were some grand compromises in the initial development of our system — compromises that were a function, in part, of the timing of the development of our system.

I think if Canada had moved forward in the '40s with a comprehensive health insurance system, we would have had less medical opposition, because at that time physicians actually saw public health insurance as a possible source of revenue as opposed to a possible constraint on their freedoms.

But by the 1960s, when we did move forward, we were in the postwar economic boom. A lot of patients could afford to pay their bills. There was an emergence of voluntary private insurance in this country. So there were a variety of conditions that by that point had actually made the marketplace of health care in Canada, like in the United States, favourable to this idea of independent practice.

So it's an accident of history. If you compare that against, for instance, the systems in the United Kingdom or Germany, their policy developments occurred much earlier — well before those other economic markets could create this sort of viable alternative for practitioners in their countries.

But I'm not at all entirely discouraged. I don't want people to feel like it's all doom and gloom. I was at an interesting meeting recently where a former executive from the Canadian Medical Association said: "There is, in es-
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sence, a sea change in physician leadership in this country. There are a lot more physician leaders who actually do want the system to be more integrated and maybe have a greater appetite for being part of an alternative system, a system in which they're paid partly on salary, partly capitation, and less on fee-for-service."

The joke that was made at the time, which I think has some political insight, is that the refugees of the NHS have largely left the Canadian Medical Association. What that meant was that we had an influx of physicians that came into Canada in the 1950s and '60s, possibly as a decision to get themselves out of a system where they were actually employees of the state and come to a country where they could have free enterprise. Now that generation of physicians, that generation of NHS refugees, are retiring.

The younger docs in this country…. I see them in my classroom, and I hear them on Twitter all the time. They seem quite energetic about ideas about maybe making things more integrated.

R. Lee: You mentioned the Canada health transfer accord, 2004. I see it's a ten-year plan. Now, next year will be ten years. Are there any talks about new transfer programs?

S. Morgan: Over the last four or five years, as you can imagine, everyone in the health policy kind of business, whether it's at the federal level or academic level, have all been busily excited that there's going to be federal-provincial negotiations over what a new accord would look like.

Harper's government became very clear in 2011, and then in 2012, on the idea that what they will be is…. They'll be in the business of cutting the cheques but not in the business of managing the health system. It is Harper's vision, I think, of this country that the provinces run health care without conditions from the federal government but the federal government helps them with some of the financing.

There is a commitment by this federal government that, starting in 2014, a new accord will be in place. It will be an accord which is more or less a transfer agreement which has a fairly lofty escalator clause. It's a 6 percent escalator over the current transfers over time. It's changing the funding formula so age of the population and needs of the population will no longer be considered in that formula.

That's not necessarily good news for British Columbia. We actually have a slightly older population than, say, our neighbours in Alberta, who have a very young population. But ultimately, the new agreement right now will be the federal government having a new transfer, but there will be no grand plan. There will be no ten-year plan of priorities, actions, measures and accountability.

In essence, this part of our history of our health care system…. This table is the table that is in charge. It's the provinces that are going to be the leaders of the health system in terms of what's going to happen over the next three to five, maybe even ten years if there's another Harper majority.

I think that's important to know as you're thinking about the challenges for British Columbia. We may not need or — depending on how you look at it — be able to look to the federal government for leadership at all on this file. We may need to be saying: "The provinces are going to be the innovators. And why not British Columbia?"

S. Hammell: I'd like to go back and talk, just for a minute, about the long-term-care patients that are in acute care beds. In trying to understand that….

Is the cost of having a person who's a long-term-care patient in an acute care bed less expensive than an acute care patient in an acute care bed? Are there implications for the cost to hospitals around that?

S. Morgan: Having an ALC patient in an acute care bed is less expensive to that acute care hospital than having a patient with fairly significant needs in the same acute care bed. But the problem is that it becomes a bottleneck. It becomes a block. We call them bed-blockers. It's not the best term, but it means that we can't actually put the appropriate patient in the appropriate bed type. This leads to sort of cascading effects on hospital systems that actually drive up costs, even though it looks like the single cost of having this patient in the wrong setting is not that great.

It would be far more efficient if we could find mechanisms to get them back into their homes, if that's at all possible, with appropriate home care, or into assisted living or long-term-care facilities. In those contexts, not only is the service provision less expensive out of the acute care centre; it also then makes the acute care centre function the way it's supposed to, which is to truly have patients with acute needs in those beds.

J. Darcy (Deputy Chair): Just picking up on Sue's point about alternate level of care beds. I was in Denmark a couple of years ago and spent some time looking into their model of integrated community care for seniors, integrated community care generally, and greater integration between the different parts of the health care system — not siloed, in fact, but very coordinated. I have some material in Danish on it, but even I struggle with that.

I wonder if you have any materials either from Denmark or elsewhere, in English, that talk about integrated community care models — and if you know of any in Canada.
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S. Morgan: Off the top of my head, I don't know of the right sort of citation or resource, but it's certainly something I'd be happy to look up and refer on to the committee, the Clerk or whoever is necessary.

Canada does have people who specialize. We all have our specialities. I happen to specialize in pharmaceutical policy, which we'll talk about later. We have specialists that look at comparative policies as it might relate to integrated care, home care, etc. They're not just looking, again, at the Canadian context. There are Canadian experts that look abroad as well.

J. Darcy (Deputy Chair): In that model, as you're probably aware, you talked about multidisciplinary teams, and they very much use multidisciplinary teams to ensure that people get the appropriate care they need in the appropriate setting. There are, in fact, financial penalties to the region that delivers the care in the community, including home support, if they stay in an acute care hospital bed too long.

S. Morgan: I'll have to get back to you with information for the Clerk or for the committee.

D. Finegood: I just wanted to offer that we're in the midst of organizing an exercise with international experts in home care and community care to come to B.C. to speak with folks in the Ministry of Health. That will be one of these closed-door invitation things. But there may be an opportunity for members of the committee who are interested in a deep dive on the topic to participate.

I'll insert myself in the list again — not that we have to use up all the time with you, Steve, but we do have a few minutes left.

Diagnostics. You did mention that as the acts and agreements changed over time…. At one point the word "diagnostics" was actually in the law, but no longer.

Was it explained why some people can purchase privately their diagnostics — for instance, MRIs — and then take those diagnostic results and get themselves in front of the line in the public system? What I hear sometimes happening is you'll have a lineup for getting the diagnostics in the first place, and until you're actually given your diagnosis, you don't start the line for the next piece. But if you're able to afford to privately get your diagnostics now, you've jumped the queue. Was that always the case in this country, or did that change at one point?

S. Morgan: It's part of the gradual change, actually, that's happened in the last roughly ten years in Canada. British Columbia, Ontario and Alberta, I think, are provinces where this is most common, where people are offering now, in essence, private diagnostic services — you know, user-pay diagnostic services.

It is one of these areas which appears perhaps to contravene the spirit if not the letter of the law as it relates to the Canada Health Act and enabling legislation here in British Columbia concerning medical services and medical care, and it's one where there are some concerns, as you said, about queue-jumping.

The advocates of this parallel private delivery are, most importantly, parallel private payment model, because diagnostic services are also offered by private providers but publicly paid. We have to be careful about that.

But this idea about paying out of pocket as a mechanism of queue-jumping is certainly a challenge. It is one of these things that will, like the issues around private surgical centres which are before the courts here in British Columbia and at the Supreme Court level…. Those issues are real challenges in terms of, again, if not the letter of the laws as we have them in Canada today, the spirit of those laws for sure.

I think it would be fair to say that partly it's been a technological evolution that has allowed for this to happen, which is why we have not seen it quite to the same extent until recently. It is just simply that the capacity to actually do diagnostic services or even relatively moderate surgical care in a small centre is relatively new, at least on an affordable basis. That's because ironically, although you may not believe this, the price of the technology has fallen considerably.

What we concern ourselves with in the health care system is the cascading effect of the diagnostic itself. Is it appropriate to do the test in the first instance? We test way more than we probably should even in Canada, where, if you look at those international benchmarks, we do have fewer MRIs and diagnostic machines of various sorts than other countries. There's a concern that if you're just testing for the sake of information, which patients love to have — and a lot of practitioners also have this sort information bias — it's a waste of resources, because you may not change the course of treatment anyhow.

Secondly, if you're testing without grounds to believe that there's something to detect, you can create this phenomenon I refer to as "the worried well" — people who go into the hospital system or into the health care system saying, "There's a shadow on this scan" of whatever it might be. "We need that investigated." Typically, those investigations may turn out to be futile, but they're not inexpensive. They do run up resources.

So managing the capacity for diagnostic services is an important part of making sure that the system functions appropriately. And this issue about private diagnostic services or private payment for diagnostic services to jump
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queue — I think that's a real challenge. It mirrors the ones around the surgical services as well.

D. Bing: Your point about the geographic distribution of physicians. Do you see this problem getting better or worse over time?

S. Morgan: Again, I'll declare this is not my particular area of expertise, so I don't want to say that I have the crystal ball in hand. I'm cautiously optimistic that things like the distributed medical school model might work. We had a very cheeky but informative conversation in my classroom yesterday, which was great. It's great having physicians in my courses because they bring a lot of insight, and I appreciate their value.

One of our practitioners in my class reminded us that the challenge for a 20-something-year-old medical student or graduates in their early 30s from medical school going off to a rural or remote community is that they may be looking for a life partner, but they can't date their patients in a rural setting because that's not allowed. My cheeky response was: "Well then, the distributed medical school model is perfect because while you're a student, you can still date the people in your community and, hopefully, fall in love, get married and stay in that community for life." Cautiously optimistic.

N. Letnick (Chair): Well, we'll end on that note. Thank you, Dr. Morgan, for that.

We'll now move on to health system structure and delivery. We have Dr. Laurie Goldsmith, assistant professor, faculty of health sciences at SFU. Dr. Goldsmith has 45 minutes' worth of presentation.

We are taking a two-minute recess while we are reloading, because I've lost quorum.

N. Letnick (Chair): Thank you once again, Dr. Morgan, Dr. Finegood, for your presentations and work, especially at three o'clock in the morning.

We now have Dr. Laurie Goldsmith, assistant professor, faculty of health sciences, SFU, who's going to talk about health system structure and delivery.

Please go ahead. And again, also to you: thank you very much for putting this together for us.

L. Goldsmith: Thank you. I'm going to start off with a couple of general remarks similar to the remarks that Steve started off with.

First of all, I am not a health economist, although in some circles I can talk enough like a health economist. But I have different training than Steve does. I am a health policy scholar with training in political science and epidemiology — and also an interest in research methodology. So some of that will come through today.

Secondly, I also am condensing material that I teach in the classroom. I teach a 13-week, three-hour-a-week — so 39-hour — class on the Canadian health care system at the undergraduate and the graduate level. Today's talk condenses probably about 65 percent of that material into 45 minutes. Happy to unpack anything in more detail in the question period, but clearly, we could spend a whole semester with you. What I tell my students is that then you only know enough that would fill a person's little finger about the health care system.

It's a very complicated system. It's hard to know enough to know what you need to know about making the changes.

In terms of how I am structuring my talk today, first of all, I'm going to remind you that the delivery system of the Canadian health care system is predominantly private. I'll spend a little bit of time parsing that out. I do find that with my students that's a very hard thing to keep in mind, so I thought it was worth spending some time with that.

I am going to talk about different types of care in the health care system and the physical resources involved in that care, then move on to talk about human resources, spend a few minutes talking about public perceptions of the delivery in the health care system, and then I'll leave you with a couple of food-for-thought items before I end.

I do want to also emphasize, repeat, what Steve said — that I will be talking about health care not public health. There's a whole other aspect of a health system that is separate from health care.

I also will be repeating a few things that Steve said, and that's in large part because they're very important elements of the health care system, so they bear repeating. I don't think anyone was expecting you to retain everything Steve said in the first part of the presentation. There will probably be some repetition of what I've said this afternoon as well.

Okay. So a reminder that the Canadian health care system is predominantly publicly funded but predominantly privately delivered. The majority of the providers operating in the health care system are not-for-profit organizations, like hospitals, or for-profit small businesses. Bob Evans, a prominent health economist at UBC, calls this not-only-for-profit.

For example, a physician's office is a for-profit small
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business, for the most part, but they don't have shareholders. They're not interested in taking over the world. They're not interested in becoming Wal-Mart, for instance, but they still have a for-profit status.

The fact that 70 percent of the funding in the Canadian health care system is public leaves the impression — the erroneous impression — that the system is also publicly delivered because the payer is public.

So a reminder. When Steve gave those circles earlier this morning, that was the same data that I'm showing here.

The middle column here shows you the overall spending of health care expenditure. Hospitals, drugs and physicians are the three largest categories of spending. Until recently physicians was the second-largest category, and a couple of years ago drugs overtook physicians as the second-largest spending category in the Canadian health care system.

The third column represents how much of the spending in that category is public. I've circled in red the hospitals and physicians. You see that they're both over 90 percent.

That very, very strong public spending in those categories that are also large categories of spending in the health care system itself gives that erroneous assumption that we have public delivery. We have private delivery. The reason why that's really important is because the two different approaches give you very different policy levers for making changes in the health care system.

Obviously, you are tasked with thinking about what kinds of changes are at the disposal of the B.C. government, so you need to keep in mind that we have private delivery, not public delivery.

Now on to types of care. I'm sure you're all familiar with the general definition of primary care — the first contact with the health care system.

In this slide I have two columns. The left-hand column is the types of care that are often included in primary care. I'm not going to go through and read them all. Suffice to say that routine care and urgent care for minor problems are the most common reasons for primary care, although there are a wide variety of things covered in primary care.

The second column is the types of practitioners that are involved in primary care. Primary care physicians were often thought of as the first level of primary care. There are lots of other practitioners involved in primary care.

Steve already pointed out that we've got public funding that is dedicated and enshrined in laws for the primary care physicians. There are lots of other practitioners that are involved that don't have that same sort of protection around the public financing. They get it through the organizations they work for, not by virtue of their professions themselves. Nurses, for example, get the public financing through hospitals and long-term-care facilities.

It's important to be aware of the ways that patients enter the health care system. In terms of primary care, in Canada, unlike in some other health care systems, patients are generally free to choose their primary care physician. This is an important aspect of the control of the health care system.

The reason why other countries sometimes employ that patients are not free to choose any physician is for cost control reasons. It is to control the flow of patients. Canada doesn't have that control.

There are a variety of different ways of delivering primary care. The ones that you're probably most familiar with are either physicians in solo or group practices. Those are still the most common ways of delivering care in Canada right now. That's the person down the street that just opens up an office.

There's also a model called community health centres, which I'll talk about in a few moments. It's across the country. There are also walk-in clinics, which have been growing over time, and hospital emergency departments.

In health services research we consider getting primary care in hospital emergency departments to be an indication of system failure in primary care. It's not where you want people to be getting primary care. Obviously, you want it there as a backup, but it's not where you want people going first and foremost for lots of reasons, including continuity-of-care reasons and cost reasons.

The usability of these various patient entry points depends on a lot of different types of variables, including the geographic location, such as rural, which was already talked about a bit this morning; the availability of the providers, so if you think of a group or a solo practice of physicians, they don't always have coverage after business hours; and the provider practice arrangements, such as if they have coverage when they go out of town.

I said I would talk about community health centres. Part of the reason why I want to talk about it is because the situation around community health centres in British Columbia is very interesting.

The conventional wisdom was that B.C. didn't have a lot of community health centres. I'm doing some work to try and document how community health centres in B.C. function and think that this work may actually turn that conventional wisdom on its head. I'm still early in the stages of that work, but it's looking like there are a lot more community health centres in B.C. than is commonly thought.

Community health centres. The definition varies a bit, but the general definition is that they are non-profit or government-sponsored centres for primary care, predominantly, using interdisciplinary teams. They employ salary payment or alternatives to fee-for-service, particularly for their physicians, so that's very different from physicians in solo practice or group practices without special arrangements.

Community health centres usually also deliver other
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services on top of primary care, so a more integrated type of care model. People who are fans of community health centres are often fans of community health centres because of that integrated kind of care model. It sort of fits intuitively what people are looking for out of primary care a bit better.

Community health centres are often specifically sited in a location to either serve a vulnerable population, such as a poor population, or specific geographic areas that are known to be underserved.

They often involve self-governance, which includes members of the community. There is a subset of the community health community that believes that having self-governance with community members on its board is a defining feature of a community health centre.

There are others that think that community health centres don't necessarily have to have self-governance. But representation from the community that's trying to be responsive to the community is something that has tried to be built into this model.

Even though it's small, it's a very important mode of delivery in Canada of primary care. According to the Canadian Association of Community Health Centres, there were more than 300 community health centres in Canada in 2011. Most of those were in Ontario or Quebec, where there is a specific model of funding, a packet of money from the provincial government for that particular model.

As I said, the conventional wisdom was that B.C. hardly had any. There has been a concerted effort over the last ten years or so for the health authorities to develop community health centres. That's been part of the growth in community health centres in B.C.

One of the regions that has invested quite a bit into developing community health centres is Northern Health. My understanding is that that is to try and address the continuity of care and continuum care kinds of issues in the north and to encourage providers to stay in the north.

In terms of primary care reforms, Steve already talked about this, but I will repeat it. We had hardly any reform in the 1980s and 1990s — not despite a lot of effort but a lot of false starts, a lot of pilot studies. Even though a lot of people were interested in systemwide change, we didn't get anywhere. That meant that Canada fell behind other countries.

Now, in the early 2000s, there are some indications that we're in a new policy environment. The academics that study this — Brian Hutchison among them — are quite pleased and think that we might be poised on the ability to be able to do some primary care reform.

What happened in the early 2000s was that we had more money coming into the system, because we had come out of the economic doldrums. We recognized that there was probably no single magic bullet for a model for primary care. We started to allow variations in the models being invested in and started investing in changing, in allowing plurality of payment models as well. Now we have a whole alphabet soup of different types of primary care models across the country. I can't even keep on top of them, let alone normal public members.

There was also a recognition that we needed major investments in system transformation and infrastructure, and we're seeing some of that pay off now. Brian Hutchison just delivered a talk about six months ago reflecting on this, and he said that Canada is probably about ten years behind other countries. Other countries are really starting to see payoff now.

Hopefully, in about ten years, we'll see some payoff from these investments in reform. Obviously, that's not a great timeline. It would be nice to have faster, but it does give you an indication that it can be slow for things to change in the health care system. It's such a large system.

N. Letnick (Chair): Just if I may, our mandate is to look at this system over the next 25 years, so…

L. Goldsmith: The key primary reform initiatives that happened in the 2000s, which hopefully will start to pay off in about ten years, included an investment in interprofessional primary health care teams, that alphabet soup that I talked about just a few minutes ago. Alberta, Quebec and Ontario are considered to have made substantial progress on meeting a target of having 50 percent of their population covered by interprofessional health care teams. The rest of the provinces are lagging behind that.

Investment in group practices and networks. Two-thirds of Ontario physicians are now in networks of practice with each other. B.C. has started the divisions of family practice to put physicians in networks as well.

Then there were efforts at patient enrolment — attaching patients to physicians, still allowing patients to choose physicians but encouraging patients to continue to see the same physician to provide continuity of care, with no penalty for the patient if they went to another physician. Often associated was a penalty with a physician if the patient went to another physician, to encourage the physician to take good care of the patient. But trying to get patients attached to physicians and medical homes….

There is a strong literature that says that when patients have medical homes, they get better care. Not surprisingly, all of us probably would like to know our physician and for our physician to know us and understand us, so you don't have to go through your whole story every
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time you go to the physician. Particularly if you only go once or twice a year or once every couple of years to the physician, you'd still want them to know who you were.

Then there's also reform in financial incentives and blended payments — there have been experiments in B.C., for instance, with adding other types of payment on top of fee-for-service to try and get physicians to change their behaviour in certain ways — and the expansion of what's considered a primary care provider as well.

That's a really quick overview of primary care resources. Now, on to specialty care. Specialty care is quite diverse. It includes emergency care, ambulatory or outpatient care, acute care — care directly in the hospital, where patients stay in the hospital — and then the whole varied complex of long-term care, long-term hospital care, as well as the diagnostic or medical imaging that takes place in specialty settings.

Obviously, specialist physicians are involved in specialty care and a whole bunch of other resources — hospitals, residential care facilities both for the elderly and for people with special types of needs, physical or learning disabilities or chronic conditions. In addition to physicians in terms of human resources, there are lots of other types of health care providers involved in specialty care, as well, with special training for that specialty care.

I do want to point out that emergency care and ambulatory care are one of the largest-volume patient activities in the Canadian health care system. That particular aspect of specialty care is also driving the ship quite a bit, as I'm sure you all already know.

In terms of how the patient enters the specialty care system, in non-emergency care, patients are not allowed to simply elect and go and see any specialist that they want. This is because primary care physicians serve as informal gatekeepers to specialty physicians. You probably would have to search for more than a week to find a specialist physician who would take you without a referral from your primary care doctor.

While it's not a formal part of the model — there aren't formal rules — there is this informal gatekeeping. It keeps patients, hopefully, at the right level of care for non-emergency care. This is different, for instance, from the United States, where you can, as a patient, sort of elect to see whoever you want to see — because of that influence of the market model operating.

If it is emergency care, obviously, patients can take themselves to the emergency department or call an ambulance and get injected into the specialty part of the health care system immediately.

Physicians also serve as gatekeepers to publicly funded medical imaging. It was already brought up this morning that patients now have the opportunity to be able to pay for themselves to be able to get medical imaging outside of hospitals and then jump the queue, but if you are trying to access publicly funded medical imaging as a patient, you have to still get your primary care physician to give you a requisition for that. There are also community-based entry points for residential care facilities.

Most hospitals operate as private not-for-profit facilities or under the authority of the regional health authorities. So even though hospitals are still predominantly a form of private delivery — private not-for-profit, usually — we colloquially call them public hospitals, which, again, confuses the issue. So go all the way back to the beginning of my talk, where I reminded you that we have private delivery in Canada, not public delivery. The fact that we call hospitals public hospitals adds even more error potential to that.

We do have some controls — because of the public funding to hospitals — over hospitals, but hospitals are still able to make independent decisions. So it's worth the reminder about that. Hospitals are either self-governed through their own board of directors, or they're governed by the local regional health authority.

In terms of the number of hospitals in Canada, we had over 700 hospitals in Canada according to 2011 data. Very few hospitals are for-profit, privately owned in Canada. According to the Canadian Institute for Health Information, there are only seven public, for-profit, privately owned hospitals. An example of that is the Shouldice Hospital in Ontario, which does hernia repair and was in existence before the creation of medicare and was grandfathered in.

