• New report examines how governments can structure arrangements with non-government health providers to avoid potential conflicts, politicization, “sweetheart deals”

 BRITISH COLUMBIA: In light of concerns raised over contracts between governments and third party health care providers in Canada, SecondStreet.org released a new report today that examines how better-performing universal health systems avoid such potential problems.

The report examines eight universal healthcare countries that outperform Canada and have notably shorter wait times for elective surgery. It finds that all eight have a relatively larger presence of non-government hospitals than Canada (one percent), as defined by the OECD: ranging from seven percent in Sweden, to 100 percent in the Netherlands.

However, these countries and many others also use a different approach to funding hospital care, known as “activity-based funding.” This model is transparent, creates a level playing field and avoids the politicization that comes with politicians approving contracts. Under activity-based funding, governments establish a compensation rate for different health services (e.g. $10,000 for child birth, $20,000 for knee surgery) regardless of where they are provided. Government hospitals, non-profit or for-profit clinics will then receive those amounts after providing care to patients.

“Sweden, Australia, France and many other countries have worked with non-profit and for-profit clinics to deliver faster, quality treatment to patients in their universal health systems,” said Bacchus Barua, Research Director at SecondStreet.org. “They avoid allegations of sweetheart contracts by simply paying health providers the same amount per knee operation, MRI scan, etc. This makes things transparent, creates a level playing field and avoids politicization of contracts.”

The activity-based funding approach is completely different from what is done in most parts of Canada. Provincial governments typically fund hospitals with a large annual cheque and then hope the hospital helps a lot of patients. Sometimes governments contract third party clinics to provide surgeries, diagnostic scans, etc. However, this can sometimes lead to allegations of improperly awarded contracts with inflated rates of compensation.

 “Quebec has had some success with moving in this direction and it’s encouraging to see Alberta announce that it will embrace this approach too,” added Barua. “More provinces should be embracing this type of reform as it can incentivize higher output while depoliticizing health care decisions.”

 To see Policy Brief: Health Care Partnerships and Hospital Funding – click here.