Managing health care fundingGovernments must plan for change today to meet the health care needs of tomorrow |
Health care in Canada is a paramount issue for citizens and governments alike. Nearly 50% of provincial budgets go toward health care spending. Add to that increased costs, antiquated infrastructure and an aging population, and many see a health care crisis looming. “If you look at the projected pressures on the health care system over the next 10 years, under current trends, it simply will not be sustainable without fundamental system-wide transformation,” says Shannon MacDonald, leader of Deloitte’s Health Services practice in Canada.
Increased pressure on health care systems is a global phenomenon, with many countries experiencing the same growing pains as costs and demand go up, without a corresponding increase in revenues. Canada’s health care expenditure is not out of proportion to per capita spending of other OECD nations. “Our health spending is in line with what most developed countries are spending, with one exception,” says Irene Podolak, a partner with the Health Services practice, noting that Canada allocates about 10% of its gross domestic product to health care, compared with 15% for the United States.
"We spend a lot of money on research and development on new ways to cure people, but we don’t spend a lot of money on better understanding the costs and value for dollars spent."
— Shannon MacDonald
Governments are moving in the right direction
Over the past few years, governments have made notable strides. For instance, the federal government’s investment in Canada Health Infoway — a not-for-profit organization whose key mandate is to accelerate the implementation of a pan-Canadian electronic health record — demonstrates its commitment to embracing technology in support of improving our health system. “Governments are beginning to realize that access to patient information is key to delivering good care in today’s world,” says Podolak. “Ensuring timely access to patient information across the health care system is critical to quality patient care, and investing in electronic health records is a great way to address this.”
Building provincial repositories to manage electronic health records is certainly a step in the right direction. However, governments must continue to invest in other innovative technologies at the local level. “Technology needs to be available to physicians and nurses at the point of care,” says Podolak. The challenge will be to justify the allocation of scarce dollars to this technology at a time when access to timely clinical services is the political priority. This challenge is one of many that governments and providers will need to consider and act on when thinking about maintaining a sustainable health care system.
Forecasting can help prepare for future health care needs
Historically, provinces have used annual budgets to manage health care, which hampers the government’s ability to forecast and spot long-term trends. “It’s hard to analyze the future when you’re just going year to year,” says MacDonald. This creates a real challenge because health care funding is not an immediate public sector crisis, but one that will materialize in difficult allocation decisions in the coming years, says MacDonald. Provinces have begun to move to longer-term budgeting, but they need to be even more aggressive in this area.
“There’s quite a lot of research on health outcomes related to a particular disease, but we are not at a point where we can put any reasonable costing information to that,” says MacDonald. For instance, what are the cost comparisons of treating a cancer patient in a community centre versus at home? To adequately plan for the future, governments need to better investigate and understand the options and related cost-benefit trade-offs.
“Health care players have lots of ideas about how to reduce operating costs, but they don’t have the data to perform a good analysis of cost compared to benefit,” says MacDonald. This is where forecasting comes in. By highlighting the long-term operating savings to be gained, forecasting can help justify the investments that must be made immediately. To avert a health care funding crisis, governments must commit to looking forward in terms of budgeting, forecasting and understanding demographic shifts.
Governments need to better understand health care costs
“We spend a lot of money on research and development on new ways to cure people, but we don’t spend a lot of money on better understanding the costs and value for dollars spent,” says MacDonald. Medical research is critically important, but it needs to be supplemented with a better understanding of how health care funding is allocated to improve return on investments. “We have clinical trials, but what about spending trials?” Undertaking research and innovation in the area of spending can help build a business case for investing in the technology and infrastructure necessary to keep the health care system healthy.