Another report that comes from the B.C. Health Coalition, by Mehra, which was looking at the growth of the private for-profit delivery in B.C., claims that there are 72 for-profit, privately owned hospitals in Canada. This is a bit of a confusing statistic because she includes surgical care centres, like the Cambie Surgery Centre here in Vancouver, as a hospital. The CIHI data does not include that as a hospital. I suspect the number is either seven, or closer to the seven than the 72, but the 72 number gives you an idea of the growth in the quasi-hospital sector that is for-profit in Canada.

In terms of hospital beds, Canada — as I'm sure you already know; it's fairly out there in the public — is well below the OECD average for hospital beds for the population. It is worth noting that part of the reason why this is, is Canada is the highest amongst the OECD countries in terms of how many beds are filled on a regular basis. Canada is around 93 percent, if I remember correctly. It's definitely in the 90s. The country that's next closest to it is in the low 80s.

What that means is that we have very little nimbleness in the hospitals in Canada. So when flu season comes, for instance, and we need a lot more hospital beds on a short term, we don't have anywhere to put people. That leads to the headlines that we're all familiar with, particularly the most memorable headline in the last couple of years about Surrey patients being treated in the Tim Hortons in the hospital, right?
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L. Goldsmith: Yeah. That is because of other policy decisions that we've made to run our hospital beds at quite a high capacity. That is an okay decision when things are going well, right? That allows us to not have as many hospital beds as other countries. We also are doing some more outpatient care than other countries, which also contributes to those lower hospital beds.

Unfortunately, I had to run out to go to the bathroom, thinking there wasn't going to be a break, when Steve was talking about the report cards, but it's a reminder that the simple comparison of numbers doesn't tell you a very good story. You need to get underneath the numbers to try and unpack what might be going on.

Residential care facilities. We had almost 5,000 residential care facilities in Canada. Most of them were roughly divided between facilities for the elderly and facilities for people with developmental delays. Some of them are quite small; others are much larger. Most of them are privately run.

In Canada that's roughly equally split between for-profit and not-for-profit status. That split, though, varies quite a bit by province. For instance, in B.C. 70 percent of long-term beds were non-profit facilities.

In Ontario 60 percent of the beds are run by for-profit facilities. In Ontario much of the new infrastructure in the last 15 years was created on a for-profit status. So there's a huge shift going on in Ontario in long-term care in terms of the for-profit, not-for-profit status in terms of longevity of the facility.

Medical imaging or diagnostic imaging. This is another stat that lots and lots of the Canadian public know quite well: that Canada is well below the OECD average for the number of MRI scanners and the number of CT scanners when you put it on a population level. Again, you want to unpack these numbers. You don't just take them on face value.

First of all, the OECD standard or average for the number of MRIs and CAT scans is not necessarily a gold standard. It's only an average. If all the other countries have been foolish enough to spend extra money on the MRIs and CAT scanners, do we necessarily want to follow that? There's nothing magic about an average. It's just simply where the middle of the distribution falls.

Also, as Steve spoke about this morning, the fact that you are using MRIs and CAT scanners at a higher rate does not necessarily mean you're delivering better care. In fact, there's a lot of evidence that there is overuse of these sorts of scans in countries that have more scans, particularly in countries that allow for-profit delivery of this type of intervention. Then there is the market that starts to drive the need for, or the perceived need for, MRIs and CAT scans.

You also want to take into account intensity of use. Canada, like for its hospital beds, has one of the highest intensities of use of medical imaging technology of all the OECD countries. So even though we have fewer MRIs and CAT scans, we are running them for much longer hours and we're keeping them much busier than a lot of other OECD countries.

There has also been a substantial recent increase in the numbers of MRIs and CAT scans in Canada. That is, in part, a recognition that we did need to invest in this area. It has been accompanied by an increased use of diagnostic imaging for medical purposes. Some of that, of course, is that we've come up with new appropriate reasons to use MRIs and CAT scans, but those who study this area say that, certainly, some of it is overuse or inappropriate use, and because of the extra availability of the scans, inappropriate use has also crept in.

Even though I'm talking about delivery, I do want to talk about the influence of private delivery on pushing for growth in private financing. That's a very important issue that's happening in Canada today.

There have been growing numbers of for-profit MRI and CAT scan clinics because of the ability to move them out of the hospital and growing numbers of for-profit hospital and surgical centres — again, like the Cambie Surgery Centre here in Vancouver — and for-profit boutique physician clinics. There is a women's health clinic here in Vancouver that has a number of physicians, seven or nine physicians, that take care of women going through menopause — all private. It's a very busy clinic because it does address a particular specialty that some patients are experiencing frustrations with within the public-financed part of the health care system.

These growing numbers of for-profit types of delivery in the health care system that are taking private financing are also accompanied by growing numbers of examples of extra billing as well as asking patients to pay out of their pockets.

What this does is it conflates the public funding with the private funding because of issues like: you can opt out for part of your care — for your menopause care, for instance — or you can opt out to go and get the MRI to jump through part of the line, and then you take yourself back as a patient into the public system again.

There are examples of the private-payment aspects of the private delivery encouraging patients to then turn around and send the bill to the government and ask the government to still cover it under the public purse. So there are pressures in two directions, asking for this private financing to piggyback on both the public financing and the private delivery that is publicly financed.

What that has meant is that there's much more opportunity for queue-jumping and for a two-tiered system of both delivery and financing for services that are covered by the Canada Health Act. What that means is that
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people with money are able to get different opportunities for care than people that have less money.

This is all, of course, against the backdrop of the recent court cases challenging the prohibitions on sale of private health insurance for medically necessary physician or hospital services. While, ostensibly, this is about financing only, it puts pressure on delivery.

This is happening, in part, because the private for-profit delivery that is accessing private financing would like to expand their business, and they want to expand their business in any way possible. There are only so many people that can pay privately for a knee replacement surgery on a moment's notice. But if you can access public funding as well on top of that, then you can increase the number of patients that can use your facility, for instance.

So I question whether it's a chicken or egg. Is it a push on the ability to increase the financing opportunities for patients in the Canadian health care system? Or is it a push to increase the market for private for-profit that is really interested in profit, not just a not-only-for-profit approach to private for-profit delivery?

I also want to spend some time talking about waiting times because, obviously, waiting times are something that is very important to the Canadian public. There has been a longstanding concern with waiting times for specialist services, hospital services and medical imaging. Let's be clear: there is not concern about waiting times for every type of service in the Canadian health care system.

For instance, a couple of years ago I was diagnosed with having potential thyroid cancer and needed a surgery to investigate my thyroid. They were going to take out half of my thyroid. The surgeon, when I met with him — it was a teaching semester for me — said to me: "Well, I can do your surgery in two weeks." I said: "Two weeks? I'm in the middle of teaching. You're telling me that it's probably going to go fine, but my hormones may take a while to balance, and I might not be able to think straight. I can't not be able to teach. I have to put it off for four months." He said: "That's fine. We'll do you in four months."

That's an example that not every element of the health care system has waiting times. There are parts of the system where we have figured out how to deal with patients appropriately, even how to take care of patients faster than might be medically important to take care of them. In my particular case, the surgeon said that I shouldn't put it off for more than about six months in terms of diagnosis. So he was fine with me putting it off for four months. But he'd seen me in two weeks, and clinically, he needed to see me within six months.

In terms of how Canada is doing in terms of waiting times on an international comparison, this is clearly a problem in the Canadian health care system as compared to other countries. Two pieces of data or two types of questions were asked in a survey by the Commonwealth Fund, which does regular surveys of a handful of countries. Canada is often included in this, and other developed countries, about seven or nine countries — the U.S., Britain, Australia — are often included, as well, in the Commonwealth Fund survey.

Twenty-one percent of Canadians said that in the last year it took too long to get a diagnosis when they were worried about a medical problem, compared to the average for the Commonwealth countries. That was 16 percent. Canada was the highest on this question by far out of all the countries.

Having to wait four or more weeks after being advised to see a specialist — 43 percent of Canadians said that had happened to them in the last year. And 25 percent of respondents from other countries was the average for this question. Again, Canada was the highest on this question.

Steve also already talked about the 2004 10-Year Plan to Strengthen Health Care. I want to talk about it specifically with respect to waiting times. There was a commitment in some priority areas to achieve significant reduction in waiting times. These priority areas are on the slide. Sight restoration, diagnostic imaging, cancer care, cardiac care and joint replacement were the specific areas, with some multiple interventions within those areas. There was a $5.5 billion wait-times reduction fund from the federal government to help the provinces deal with this.

By 2007, while there was significant activity, there was some decrease in wait times, but it wasn't happening as quickly as we had hoped. The other problem was that we didn't have a lot a data to be able to track it and to be able to compare provinces to each other.

The objective was that by 2007 we would be able to have the data collected and able to compare with provinces. So by 2007, even though we had put a lot of money into this initiative, we couldn't say a lot about what was going on.

By 2011 CIHI was reporting finally. This was the first time since the 2004 money started that we were able to analyze trends in these priority areas and amongst the provinces. They could say that by 2011 eight out of ten patients received priority procedures within the benchmarks for those areas.

By 2013 CIHI was noticing that while there had been progress, the progress had plateaued. Even though the money was coming near to the end, we had got nowhere near as far with this money as we had hoped in terms of buying change around waiting times.

This is probably too small to read, but I can certainly send this on to the committee. This outlines how the different provinces have been doing. All the way over there on the left, you can see that for two of the priority areas, B.C. went down over the three-year period before 2011, and it plateaued in three of the other categories.

I share Steve's concerns with report cards and rankings. I do happen to like this one, though, from the Wait
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Time Alliance. This is a group of, I believe, physicians that are tracking the wait-time websites for patients and reporting on them.

Part of the reason why I like this is because in their report card they show how the grades have changed over time. I have B.C. up there, and I want to point out that B.C. has changed, has been improving over time, in terms of its wait-time website for the public.

I'm going to have one slide on mental health services. Mental health services are very important and are in the news a lot here in B.C., particularly in Vancouver because of the existence of the Downtown Eastside and the closing of Riverview.

I will say, however, that I know too little about mental health services to comment well on it. There are many of my colleagues at SFU who specialize in mental health services, and I would encourage the committee to think about exploring this in more detail.

It's a very important part of the Canadian health care system that doesn't get a lot of focus. It is getting a little more focus with the existence of the Mental Health Commission now. But again, Canada is behind other countries in terms of addressing mental health services and even the foundation of a national-level focus on mental health services.

I do want to point out that the policy legacies that Steve laid out this morning do directly affect the ability to deliver good mental health services. That is because of the public funding for physicians and hospitals only, or the predominant funding for physicians and hospitals, accompanied by the interest in deinstitutionalizing people with mental illnesses from hospitals.

That means that pretty much the only public funding on a universal basis that's available for mental health services is for physicians. That's not sufficient.

Most patients in Canada get their health care services for mental health services from their family physician. Family physicians, under the traditional approaches to the payment models, only have a few minutes with patients. That's not enough time to deal with most mental health services. If you need to see a psychiatrist, there are very, very long waiting lists for psychiatrists, which is the only other type of provider that is paid for on a universal, public basis for mental health services.

So there are lots of problems with getting access to services. Because people with mental illnesses often have trouble with their employment, with other aspects of their life, they often don't have access to a lot of independent money or supplemental insurance from their workplace. So we're heaping problems on top of problems with a vulnerable population.

The Canadian Mental Health Association calls primary mental health services the orphan of an orphan. You may remember that the Romanow commission mentioned that mental health was the orphan of the Canadian health care system. The Canadian Mental Health Association goes further and talks about the need for good primary mental health services as the orphan of the orphan.

I'm sure you're aware of this because of the discussion around the deinstitutionalization of Riverview, but the whole movement towards taking people out of hospitals with mental health services was intended to be accompanied by more community-based care for mental health services. That promise has never been well delivered. We've taken people, and we've just left them without enough services.

Briefly talking about health care professionals. Canada has invested a lot in increasing the number of our physicians in Canada. We're still below the OECD average. However, we have more primary care physicians than the OECD average for physicians.

Nurses. We did cut back quite drastically on nurses in the 1980s and 1990s, and we are now recovering on our rates of nurses in Canada. The next most popular, the most frequent types of health care professionals in Canada, are pharmacists, dentists, physiotherapists and psychologists.

You probably are aware that there was quite a different trend in physicians in Canada. The 2000s marked quite a growth in physician supply. There were so many problems with having enough physicians in Canada, and there had been some cutbacks in physicians. This has been because we've increased both the slots in medical schools and we've made it more possible to facilitate the employment of international medical graduates.

It is worth highlighting that 77 percent of our new international medical graduates that we have got practising in Canada come from low-income countries. This is a change in the trend, where before we used to get our international medical graduates from other high-income countries that were similar to Canada, such as the doctors that came from the U.K. There now is a concern around the equity of Canada and other developed countries poaching physicians from low-income countries.

It is important to point out that a physician today is not the same as a physician from yesterday, from a while ago. More than one-third of physicians now are women. As we know, women have babies and take time off to be with their babies more often than men take paternity leaves.

It's important to point out that over 40 percent of family physicians are women, so this is changing the availability of family practice. A younger doctor does not work as long hours as an older doctor, as well, on top of that.

Our physician counts. Again, you have to get underneath the physician counts because a physician is not necessarily the same as a physician from a while ago.

There is a perception in Canada that we still have a problem with lots of physicians leaving the country. We have had a net gain of physicians coming to Canada over the last five years, so we're no longer having that
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drain to the United States that still is an urban legend in people's minds. We now are fairly stable in terms of our immigration.

I know there's an interest in the committee in rural populations. I do want to point out that we don't have the same distribution of physicians in rural areas that we do in urban areas. While 18 percent of our population in Canada lives in rural areas, only 8.5 percent of physicians in Canada are distributed in rural areas.

A little more than 14 percent of family physicians are in rural areas. It's coming closer to matching the population in rural areas, but it's still not good enough. Because of a concerted effort on increasing the number of physicians in rural areas, there has been an increase recently in the number of physicians in rural areas. That's still not good enough to address the distribution problems.

I do want to add that I am a rural health researcher. In rural health research circles the joke is that still the best policy for keeping physicians in rural areas is to develop a dating service, quite literally. The best way to have physicians stay in a rural area is to have them marry a local. No other policy comes close to that.

I obviously talked too long on some early slides, so I am going to skip over this slide, other than saying that lots of Canadians use a physician within a year. Physicians are a portion of the health care system that lots of Canadians have contact with.

It's important to point out that most of the care that Canadians receive from the physicians, they're quite happy with. So 76 percent of Canadian adults rated the quality of their care as excellent or very good in a recent survey.

Nurses. I do want to talk briefly about the existence of nurse practitioners. We used to invest in nurse practitioners. Then we stopped investing in them.

We've started investing in them again. We're starting to recognize that they can play important roles in the health care system again, and we're starting to explore ways to more explicitly involve them in the health care system. Still lots of issues around that, but worth just pointing it out. They also are helping to deliver care in rural and remote areas quite effectively. So part of interprofessional teams.

In terms of what the public thinks of the delivery in the health care system, just before the election Angus Reid had a poll about how the B.C. public was feeling about the health care system to try and hopefully interject some discussion of health care in the recent election. It wasn't happening.

It was an interesting time for me as an academic, because I was teaching students and saying: "It will start happening in the news. It will be fascinating to study it as it comes along." And there was nothing.

The B.C. public generally felt that while there were some good things about the B.C. health care system, many changes were required. Sixty-five percent of the public stated that.

It's worth noting, though, that where they thought that changes were needed was within the system itself. Things that are under the control of…. The delivery system needs to be better organized to be able to improve the problems. The top two problems that the B.C. public reported were bureaucracy–poor management and long waiting times with the system.

Neither of these are unsolvable issues. There's a lot in the research literature that talks about success stories around both of these. There is the possibility of improving the system in the way that the public would like. It is not an unsolvable problem. It is not easy, but there are success stories around these issues.

If I can eat just a few moments into the question time, I want to leave you with a couple of foods for thought. One is: be careful about comparing apples to apples. They're not necessarily the same things. Steve already cautioned you about this a little bit, and I want to caution you about it again. Don't just blindly expect that the physician numbers are the same numbers all the time, that the number of MRIs and CAT scans are necessarily comparable.

Although part of the public dialogue is that profit and competition would instantly improve the Canadian health care system, it is not inherently the solution. There is lots of evidence in the research literature that says there is a complicated influence of profit and competition in health care. It doesn't necessarily fix things, especially not quickly.

Financing and delivery. While they are closely connected, it's important to try and keep them distinct — again going back to what I said at the beginning, the importance of the policy levers. You need to think about the policy levers and whether they lie in the financing realm or the delivery realm, even though they might be influenced by both.

One thing that I like to remind my students quite frequently is that even if we have more private financing in the health care system, we're still drawing from the same pool of providers. You can't grow a doctor overnight, so we can't instantly increase how many more people work in our health care system simply by injecting more private money.

Also, patients are not widgets. So we have to be careful about thinking about importing ideas from other types of systems, like the automobile system. People who tend to need more health care tend to be more complicated and tend to be more vulnerable, such as economically or socially disadvantaged patients. They tend to have more complicated things going on in their lives that also affect their ability to get and use health care.

We need to take those things into account when we think about the health care system. So it's very important to remember that patients are not widgets and that any thinking about health care system design must take into
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account that patients live in lives and that there are trade-offs that they have to make and that those might not fit into a one-size-fits-all kind of health care system design.

Then, finally, I will stop at this slide to talk about policy levers and legacies again. So a reminder that there are only certain levers available because of the design of our health care system. It's very important to also consider that there may be unintended consequences of policies. We tend to try and design health care policies thinking that everybody will interpret the policy exactly the same way and that everybody will behave as we hope they will behave.

There is literature on financial incentives in health care systems. They talk about…. If you use carrots and sticks to try and motivate providers, don't be surprised if they act like asses — instead of motivating people by their professional motivation, their willingness to serve the community. So you want to be careful about what can happen without meaning it to happen. I spend a lot of time with my students trying to get them to think about the unintended consequences of policies as well as what is directly intended.

It's also important to remember that we are constrained by what has come before. It's helpful that Steve spent an hour this morning on the history so that we have a good understanding of how we got to where we got and what that has created in terms of our expectations and our familiarity with the way things are organized. It does impact how we change and how we interpret what changes are happening because of where we are today.

My question is on something you mentioned — the Angus Reid poll. Bureaucracy and poor management are at the top of the list. The public perceived that as a major problem. You mentioned that the solutions are there in the literature. Can you give us the top three that we can do without too much time?

L. Goldsmith: On the system. Well, the short answer, I would say, is that probably none of them are quick and easy. I can't tell you the top three off the top of my head. I'd be happy to get back to you on that, though.

For instance, if we think about the hospital backlog, running our hospital beds at 93 percent capacity is probably not a good idea. We do know that some health care needs have a seasonal effect. We need to have some extra capacity in the system to be able to deal with that seasonal effect, or else we'll have the Tim Hortons headlines happening again.

In terms of waiting times, one of the aspects of the literature would say that better coordination is needed. There are examples in Vancouver where they have worked on the coordination for particular types of interventions, and they've decreased the waiting times.

L. Goldsmith: Something is happening. It's not systemwide. It's often accompanied by a group of providers or a group of bureaucrats being very interested in a particular type of clinical area, and they work together to improve it.

L. Goldsmith: Right. The money that we put in, in 2004 federally to work on wait times has bought change. It has not bought it fast, has not bought it systemwide enough yet, but it's getting there.

N. Letnick (Chair): Thank you. And by the way, as far as our process is concerned, sometime in the spring — it still has to be adopted by the committee — we will be going to the public and asking for alternatives and solutions and ideas. So you have a few months to think about that question and get your answer ready.

L. Larson: The community health centres. I find that really interesting. Certainly, as Donna pointed out, in rural…. I'm thinking that this is kind of a good solution in rural British Columbia, obviously, because we have a limited amount of resources — and getting them together for people rather than them having to drive in all kinds of directions for different types of care.

Do you see this as a viable solution to some of the issues that are facing us — going more into this type of care centre?

L. Goldsmith: I do. The more time I spend studying community health centres, the more I think they are a very good solution and probably should be expanded beyond vulnerable populations. A lot of them serve vul-
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nerable populations.

I can only speak to B.C. about this particular factor. There are interesting examples in British Columbia of organizations — buildings, for lack of a better term — that I am calling community health centres because they have elements of community health centres.

A lot of them, when there was a B.C. association of community health centres, were electing to say they were a community health centre. These were buildings that were literally built by the community and offered to the health care providers in that community a spot to be able to function, in the hopes of retaining those providers in the community.

Having spent a lot of time in different rural areas in different parts of the U.S. and Canada…. It may not be clear to all of you that a lot of times there is sort of only one main street. Even if providers are in different buildings, they're just down the street from each other and they do sort of collaborate even across the walls.

This phenomenon of communities trying to pull together the providers and offer them buildings is a very interesting phenomenon that seems to then encourage more collaboration amongst the providers. I don't know if it's because the community is explicitly supporting the providers so that the providers are then feeling like they should do something back for the community.

Still, the entire community health centre movement is a very interesting movement. It is often accompanied by advocating for social justice for vulnerable populations, which I also think is an important role in the health care system.

It would be nice if there was more committed funding for community health centres in provinces other than Ontario and Quebec. Outside of Ontario and Quebec the community health centres that are in existence are scrambling all of the time to have enough funding to fund the activities that they do, but they have very good results.

For instance, in B.C. there was money from the provincial government for funding nurse practitioners in the community health centres that existed. That was taken away a couple of years ago. Some of the community health centres have not been able to replace that money and have lost their nurse practitioners, which has directly affected the ability to take care of the same patient load that they were taking care of.

J. Darcy (Deputy Chair): Well, that couldn't have been a better segue to what I wanted to ask you about, which was about funding models for community health centres, and nurse practitioners in particular.

I know that in divisions of family practice, which have been one of the ways in B.C. that there have been attempts to deal with issues of reform of primary care…. In that model, as well as in the community health centre model…. I guess you've confirmed what I was going to ask about as far as the community health centres.

But in the divisions of family practice, I think one of the challenges there is that they would really…. Some of those practices would very much like to use nurse practitioners, but there are complicated funding issues involved, including overheads and so on. I wonder if you could speak to that.

Also, with some of the community health centres in place, you talked about the issue of vulnerable populations versus non-vulnerable. There are some in Vancouver, for instance, who serve vulnerable and non-vulnerable populations. They're under extreme pressure right now to go to only vulnerable populations. I wonder if you're familiar with that, but if you can also speak to the funding issue for nurse practitioners a bit further.

L. Goldsmith: Unfortunately, I don't know a lot about the financing details of the divisions of family practice, so I don't think I can add anything more to what you've just said around the issue of nurse practitioners and divisions of family practice.

I will point out that this is the policy legacies at work again. Because of the Canada Health Act, because of the agreement of transferring money from the federal government to the provinces, we do have what are, essentially, distinct pots of money for physician and hospital services and not distinct pots of money for anything else. The nurse practitioner issue is one representation of that policy legacy, so the ability to have public funds that are theoretically earmarked for services other than physician and hospital services would help the situation.

In terms of the vulnerable/non-vulnerable, it's a push that's happening for community health centres across the country. It may be because of more providers involved in care in community health centres.

On the surface, they appear to be a more expensive model for primary health care than just having physicians take care of patients. There isn't a lot of systematically collected evidence on community health centres in Canada and their outcomes. But the little bit of evidence that there is indicates that they are potentially cost-effective — not necessarily a cost savings but a pretty good bang for the buck that is spent on them.

There is very strong evidence from the United States that the existence of community health centres does save the health care system money, but that is a health care system that has a very expensive acute care portion of the system and also has a lot of people that are not getting care because of the lack of insurance, except through community health centres that accept them without paying anything. So it's a little difficult to import that research evidence here to Canada.

There are people in the community health centre movement that think that community health centres are helpful for all sorts of populations, not just vulnerable populations, and are advocating for that.
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N. Letnick (Chair): I've inserted myself in here. I have four, but I'll just do two and then see if anybody else has anything else.

You talked about Ontario leading the way for increasing the number of private long-term beds. Do they have a particular incentive in Ontario, other than profit, that's allowing them to be an outlier compared to the rest of the country?

L. Goldsmith: I don't know what the incentive for that is. That reflection was the clash of my academic with my personal life.

At that time I was looking, as part of my family, for nursing home placement for a family member. Because I was aware that there was some indication in the literature that private, for-profit introduction in long-term care decreased the quality of care in long-term-care facilities, I was very interested in the profit status of the long-term-care facilities that were available for my loved one.

I did notice this interesting trend — that all the shiny, new and fabulously laid out long-term-care facilities were all for-profit — and more systematically looked at it. That's when I noticed that the new facilities were pretty much all for-profit. I didn't follow it up further.

N. Letnick (Chair): Okay. You mentioned the women's facility here helping people with menopause. Are those physicians opted out, as Steven was talking about?

D. Bing: I worked in a community health centre in the early part of my career, so I'm quite familiar with them. One thing I really liked about them was that instead of this physician-centric system, it was a team approach. We had pharmacists there and nurse practitioners. There was even a social worker. We could look after the whole needs of the patient rather than just the medical needs, as we presently have with our medical system.

I was wondering, though, about the demographics. You were saying that one-third of physicians now are female. In actual fact, in medical schools it's probably two-thirds female, so there's going to be a growing trend for more females in the system. Because they have families and because they have to look after other people, does that mean the number of hours being serviced is going to drop from the current, where we have more A-type males doing more hours?

L. Goldsmith: Yes, we have already documented that the number of hours…. Well, younger doctors work fewer hours than older doctors do right now.

Younger doctors are more interested in quality-of-life issues than the older doctors, whether they're male or female. With the addition of more females in the younger generation of women, as well, and with the time they take off, that also makes it even less time that the physicians spend in terms of overall hours with patients.

D. Bing: In terms of training doctors, then, do we need to increase the numbers being trained so that we can make up for the change?

L. Goldsmith: I would say that that's a simplistic approach to the problem. The policy approach in the last ten years has been to increase the number of doctors. "We need more doctors; we need more doctors" has been the cry.

That is not working well enough. We still have patients, people, who can't find a family doctor, for instance.

That brings us back to the team approach to care. Not only is the team approach to care often very satisfying for all the health care providers involved; it's satisfying for the patients. It allows patients to have a medical home that isn't just dependent on one provider. If that provider has to take time off for a maternity leave or family issues, then the patient is left without the medical home.

It also has been shown to improve the quality of care, and there is some evidence that it's quite cost-effective.

N. Letnick (Chair): Just to follow up on Doug's point, is it also true that we have more doctors marrying doctors and that when we have two physicians, their level of capacity is also reduced?

L. Goldsmith: I don't know the answer to that question, despite my joke about the dating service in rural areas earlier.

N. Letnick (Chair): My study was that it was, actually. When you have two young physicians that get married, their capacity is actually reduced relative to when they marry outside of the physician group.

L. Goldsmith: Yeah. Well, to some extent that just reflects a larger societal issue of more women working outside of the home and what that does to the whole of society. It's not surprising that you're finding evidence that it spills over into health care.
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My last question is on wait times. You talk about wait times improving somewhat since the accord but not continuing to improve in some areas. Can we also say that the number, the volume, of surgeries in those five areas has increased considerably and that maybe that's the reason why the wait times maybe have not been as aggressively decreased as we might want to see?

L. Goldsmith: It's entirely possible. I don't know the answer to that off the top of my head. I do want to point out that we were only tracking those priority areas explicitly.

There is some indication that the intense focus on those priority areas took away resources from other aspects of the system. So potentially, there was the balloon effect. You squeeze on one part of the balloon, and the balloon gets bigger in another part. There are some indications that the intensity of focus had the unintended consequence of hurting another part of the system.

There is always the possibility of the diagnostic creep, right? Some patients take themselves out of the system. They decide not to get their knee replacement in the next couple of years because there's such a long waiting time. But if the waiting times go down, then they're more likely to get the knee replacement if they're sort of on the border of needing the knee replacement, for instance.

N. Letnick (Chair): Right. Again, the evidence I've seen shows that a considerable number of surgeries have happened over the last eight years since the accord was first signed, and that is one of the reasons why the level of wait times might not be as aggressively improved as we'd like to see.

Do you have any evidence, any research that shows that other areas have suffered? You did mention that anecdotally, that might be a possibility, but do we have anything that has actually looked at the other areas and said that that's as a result of the focus on these five particular priorities that the federal and provincial governments signed a few years ago?

L. Goldsmith: I'm saying this from having spent some time on the waiting-time literature. Or I said what I said from having spent some time on the waiting-time literature.

I'm just racking my memory to remember if it's a policy commentary on the potential unintended consequences or if there were actual hard numbers that backed it up. I can't remember it off the top of my head.

I'm going to turn around and see if any of the other academics in the audience know the answer to that.

S. Morgan: I think the answer is that hard numbers, no — partly because even for the priority areas, we didn't have hard numbers prior to the priorities.

L. Goldsmith: Steve pointed out that even for the priority areas, we didn't have hard data at the start of the initiative, and so he's suspecting that we probably don't have hard numbers on the other areas. So it is probably a policy commentary, but I'm happy to go back to the literature and confirm or deny that and send it on.

J. Darcy (Deputy Chair): One question on wait times and another on community health centres.

Just from studying the work of the Wait Time Alliance, in the non-priority areas it appeared that there are some provinces that track a whole lot of other areas — the non-priority areas — and their progress on that and other provinces that don't.

This made it pretty hard to do comparisons and see where we sat, because there are some things, like disc surgery or treatment for disc pain, that just aren't tracked at all in B.C. but are in some other places. So I suspect that it would be a whole major research project just to dig into that, since there aren't stats available. I know I've asked for some of them from the ministry, and we just don't have them in some areas.

L. Goldsmith: Yeah, and I think if this area intrigues you, it's worth going to the Canadian Institutes of Health Research and looking at their year-by-year reporting on the ten-year accord, on waiting times, because they did track how well the data were coming together every year. Then they would have a one-page press release in addition to a detailed report.

It's interesting just to even look at the one-page press releases: how slow it took, over the different priority areas, for the data to come together. If you remember, from one of my earlier slides, I think it was 2007 before there were any indications that we could potentially do some comparisons. So it is an interesting little, maybe 15-minute, exercise to just look at those ten press releases from CIHI.

J. Darcy (Deputy Chair): What I was referring to was in the other areas. A lot of them aren't tracked, which makes it pretty difficult to see….

L. Goldsmith: Right. CIHI does comment on what has
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happened in the other areas a little bit.

J. Darcy (Deputy Chair): In the non-priority areas? Okay. Your report on community health centres — when is that work going to be…?

L. Goldsmith: When is that…? It's a good question. It was supposed to have been finished about four years ago, and this is, again, the interaction between my professional life and my personal life. I have had incredible lived experiences about the Canadian health care system, having had four medical leaves over the last five years. So my community health centre work has continually started and stopped.

I hope that it will be done within the next six months, but I have learned one thing — that I cannot predict the future anymore.

J. Darcy (Deputy Chair): Related to community health centres, one of the things you said is there've been some analyses that says that they're cost-effective, presumably in terms of results and preventive care and so on. That's one of the most difficult things to measure — isn't it? — what we save through preventive care.

It's easier to determine what it costs us if we don't do preventive care. You know, like if you don't treat diabetes, then there's a multiplier effect with all of the other related diseases, and if you do treat it, then this is what it looks like. But in a particular practice, like a health centre, how do you measure that?

L. Goldsmith: You can do, basically, imputation using population-level data of a similar population — what has happened in the past for a similar population with a similar condition if left untreated. There's a whole field in the health services research community that does very rigorous work on cost-effectiveness analysis that is able to do that kind of calculation.

It does require time, though, and there hasn't been a lot of focus on the issue related to community health centre delivery in Canada. There isn't a lot of data collected about outcomes systematically for community health centre data in Canada.

Part of my study is just looking at what evidence we do have about outcomes in B.C., even if it's not systematic. What can we say at all about outcomes from community health centre delivery? So to sort of give a baseline and to then be able to build on it.

S. Hammell: I'm very interested in the hospital system itself as it impacts the health care system. In your slide here you have total hospital beds per 1,000 in Canada, 2.8, and in the OECD, 4.8. Then you have acute care beds, 1.7 and 3.4.

We've talked earlier about some of those acute care beds being taken up by long-term-care patients. Is that reflected in these numbers?

L. Goldsmith: It's a good question. I can remember looking at the footnote when I updated this slide earlier in the year, and I can't remember the answer. Those are the kinds of things that are buried in footnotes in the OECD data. I can look it up and get back to you.

I can't remember if I said this earlier, but I can tell you that part of the reason why Canada has fewer acute care beds is that we're a little more aggressive at using outpatient care than some of the other OECD countries are.

S. Hammell: Also, is there any evidence that there's an increase in people returning to the hospitals because they have been released too early?

L. Goldsmith: There's certainly some evidence of that in the research literature. But related to the hospital bed capacity — I don't know the answer to that.

S. Hammell: I'm just thinking about the whole system rather than just the bed. There's a system there that's operating, which doesn't appear to be operating well. You wonder: what are the essential pieces that are not working well?

My description of an emergency ward is that it's one big, huge, expensive walk-in clinic.

S. Hammell: Not only. But certainly a significant portion of it plays that function.

L. Goldsmith: Right. And the whole movement behind having a medical home for patients, having a place that patients are attached to, is to try and cut down on the use of an emergency department as a walk-in clinic.

So having a network of physicians or having something like a community health centre that has an interprofessional team associated with taking care of the patients tends to more likely have some method of taking care of patients after hours, whereas a group or solo practice physicians are less likely to have a method of taking care of patients after hours. So some of that using an emergency department as a walk-in clinic is as a result of needing care outside of normal business hours.

S. Hammell: Can I just spring from that to one quick
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question around the community care centres or the health care clinics in Ontario? My understanding was that a lot of money was put into doctors to move them into community health care clinics. The question would then be, for me to follow up, if that assumption or information I had was correct — that those community health clinics operate on fee-for-service.

L. Goldsmith: The defining features of community health centres, and Ontario follows them very closely, are that physicians are paid by salary. So in all the community health centres in Ontario the physicians are paid for by salary. I have not heard that the physicians needed to be coerced into joining community health centres in Ontario.

Across the country many community health centres report that if they had more money, they could hire more physicians. The younger physicians are very, very interested in working in community health centres because of the existence of the interprofessional team and also because they don't have to run their own small business of having a clinic.

You're all invited to stay for lunch. I just ask that we let Steve go first, because he has to make the next presentation.

Members, if you wouldn't mind taking your lunch and coming back to your seats here. Once Steve is set up and we are set up, we can start. So ten or 15 minutes max.

N. Letnick (Chair): We'll start with health systems structure and financing — Dr. Steven Morgan, professor, School of Population and Public Health, UBC.

S. Morgan: Thanks again for listening to me on what is a packed day of this health care 101 material.

I've been asked to talk about a couple of things that seem disparate, but I think they'll piece together. There was a question posed of, I guess, Michael Smith and discussed around the presenters as it concerned private-public mixes of health care financing. I'm going to talk briefly about some of the issues around blended financing models and how different sources of finance can enter a health care system.

I'll provide I think just a brief caution when hearing about innovative systems of financing. There are a number of questions one needs to ask about what, ultimately, the goals of that are.

Then I'm going to transition to the area that is my area of greatest expertise, which is pharmacare policy. It's probably a good example of a blended-financing system in Canada, a mixed source of money coming into that component of the health care system. I'll talk about the pros and cons of that and make some recommendations for this committee to consider in terms of what the future of PharmaCare policy in British Columbia might strive to achieve — and, hopefully, open up for some questions and discussion around that.

Very briefly, just to give you a sense of what we mean when we talk about health care financing, the academics will be clear to distinguish financing from funding. I know that seems an odd distinction, but when we talk about financing, we're talking about how money comes into the system.

Often we use flow diagrams like this conceptualization borrowed from a book chapter by Normand and Busse, who argue that ultimately all money in the health care system, in essence, comes from households or firms. In fact, one might argue that if it comes from firms, then it also comes from households that contribute to the revenues of those firms. So at some level it comes from citizens, and it ends up with providers.

There's sort of a fundamental law of health care financing that every dollar that goes into the system, again, comes from somebody's pocket and ends up back in somebody's pocket — that is, every dollar of spending is a dollar of somebody's income in the system.

There can be a variety of mechanisms of financing health care systems — through government; through social insurance funds, which we talked briefly about this morning; and through private insurance. As I mentioned, different health care systems use these different tools to different degrees, as well as the direct payment, which we call out-of-pocket payment directly from patient to provider.

When thinking about health care system financing, those that are architects of the systems of financing around the world have to bear in consideration a few fundamental things that are potentially unique around health care and health care systems. One of them is the issue of risk and insurance. People are averse to risk. We generally don't like uncertainty about our future incomes and therefore, for a variety of reasons, have insurance that would help us protect against financial risk that we might face, such as home insurance if there's a fire or theft, etc.

Health insurance, in part, helps people with dealing with the financial consequences of uncertain future health care needs. Therefore, beneath the surface of most health care systems there is a degree of classic insurance theory and classic concern about protecting people against future uncertainty.
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However, in the health system the risk of future needs is not like the risk of future needs in a system such as home insurance concerning fire or theft. Insofar as for individuals who have health care needs, typically those needs are…. Once one discovers that they are in a state requiring health care, the needs become chronic, and typically, year after year a person will have particular needs.

So the nature of risk in health is a bit different than it would be in some other classic insurance markets. That's important to bear in mind, because different people of different health statuses and different ages represent to the insurer different risk and different expected burdens. Therefore, systems around the world have grappled with mechanisms to ensure that those who actually have the highest risks, the highest needs for ongoing health care, can ultimately access the insurance market or, if it's a public health care system, just access that public health care market.

Those are important considerations, and we need to bear them in mind when talking about health financing.

We also need to bear in mind — and I'll talk further about this as it relates to prescription drugs — issues around access and barriers to it.

We talked briefly this morning about the Canada Health Act coming on the heels of a rather damning report by Justice Hall in 1980 condemning the use of extra billing and user charges. This was not simply because Justice Hall felt that those charges represented a financial burden on patients who already were beset with the unfortunate consequences of needing health care. Perhaps it was deemed inequitable to add to those health needs the additional burden of financial costs, but Hall was concerned that those costs also represented a potential barrier to access.

There is a mountain of literature that does show that patients will choose not to consume health care if you put financial barriers in their way. Sometimes those choices by individual patients actually cost the system more money down the road. So when we're thinking about financing systems, when we're thinking about how care is paid for and whether or not it comes directly out of the pocket of the individual who's going to consume those services, we do need to be mindful about whether that out-of-pocket charge, regardless of the service type, represents a barrier.

Financing, or the way that you develop your financing system for a health care component or the system as a whole, is also an important contributor to the extent to which you can have expenditure management in the system.

If you think back to that complicated slide with all of the flows and buckets I had earlier, if you have multiple mechanisms by which money can enter into a health care system, expenditure management becomes very difficult. To the extent that one source of funding dries up, other sources of funding will be relied upon more heavily, and the providers of services will balance their books accordingly or pursue, whether it's their profit motive or otherwise, their revenue streams accordingly.

In a system with a single payer, such as Canada's medicare system for hospital and physician services, you in essence have one source of finance, which makes it easier, to some degree, to manage the expenditure in the system. Similarly, in systems like the NHS, where it's a universal public system, expenditure management actually is at least easier in its technical terms because one can simply turn down the tap as it relates to the public revenue going into the system and then the system has to adjust.

As per the Canada Health Act, it would have to adjust without being able to seek new sources of revenue elsewhere. So it truly means…. The extent, for instance, the government puts money into a system like our Medical Services Plan means that's the money available in that system and the system needs to adjust.

The other thing, the last thing I wanted to highlight in terms of considerations when thinking about mechanisms and sources of financing for health care, is to very carefully consider the correlation between needs, means and then the equity implications of that. It does turn out that society's most vulnerable are the ones that most need health care and are therefore the ones that are the least, unfortunately, capable of affording the care that they might need.

As a consequence of that, I'm going to go to this next slide to remind you of public payment for health care in countries with different systems of financing. United Kingdom, Germany, Canada and the United States are my examples. In all of these countries the government plays a significant role in making sure that society's most vulnerable have access to the system. Another thing to note in terms of these countries is that the extent of voluntary insurance — which is the pink bar here — is varied across countries.

I think the idea of voluntary private insurance for health care is a theme that people are interested in discussing in Canada, even based on my own Twitter account. I think there are a number of stakeholders that are keen to see more voluntary private insurance in our system. It is notable that few countries around the world rely heavily on voluntary private insurance for health care.

The United States is depicted here with a very significant component of health spending financed through that mechanism. As the Obamacare policies come into effect and are complete in terms of universal purchase of the insurance packages that are required under that system, the United States will effectively have no more voluntary private insurance. What is pink on this bar will more or less be the equivalent of the light-blue social insurance.

Countries like Germany have a tiny bit of voluntary
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private insurance, and a few other European countries. If you look at OECD National Accounts, pundits are keen to point out that there's this, in essence, parallel insurance system.

If you drill down into what they are insuring through this private insurance, those voluntary insurance markets, it's not typically a replacement for the social insurance or public insurance offered for core services. It's actually typically an insurance market for services not covered under those schemes. In particular, it's services like dental care, which account for significant proportions of voluntary private insurance in other countries and, as I've mentioned earlier this morning, in Canada.

Countries around the world such as Germany — and you may have heard, also, about Australia's examples — allow people, in essence, to opt out of the public or social insurance system in those countries and into a voluntary private insurance market. That represents a fairly small percentage of total spending for the core services in those marketplaces.

In the context of Australia, in order to make it successful, the government has had to bail out the private insurance industry through public subsidies to an extent that it would hardly be fair to call it true private insurance. Ultimately, the public purse is paying a very sizable proportion of what otherwise looks like free market activity.

I think that in the context of contemporary policy debate in Canada around health care, notwithstanding certain actors wishing for voluntary private insurance or more out-of-pocket payment for core medicare services, there are a number of pundits who argue that to expand medicare to include those other services originally envisioned as being part of our national health services, you might turn to the social insurance model.

You might turn to a model that says, "If we can't fund it through government because we perhaps don't want to take on the tax burden, could we fund it through these other systems like you see in Europe?"

I want to just carefully go through what a social insurance system looks like, because it's an important lesson to understand how complex social insurance is and what the implications may be if we go down this path.

The first thing to note is that social insurance systems require compulsory participation in the insurance system by all people. This avoids the market failure that results as a function of adverse selection. If you had an insurance market that was truly voluntary, as has been the case in U.S. health care for a significant portion of the population, the people with the greatest needs represent, again, high risks to insurers and, therefore, will be charged the highest premiums.

Under such a circumstance, those people are unable to afford even the insurance that might help them afford the car. The market fails, because if you require the insurer to provide that care to them at a low premium, you'll end up in a situation where only the very sick enter into the insurance markets and ultimately your insurers go bankrupt. So the first step in social insurance is to require mandatory participation.

I should also mention that in our context for things like automotive insurance or workers compensation and other forms of social insurance or things that look a bit like social insurance in Canada, we compel participation in social insurance markets sometimes because there is a risk that individuals won't have the foresight to realize that they should participate, that they should actually be in the insurance plan because one day they may actually need it.

So whether it's unemployment insurance, pensions, automotive insurance or workers compensation, we tend to compel participation in these plans not just because of risk collection but also because of potential poor choices by individuals — at least, poor choices from a broader social perspective.

In order to make sure that people can afford to participate in a program, particularly if you're going to compel them to participate, social insurance systems require that the premiums be community-rated. Whether it's a payroll tax or an actual premium amount, a fixed dollar amount to participate in the program, they'd be community-rated and not be rated based on your age or your health status. Again, this is just to make sure that the people who actually have the greatest needs aren't barred access from the system because of the cost of what would be the care that they'll extract from it.

This means the system is going to redistribute money from those who are relatively young and healthy to those who are relatively old and unhealthy, just like the universal public health insurance that Canada has does.

In order to make sure that insurers want to play in this game, because it's a risky game if you've got community-rated premiums, social insurance systems have policies that are referred to as guaranteed issue, which ultimately means that the insurer is not allowed to refuse a patient or an individual insurance at those community-rated premiums.

If you allowed insurers to select patients based on who they wish to insure under the plan, of course they would do what's referred to as cream-skimming. That is that they would cater only to relatively healthy clients or healthy population groups, as opposed to the broader population that would include both some healthy populations and some unhealthy.

Then finally, a couple more notes. This one is important in terms of how insurers are monitored. There are very tight regulations of both benefits and the use of funds in social health insurance markets. This is true of Obamacare, just as it's true of social health insurance around the world. You have to actually define what the minimum basket of entitlement for those who are participating in the plan is. You have to, in essence, tell the in-
[ Page 56 ]
surers, "Thou shalt cover such costs as," and then they've defined the costs that it would be required to be covered under the insurance.

This is in part because you want to make sure that the bundle of services offered can't be used as a mechanism, again, for selecting only healthy clients. In the context, for instance, in terms of a pharmaceutical benefit, an area that I am particularly familiar with, you don't want to allow an insurance company to exclude psychiatric drugs from its formulary or from the drugs covered, because doing so would actually be a very effective mechanism of getting a significantly high-cost population off of their insurance books. Those who have psychiatric needs would therefore have go to other insurance companies to see their needs met.

You have very tight regulation of what benefits have to be provided and also tight regulation of use of funds. One of the definitions of social insurance systems, whether it's for health care or other kinds of benefits, is that the funding that is collected is siloed and earmarked specifically for the use that it was collected for.

Again, unemployment insurance in Canada is a good example, as are workers compensation boards. The moneys collected are not part of general revenues for government. They get put into very specific accounts that are used for very specific purposes.

This is true around the world as it relates to social health insurance. The insurers have to use these funds for the kinds of things that they're collected for. Moreover, as particularly is clear in the case of the rollout of Obamacare, the system has to regulate, in essence, the amount of profit and administrative cost that the insurers can embed into their premium system, sometimes referred to as the medical loss ratio. Ultimately, social insurance systems have to regulate the amount that insurers collect and use for the purposes of things like paying executives or paying a shareholder return.

From the perspective of government, social health insurance systems are not easy. They require constant monitoring of how the systems are performing and risk adjustment. In particular, risk adjustment is necessary if you have multiple insurers in a social insurance system.

Especially if you have very good mechanisms for collecting revenues on a community-rated basis, some insurers, just owing to their particular population groups that they attract, will actually have higher-risk groups within their pools. It is the responsibility of some mechanism of government to redistribute across insurance groups from those groups that are insuring relatively healthy populations to those groups that are insuring relatively unhealthy populations.

It's an extraordinary feat, and it requires an incredible amount of administration. Recent accounts of the Dutch experience in transitioning from a not-for-profit social insurance to a for-profit social insurance have actually illuminated just how taxing it is on government, both in the figurative sense that the government has to go about a lot of monitoring and evaluation but also in the literal sense.

The last important bullet is that government ultimately still has to be there at the end of the day to bail out insolvent insurers or insolvent sickness funds.

This does happen on an ongoing basis in countries and systems that use the social insurance tradition to fund their systems. You can't let an insurance fund go insolvent, because there could be thousands, perhaps millions, of people who are part of that fund and who would suddenly find themselves without health benefits if the fund went bankrupt in, say, October of a fiscal year. So government plays an important role in stabilizing against the solvency challenges that might come to particular funds.

It's a very complicated thing. I think health policy analysts want to really make this clear. At conferences I attend on a regular basis and in discussions with the public and reading through editorial pages of newspapers…. Health policy analysts want to make clear that even though it sounds like a simple idea, social insurance systems of European countries where employers and employees just contribute into these private insurance accounts are not simple.

It actually is not a free market. It's not the sort of idealistic vision that will harbour the efficiencies of a private market to improve the way that health care is financed. It is actually a very, very tightly regulated form of marketplace for insurance. It does impose considerable burdens on the system.

Some estimates from European countries that are produced by the World Health Organization and the OECD suggest that the administrative cost of multi-payer social insurance systems can be as much as ten times as high as the administrative cost of single-payer public insurance systems or single-payer public health care systems like the U.K. or Canada. Important to bear in mind.

I want to just ask a few questions — to just pose these — that people should be asking when they hear about people proposing new, innovative forms of health care financing. That is: what is the goal? Appreciate that we heard this morning…. Laurie mentioned the idea that there are a fixed number of providers in the system, typically, so we're basically dealing with a fixed capacity. How much money you inject into that system may not necessarily actually grow new providers in the short term.

One of the first questions to ask is: is the proposal for new, innovative financing a proposal to solve a capacity issue? If so, how does the financing actually address capacity? In what way does it actually grow new capacity for the system?

If it's particular around capacity to access surgical procedures of surgical specialists or that kind of human resource, you really need to ask the question: would this particular way of financing actually make it possible that
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Canada would have more of those specialists? And as we are beginning to hear in the Canadian context, to be clear, it does appear that we may have, actually, an excess capacity of some of those specialists — that we may not be thinking to attract more.

The other question to ask is: are the proposals around new mechanisms of finance to provide efficiencies in some way — to stimulate efficiencies on the demand side?

It's often this idea that if patients paid more of their care through some mechanism that was clearly connected either to its use or at least to health care contributions, they would be more mindful of the services they use. Therefore, the demand might become more cost-effective. Again, that idea also has to be compared against the evidence that requiring that patients pay also may impose barriers on them accessing the care that we want.

The flip side of efficiency is on the supply side. Is the innovation in financing meant to stimulate providers to compete in some way that another financing tool might not be able to stimulate them? Or is it just simply to get more money in the system — which, as you dig deeper and deeper on some proposals, may ultimately be the argument that is at play?

Really, there's a sense that there may not be sufficient funding. It's certainly the argument that was at play in Canadian history in the 1960s when physicians were opposed to the idea of a public insurer, in essence, forbidding them from collecting moneys directly from patients.

It was the idea that was repeated again in the 1980s in response to the requirements of the Canada Health Act.

Again, practitioners across the country were upset that the prohibition on them charging patients on top of a public schedule would prohibit enough money being in the system for them to maintain the salaries that they thought were reasonable for their professional status. Or as is the case in some arguments, is the goal of financing innovation simply to get somebody else's money into the system?

I think this is an important one. When you think about calls for parallel private insurance, a reduced role for the public payer — that is, a reduced role for taxation as a mechanism of finance and an increased role for voluntary contributions or even compulsory contributions that come by way of premiums — to those of us who are fortunate enough to be considered high-income earners, and I would declare that would include myself and my family, that would be a good thing. It means less of my money goes into the system and more money from people of lower incomes would have to.

I think the distributive agenda behind some of these calls needs to be challenged. Is it really just an attempt, ultimately, to redistribute the financial burden of the system to different actors? Typically, I think, particularly in contemporary calls, the call for redistribution tends to be less from the wealthy and more from the average person in the population. That would include any call for parallel private insurance as well as any call for increased premiums as a source of revenue for health care in this country.

Those are my cautionary notes around financing innovation. I apologize for making those so quickly. I now am going to be even quicker talking about pharmacare reform in this country. In particular, I want to talk about some of the challenges that we might face in British Columbia and how we might get over them.

We've talked a lot about Canadian medicare already. This is universal public financing for hospital care and physician services. It is, in essence, a model that is a work in progress. It's important to note this particular fact, which I keep repeating at every talk I can give these days: every developed country with a universal system of health care provides universal coverage of prescription drugs except Canada.

We are quite literally the only country in the world with a universal health care system that excludes prescription drugs. Even the United States, post-Obamacare, will have universal coverage of prescription drugs, and we know this — or at least, we can predict this — because something on the order of 98 percent of people who purchase voluntary insurance for health care in the United States include in their health insurance packages coverage for prescription drugs.

So post-Obamacare, Canada will be the worst-performing country in the world in terms of coverage of prescription drugs for its population. This is an accident of history, because it was not ever envisioned that Canada would exclude prescriptions from its medicare system.

Back in the '40s and through to the '60s pharmaceuticals were seen as a component of what would eventually be a more comprehensive health insurance system for this country. Despite the fact that the federal government hasn't ponied up in terms of legislation that would cost-share pharmacare programs, provinces have done their bit to try to patch some of the gaps in coverage.

I'm going to very briefly talk about three models of pharmacare in this country at the provincial level. Ontario's model, which is actually what British Columbia's model had looked like up until the early 2000s, is a model that addressed the needs that were most salient in the 1970s and '80s, and those were the needs of persons on social assistance and the needs of people over the age of 65. Both of those groups could be considered populations likely to have high needs for pharmaceuticals and have low incomes to pay for them.

As a consequence, in Ontario they have relatively comprehensive programs with very low co-payments, or cost to patient, for those population groups. Co-payments for modest-income seniors in Ontario's program are $2 a prescription, which is about equivalent to international norms but not quite equivalent to Canadian norms in other provinces.
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British Columbia's system, referred to as Fair PharmaCare, is a system that is, in essence, premised on the idea that no person should have to break the bank to fill the prescriptions that they need. It is a system where we no longer provide specific benefits to people based on their age, but rather we provide what's referred to as catastrophic coverage for people based on their income.

If your income exceeds a threshold of $50,000 in this province, you will pay 3 percent of your household income, either out of pocket or through voluntary private insurance, towards medicines before the public purse kicks in to help you with your prescription costs. This 3 percent of household income deductible, obviously, for many households, can amount to thousands. Certainly, for the median household income in British Columbia, it is at least $1,000.

It should be noted that British Columbia's is the most generous of such programs across Canada. As soon as Alberta rolls out its new income-based pharmacare program sometime next year, all of the western provinces will have programs of this type. Depending on where Alberta pegs its deductibles, British Columbia's may remain the most generous, so to speak, in terms of the lowest percentage income as the deductible for the program.

Then Quebec's model, which is an alternative model, is in essence a form of social insurance, where all Quebeckers are compelled by law to purchase private insurance if their employer offers any non-wage benefits to its employees. So if you're an employer in Quebec who offers various benefits like dental or optometry insurance, you as an employer are also compelled to offer your employees pharmaceutical coverage and your employees are compelled to purchase that.

If you are an individual who does not work for such a firm, you are compelled to purchase a premium-based insurance plan from the province, which functions a lot like an insurance plan would, with premiums, deductibles and co-insurance — that is, a percentage of the cost of prescriptions that the patients have to pay out of pocket.

I want to compare those three Canadian models against two international models. There are many we can compare to, but I'm just going to compare it to the model in the Netherlands, which is a true social insurance system that includes all health care, including prescription drugs, and to the U.K., which is the public health system idea where, in essence, everybody's covered under this government-run public health program which includes prescription drugs.

In the U.K. and the Netherlands co-payments for prescriptions are relatively modest. People are covered more or less from the very first prescription they need to fill, and the co-payments tend to be lower than $10 equivalent in Canadian context, and for people of various ages or health statuses those co-payments are waived in their entirety. In the Netherlands, indeed, co-payments on most medicines are zero unless you're filling a prescription for a medicine that is considered not a preferred medicine — that is, a prescription that comes at a higher cost than perhaps an alternative within the class.

So how do these systems perform on access to medicines? There's no doubt if you talk to people in the pharmaceutical policy arena, the number one priority for any financing system for medicines is to ensure that patients can fill the prescriptions they need at the time that they need it.

This is very bad news for British Columbia. Excellent data from a variety of sources shows that approximately one in ten Canadians report that they cannot fill the prescriptions that they need as a function of the cost that they bear out of pocket. In British Columbia the figure is approximately 17 percent of the population — double that which you would see in provinces like Ontario and Quebec. Part of this may be the cost of living in British Columbia as a function of the fact that we have, for instance, the highest real estate prices in the country and perhaps, therefore, the lowest disposable incomes.

But part of it is the fact that our PharmaCare system, although designed to protect people against catastrophic impacts on their incomes — you know, anything above 3 percent of household income — is not designed in any way to encourage use of routine medicines. In order to encourage use of medicines that are required by patients, you have to start paying for the very first prescription they receive, well below the 3 percent household deductible. This is a challenge, and it's a challenge for all of western Canada with these income-based drug plans because they ultimately are not designed to encourage access.

Quebec has a universal plan, in terms of everybody compelled to have insurance does have better than average access to medicines in Canada. But if you notice, against, say, the Netherlands and the United Kingdom, it still fares remarkably poorly, and that's because people in Quebec still face considerable charges per prescription because of the deductibles and co-insurance that the Quebeckers have under their plan.

The charge is in the order of $25 or $35 a prescription, depending on the cost of the drug being prescribed. And that is quite significant in terms of a financial barrier when you consider the research literature shows that fees as low as $2 can be deemed as a barrier to filling prescriptions that are needed for medicines that patients might be given.

Financial equity in terms of: how do we protect people against the financial burden associated with their needs? Again, the picture is somewhat poorer for British Columbia. We're not too far from the Canadian average in this regard.

Approximately 6 percent of our population report that they pay over $1,000 per year in household expenditures
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for prescription drugs in British Columbia. Quebec, interestingly enough, is much higher than that, and that is because every adult in the Quebec system faces annual deductibles and co-payments independent of their family membership.

So per household, if you have two senior adults in a family in Quebec, you can expect very considerable burdens of prescription costs, because each senior bears those deductibles and co-payments.

Again, in contrast to roughly 5 or 6 percent of Canadian households bearing these costs on an annual basis, in the Netherlands or the United Kingdom less than 2 percent of households would bear such costs — important to consider.

The other thing is — and I put this up every time I talk about these slides — again, going back to this idea about health care being distinct from other markets.

In the health care sector, if you are one of those households that has high needs for prescription drugs or needs for high-cost prescription drugs, which can include things as simple as having a family member with diabetes or asthma or hypertension or depression, the annual costs of prescriptions for those kinds of routine needs actually can add up quite considerably, as can the costs, of course, of more serious illnesses like rheumatoid arthritis, etc.

The issue that's problematic in terms of high-deductible insurance coverage like British Columbia's is that the households that have these needs face these needs every year — year after year after year — often, tragically, till their death. This is important, because the model that we have is one that's sort of premised on the idea that it's like having a house burn down — that it will happen once to a family but not likely again.

That's just not the case in health care. The house burns down year after year. In essence, high-deductible drug plans require those households to pay that 3 percent deductible every year that their family members might have a chronic need.

Finally, on efficiency, the issue concerning: "Well, maybe we spend less in this country because of the system of financing. We have maybe more competition because we have multiple payer types and a variety of incentives for people, in essence, not to use prescription drugs that they are prescribed." It turns out not to be the case.

These charts here show inflation-adjusted spending per capita on pharmaceuticals in Canada and other countries. This is Canada's record, which now represents approximately $30 billion of spending per annum. If we had spending levels now equivalent to the level that they see in the Netherlands, Canada would be spending approximately $11 billion less per year on medicines than we do today.

Now, remember, the Netherlands does better on access to medicines, better on financial protection for patients and, certainly, as it concerns equity year after year because there is so little burden on the patients and the families. It does better on sort of an ongoing basis as it relates to those measures, yet it spends drastically less on medicines than Canada does.

Even more profound is the United Kingdom, which has maintained better control over medicines over the last decade and a half, for sure, relative to Canada. If we had their level of spending on medicines in this country, we would save $14 billion a year. So $14 billion a year is real money. Even in the health care system, which is a remarkably big component of public and private spending in this country, $14 billion is real dollars.

Just briefly talking about British Columbia's specific history on medicine spending pre– and post–Fair PharmaCare. I understand quite clearly why government was motivated to implement PharmaCare.

There was a concern that the province could not afford an age-based entitlement against the growing population of the baby boomers. Therefore, something had to do be done to sort of better control public spending so that the government wasn't left carrying a considerable burden of seniors' drug costs.

The problem with that was that, although very effective at limiting the spending on medicines in the public purse — and this is the per-capita spending on medicines for British Columbia over the recent decades — the policy basically shifted those costs onto the private sector. It had no impact on controlling total spending in this province.

As a consequence, we didn't get the benefits, say, that the Netherlands or the United Kingdom have received in terms of having systems of single-payer financing and incentives for physicians to consider the cost of the medicines they prescribe.

Instead, we basically got continued runaway drug costs in this province — again, controlled for the provincial government but not controlled for the province as a whole. Private payers — whether it's unions, employers or the retirees without insurance — are bearing a considerable cost that they used to not bear in this province.

Quebec's system is not much different in fact, certainly not something to boast about either. This is the same data for Quebec pre and post its implementation of compulsory private insurance. It's important to note that since it implemented that compulsory system of private insurance, the Quebec spending on medicines has taken off relative to the rest of Canada. It's now over $100 higher per person in Quebec than it is in the rest of the country, which is considerable money when you add it up over the more than seven million population of the province.

It's important to note that some of this is owing to volume of medicine use. Quebeckers do fill more prescriptions than people in other provinces. But they also tend to fill prescriptions that are at higher cost than other provinces, they use generics less often, and they pay high-
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er prices than the rest of Canada. This is all very important because Canada, relative to the rest of the world, fills prescriptions for higher-cost medicines than our comparable countries, we use generics less often than people in our comparable countries, and we pay far higher prices than people in our comparable countries.

I'm going to close on a few notes around the challenges that we face in pharmacare and why I think the task for governments is not a simple one. I would never pretend it is. One of those challenges is the aging of the baby boomers. This aging process creates a rhetoric, at least, that the system would be unsustainable if we were to try to finance prescription costs.

Data are convincing that, in fact, total cost of prescription drugs will not increase dramatically as a function of the aging of the boomers. It'll increase approximately 1 percent per year in total as a function of the aging of the population here in British Columbia through to at least 2036. But of course, the public liability is affected if you tried to have an age-based entitlement. If you said that everyone over 65 gets full coverage for medicines like they do in Ontario, the government is on the hook for a fast-growing share of costs, because the boomers are entering into those years.

I understand quite clearly after conducting numerous interviews with government officials that this was in the mind of British Columbia policy-makers in the early 2000s, when the Fair PharmaCare system was designed. It was to make sure that government didn't bear that brunt.

The problem was that it was based on an idea that the private markets would fill the gap, that voluntary private insurance would somehow magically make sure that British Columbians weren't bearing those costs out of pocket in their retirement years. The data now show that that premise was false. The data from British Columbia that I showed earlier come from Canada's survey of household spending, which is very good data on the expenditures borne by individuals out of pocket on medicines, separate from the expenditures borne by individuals for their payment for voluntary private insurance.

One of the reasons why the premise that voluntary private insurance would kick in and help people past their retirement years turned out to be false is that employers and unions can't afford that burden any more than government could have in the idea of government having an age-based entitlement. Ultimately, we've seen erosion of workplace benefits for retirees being offered. Approximately two-thirds of Canadians about a decade ago were offered retirement benefits that included health when they were recruited into corporations. Today it's just around half of new recruits that are offered retirement health benefits.

If Ontario swings the way that British Columbia and the rest of western Canada have swung with respect to removing the seniors drug program, I would suspect that the retirement market for private insurance through employment will all but disappear in this country. It will not be tenable for Ontario employers and unions to provide benefits for what used to be covered by government, given that they have an ever even smaller base on which to finance it. That's a real challenge for us.

Another big challenge — and this is a big challenge for Canada and abroad — is that the paradigm for pricing pharmaceuticals has changed dramatically from one where it was relatively transparent what countries paid for patented brand-name drugs around the world. Canada's regime for ostensibly controlling Canada's patented drug prices was based on comparing market prices around the world and saying that Canada would pay no more than the median of a number of comparable countries.

Now manufacturers realize that if they give a deal to a payer in the United States or Europe or Canada and that deal was transparent, then all payers all around the world would want the same deal.

Over the last ten years manufacturers have increasingly been signing confidential reimbursement contracts with payers for medicines in the United States and around the world and in Canada. These contracts, ultimately, are good business for manufacturers. I've argued, much to the chagrin of many of my academic colleagues, that they can also be good business for payers. I think it can be the right thing for government to be doing.

But in order to harness these deals, in order to negotiate the best possible prices for medicines, you've got to have purchasing power. Unless you're basically the buyer of all medicines for the entire province, you haven't maximized your purchasing power in British Columbia or anywhere else in the country.

I'll briefly touch on the fact that the other big challenge facing us in this sector is the emergence of specialized medicines for either rare diseases or possibly even relatively common diseases that cause patients very dire circumstances.

In the 1980s we used to think $100 per patient per year was fairly expensive for a prescription drug. In the '90s it turned out to be maybe $1,000 per patient per year was expensive for treating a patient. In fact, we thought it was borderline hostage-taking by pharmaceutical manufacturers when HIV treatments were in the order of $10,000 per patient per year. Yet those treatment therapies literally saved the lives of the patients that they were provided to.

Unfortunately, today it is no longer hundreds or even thousands of dollars per patient per year that drugs are coming onto market with. It's quite literally hundreds of thousands of dollars per patient per year for new treatments. The pricing paradigm for global pharmaceuticals is an extraordinary challenge, and it's one which we will need not just a provincial but a national framework for setting reasonable limits on. It's one where the provinces
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are going to have to bind together in ways even more meaningful than they've already started to do through purchasing consortiums that are underway with product-listing agreement negotiations and generic pricing.

Very quickly, because I think I'm about three minutes over time here, which way do we go forward on pharmaceutical policy, and what can we do for British Columbia? One of the things I think…. I mentioned this to other provinces, but it is probably even more important here in British Columbia to revisit the Romanow recommendations.

I say this now with a declared conflict of interest. I was one of the co-authors of the recommendations in the Romanow report, and we recommended that a limited, short-term fix on Canada's pharmacare problems would be that all provinces have, at a minimum, catastrophic coverage for medicines for all people. But that was recommended as the minimum short-term fix for what was perceived as a significant problem in Atlantic Canada. A lot of people literally had no coverage whatsoever for medicines.

British Columbia went to universal catastrophic coverage, which was perhaps a step backwards in some ways in terms of the benefits offered prior to it. Nevertheless, it embraced that recommendation of Romanow.

I think B.C. can now say it's ready to take the next step in the Romanow commission recommendations. If you read the report again — which I helped write, at least as it related to pharmaceuticals — the report went on to say we need to expand universal first-dollar coverage for medicines that are known to be of proven value for money to the health care system.

There's a variety of classes of medicines — cardiovascular treatments, airway disease treatments, even a lot of the psychiatric drugs available — for which we know that if a patient is getting the right drug and is able to fill the prescriptions when they need them, they will stay out of hospitals. There's a value proposition to the health care system. I think that's something we should be looking forward to or looking at as a model for expanding pharmaceutical coverage in British Columbia, at least on a universal basis for drugs that we know will return a profit or return investment to the health care system.

The other thing I think we could take an even tougher line on than we have in the past is generic drug pricing in Canada. Through the pan-Canadian purchasing alliance…. It notably is not actually a purchasing alliance for pharmaceuticals because, ultimately, the provinces are still just basically insurers, and in many cases insurers of last resort for pharmaceuticals.

That purchasing alliance has set a benchmark of approximately 18 percent of brand-name prices as the new benchmark for what we would like to see generics be priced at in this country. Good data from our centre at UBC — my colleague Michael Law and others — has shown that those prices, even at 18 percent of the brand-name prices, are probably on the order of five to ten times more expensive than you would obtain if you truly were a purchaser of medicines. That is, if you truly tendered the supply of medicines for a province as large as British Columbia, you could obtain prices that will be closer to between 2 percent and 5 percent of brand-name prices.

We know this because some Canadian manufacturers sell products to Canadian purchasers like our government in British Columbia at prices that are on the order of sometimes five, sometimes even 20 times more than the price that the same manufacturer sells the same pill to the population of New Zealand.

New Zealand has a population of four million people, but they get the greatest prices for medicine, possibly in the world, because they tender the supply for the entire country. The tendering in the context of New Zealand is actually a clever tool because it was initiated not because they wanted lower prices but because they wanted to guarantee the security of supply for that country, a country that is a small country in the middle of the Pacific.

Despite the rhetoric that people will argue that sole-supply contracts can result in drug shortages, the pioneers in sole-supply contracts, whether it's the PHARMAC agency in New Zealand or even Veterans Affairs in the United States…. Both of those actors use contracts not just to secure better prices but also to make sure that the manufacturers will supply their markets first and foremost if there is a global shortage.

British Columbia could do this, and it could certainly do this if it did it in partnership with provinces, say, in western Canada, which at least share, in the near future, the fundamental structure of an otherwise catastrophic drug coverage program. You could purchase all generic drugs at prices that would probably allow you to provide, for free, generic drugs under a single-purchasing system at approximately the same cost that we currently bear by only being payers of last resort for those medicines. This is this argument about being tough but fair. Let's negotiate better contracts with manufacturers.

Lastly, on this one, we can get creative. If we need new revenue sources for financing pharmaceuticals in the province, I think that the average provincial voter, the average citizen in this province, would recognize the deal if they saw that you were getting better prices and encouraging access to medicines that kept people out of hospitals.

Importantly, I think they would see a good deal if you had a transparent mechanism by which you were raising the revenues and using them to fund medicines. This may be, to steal a page out of the social insurance book, at least in terms of the idea, a very transparent fund — a new tax perhaps, perhaps the equivalent of 1 percent of household income, that would be used exclusively for funding medicines of proven value for money to the health care system in a very transparent fashion. It would go into a
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specific account earmarked for the purpose of purchasing medicines for the population.

Something like that, I think, may be politically tenable and, as I mentioned earlier, could actually be a win-win in terms of reducing prices and keeping people out of hospitals.

I'll end with this last slide. It seems depressing that we are the only country in the world that has a universal system of financing health care but excludes prescription drugs. You could flip that on its head. People say it's not possible. Every other developed country proves it is.

D. Barnett: Your last slide is very interesting. I'm sure it's very complex as to why other countries in the world can accomplish this and Canada can't. Do you have any examples of this that we could take a look at?

S. Morgan: There are numerous ones. We've done a number of reports on different countries, whether it's Australia, New Zealand, the United Kingdom, Austria, Germany.

On our website for a national research network that I coordinate called the Pharmaceutical Policy Research Collaboration, we actually outline how pharmaceuticals are managed in, I think, 11 different countries around the world. Of those 11, only Canada and the United States stand out as countries that don't have universal coverage. Those documents describe the various ways in which these countries manage spending.

I also have a recent report published with the C.D. Howe Institute in Toronto where we look at Canada and how it compares to a number of the other countries, like the United Kingdom, Australia, New Zealand, the Netherlands. In that report, we articulate some of the ways in which these other countries both secure better prices for medicines and also — and I think it's important if we allude back to this idea of our siloed mentality of our health care system — have mechanisms to provide the prescribers better information about appropriate prescribing at the point where they need it. Canada lags way behind the rest of the world in electronic health information systems and electronic prescribing decision aids.

Also, they have mechanisms to provide a prescriber some incentive to consider the relative cost of the medicines they're prescribing for their population — various financial mechanisms to close the loop so that the providers realize that every dollar of prescriptions used in the system is coming out of the system that could provide other forms of care as well.

R. Lee: Thank you, Dr. Morgan. In some countries I understand that the pharmaceutical fee is actually included in the physician's fee — for example, Hong Kong, in some areas — and sometimes you have to pay for it extra. So I don't know. In those countries you mentioned, is it possible that, actually, it's covered already somehow in the account — say, the costs of seeing a physician?

S. Morgan: Well, the answer will be no in the countries that I've alluded to. Again, the ones that I've mentioned — Australia, New Zealand, the Netherlands, the U.K., Germany, France — all have systems where the delivery of physician services is separate from the dispensation of prescription drugs. So they all, in essence, have various forms of retail distribution for pharmaceuticals that bear some resemblance to Canada's system of having independent pharmacies that stand independent from the physicians' practices.

There are a number of Asian countries in particular for which that's not necessarily true. In fact, there are countries like Japan where, in essence, you have dispensing practitioners or dispensing physicians who not only write you the prescriptions but sell you the drugs. You can imagine how perverse the incentives are under such a structure.

J. Darcy (Deputy Chair): Wow. When you spoke about New Zealand, for instance, and other countries that have significantly lower drug prices…. We're not a country; we're a province. I wonder if you could talk about what we have the ability to do as a province in this area.

Secondly, academic detailers — what role you play. I think the government, the ministry, has ten or 12 academic detailers, and the pharmaceutical industry, I think, has — I don't know — hundreds. I don't have the exact number at my fingertips. But I wonder if you could talk about that issue and what impact you think that has on prescribing and cost.

S. Morgan: Yeah. Very briefly, what can a province do? Well, if they can do it in New Zealand and achieve the kind of prices that they do with four million people, British Columbia has a population mass sufficient to actually leverage price gains on a similar scale. It requires concerted action on behalf of the province.

We already see that kind of action as it relates to the purchasing of medicines for use in British Columbia hospitals. We have very centralized processes for negotiating contracts on hospital acquisition. It's actually a good mechanism, and you could consider expanding that mechanism, perhaps even using the common infrastructure of that mechanism, to start tendering contracts
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for generic drugs to be used in pharmacies.

It will be a battle. I'm not going to pretend it wouldn't be. Why? Because pharmacies actually make a lot of money on the margins between what a manufacturer of a generic drug would be willing to pay and what the government is willing to pay. There's a big gap still in there, and that means big opportunities for various forms of financing to flow back to the pharmacy chains from the manufacturers of generics.

So it's not going to be an easy fight, because the big chains will actually be upset about British Columbia trying to get the generic drug prices even further down. But it's possible. Again, you can leverage some of the infrastructure we have already.

I think that the province of British Columbia can also move forward on some of the issues around the Romanow recommendations by actually getting citizens and patient groups behind us and saying: "We really want a universal benefit for drugs to treat diabetes. We really want a universal benefit for drugs to treat hypertension and cardiovascular risks, because we want to keep people out of our hospitals."

It's just that simple. Get the public behind you, because ultimately these things have been proven, if done in a clinically appropriate way, to actually pay dividends to the health care system that the taxpayers are already paying for.

As related to academic detailing, it's a real challenge. The manufacturers of pharmaceutical products do not have a stellar record on promotion of medicines in terms of its balance of evidence and talking about risks, etc. It is very difficult when the province is trying to use academic detailers to, in essence, provide balance against an industry that can spend millions in a heartbeat on its sales workforce.

I think that the idea and the premise of academic detailing is sound. It's a tough fight. If you look at the literature on academic detailing, it basically says it does have short-term effects that are positive, but if you want to maintain those effects, you've got to keep going at it year after year, literally month after month to counter the effect of the detailers. They're in there to sell the products on an as-frequent basis. So it's a tough challenge.

There are things that we could do. I think the strongest thing that the province could do is continue pushing on electronic medical records and actually really strive to have one of the best decision support systems in the country, if not the world, as it relates to: when a doctor is looking through the records for a patient and about to write a prescription — ideally, electronically write that prescription — up pops the best available evidence concerning what would be the right drug for that patient. That, I think, would trump academic detailing in a sense that it would bring the information at the point when it's most needed, which is at every single clinical encounter.

N. Letnick (Chair): Going back to the beginning of your presentation, Steven, when you talked about the health system structure and financing, what determines whether a service is deemed medically necessary and therefore covered by the act?

S. Morgan: Yeah, that's a great question. In fact, there was a relatively esteemed group of people who were charged with the task of uncovering the secret, defining-the-medicare-basket project, as it was.

The Canada Health Act is deliberately vague, and enabling legislation at the provincial level is deliberately vague to some degree in defining what is medically necessary, in part because technologies change over time, particularly as it relates to insured services as would be concerned, like surgical services of practitioners. The landscape changes quickly.

So there's no hard and fast rule. It's certainly the case that some things that we do provide public funding for, some services, are things that we probably would want to delist. Some people estimate that as much as 30 percent of what physicians do in routine practice is the kind of practice for which there is little evidence to support.

You might want to delist some of the things that practitioners do. The challenge, of course, is auditing every single clinical encounter as it relates to physician services.

What is and what is not medically necessary? What should or should not be covered by the system is difficult. In essence, right now, the formula is we define it by provider type. If it's a physician, it's in. If it's not a physician, then it's a mix of private, public and out-of-pocket payment.

So the answer is not easy. It might be actually preferable, as we move towards more integrated primary health care in this country, to think we're funding primary health care as a basket, and then we're having very clear distinctions on technologies that are more easily identified about what should be public and what should be private.

Pharmaceuticals, again going back to that file, is a good example of a domain in which you can actually have a formula. You can list what drugs, under the formula, are in essence ones that would be subject to public coverage.

As it relates to clinical services, it becomes more difficult because of the fact that it varies encounter by encounter.

N. Letnick (Chair): The other question is…. Twice in the last half hour you mentioned that one of the advantages of a different drug program is to free up space in hospitals. But every time I bring that argument to my health authority, they say, "Well, somebody else will just fill up the space," and it's not saving them any money. So here we're talking about the silos again, right? We're improving people's lives, for sure, but the silo of the health authority won't see any benefit, so they have no
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encouragement to make that happen.

I know it's a complex system, and we'll talk about that with Diane later. What response would you have to that?

S. Morgan: I think they're right. The fact is that if you free up beds at a health authority, they'll fill them. There is a reality there. The system basically absorbs as many patients as it can, perhaps because there is some level of unmet need out there in the health authorities.

In some sense my argument, in the first instance, would be that if we can get some patients out of the system that don't…. We really wouldn't want them to be in there, and we don't want them to have out-of-control asthma. It benefits them, but it means there are less people on the emergency department. We don't want people having unnecessary heart attacks and stroke, not only because they are heart attacks and stroke that no one wants to have, but because we'd like to free those beds up for patients that we couldn't prevent their conditions from emerging.

The flip side is…. Again, this is the grand challenge for modernizing Canada's health care system, and again, it's the reason why people like Michael Decter and Don Drummond and David Dodge and fairly even conservative-minded people in this country in health policy files are saying, paradoxically: "We actually need to expand our public health system in order to get it into a sustainable or controllable fashion."

One of the answers I would have to the health authorities is to say: "Great. Why don't we hand over the drug budget to you as the health authority? We'll have a universal drug budget that you manage or that you coordinate the management of through your purchasing consortium that already exists."

You begin to see the trade-offs. Do you really want to increase the drug budget because we're purchasing more medicines than perhaps we should be or we're paying higher prices than perhaps we should be? And do you want to make sure that people get access to medicines that'll keep patients out of your own hospitals?

I think the answer to both of those questions will be, actually, that they want to get better prices and they want to increase access. The reason I think that is that the two countries that I hold out as examples of exemplaries in pharmaceutical policy, the U.K. and New Zealand, both have regionalization structures that fund health care — district health boards in New Zealand, not unlike our health authorities, and primary health care across the U.K.

In both cases those bodies that are responsible for funding community and hospital care also fund medicines. They break down the silos by putting it all together.

That's why I think that the argument I make is true. It's that the physicians in those settings realize…. Even though they begrudgingly accept a formulary, they realize that the formulary is probably in the best interests of their practice.

S. Hammell: I just want to ask you how this new trade agreement with the European Common Market affects drug costs. Is that going to have an impact, in terms of this, of even increasing the cost of drugs?

S. Morgan: Well, it's the evidence we'll see when all the details are out and when we see what happens in terms of generic entry.

This agreement does extend the market exclusivity for patent-holding manufacturers by giving them what's referred to as data protection. It means that another manufacturer can't license a drug based on the clinical trials of the originator for a fixed period of time. It delays generic entry.

It is important to note that the pharmaceutical industries experience what's referred to as a patent cliff. Most of the blockbuster drugs of the 1990s have had patents that have been expiring over the last five years. The last few great blockbusters in terms of primary care medicines will have their expiries in the next couple of years. By 2017 most of the big expiries are over.

As it reflects the Romanow recommendations of making sure that we get preventative medicines in the hands of Canadians at a time that they can afford, it's not going to be a deal-breaker. You could still do it at very low costs by tendering generic supply for those medicines.

But as it relates to these new biologics and the ones that have been coming to market over the last few years, it's a very significant concern. It means that we may not see generic versions of biologics, which are referred to as biosimilars, for a longer period than we had foreseen in the past.

Treating very serious conditions, including cancer, will go up as a consequence of these decisions. Notably, however, the cancer drugs, in essence, as they are administered in facilities, are already in the system right now. We're just going to have to find ways of coping — hopefully, coping without pushing the cost onto the patient.

N. Letnick (Chair): We are getting over time, so we'll finish with Doug and then Richard, please.

D. Bing: I'm a little bit concerned about the costs. Since I've been elected as an MLA, I've had a number of drug companies come to my office to try to make me aware of their product and to try, I guess, to get it on my radar so that if it comes up at cabinet, I will support implementing it or bringing it forward.

For example, I had one company. They've got a drug to prevent osteoporosis. It sounds like a great idea. I asked them what the cost was, and it was $20,000 a year. Just calculating in my head, it would bankrupt the whole system if we were to agree to do that.
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There's another drug that…. Actually, it was a vaccine. We've vaccinated most of the young girls with it. Now they're thinking of expanding the market by getting all the boys vaccinated as well.

These things can just get out of control if we just allow universal coverage and costs. What do you think about that?

S. Morgan: First of all, I think it's key to say that those of us that would advocate for a universal pharmacare program would not advocate for an open bar for prescription drugs.

A universal pharmacare program in Canada or any of these countries that you would compare to is defined against limits on what the government will or will not pay for. Even in the United Kingdom, which is a country that doesn't operate with a strict formulary, they define drugs that are deemed to be too costly for public funding.

In the Canadian context, because we're starting from a system without universal coverage of medicines, the argument is to grow incrementally and to grow in a very deliberate way.

My slide about taxing and trying to create a fund that would be for universal coverage of medicines is deliberate, because in New Zealand, which has achieved some of the best success in expenditure management on pharmaceuticals, they have a fund. They have a budget that their district health boards give them every year and say: "Thou shalt not spend more than these dollars on medicines."

They depoliticize the decision-making by creating an arm's-length body that is responsible for that budget. It means that the MLAs, or the equivalent thereof, aren't under the constant pressure, because they can say — which is good for you: "It's not my decision. It's the decision of this body that's tasked with managing this fund." It's not unlike you having a body that's tasked with managing, say, the unemployment insurance fund for Canada.

S. Morgan: Yeah, we have a complex system now with respect to drug review process. We have advisory bodies both at the federal level, through CADTH — or the national level, because it's an FPT process — and at the local level, through the therapeutics initiative that provides advice. Then we have drug benefit advisory boards or decision-making panels that make recommendations for pharmacare.

N. Letnick (Chair): The reason I bring it up is that in the four years that I've been an MLA, I've never had a drug company come to me and ask me to advocate for them for their particular drugs. So we might want to….

N. Letnick (Chair): Yeah. We might want to look at the process. Maybe we'll have to look at the process as to how drugs actually come through and get approved. Anyway, we can take that off line and talk about it.

R. Lee: Yeah, I'm most interested in the follow-up on this line of idea, of questions. You mentioned about the basket of drugs in the developed countries. Of course, you said Japan is probably not in one of these groups, right? It's a different system.

S. Morgan: Oh, Japan has a universal drug benefit, but it's not one of the ones I've compared to here.

R. Lee: Yeah, but my question is…. For those countries you mentioned, the basket of drugs — there must be some differences. How different are they?

You also mentioned the HIV/AIDS, for example. We actually have a good program for that. And new drugs are expensive. If you only prescribe generic drugs, then some of the benefits may not get realized in terms of research and in terms of getting better treatment for patients. So how can you balance that?

S. Morgan: Very quickly, there's no connection between generic drug use and research and development on new pharmaceuticals. There's a lot of mythology about how you create incentive for new innovation.

You don't create incentive for valued pharmaceutical innovation by overpaying today in the hopes that you'll be able to get cheaper drugs in the future. You need to be very careful. You need to be a very wise purchaser today in order to provide the industry incentives for purchasing tomorrow.

For Canada in particular, we are one of the worst performers in the world in research-and-development investment. Pharmaceutical companies invest very little in our country by comparison to other countries. They invest five times more in the United Kingdom than they do here in Canada, and yet the U.K. pays far less for medicines than we do. So we have to be careful about arguments about R and D.

That said, you've mentioned the centre for excellence or our approach for HIV and AIDS. I think British Columbia's approach on that is exemplary of what happens when you truly centralize the acquisition and the decision-making around clinical protocol for a disease
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and you make the drugs available as affordably as possible for everyone who needs them. B.C.'s Centre for Excellence in HIV/AIDS and the programs for making sure that British Columbians can get treatment are exemplary in this country.

If you compared that against some other provinces — in this mind, I'm thinking perhaps of Saskatchewan, for which the data are far worse — it shows that you can manage the budget, you can provide access, and if you do it, the outcomes are positive.

I think if you took that model, if you took the B.C. Cancer Agency's model of a protocol-driven cancer therapy in this province in cancer agencies, and you expanded that to protocol-driven therapy outside of the agencies in the community, you'd have similar benefits.

I think these case studies in our system are there and show that it can be done. It's just a matter of, in essence, scaling up and having the political courage to say: "We're going to take this on, and we're going to take it on despite some opposition from some fairly powerful opponents."

N. Letnick (Chair): Well, that's why we're here. Thank you very much, Steven, again, for a great presentation.

We'll take a minute, and just one minute, while we change speakers. If you need to stand up and get rid of those after-lunch blues, now's the time to do it.

N. Letnick (Chair): Our next presentation on outcomes, comparisons and change methods will go about an hour, maybe a few minutes less. If that happens, there would be no objection from us. Then we have some time, of course — half an hour — for questions after that if we need it.

Dr. Aslam Anis, professor, School of Population and Public Health at UBC, is going to tell us why we shouldn't use the Conference Board of Canada report card but will tell us what we should be using so that we can measure outcomes over the long term so we have something that will tell us whether or not the changes we propose and are acted upon are actually working.

If you're not going to do that, then maybe you could talk about it in your discussion at some point. So I'll turn it over to you. It's all yours.

A. Anis: Okay, thank you very much. Before I start, although I am a professor at UBC, I also want to say that I'm a research scientist based at St. Paul's Hospital. We have a research centre called the Centre for Health Evaluation and Outcome Science, and we do a lot of health evaluation and measurement of outcomes.

Incidentally, I was not able to put together slides from my course for this presentation. I had to make new slides, because what I teach is cost-effectiveness in health care and not so much macro-level outcome measures. I thought it was great that I was asked to do this. It made me do stuff and learn about stuff that I'd only vaguely known in my head was important, but now it made me come up with this presentation.

One of the things that struck me when I was sitting here and just trying to prep myself for my talk is that there's a problem with my title. In my title it's Health System Outcomes, Quality and Performance Indicators. It could easily say "health outcomes," and take "system" out because I'm not sure what I'm talking about is directly the result of the health care system. These are health outcomes we have in Canada, and these outcomes are produced by a combination and a multiplicity of things. So keep that thought in mind while I talk about health outcomes.

I'm going to talk about health outcomes from different perspectives. I'm going to talk about, simply, outcomes that occur in populations. Then I'm going to talk about financial statistics — I don't consider these as outcomes; they're just financial statistics — and then again, indicators of access. These are generically called health outcomes, and they're generically called health system outcomes. But I'm not sure the health system has anything to do with it. It's the overall system.

Then I'm going to talk a little bit about quality measures, then talk a little bit about system approaches, which you alluded to earlier, and I'm going to set it up for Diane to talk a little bit more about system approaches. I'm going to finally conclude with a few comments about sustainability of the health care system.

Let's start. The very first slide I have over here is a comparison of life expectancy and health-adjusted life expectancy at birth. This is taken from the OECD. So the OECD is in red, and if you could look at it carefully, in the OECD the average life expectancy for women is about 81.9 years and for men is about 76.3 years. That's the red bar. Beside the red bar there's a lighter shaded bar, and the two sum up to the total amount.

It's 81.9 for women and 76.3 for men. The red bar is something called health-adjusted life expectancy. So what that says is that people might live that long, men might live almost 82…. Women might live 82 years, but if you look at how they live and when they live in good health, without any injuries, any disease, that number is much smaller.

Actually, those red bars over there work out to 74 years for men in the OECD, on average, about 72 for…. I'm saying this all wrong today — 74 for women and 72 for men. On average, about 70. That means they lose about 10 percent of their life when they don't live in perfect health.
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Although their life expectancy is there, the perfect health life expectancy is almost 10 percent lower.

That's one of the first lessons in thinking about health outcomes. Health outcomes will be misleading if you're looking at health outcomes that are not adjusted for quality.

When you look at Canada, for example, Canada stands much higher than the OECD average. The life expectancy average for Canada is about 83 for women. Then if you look at the adjustment, the adjustment is similar. Women in Canada, although they live longer than the OECD average, when you adjust for the quality of health that they have, it is lower.

Actually, if you look at the rankings, if you look at crude measures of life expectancy, they fall in the same ranking as if you look at the health-adjusted life expectancy. I have a picture here for Canada, and if you now look deeper within Canada, you'll see that we do quite well in British Columbia.

In British Columbia you'll see that women have an average unadjusted life expectancy of about 83.5 years, and if you adjust that, it works out to about 72.3, and we lead the country.

However, there is still a difference between 83.5 and 72.3. It works out to about 13 percent. So 13 percent of their lifespan, women don't live in good health. They don't live in perfect health.

One of the goals for our health care system could be to increase the green bar — make it higher. But the other goal could also be to increase the lighter shaded bar and to make it higher. That's the difference between crude measure of life expectancy and a health-adjusted life expectancy.

Now that adjustment that's done over here was done using a quality-of-life measure known as the health utilities index. The health utilities index was used to weight the quality of life in each year, and that was then multiplied by each year that people lived, depending on their quality of life, to come up with that adjusted measure.

Another way of looking at health system outcomes…. Actually, before I go there, this number here, although B.C. leads Canada, I really don't know, definitively, what the role of the health care system is in achieving that outcome.

I think in British Columbia we have a more temperate climate. We have the lowest rates of obesity. We have higher levels of exercise among the population. The rate of smoking is the lowest in the country. All those things contribute to that number, and the health care system also contributes. That's why I said the title of my talk, when it says "health system outcomes," can be misleading. It's the outcomes we have…. We really need to figure out what contribution of that comes from the health care system. Of course, there's a big contribution, but it's not clear.

So in B.C., I think, our climate, our multicultural society — Asian diets are higher in fish, lower in fat, maybe — exercise, lower smoking rates, all contribute to this.

Just for the committee, you'll have lots of papers coming to you, lots of statistics. People will say: "Look at this number. This is great." I'm giving you fodder to think about, when you see those numbers, that these numbers are set up that way.

Another way of looking at outcomes is to look at mortality rates. These are standardized mortality rates. If you look at the standardized mortality rates, the OECD average is 69 and 106 for men and women. If you look at Canada, it does much better. It is on a lower level. Unlike the previous number where a larger number is better, here a lower number is better. We're looking at mortality rates, and the lower the number, the better the outcome.

So if you look at the standardized mortality rates per one million population, Canada does quite well. If you go within Canada, again, British Columbia does really well.

Again, I'd ask you to keep thinking whether it is our health care system that achieved this outcome or the other determinants of health, the social determinants of health, and then make up your mind about what you want to attribute this to. I'm certainly unsure about what the influence of the various causal factors are.

Another kind of outcome measure. The first I showed you was life expectancy and adjusted, then mortality. Finally, another, which is digging a little bit deeper but also an outcome measure, is the prevalence of various conditions.

Here we have the prevalence of diabetes. I put on this one slide the prevalence of diabetes because diabetes causes stroke, myocardial infarction, heart disease. Really, what causes diabetes? You have to go back. Obesity is one of the leading causes of diabetes. So a lot of the things impact the proportion of people who are obese in our province and then those who develop diabetes and go on to develop heart disease and stroke. If you look at that, Canada doesn't look very good.

Our rate of prevalence of obesity is almost at the highest level of the scale. The OECD is much lower. This is going to tell us a story that I'm also going to talk about in a second — that same obesity when I go from the OECD. The system is I have one slide on comparing Canada with the rest of the world and then comparing, within Canada, B.C. Again, if you look at the B.C. comparison, we have it slightly differently here.

Here we have a map. It shows you the age-standardized prevalence, and it shows that Newfoundland is 6.5. These
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different coloured codings are to show the prevalence level according to the province. You see B.C., which is the green, is similar to Saskatchewan and then similar to Quebec. It's among the lower end of the scale. Then Ontario is among the highest on the scale. But the scale is pretty narrow.

It's interesting to see that for the rate for B.C., we're talking about five to 5.5 — these are the different groupings — whereas in this case Canada's obesity prevalence was 9.2 percent. This is a lot lower than the OECD statistics.

This is why I have this table, I think, which is very important — that whenever you look at outcomes, whenever you look at statistics, you have to look at it very skeptically. They depend on the data that is used to generate them and also the methodology that is used to come up with the calculation, just like Steve was talking about — the Conference Board statistics, how they do them.

Here the important message I want to leave for you folks is that these measures all have some usefulness, and they all have limitations.

If you look at generic indicators such as life expectancy and age-standardized mortality rates, which are the crudest measures, they're very broad indicators. I don't know if they're indicators of health service delivery, but they're certainly indicators of population health outcomes. Those are the uses of that variable. But the limitations are that they really mask the contribution of specific causes. They do not include morbidity, and you really need to still desegregate them more by age and other stratifications.

Then there are summary indicators that are an improvement of those, such as the health-adjusted life expectancy. The health-adjusted life expectancy, from a policy perspective, is a better view of the population health assessment, and most importantly, it takes into account both mortality and morbidity.

Again, they have some limitations because of their controversial methodologies. How do you adjust life expectancy for quality? In Canada we are using something known as the health utilities index, and we generate what are known as quality-adjusted life years. The World Health Report, which was first done in 2000 by the World Bank, used something known as DALYs — disability-adjusted life years.

So there are different ways of doing it. There are different weighting mechanisms, and they all have their strengths and limitations.

Finally, there are morbidity indicators, which are based on health server data such as incidence and prevalence. When I was talking about the diabetes example, that is certainly an improvement, because you're digging deeper. You're not just looking at overall life expectancy, health-adjusted life expectancy. You're looking at the prevalence of specific diseases.

But here the data can be influenced by how it is collected. The reason the OECD comparison with Canada was different from the Canadian numbers I had was because the OECD numbers were generated based on self-reported data, and the Canadian map I showed with the Canadian prevalence of diabetes was based on health-linked database. Depending on where the data source is, whether it's voluntary self-reported data or actual health administrative data, you get different results.

Those were the outcomes you get in terms of the health of the population. We can now look at different kinds of outcomes which are considered financial or performance outcome measures.

Here I've just got a number. This is not really an outcome measure I want to focus on, but it leads us to the next one. It is the first part. If you look at age-sex–standardized acute hospitalization per 1,000 population, then you get this number, which shows B.C. has a hospitalization of 74 per 1,000 population. It is just above Ontario. Again, in this case a lower number is better than a larger number, so we are doing quite well when you compare us with respect to the rest of Canada.

A hospitalization rate doesn't say anything to you about the performance of the health care system. You can go from there to the second part. It's a two-part model. First you figure out what the hospitalization rate is, and then you look at the hospitalization event. Then you see whether that hospitalization event leads to a certain length of stay, which is different in each province.

Based on that, you can now look at age-standardized average length of acute in-patient hospital stay. If you look at that, then we change, although in terms of hospitalization rates we are almost the second lowest. Now, if you look at average length of stay once that hospitalization occurs, we are not the highest, but we are not the lowest.

So that's one way of an outcome measure. If you're interested in terms of performance, you can look at standardized length of acute hospital stay. I call that a performance outcome.

Another outcome measure, which we talked about earlier today, is to think in terms of access. In terms of access, you can look at Canada and say that access depends on the availability of physicians. I have a diagram here comparing Canada with Australia, France and the United States. Those are the physician density in rural and urban regions, and Laurie has talked about that a little bit today. You can see in Canada an average of 84 physicians in rural areas and 217 in urban areas. You'll see that we are much lower than France, the United States and Australia.

So certainly, if you believe that the distribution of physicians between rural and urban regions and the number of physicians is a good indicator of access, then we have some issues here that we want to think about. If you go deeper and look at British Columbia now, here's a diagram.
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I'm going to make you dizzy by the time I'm finished. I was asked to talk about performance statistics, and there's no way to talk about performance statistics without putting up all these different diagrams. Believe me, I had a lot more. I've cut a lot of them out. So I apologize for doing this.

Here I'm moving from comparing different countries to just looking within the country, and I have three things that you can look at over here. The white one over here says "Family medicine," so the GPs. B.C. has 11 percent in terms of GPs in rural areas, but the population that lives in rural areas is 14 percent. Proportionally, the distribution is not equal. Then only 2 percent of specialists are in rural areas.

That gives you a flavour of the distribution of physicians, urban versus rural, GP versus specialist. You can see how that compares with other provinces. Really, this is a diagram that you need to think about for a bit and then come to your conclusions about how that translates into access.

If you then go further and say, "Okay, I'm interested in a different kind of performance measure in terms of how well the health care system performs, in terms of waiting lists," here's a diagram which doesn't show Canada in a very good light. It shows that the percent waiting four weeks or more for a specialist appointment puts Canada worst. The bigger number is worse here. Compared to other countries, 59 percent wait four weeks or more for a specialist appointment.

Now, I have colleagues who do work on waiting times, and again, you have to look at it more deeply. When do you measure a waiting time? When the GP refers you to see a specialist and then when the specialist refers you for surgery and you get the surgery? If the GP refers you because he suspects you need revision surgery but the specialist thinks you don't need it, then adding that to the waiting time is not right. So these statistics have to be taken with a grain of salt, but certainly, when you look at the percent waiting four weeks or more for a specialist appointment, Canada doesn't do very well.

If you are looking at percent waiting four months or more for elective surgery, we don't do very well. But the keyword here is "elective," and if it's truly elective surgery, you have to think about the outcomes that you get and then think of these statistics relative to the outcomes they produce.

Going from that kind of performance measure, we can think about types of outcomes that happen in terms of the cost of hospital spending per discharge. Here we have "Hospital spending per discharge," and Canada has pretty high costs. The United States spends about $19,000 per discharge, and Canada spends about $14,000 or $15,000 per discharge. These are adjusted for cost of living. This is not just exchange rate conversion. These are done based on purchasing-power parity.

That methodology follows the methodology where you look at the price of a Big Mac here and the price of the same Big Mac in the U.S. and make the adjustment based on that. I think it would be more appropriate to do a Starbucks comparison now, because people are more interested in that. Again, Canada doesn't do very well. That's an indicator of financial performance.

Another indicator of financial performance is the cost per weighted case, and this is data that is generated by CIHI, the Canadian Institute for Health Information. The methodology they use over here, again, looks at people flowing through a hospital, and they've developed certain indicators of resource intensity. These are based on a combination of something called resource intensity weight — how intense are the resource requirements for certain patients? — and according to what's called their case mix grouping.

Again, if you look at that, British Columbia comes out kind of in the middle, and the provinces like Quebec seem to be substantially lower than British Columbia. So in terms of that indicator, we're not doing very well.

Finally, if you go and look at the total expenditures on health, again we compare outcomes. I should stand corrected. They're not really outcomes; these are expenditures. Per-capita U.S. dollar spending — the U.S. is the highest. That is the one where it says $8,508, and over time it's growing the fastest. Using that same purchasing power parity and conversion rule, if you look at Canada, Canada spends about half of what the U.S. does, but it's still among the highest among other developed countries. When you compare with the United Kingdom, it is quite a bit lower than us, and then France and Canada.

Another way of looking at that health outcome…. That's the whole thing about looking at these performance indicators. You can look at them in different ways. In terms of that spending on the left panel, if you look at the wealth of the country and then the population and then adjust it as a percentage of the GDP, they spend about 17 percent of their GDP. The U.S. spends 17.7 percent, and Canada spends about 11.2 percent. Still, Canada is pretty high up there compared to the other countries. That gives you a flavour of how much we are spending as a proportion of our GDP and as a per-capita measure.

That's an outcome measure that falls in the category of expenditures and financing. If you drill into Canada and look at it and look at total health care spending per capita, then B.C. actually does not too badly. It's the second lowest in the country. B.C. is just below the average and is just above Quebec.

Another number which is often used to make system comparisons is the proportion of the provincial budget that goes towards health care spending. For British Columbia I have two numbers here — for 2008, and, unfortunately, I have a forecast for 2012, when it's 2013 now. But that was the latest data I could find from the
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source. There you can see that British Columbia hasn't changed, but it spends about 41 or 42 percent of our provincial budget on health care. That is not very different from the Canadian average, which I would say would be about 40 percent.

If you look at Canada overall and if you look at per-capita expenditure growth — this is not just looking at health care but overall in the economy — 1.1 percent is the change in revenue that has occurred between 1998 and 2009. The decrease of minus 4.4 percent is the reduction in debt charges that has happened as Paul Martin and others were able to cut our deficits. Then the increase in health was about 3.7 percent.

But there have also been increases in transportation, communication, education and social services. So you can look at the health care spending increases, and you can compare them with spending increases in other areas and decreases that have occurred because Canada's indebtedness overall has come down.

Another way of looking at it is if you compare the 2001 to the 2011 historical rate, the average annual growth rate was about 6.5 percent. That had actually decreased quite a bit to 2.5 percent. Part of it has to do with the recession worldwide. But population growth and everything else adjusted, we still had a growth of about 2.5 percent. This is overall.

You could ask the question: why is health spending increasing? I'm certainly not going to be able to answer this in much detail. I just wanted to do one or two major decompositions. One of them is that it's certainly true that Canadians are using more health services — population growth and aging. There are increased numbers of health care providers. These increased numbers of health care providers also have higher wages. Also, newer and more costly drugs, diagnostic tests and surgical procedures.

All these things conspire together to make spending increases. But again, this is only looking at the spending side. We haven't looked at the outcome that we get for that. One of the deficits of our health care system knowledge is that we haven't invested enough in understanding the outcomes we are getting from the inputs we are putting into the health care system. We have partial views and causalities and very well established….

Here is a breakdown of the contribution of population increases and aging. You can see that it's not really aging that's driving the whole thing. It's a combination of both population growth and aging. In British Columbia the 2 percent growth we have is 1.2 percent in terms of population growth, and 0.8 percent is from aging. That's another way of looking at it.

This is another way of looking at overall health care expenditures from a sectoral perspective. This was something that was alluded to in earlier presentations. The biggest line item in a health care system is this gold line, and that represents the spending on hospitals. You can see historically it used to be almost 50 percent but has been coming down. From 45 percent it's now down to between 32 and 33 percent.

On the other hand, spending on physicians and other health professionals has stayed steady at about 15 percent. Actually, that spending is only on physicians, not on other health professionals. The blue line is physician spending.

Then you can see the last component is the spending on prescribed and non-prescribed drugs. The non-prescribed drugs have remained a bit stable. You can see, historically, if you wanted a snapshot…. If somebody would ask you at a cocktail party — you're on the Standing Committee on Health — what the biggest cost drivers are, well, the biggest is spending on hospitals. The next one is on drugs, then following closely behind that is physicians.

That was in terms of proportions. You can see the proportion of spending on hospitals is coming down, while drugs is going up, and physicians is remaining constant. But if you look not at the proportions but the total dollars, they have certainly been increasing. If you look at total expenditures per capita, they have been going up, and they're almost at $1,800 now per person in Canada.

I want to pause at this point and shift gears a little bit. I've shown you a lot of graphs, and I won't show you any more. I won't show any figures. I'm going to dig behind them. What causes these things to happen? I've shown you about hospital funding. I've shown you the cost per hospital length of stay, the cost of hospitalization. I want to now talk about what drives these costs and how they are determined.

The largest component of the health care system in Canada is hospitals, and hospitals have traditionally been globally funded. You get a global amount of money from the province assigned to running their hospitals, and then those funds are allocated to different hospitals. A lot of people have said that is not a good model, because it's not activity-based. There's been a push to move from what has been global funding to activity-based, a.k.a. performance-based.

Ontario, for example, has been the leader in Canada, this country. Ontario has gone from being 100 percent global funded to only 54 percent global funded. So 40 percent of their funding is based on something called the health-based allocation funding model, and 6 percent goes to clinical quality grouping.

B.C. is not as advanced as Ontario, but B.C. has also started implementing different kinds of initiatives to be more performance-based. Kevin Falcon, for example, announced in 2010 the emergency department initiative. It started with four hospitals and then spread to a lot more.

Emergency department length-of-stay targets were set, and these targets say that if a person comes into the emergency department and is not further admitted into the hospital but is discharged within X number of hours, then they have met the waiting time target and you will get an extra payment based on that. If they're
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admitted to hospital, there's a second target, and if it's done within that…. Then there has been extra money directed towards generating more hip and knee replacement surgeries.

There have been initiatives in terms of primary care reform. These have been linked to pay for performance of the physicians. The reason I bring this up is because when you're looking at health care statistics and when you're looking at those numbers to understand how the system is performing, you have to see that there are some statistics that cannot be linked to performance because the funding has never been set up to look at performance.

Now that we want to look at performance, we haven't actually made the funding to be incentive-compatible with the performance indicators. It only happens slowly. So some changes have happened.

The ED length-of-stay target — somebody had a question on what the results are on that. The results are actually mixed. Some health authorities and some hospitals actually improved the volume of patients coming through and reduced their waiting times. Others didn't, so the results are mixed.

If you go and look at total expenditure per…. If you look at how these performance-based systems are being implemented within the health care system, one of the things that Ontario is doing and with the same idea the model is for…. Other places where you want to move towards performance-based funding for hospitals is to think in terms of case mix and activity-based funding.

Case mix is basically a definition of the hospital activity. You can have a case mix group which says that you came in, you were a dialysis patient, you got discharged, and then you got into a regular program of dialysis; or you came in, and you were diagnosed with something. Then they define the activity in terms of case mix, and then they define a dollar reimbursement for that case mix.

There's a case mix definition and the payment price for each case mix. Then the hospital is funded based on a payment per patient and provided a paid price for each patient they see according to the case mix. Then the hospital suddenly, instead of being a unit that received global funding, is now not receiving global funding. It actually becomes like a business that receives revenue based on the volume of people going through and at what times. So the hospital revenue then gets based on case mix and payment price for each patient.

This is similar and is kind of copied from the U.S., where they have diagnostic-related groups and then they have determined a prospective payment system. So in the U.S. it's slightly different. They get their funding based on diagnostic-related groups ahead of time. We get it after the utilization occurs.

Just to explain to you a little bit what the differences are, when you have global funding like we've had in Canada for most of the past two or three decades, it allows hospitals to reduce activities when they don't have enough money. They can allow wait times to increase because they are not being paid according to wait times. With performance-based funding, if emergency room wait times go up, then the hospital gets less money. Under the performance-based system, that doesn't happen.

With activity-based funding, though, it doesn't solve the problem. Activity-based funding has its own limitations too. Some of it is because they are getting paid for the type of person going through. There is this tendency to up-code, to say the person is actually sicker than they really are.

Then there is something known as cherry-picking or cream-skimming, and the same thing happens. It makes it easier to treat a certain kinds of patients that are low-risk, that costs less to the hospital based on the…. Sometimes incentives for hospitals and the kinds of technology they adopt are affected by these kinds of systems.

So the activity-based model is mostly based on process-based measures. They're really based on patient outcomes or the outcomes they produce and the people they cater to. While activity-based funding is an innovation over global funding and it can achieve hospital efficiencies, it's really not useful for understanding the challenges of the health care system, which is complex and which can involve more than just hospital-based care.

We have an improvement in terms of looking at performance and basing our funding on performance, but there are still lots of challenges. While we can achieve some hospital efficiencies, it's not necessarily true that we are getting systemwide efficiencies.

If you want to think about systemwide efficiencies, what should we think about? The title of my talk was to talk about outcomes, but if you look out there, there's very little in terms of real clinical outcomes.

So funding should really be based on clinical outcomes. It should be based on quality measures, in terms of the quality of the service that is being provided, and perhaps, ideally, on the quality-of-life outcome.

I didn't think I would have enough time. One of the things that's been going on — a revolution in health services research — is the use of patient-reported outcomes. Patient-reported outcomes is an ability to actually look at the quality of the service that is being provided and how it is actually affecting the health status of the patients who are seeking that service, according to their own reports. So that's another way of looking at it.

Then, if you take clinical outcome quality measures, quality-of-life outcomes, you have to also think about just thinking beyond the specific hospital. You have to start thinking of system modelling approaches. System modelling approaches actually look at the flow of patients — not just when the patient arrives, how they're dealt with.

You want to think about if you can stop the patient from coming to the hospital and maybe stop the patient
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from going to a physician's office. Then you can look at — if you stop the patient from going to the physician's office — if there's something good or bad happening, do they end up somewhere else?

These alternatives to hospital care can be modelled in the system modelling approaches. They tend to be complex and data intensive, but I think it's something we have to start thinking about implementing if we want to have a better approach towards understanding the performance of the health care system. Again, like somebody else had already said, we require investments in outcome measurement, and we require investments in electronic medical records to be able to get this system.

Before I talk a little bit more about the health care system modelling approach, I want to bring in the one dimension that I've alluded to but I haven't talked about very much: what is health care quality?

Health care quality is something which I could spend all day talking about, but I just have two slides. According to the U.S. Institute of Medicine, it's the degree to which health services for individuals and populations increase the likelihood of the desired health outcome. So it's linked directly to desired health outcome. It's also consistent with the current state of the art, so it has to be evidence-based. In terms of achieving…. So there are many dimensions of quality — safety, effectiveness, patient-centredness, timeliness, efficiency and equity.

There is another group in the United States known as the Institute for Healthcare Improvement. They have summarized all that. The first definition is from the Institute of Medicine, and the IHI have summarized that in their Triple Aim initiative, which is the simultaneous pursuit of better care for individuals, better health for populations and lower per-capita costs. So you see, in the first introduction, I just talked about per-capita costs. There was nothing in there about the care for individuals and the health of those individuals.

Now, to be fair, we have in Canada and in British Columbia tried to do different things to start looking at quality. They have the clinical care management initiative in B.C., and the objectives of this initiative are to provide best-practice recommendations and goals for improvement. They try to achieve broad implementation of these best-practice recommendations, and they want to look at continuous and appropriate measurements.

The B.C. Ministry of Health, the regional health authorities, the B.C. Patient Safety Council and health care providers have all been involved in these initiatives. But they're just little baby finger steps. We need to do a lot more.

I'll give you a sampling of the kinds of things that have been done. I work in a hospital-based evaluation unit, so I'm involved with a lot of people who are doing this and work with them to help them with methodology. You know, there are initiatives that look at surgical site infection and surgical checklists, medication reconciliation, preventing stroke, better management of heart failure.

I've got one in red, which is care of critically ill patients, and this is something that I was involved in with one of my colleagues — well, he's based at our centre; he's a critical care physician — and so I got this example for him.

There what they did is…. CHEOS, which is the centre that I'm involved with, helped them set up a study where they linked all these intensive care units all across the province, set up a database and started looking at glycemic control of patients going through the ICU.

The idea is that with better glycemic control, people will have better outcomes. The result that they found right now is that it's clear that glycemic control is related to the outcomes people have, but we find…. That in itself is a learning thing. We were not sure whether achieving better glycemic control does improve outcomes in patients of this particular population. We found that's true, but we also found that the correlation between glycemic control and patient outcome varied by hospital and really can't explain it at this point — why it varies in this way.

Here comes the huge elephant in the room. Every time you start thinking of health care outcomes, we are thinking in terms of the health care intervention, the health care system, where that is only one of the determinants of the health outcome. There is this huge other socioeconomic determinant of health, which we haven't invested in enough to understand.

This is a slide from Don Berwick that was published in JAMA recently. He has identified that if you take this kind of a quality-based approach, then for the U.S., trending towards 2020, there are failures of care delivery, there are failures of care coordination, and there is overtreatment, with administrative complexity, pricing failures, fraud and abuse. If these things are not checked in the U.S., then going from their current GDP per capita of 17.5 percent, by the time 2020 comes around they'll be at 20.5 percent. That's a huge….

We have the same kinds of potential problems happening in Canada. To look at that, we have to change the way we look at health outcomes, and we have to bring in the quality dimension.

How do we bring in the quality dimension? The first thing we have to do is we have to think in terms of systems. We can't just think of single interventions and single points of care. We have to think about the flow of systems. The systems approach to looking at complex situations was actually developed by Disney.

In 1970 Disney started using complex models to understand how guests flowed through their theme park. The question that Disney had was…. They had five monorail trains, and they had long waits. When they simulated the people going through the theme park, getting on the rails, going to the different attractions, what do you think they found out was the best solution?
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A. Anis: There you go. Less trains. The answer was: remove one train to decrease waits and improve travel time. What happened…. It's not intuitive, so I would have said the same thing. But it turned out that with the five-train monorail system they had, people were not getting in and out of them fast enough at the station, so there was always a loaded train waiting to get into the station. People were sitting on those trains, and that was causing the inefficiency. But they had to map the flow throughout to be able to understand that.

This kind of modelling is very useful, and it has been applied in health care and in other areas. Transportation economists apply that to planning the air travel system. They look at plane arrival times, departure times. They look at the length of time. They figure out: how many airplanes do I need to make this efficient? Flying from London to Vancouver, you can do with one plane because it's only ten hours, but as soon as it goes over 13 hours, when you have to go to Hong Kong, you've got to have at least two planes, both going in each direction. I think Hong Kong you can still do with one, but I think you need two because of the wait times on the ground.

This is a robotic automotive plant where the same kind of concept is being applied. Here you have the health care setting where the same kinds of principles can be applied.

I'm going to give you an example of people in my group who have been doing this. I have a post-doctoral student, Greg Werker, who recently applied this kind of patient flow model to this area, the Downtown Eastside.

He was looking at resource planning in the Downtown Eastside, and the thing that he looked at was people with mental health and addiction problems flowing through the system. The people with mental health and addiction problems had interactions with the emergency department. "ED" stands for the emergency department at St. Paul's Hospital in Vancouver Coastal, and "P," on top there, the police department.

Interestingly, there was an announcement by the Minister of Health yesterday that he has realized that this is a problem. He has a report that's going to be tabled with him, and they're going to work on this.

But Greg had looked at this. He looked at the encounters that the police have with these people, the criminal justice system, acute care in-patients and other entry, and then when these people flow through, they can come from the police. The police can pick them up and bring them to the emergency department. They can wait to see a doctor in the emergency department for X number of hours.

He looked at it and thought: "What if I reduced the number of hours they wait?" That would mean a scenario where you increase the emergency department capacity. He said: "Well, how about building more detox centres so the police don't bring them to the emergency department? They'd take them to the detox centre." So you have that.

Then they go into methadone maintenance therapy, or they go into ACT. ACT is assertive care treatment. This is a very interesting program that was developed in Victoria, where they have care of these people in a very high ratio, 1 to 10 — one health care worker or one case worker per ten patients. It's very interesting.

His results are not complete yet, but the most important findings, the earliest findings…. You look at quality-adjusted life expectancy, and you look at the outcome they produced, and you look at alternative scenarios where you can add emergency department capacity, a detox capacity.

One of the things we found was that assisted living and reducing homelessness plays a much greater role in affecting the flow of patients here than anything the health care system can do. Just providing income stability and housing stability — and this has been shown by my other colleagues, with Jim Frankish and Michael Krausz, where they look at the homelessness project — seems to play a huge role in having better outcomes than this. I'm not saying that we don't need to treat the health care system, but we do need to think of these problems as systems and then go from there, using these kinds of approaches.

The result from this model was that increased capacity is cost-effective in some areas but not in others. It was also clear that reductions in crime were associated with the largest improvements, and so this reduces the police budget to a large extent. And then outcomes, of course, are very sensitive to population size, crime costs and things like that. But just to tell you that what I started off with is life expectancy and standardized mortality rates. Those kinds of measures are very different from these kinds of approaches to looking at how people flow through the system.

I have about six minutes left, and I just have a very few closing remarks. I want to say that I've shown you a lot of data — comparison of health outcomes, health system process, statistics, access issues, limitations of aggregated comparative data.

I didn't say it at the beginning, but I am trained as an economist. Laurie said she wasn't. I am. I'm plagued with that training. Part of the reputation that economists have is they tend to be wishy-washy, right? They are 10 percent on the one hand, and on the other hand…. I have done that all throughout the hour that you gave me. I've told you on the one hand, this is a useful statistic, but on the other hand, the limitations of this statistic are that it depends on the type of data you use.

You know, economists, before they were called wishy-
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washy, on the one hand versus the other hand, were called the purveyors of the dismal science. Does anybody know how economics got the title of the dismal science? Economics was called the dismal science.

Malthus was an economist and a philosopher who had some dubious data collection methods, people say. But what he did was he looked at population growth in the late 1700s, and he looked at food growth. He found from his data that population growth was occurring exponentially. Exponential growth means you go one to two, two to four, four to eight. He found that the capacity of the world to produce food…. The food supply was only growing arithmetically — one, two, three, four.

He came out with this doomsday prediction for the world. He said that our population growth is outstripping our ability to feed our population, so we're going to just be heading towards doomsday.

Now, this is similar to a lot of the health care rhetoric you hear. "In the health care system, health care costs are growing so fast that we're headed towards doomsday. We'll not be able to contain our health care expenditures. We are now at 40 percent of provincial budgets. We'll end up at 80 percent, and soon." You've heard that, right?

I suspect that these kinds of things would depress anybody. But I want to tell you that Malthus was cheating, and a lot of the people who provide that health care doomsday scenario are also cheating and selectively using data.

There was this paper here by Di Matteo and Di Matteo that was published by the Canadian Health Services Research Foundation. They basically were predicting, although they didn't say it, this what I call Malthusian unsustainability of the health care system.

They had this health care cost graph going through the ceiling. Basically, what they said was that if you look at per-capita health expenditures, which we've talked about…. We've talked about what the per-capita health expenditures are and what the limitations of that measure are. They said the per-capita health expenditures were $1,200 in 1975 and were at $2,791 in 2010.

They figured out that GDP growth was only 5.3 percent, whereas health care growth was 8.2 percent. It's similar to the Malthusian argument that GDP is not growing as fast as health care is growing. So health spending growth increases GDP growth by 2.3 percent, and we have a problem.

Interestingly, it was not an economist who provided a really nice answer, a rebuttal to this. It was a clinician, I believe, from the University of Toronto, who said that what you're looking at is a very small part growing at a high rate. You're not looking at the whole thing. If you look at the whole thing….

This is a picture where the green line at the very bottom is the growth in health care expenditures at the rate that we've talked about. But health care expenditure is only 11 percent of the overall story. Overall, the economy is growing, even though at a lower rate but for a larger base number.

The yellow line is the growth rate of the economy, and the green line is the growth rate for health care expenditure. If you subtract that, then you get the next dotted line. That's still growing.

Certainly, the health care system has had expenditure growth. There are a lot of limitations about the way we look at expenditure growth, but certainly, we're not in a situation of unsustainability.

By the way, Malthus influenced a lot of people. He influenced Charles Darwin, who said that populations that survive…. Lots of species will compete with each other. Only the fittest will continue. And there was David Ricardo, who had a debate with Malthus.

Basically, what Malthus failed to take into account was the fact that there's technological progress. He was looking at the growth rate of food at what he thought it would grow at and the population growth rate at what he could get from his numbers.

But with technological progress, we can produce a lot more. Our economy is growing. With technological progress, we can lead to have both higher output and higher wealth in our societies. If we can selectively sustain our health care system by choosing the quality-enhancing innovations that come across and help expand our quality of life, I think it is a totally sustainable system.

N. Letnick (Chair): Okay. One minute shy of your allotted time. Thank you very much. I'll start the discussion.

Thank you for the presentation. Going back a few slides, you did show the Triple Aim.

You also showed, just above the Triple Aim, the dimensions of quality, safety, effectiveness, patient-centred, timeliness and two more. Is there a gold standard? Is there something that we can just pull off the shelf or off the Internet on an annual basis that will accurately, with all the correct statistics underlying the numbers, present a good picture of these six dimensions of quality relative to the rest of the country and ourselves, preferably against the OECD — if not us, then at least Canada against the OECD?

A. Anis: Well, the answer is no. There is no gold standard, but there is a standard to think about these problems. These quality indicators and how to move on them,
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how to achieve better outcomes that have been put out by the IHI, Institute for Healthcare Improvement, are relevant to the context that they are studying them in.

They're a broad indicator that you should try to improve quality in this way — for example, to reduce medication errors. That is not a gold standard, but it's a gold principle. Medical errors are going to happen differently in Canada as opposed to the U.S. If you have automated pharmacy dispensing systems in hospitals, they create some problems. If you have manual ones, you have different ones.

We can't download directly. We can download the principles, and then we can apply them to our constant context, depending on where we are. Does that answer your question?

N. Letnick (Chair): Well, I guess the answer is no. The ten of us don't usually like to take no for an answer. That's why we're here.

A. Anis: I'm not saying it's no. I think, for example, St. Paul's Hospital made some pilot projects where they invited the Institute for Health Improvement people to come. They looked at our certain procedures that were happening and the way they were being managed, and they suggested some things to do. But we haven't really implemented them.

The know-how on how to implement the Triple Aim is useful, but they would have to then be derived in our context.

N. Letnick (Chair): The reason why I'm asking is that at some point we have to go to the people and identify our challenge, right? It's not just the challenge of financial sustainability. You've clearly pointed that out in this slide that's up here. But it's also a challenge in improving the system for British Columbians to make sure that it continues to be responsive and that the timeliness is better, that it's more effective and that it's safer.

It would be nice to quantify what the levels of challenges are in each of those different areas, because I imagine it's not uniform in all those different areas. Therefore, we should look at perhaps providing more resources, if that's what it takes, or shifting resources to those areas where we'll get the biggest benefit for our buck — marginal return, of course.

Before we can do that, we need to have some metrics by which we can go to the public and say here's how we're doing in this particular piece relative to the other provinces — you did show us some graphs, and that's great — and here's how we're doing relative to the rest of the world, and then ask the public, the broad public. But I imagine a lot of what we get back will be from people in this room and others: how do we best address those challenges?

Getting back to the question, what can we use to provide good data or good information to the public so that they know what we're trying to fix?

A. Anis: I think a starting point…. I was in Montreal the day before yesterday, two days. There I was meeting with a group of people across the country, and they were talking about setting up a patient-reported outcomes network across Canada. One of the first things I think we need to do is to be able to measure outcomes that we produce in our health care system. Those outcomes have to be based on what patients are saying.

We have for the longest time relied on outcomes that were judged to be good by clinicians who looked at X-rays, who looked at HDL and LDL ratios, who looked at joint damage and said: "You know what? Biologics retard joint damage, so we should pay $20,000 per patient to use a biologic."

But if you really looked at it, patients who take biologics don't know anything about the radiographic progression. So the first thing we have to do is implement, across the country, patient-reported outcomes. I believe Michael Smith is in tune with that, and they're supportive of that.

To answer your question, if you want to go back to the public, we have to show them something that they value, and we need to create that metric. There are lots of examples. There is the PROMIS Network in the U.S. We have lots of outcomes that we've measured. We have to institute across-the-board measurement of patient outcomes and then use those to say: "This is where we have the biggest deficit in patient outcomes, and this is where we can improve them."

J. Darcy (Deputy Chair): For performance-based funding, activity-based funding, whatever the acronym, I understand that for wait times for certain types of procedures, and there are those five identified that were priorities, if you do dedicated funding — for instance, as we've done for knees and hips or cataracts or whatever — you use staff time and operating time most efficiently and so on, and you can put more people through. You can shorten wait times.

But it did involve more funding in order to do it. There are incentives to do it. I understand that piece.

I don't understand for emergency rooms, because what we've heard from all of you is how complex…. My colleague — Sue Hammell, I think — said to me a few weeks ago that what happens in an emergency room, looking at what's going on in an emergency room…. You can tell all kinds of things about what's happening in society and in health care in particular because of what you see
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in emergency rooms.

You touched on people's mental health or addictions. Should that necessarily be where they are? There are lots of seniors there for whom the answer is more home support or other forms of support. You could go on like that. We've talked about community health centres, multidisciplinary teams so that people have access to other forms of care.

I don't understand the concept of pay for performance — for instance, to shorten wait times in emergency — that isn't looking at a bigger picture than just how quickly you move people through. One of the reasons people don't get moved through very quickly is also that there aren't hospital beds for people to transfer into, right? So there are holding areas in emergency rooms. Are those people released with a care plan?

A. Anis: With the waiting time thing, it started in Alberta. They put $20 million, and they got all these private surgical ORs that were then contracted. They got these doctors, and they started doing more hip surgeries and more replacement surgeries. They came around and told the rest of Canada what a miracle they've achieved. They never talked about the extra money they put in. They just said they've shortened the wait time.

The gist of the story is that if they hadn't shortened the wait time and had taken their $20 million and spent it on breast cancer screening or something else, would they have got more out of it?

The thing is to look at the value for those initiatives. To understand the value for those initiatives, I go back to my previous…. You have to measure population, patient-based outcomes and then do a comparison of the extra cost of these initiatives and what that extra cost means in terms of opportunity costs of not doing something else, and then compare it with the benefit you are getting.

All the initiatives we have, whether we're doing performance-based funding, are really not being evaluated in the way they need to, to answer your question. So we're not answering the question because we are not posing the right question.

R. Lee: I'm very interested in the modelling of the whole system. As you know, global optimization isn't really sometimes equivalent to local optimization. I mean, that's the system in general. But the objective functions you are trying to optimize probably would have, let's say, technology on the inside. How can you say that in five years your objective functions will probably have different constraints, that kind of thing? How do they project in, say, 20 years?

A. Anis: I heard a lot of technical terms that I can relate to. I don't know if everybody else can relate to them. The technical term I heard was that global optimization is not the same as local optimization. I totally agree with you. Most of the time we are looking at local optimization, not looking at the global optimization. The local optimization example is when you're just focusing on one thing and not looking…. The global is when you take a system-based approach, right?

In most cases the local optimum is not the same as the global optimum, but usually by taking a system-based approach, you can solve that problem. Does that answer your question?

R. Lee: I know that. What I mean is…. The objective we try to achieve probably depends on technology, other constraints, other variables, other improvements in a system. We try to optimize the global one, the outcome.

A. Anis: We don't try, though. We haven't done anything like that. We have one or two initiatives. We really don't try that.

I was very impressed when I heard the Health Minister say yesterday he's going to try to come up with a solution. But I don't know what the solution is. Whether that solution is going to involve taking into account policing, taking into account alternative assertive care, a setup for the public — I don't know. If it does take that, then I'd be very encouraged.

R. Lee: You give an example and say other…. The police, the waiting system, the hospital, the emergency services — probably those are all the factors in the study of the efficiency of the system. But compare that to the health care system. I think they're parallel there. I think our challenge, probably, is to identify enough factors so that we can have a better system. I think that's our objective.

A. Anis: Yes. I think that if you're just aware of these issues, that is going to be a big step towards the realization of that kind of thinking. We cannot overnight have complex health system modelling in every area. But at your committee level, if you were to think of it as a big balloon…. If you squeeze it at one end, you will get a narrower balloon there, but it's going to blow it up somewhere else. If you think of it like that as a system, I think that would be really good.

N. Letnick (Chair): This is a good segue to our next presenter. If I don't see any other hands….
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Thank you very much, Dr. Anis, for your presentation. It was very well-received. Lots of work yet to be done, obviously. Lots of work.

We'll take a minute to stretch while we have Dr. Finegood getting ready to do her presentation. I won't put the YMCA song back on.

N. Letnick (Chair): Now we are going to hear from Dr. Finegood on seeking solutions within the complex system.

D. Finegood: Thanks, Norm. I know you said earlier today we're not going to talk about solutions very much yet, but what I thought was that by this point in the day, you'd all be feeling a little bit like this — that all the information you got is kind of jumbled up there, and you're trying to figure out how it's all connected. Or you might be thinking that the health system looks something like this. It's probably true that it does.

In fact, this is actually a map of the obesity system. It comes from a work that I did years ago. What I like about it, I always say, is that you can't actually see what the boxes are, because it doesn't really matter. Then I can use it for any particular complex system I want to talk about.

But what's really important about the picture is that it focuses your attention on the interdependencies. It's the interdependencies that become really important when a system is very complex, and that you need to think about.

The other thing it does is it's a bit like the comment that Aslam just made about the balloon. So if this is our balloon and we want to go squeeze on one part of it, we can see quickly that the system will react, and all the interdependencies will play a role in determining what the actual outcome is. It isn't as simple A is going to lead to B. This is going to be kind of the take-home message that I'd like to provide.

But if you're feeling like that, it's good to know that there are some common responses to complex problems. Retreat tends to be a big one. Despair. Believing the problem is beyond hope. You know, it does feel, at this point in the day, a little overwhelming.

I should have said before I started that I am not a health care system expert by any stretch of the imagination. It's not my area of expertise. I actually was trained as an engineer and a basic scientist. But I've been studying complex systems for a while because I felt despair and retreat about solving problems like obesity when I was the head of a CIHR institute.

We also like to assign blame. We do that a lot in the media in particular. We were talking earlier today about how difficult it is to nuance an issue when it comes to media attention. Most issues are shades of grey, but we have a tendency to talk about them in black and white ways. As a result, we tend to assign blame.

We also look for simple solutions, because it makes us feel better if we're actually acting and doing things. But simple solutions rarely fix complex problems — is the way to think about it. Occasionally we galvanize our collective efforts and invest significant resources, and I think, you know, we're doing that. We're in the middle of that. That's a good thing.

When it came to the work I did in obesity…. We weren't doing much about obesity for a long time, and then we started to pay attention to it. But it's really important that we think about what those solutions look like.

What my take-home message will be is that we need to actually reframe the way we think about the problems and the kinds of solutions that are appropriate for them and to really consider those aspects of it.

What I want to do is give you a bit of a frame for thinking about complex problems. That's the intent here, and this is just to remind us that in a complex system there are different levels to think about the problem at. At the top are those deeply held beliefs that drive the system. Deeply held beliefs can be very, very powerful in terms of driving how a system operates.

You know, it's interesting. We've heard a lot about deeply held beliefs of Canadians that our system works well or that physicians are part of the public system, yet they're actually private providers. You know, we don't necessarily have all the correct beliefs.

We can think about the goals in the system, and I'll make some comments about goals and how you might frame them differently if your system is complex. The structure as a whole becomes important, the information flows and the connectivity.

If you've got that big, messy, spaghetti diagram that focuses your attention on the interdependencies, then it suggests that an important aspect of solving a complex problem is to really focus on those interdependencies, to make sure that the information flows between the complex parts of the system are good.

We've already heard about electronic medical records and the need for a more universal system, that sort of stuff, but things like connectivity and trust are also incredibly important because so many transactions, so much of the system, operates on people-to-people interactions that building trust in the system can be important.

Feedback and delays are often not thought about, because they're hard to think about. Well, it's easy to think about A leads to B, but A leads to B leads to C, and B can affect C, and B can affect A. All those complex interdependencies mean that we could seek solutions in that
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space of connecting things that are not connected, creating feedback loops that are positive and helpful, using data indicators, research as a mechanism for actually getting there.

Then there are the structural elements. Those are all the individual actors, the various bits and pieces, the operating parameters. It's important to remember, too, that as we go down the level, we have to do a lot more of each of those things because their effectiveness starts to diminish. They're easier to do, and that tends to be where we do most of the work in a system — down at that structural element level, as opposed to paying attention a little bit to paradigms. I like to talk about paradigms.

Let me talk a little bit about the paradigm shifts I think we need to make in order to think about this system differently. The first one is that we need to not think about the problem as only complicated but actually as complex. I'll explain what I mean by the distinction between the two in a second.

But I think that distinction is really important, because "complicated" is a little bit more like "simple." The solutions that are appropriate for simple problems, where you can actually figure out that A does lead to B, then you fix A, or you change it so that you get the outcome you want around B…. But if you think of that spaghetti diagram, remember, you may not get the outcome you want, because of all the interdependencies. That picture really shows the complexity, but if it's only "complicated," it's kind of like multiple simple systems put together, right? So it's slightly different.

We need to think about adaptation instead of attribution as the focus of our attention when we measure things and when we try to understand things. What does that really mean? Well, we just heard a lot about it.

Many of the speakers today said: "We have the healthiest population in Canada here in British Columbia, but I don't want you to think it's because of the health care system per se, because there are all these other things that are important." So they're qualifying that attribution of the relationship between our health and the health care system.

What we really want to do in our system…. I often think of how we've got to work out: what's the cause of childhood obesity?

"Oh, kids have too much exposure to junk food, so let's take it away." That's not a bad thing to do, necessarily. But what we need to do is think about how we adapt the system, and adapt it in different contexts, because in each of your ridings things are different. You know, things are different in rural Canada as opposed to the big cities. So when we find a good intervention, we have to figure out how to adapt it to a system.

We want to do this through an approach where, instead of thinking we can make it happen, we want to help it happen. I'll explain that a little bit more in a second.

So what's the difference between complicated and complex? Think of an airplane when you think complicated. We've done a fabulous job all across the world of taking the complicatedness of air travel and making it pretty damn safe, right? You know, it's really safe to fly, and it's because we have detailed knowledge of every little bit and bob in that complicated system of air travel.

The only thing that tends to push it towards complex is the human behaviour in the cockpit for the most part. When you see crashes, sometimes that's the reason, or they figure out exactly why.

If you can work out most of the A leads to B leads to C, it's more of a complicated system. I'll just make the analogy to what Aslam was just talking about in terms of modelling. I would argue you're taking sometimes what is a complex system and trying to wrassle it into just being complicated when you do that systems modelling that he was showing you. You're trying to say: "Okay, well, let's take out some of the factors and think about it as just complicated and then understand all those relationships." I'm not trying to diminish the value of that, but it does tend to go in that way.

I talked about letting it happen versus making it happen. In transformation in a complex system, if you let it happen, it tends to be unpredictable and unprogrammed. Whatever the result is emerges. The system will be self-organizing and adaptive. The consequences are described as a natural and emergent system. The approaches to that are things like knowledge construction — trying to make sense of what's going on.

If you try to make it happen, then what you have is a more scientific and orderly or planned approach — regulated, programmed, properly managed. It's a very managerial approach, and government tends to work in this way. Our health system, our Ministry of Health, works in this way, in a big effort to try to make it happen.

But in a complex system that's hard to do because of the nature of that picture. So really, what we should be doing is trying to help it happen. If we take a complex systems approach there are a lot of other mechanisms that become important, like the social and technical. The features are that you have to negotiate and influence the change, and you need to do things like diffuse best practices, negotiate, and transfer knowledge. That's what I would argue in terms of moving to a help-it-happen approach.

When I come back here…. Let's talk about goals for a second. Now here I'm going to be a little bit in conflict with some of the things that have been said already. But here's the basic idea around goals and targets.

The idea is that we should probably focus more attention on process-based targets and information there than outcome-based targets. We've just talked a lot about different outcomes in the system. But the problem with outcome-based targets is that they are the end result, so it takes a longer time for them to change.
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We have a tendency, because of the short timeline in government and the way we work, to be looking too soon for the outcomes that we actually want to achieve. I'm not saying we shouldn't do it, especially if the committee has here a long time frame in the way they're thinking about it. But if we're totally focused on outcomes, then we get the information indirectly about whether the system changes that we made were actually the ones that caused the outcome.

Again, you can be confused by the fact that we have great outcomes here in terms of health in British Columbia or in terms of mortality, but it doesn't relate back to what was changed.

With process-based approaches or goals and targets in the setting of the data, you get information from the result about the action you took, and you have a shorter timeline to actually getting information that allows you to change your behaviour. It's much more direct.

Now, to give you a really concrete example that most of us could relate to, let's think about body weight. As an individual, if I want to change my body weight and I measure my body weight on a frequent basis — the recommendation is weekly — I'm getting indirect and long-term information because even weekly is probably too frequently for the time that weight loss should occur over.

It doesn't tell me about which of my behaviours that I changed were the right ones to change, whereas if I wear a pedometer and I count the number of steps I take every day — so I monitor the behaviour that we know is healthy and leads to change — then I know if I didn't achieve my goal of steps or I got very few steps. I can quickly think, "Okay, I've got to get up at lunch and go for a walk," or whatever it is.

That's the kind of distinction I'm talking about between process and outcome. And it's well worth, as you think about your approach to solving problems here…. We need those process outcomes as much as we need some of those outcome goals and targets.

In terms of information flows and connectivity, let's talk a little bit about those sorts of big structural solutions to complex problems. In a complicated system the hierarchies we're used to in government and in the systems that you work in make sense, as I said before. But again, we aren't in that sort of situation.

Does it mean that we need a solution that looks like the problem? Not necessarily. But it's really important to remember that these two things clash. We're trying to solve a problem like the one on the right with a system that looks like the one on the left. You can quickly imagine that that's a bit of a challenge.

There are solutions, though, that are appropriate for those complex problems, and they naturally emerge from that kind of a picture — enhanced information flows and connectivity and build trust. Some of the initiatives in the health care system that do that have been very helpful.

Distribute decision-making. We've had a little bit of a talk about that. Dr. Morgan talked about how if you put the hands…. If you match the capacity of the individuals in the system — like the docs who are making decisions about one thing — and you enable them to figure out the balance, you put that decision in the hands of the people who have the right levers to change the system.

That discussion about bundling the costs of the pharmacare into the hospital system so that they're working at the trade-offs — you're putting the decision-making in their hands instead of…. If it happens way up in the ministry somewhere completely removed from the place where prescriptions are being made, you might have the decision-making power and the levers in the wrong place. That's the nature of that.

Structural solutions for complex problems. These come from a paper about the health care system in the U.S. in particular, but I think they're useful to think about.

We've already heard, again, about the kind of separating simple care from complex care. We heard it in terms of the discussion around beds and the wrong people being in the beds that are set up for complex care. You've got people who actually need relatively simple and different kinds of care blocking those beds from being used for the right purpose. This is, again, about matching capacity and complexity, and when you have the right solutions for simple problems, you have different kinds of solutions for complex problems.

Empower work groups to be competitive as an incentive. There's lots to be thought about in terms of incentive structures. We've talked a lot about that here today. You can think about competition as a tool to create incentive.

Here, the analogy would be to sports teams and sports leagues. Which is the most competitive team in a league? It's the one with the most cooperative players, when you think about hockey. So if you want to incentivize cooperation between professionals, then you might sometimes make them compete with other groups of professionals, not necessarily in a one-to-one way, via marking their indicators and things like that. It's another way to think about it.

In places where something is more complicated or where redundancy can help improve communication, then you may do things like prevent errors.

Self-regulation. Feedbacks and delays — just a few ideas here. I know I'm running out of time. Here, things like creating teams to rapidly diagnose and treat highly complex conditions is important. Where you've got individuals who have multiple co-morbidities, creating doctor teams that actually have all the right expertise at that moment and come together around the patient really is an appropriate solution for the complexity of that individual's condition.

We talked about empowering workgroup competition. That creates a feedback loop or an incentive structure that
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can be useful.

Some other ones that I haven't talked about — integrating assessment of effectiveness. In other words, doing more to understand whether you've achieved the process changes you're looking for can be very valuable.

I'll use this as a platform to say we're working hard with the ministry in very specific ways — tend to be isolated at the moment, because it's difficult to do it systemwide — to help bring more capacity for measuring the impact of changes and actions that are being taken.

An idea that I'll just throw out there that I think is incredibly important but has yet to probably arrive at health care is the notion of anti-fragility. We tend to try to build resilient systems — ones that can withstand the biggest problem that we expect, that we think the system is going to encounter. So we try to have a system….

In health care we're maybe not doing so well because our beds are at such full capacity, but usually in public health and things like that, we think: "Okay. Here's the worst thing I can imagine. Let me build a system that can cope with this if I want it to cope with it." But the worst thing that's going to happen is going to be beyond your imagination, because it's going to be worse than the thing you can imagine, right? To shift that around, what we need to do is think about….

This is a bit about changing the way we think about the system. Let's try to figure a system that learns something every time something happens and gets better and better every time it happens. It's a different way of thinking about organizing our systems. I get that this is at a theoretical level, but I just wanted to give you some sense that there are ways for us to deal with these sorts of challenges.

I'll just come back in my last slide to remind us that the health system is big…. I should've put the big, messy picture in there to remind us that it looks like that. The research system is equally big and messy. Both of these systems have very different incentive structures.

You'll notice my colleagues today, myself included, were very careful to say what we're experts at and what we're not experts at, because we always worry, particularly in an academic environment, that something will be misconstrued or something like that. So there are different structures and different timelines.

We work on very different timelines. I think I said to Judy when we met that my favourite quote about government is: "We have two speeds — glacial and the speed of light." There's not a lot in between in terms of the way government acts and the way, to some extent, our health system acts. I apologize if that sounds denigrating. It wasn't meant to be. But it is the fact of it.

The research system tends to work on a somewhat longer timeline and often, in the past, has not been able to meet the needs of continuous improvement and rapid improvement in health care.

"Well, okay. Tell me what your problem is. I'll figure out the research question, and I'll propose it. I'll go and apply to an organization like CIHR or Michael Smith for a grant. That will take another six months to get the money to do the project. Then it takes me three years to do the project, and then I can give you the results you wanted." Well, that's probably even worse than glacial in your mind, I suspect, when the problem is urgent.

What I'd like to say is that I think an organization like Michael Smith is well positioned to work out better ways to integrate the health system and the research system. If we don't have system to do that, if we don't have ways of doing that, we may not be able to get the kinds of evidence-based answers to the key questions.

We've been doing work in a number of areas with the ministry. One, for example, is around the investments that the seniors directorate has made in Better at Home. Here, government has invested in a non-medical home support program through the United Way and wanted to know: is it cost-effective, or are we avoiding costs by keeping people in their home? They funded the project.

Certainly, the United Way is doing what evaluation they can do within the context of that budget, but they don't have the expertise or capacity to do a cost-effectiveness evaluation. We've worked with the research community to bring them together with the government and the United Way, so the funder, the fundee — that's always a tense, little environment — and then the researchers who might be able to have the expertise to address that.

We're trying to find ways to try to answer these kinds of key applied questions as quickly as is feasible with the expertise and the power of the folks behind me.

D. Bing: Not a question, but I'd just like to thank you for that presentation. I found it so enlightening and very useful. I thank all of you for speaking today. It was an excellent session. I really appreciate it.

Process. The previous iteration of this committee, prior to May 14, thought that the next part of the process, which is what we're in now, would look something like this.

We would have a basic discussion with key stakeholders — such as yourselves, Ministry of Health, and Auditor General, who did a report on the health system. Then we would go out to the public, British Columbians, and identify what our challenge is, as proposed in volume 1 of our work. Actually — as he grabs his report, puts on
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his glasses — for those of you who are at home: "It was noted that in addition to the financial aspects of sustainability, other elements — like outcomes, access to care and services, patient satisfaction — should be included in measuring and defining sustainability."

When we go to the public and say: "Here are our key challenges…" Sustainability, but all these other things as well, which is why the mentions of quality at home. We would ask the public to tell us what they think the key challenges are to achieving better outcomes in these different areas, why, defend it, propose comprehensive solutions so it's not just a matter of squeezing the balloon and having it pop up somewhere else — all within a limited envelope of funding, which we're always….

We have scarcity in the system. As I said yesterday with my colleagues, no matter what government is in charge, there is always not enough money for health care, right? So let's put that aside.

That's part of the process — to go to the public and ask for input. Then the thought was we would make that input public so people can see, people such as yourselves can see what other people such as yourselves are recommending — a little peer review — and have an opportunity, then, to tour the province, especially with those submissions that maybe we go: "Wow, we didn't think of that" or "That seems like it's extremely important." Invite people around the province to speak to their presentations, including at the same time, since we're going to tour the province, invite groups, regional health authorities and others to speak to the challenge.

Hopefully, all of these people that come and speak with us in this format — because this is our format — have submitted something to us that we have had a chance to read and examine and others have had a chance to read and examine and provide some perspective on.

Let's not kid ourselves. We're going to get everything from the Fraser Institute that says, "Go private," to the Centre for Policy Alternatives that says: "Just pour more money into the system." I'm generalizing, and I apologize. I'm about to get letters, but that's all right.

You know what I'm saying. There will be all kinds of ideas there, and it's important that they happen in a public way so that others can provide maybe a different perspective.

Is that potential process something that you believe can achieve the goals that we're trying to achieve given the complex system, or do we have to go back and think of another way that would work better?

A couple of things I guess I would say. I think the goal of public engagement and population engagement in the dialogue is incredibly important. I'd say that we've had too little input from the public — thoughtful input from the public — for a long time, particularly…. But the question is: at what level can public input be incredibly useful?

It's easy to understand that if you get a group of people who are on kidney dialysis together and you ask them what are their questions — what do they want to know? How do they want to see the system change? They will be very engaged, and they'll thoughtfully be able to contribute, probably over a repeated-engagement approach in that kind of a conversation.

You can also get thoughtful engagement from the public at the other end of the spectrum, where you're at, which is trying to balance and take that pie that's fixed and get thoughtful input on which elements of that pie we might want to change.

But the process probably isn't the best one. And the reason why I say that is you would be just hearing from a group of individuals. You're going to collect a whole bunch of individual perspectives, and I don't know how you're going to balance that information. That would be a very challenging exercise of balancing that information and figuring out how to weigh it.

But you can engage the public through deliberative dialogue approaches. There are a number of different models that are emerging. I'm not an expert in the processes, but what I understand of them, it generally requires kind of a repeated engagement so that people become familiar with the issues.

You guys will have repeated engagement with these topics over the time, but the public may not. So if you really want thoughtful input from them, you have to take them out of the space that they're usually in — which is reading the kind of black and white framing of the issues that they get through the media that they tend to watch and read — and put them in a space where they can actually have time to think about, weigh, talk to experts and do a more deliberative exercise.

If that's the sort of thing that you'd like to try to accomplish, it's something that we may be able to help with. I don't know. I mean, it's certainly to be talked about. But I worry a little bit that that exercise of just getting kind of one input from each of the different perspectives will just leave you in a place where you don't quite know how to put the picture, the jigsaw, together.

D. Finegood: Yeah. I'd be happy to talk to you about whether there's something else we can do to help, or whether there's a mixed model that might be useful to you. I don't know.

N. Letnick (Chair): Well, luckily we still have some time to come up with our committee's version of what we want to do in this phase. It probably won't happen until the first quarter of next year anyway, so it gives us enough time to work on it.

R. Lee: Yes, thank you, Dr. Finegood. I think this is a
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very interesting discussion here. I'll actually continue on the question I asked before. I think the system is so complex that there are so many factors. But you mentioned about "Let it happen, help it happen, and make it happen." I think that's a very good model for what kind of a situation you want to get into.

I think the general public will probably just let it happen. Some of the activists would like to make it happen, but sometimes they cannot do it. I think there's a whole complex of including input from the public as well. How to help it happen? I think that's useful. That's opening up dialogues and negotiation or finding out different interests so that we have suggestions or recommendations at the end that the system will work better but may not be the best.

D. Finegood: I think the whole world should go in that direction, but that's just my passion for recognizing that most of the problems that we face — that you face in government — are wicked, complex problems. We've come to a point in the evolution of the world where the complexity of our problems outstrips our capacity to think about them as individuals or in the way that we've been used to thinking about them for eons, right?

You know, when life and all the information we had about it was much simpler, then kind of an A-leads-to-B way of thinking about the world was okay. But we've actually reached the point where the systems are just so complex….

I have another slide which talks about the different characteristics. Randomness, nonlinearities — these are some of the things that make a system complex. We're fooling ourselves if we use methods and approaches that are steeped in this kind of reducing the problem to A leads to B or working out the causes and figuring that if you work out the causes, you'll know the solution. In fact, that kind of….

It's a little bit of heresy, and I'm sure some of my scientist friends behind me are shocked when I say that this reductionist approach that we have about most things in life actually isn't that helpful when you get to a problem that's big and messy.

That's why I suggest things like helping it happen and thinking about solutions where you take the people who have the capacity to solve a problem, the ones with the knowledge sometimes in their heads about the real nature of fixing it…. So the local solutions that you were talking about, local optimization, become quite important. And you don't want to do it in isolation.

What you want to do, then, is help the people in a local environment, dealing with their local context — which is different in one place from another — connect to people in other local environments, so they can share what they learn. So you act local, connect, in a sense, regionally and learn from the global amount of data that's out there. That's a much more systems-oriented way to think about it.

J. Darcy (Deputy Chair): You know, I accept completely what you said about complex versus complicated, and there aren't any simple solutions here, and the "help it happen" rather than "make it happen."

I mean, this is something the committee is going to need to spend a lot of time talking through after we've got all of this expert knowledge–sharing that's gone on, right? Do you think it makes sense as an approach to say: "Okay. It's big. It's complex. It has all these moving parts. You've talked about how to…."

J. Darcy (Deputy Chair): The balloon? Okay. So isn't our challenge as a committee that we have to figure out what are the pieces that could be taken on that can make the most difference in bringing about some of the system change we've talked about?

You can't tackle it all at once. That's clear. There are choices to be made. But if what we're looking for are those pieces, those changes, that transformative change that makes a difference and that helps to make those changes in other parts of health care…. Do you know what I…? I'm not putting it very well.

But it's about what unlocks what, right? What helps the most to advance some of our goals? So if that's about prevention, if that's about…. Anyway, we talked a lot about what the problems are and some of the things we're not doing well enough.

D. Finegood: I guess I'll come back to these levels in the system and say yes, you do need to figure out what levers you have and that you can recommend changing within government, for example. I mean, you don't necessarily have…. You don't hold all the levers, so to speak, but you hold a lot. You have some pretty important ones in terms of public policy. It's public policy and financing. It isn't just about the money. I think that's an important thing to think about.

But I would encourage you, as you think about the problems, not to think about them only down at that bottom level where you're thinking in the details of specific parts of the system or specific pieces, but that you're also thinking about those strong paradigms and goals, the paradigm that we have this publicly financed, privately delivered system. Clearly, my colleagues have articulated the importance of, you know, not just the deeply held belief that it's a public system, even though it's not quite, but that this system works.

You know, Canadians would be surprised. We didn't look at all the OECD outcome indicators, but Canadians
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would be surprised at some of the data that we saw there about how Canada does in terms of its health care system, because we tend to be fairly proud of our health care system, right? Is that well placed?

Anyway, the point is that…. I would encourage you to remember to go back and think about the different levels in the system, because the more powerful levers are higher up, and there's less evidence about change in those areas. So when we look at the evidence base, most of it's at the bottom, because that's where you can control things enough to do a good, proper, reductionist type of scientific study where you can figure out how A leads to B leads to C.

The stuff up the food chain — a little harder to make adequate measurements. That's kind of why there's a little bit more of a theoretical articulation of a way of thinking than it is exact steps that you can take.

I know that's not a great answer to your question, and you're feeling like my slide that talks about despair, retreat.

D. Finegood: You fall back to that despair. But the take-home message is that you don't need to despair, because there are solutions that are more appropriate when applied to complex systems.

Happy to talk to you again sometime, but there are strategies that you can use. When you're thinking about solutions, ask yourself: does it tick off some of these strategies that we know are better in a complex system than in a complicated or a simple system? Using that as a kind of a guidance can be very helpful.

J. Darcy (Deputy Chair): But you also talked about paradigm shifts. So if one of those paradigm shifts is focusing more on prevention and not exclusively on treatment, which we still do despite, you know, having tried for years and years, knowing that we needed to do the other…. I mean, that's big-picture. I didn't express it that way, but the kinds of things…. Then you need to look at what that means. What does it…?

D. Finegood: Yes, sure. It's very big, absolutely. And one of the reasons we don't go to that big picture is because the payoff on prevention feels like it's too far down the line. That is the fundamental challenge.

The paradigm that we live under, where we need to see immediate change, drives me to suggest: look for changes that you're likely to see in the time frame you want to see them. That's the one thing.

But I come from having headed an institute that was focused on obesity for eight years. My favourite sound bite in relationship to what you're saying is that if you want to deal with wait lines, you have to deal with waistlines. You absolutely have to, because you'll never stop people from getting in line if you don't do prevention, right?

If you don't stop them from getting in line, then you can never tackle the wait-line problem. No matter how much money you throw at it, people will still continue to flow into the system.

R. Lee: I just wanted to follow up on the prevention. We also saw the data say — the Angus Reid poll — only 7 percent of British Columbians think prevention is a problem.

I think we need a lot of education before, as a political…. More people would like to see prevention — going and spending more money on prevention, including the public, including the people making these decisions in government. I think, probably, the awareness of prevention is important somehow.

D. Finegood: Awareness is important, but I think we also have to get smarter about how we do it.

You know, I heard the Minister of Health at the Life Sciences B.C. lunch. I asked him the question about prevention — what he thought about that. He expressed what I think a lot of people will express. It was a certain level of exasperation. No matter how hard you try, people don't change their behaviour.

But as somebody who used to weigh 250 pounds, I can say the fact that you can change behaviour. But we have to tackle it in different ways. We have to think about the challenge as an individual in different ways.

We have to find smarter ways, as scientists, to develop approaches and tools that will help people actually change behaviour. I think that's as true for personal weight loss as it is for prescription behaviour of a physician. We have to find better ways to enable them to make better decisions at that point of decision and for which they have the capacity to make that decision.

I think there's a lot of work to be done to do prevention more effectively than just education.

By the way, a week or so ago I put an app on my iPad that allows me to put in all the food that I eat on a daily basis and all the exercise. It gives me the caloric result so I know how much I'm over or below what my target should be.

That's because I found out that I was 160 pounds,
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when I thought I was around 155. So there's the motivation for me.

D. Finegood: But you're an unusual individual when it comes to the capacity to do that.

Listen, I was the head of an institute that was focused on obesity for a long time, and I find counting calories a heck of a lot of work. Yet I know if I want to lose any more weight — and I'm still obese — that's what I have to do because of my biology.

We can't expect everybody is going to have the capacity to do that, so we need a range of strategies that actually help it happen for individuals as well.

J. Darcy (Deputy Chair): I just want to clarify. When I say "prevention," I don't just mean what Mr. Lee said about changing individual behaviour. I'm talking about investing in those parts of our health care system that also prevent more illness down the road or that prevent the use of the most expensive forms of the health care system.

So it's home support and community care and mental health — some of those things that prevent us, as well as education about individual behaviour. I think it's prevention in the broad sense.

N. Letnick (Chair): Committee members, we do have a portion on the agenda that says "Closing discussion." It's been a long day, so if you have something to say, we'd love to hear it.

S. Hammell: I certainly do. I cannot agree more that what we don't want to do is go out into the community and just listen to people coming and complaining to us about the health care system.

I have been on many committees where that has been done. It may be productive for the people who are venting, but at some point we have to come up with something. So I think we have to think through that in terms of going out.

I also would be very interested in having a further discussion around this line of discussion in terms of complexity versus complex, and also the presentation prior to that. I think what is happening here is we're not clear where we're going.

It seems to me, in the last one we were in, there was a piece put up that people could hit at. They came with a point of view on some of our presentation and were therefore taking…. They had meat to get into. I think we just need to think through how we're presenting so that we get feedback.

This has been a wonderful day. We've heard a lot of input, but I'm not sure how to hang any of it on our particular direction. I think we need to think about that as we move forward.

N. Letnick (Chair): You're absolutely right. A big part of this process is so that we have the tools necessary so that when we do sit down to discuss how we actually do our mandate, we have those tools behind us.

The discussion of how we proceed, as I articulated a little bit to Dr. Finegood, is nowhere near ready even to distribute amongst ourselves to start yet. We'll have more education before we get to that discussion, but at some point — in my vision of where we're going, I would suspect it'll be somewhere in February or March — we're going to sit down and go through some of our choices as to how we proceed. That has to happen, I believe, after we get this preliminary work done.

Seeing nothing else, I'd just like to say thank you to all the speakers, thank you to members of the committee and to all the staff. In my climbing days…. I don't do it anymore; that's prevention. In my mountain-climbing days the hardest part was taking that first step and starting to go up, but once you got into a rhythm, things got a lot easier and a lot better. I would say that's where we are right now. We're in that first step. We're starting up the hill.

Was "despair" one of your words? I think we'll be out of that pretty fast and into excitement and enthusiasm and ready to take on, as we are, this great challenge that's been given us and this great responsibility.

We are very lucky MLAs, I believe, to be here. Thank you very much, again, for your help. I will call the meeting adjourned if I can have a motion to adjourn the meeting. That's Sue.

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Chair:	* Norm Letnick (Kelowna–Lake Country BC Liberal)
Deputy Chair:	* Judy Darcy (New Westminster NDP)
Members:	* Donna Barnett (Cariboo-Chilcotin BC Liberal)
	* Dr. Doug Bing (Maple Ridge–Pitt Meadows BC Liberal)
	Katrine Conroy (Kootenay West NDP)
	* Sue Hammell (Surrey–Green Timbers NDP)
	* Linda Larson (Boundary-Similkameen BC Liberal)
	* Richard T. Lee (Burnaby North BC Liberal)
	Jane Jae Kyung Shin (Burnaby-Lougheed NDP)
	* Michelle Stilwell (Parksville-Qualicum BC Liberal)
	* denotes member present
Clerk:	Susan Sourial
Committee Staff:	Josie Schofield (Manager, Committee Research Services)

Witnesses:	Dr. Aslam Anis (University of British Columbia)
	Dr. Diane Finegood (President and CEO, Michael Smith Foundation for Health Research)
	Dr. Laurie Goldsmith (Simon Fraser University)
	Dr. Steven Morgan (University of British Columbia)

1) Dr. Diane Finegood, President and CEO, Michael Smith Foundation for Health Research
2) Dr. Steven Morgan, Associate Director, Centre for Health Services and Policy Research, University of British Columbia

REPORT OF PROCEEDINGS (Hansard)

SELECT STANDING COMMITTEE ON HEALTH

REPORT OF PROCEEDINGS
(Hansard)

SELECT STANDING COMMITTEE ON
HEALTH