Shawn Whatley: Ford’s health reforms return Medicare to its roots

Panic over Ontario's health reforms are not justified
Ontario Premier Doug Ford makes an announcement on healthcare in the province with Health Minister Sylvia Jones in Toronto, Monday, Jan. 16, 2023. Frank Gunn/The Canadian Press.

Premier Ford may have found a way to slice the tie that binds politics to patient care in Canada. It could save Medicare.

Last week, Premier Ford announced plans to expand publicly funded health services outside of hospitals. It created a string of headlines about “private care”, “for-profit” healthcare, and “private clinics.” The panic is legitimate, but the content of the panic is not.

The plan changes the management of Medicare, which warrants panic for some. If successful, Ford will dilute the number of services falling under the Public Hospitals Act 1990 and expand services outside the Act itself. It upsets our hospital-centric health-care system built on decades of deals, patronage, and log-rolling.

But the truly innovative bit is this: his plan shields government from health-care performance failures, at least for the expanded services. It inverts the current risk calculus in health care.

Hospitals create significant risk for government, over which governments have little control. When hospitals fail, as they often do, they just ask government for more funding. Government wears the failure plus bears the pain of increased funding, with no guarantee it won’t happen again.

Non-hospital facilities go bankrupt when they fail to offer quality services within budget. Insolvency risk forces non-hospital facilities towards quality, service, innovation, and efficiency in order to remain viable. Survival depends on their own performance.

Creative destruction?

This change will frustrate union agreements (power). It will reorganize hospital services (funding). And it will bloat surgical incomes (envy). Those who long for true, laissez-faire, free-market health care will not be happy either. And this could sour the civil service, given the existential threat to its control of health services.

What causes all the discord?

The premier’s plan inflames a deeper debate. Is Medicare about the public administration of health insurance, or is Medicare about the public management of medical care? Do we have provincial insurance plans, or do we have provincial health-maintenance organizations (HMOs)?

Many assume medicare is both: administering insurance and managing medicine. We have health insurance and HMOs.

This sounds simple, but it is impossible to implement. A CEO of a large hospital said, “It is not clear to me who runs the hospital. Compared to what I’m used to, it’s challenging to get things done.”

Public administration of insurance

The Canada Health Act 1984 emphasizes public administration, which it adopted from the Medical Care Act 1966, as one of its key founding principles (including comprehensiveness, universality, portability, and accessibility).

The Canada Health Act spells out what administration means and what, exactly, the public is supposed to be administering:  

“Public administration

  • 8 (1) In order to satisfy the criterion respecting public administration,
    • (a) the health care insurance plan of a province must be administered and operated on a non-profit basis by a public authority appointed or designated by the government of the province”

The late Malcolm G. Taylor, a medical historian, described in (painstaking) detail the history of Medicare in Health Insurance and Canadian Public Policy(1978, 2009). Many consider Taylor’s book the definitive study of Medicare in Canada. Public administration of health insurance seems beyond debate.

How, then, did ‘management of medicine’ enter the mix?

Public payment = government risk

Parliamentary democracy rests on the opposition holding government to account. Accountability requires control. Thus, government needs some control over the things it promises to provide.

Note, the need to control stems from the promise to provide. You cannot promise to act without the power to take action and fulfill your promise.  

When it comes to hospital services, the Ontario government’s locus of control rests with the Public Hospitals Act 1990 and the network of regulatory bodies and statutes involved. A platoon of civil servants works to maintain, regulate, oversee, licence, inspect, and accredit public hospitals.

There is more. Hospitals themselves develop libraries of Rules and Regulations, policies, and procedures to shape clinical performance. Collective bargaining agreements stipulate what management can and cannot ask nurses to do. Physicians’ hospital privileges outline rights and responsibilities to access resources and maintain those rights. A towering stack of agreements, memoranda, and historical precedent grows up inside the public hospital system, with each hospital having a culture and heritage of its own.

Ford’s plan inserts itself into this 50-year-old approach, which struggles to maintain its own status quo, never mind increasing output.

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Failure must be an option

Management experts debate whether the potential for failure is a prerequisite for success. It may not be, but it sure increases one’s effort to avoid it.

No matter how poorly a hospital performs, no one goes broke if it fails. Patients may endure waits, indignity, and mistreatment. They may suffer and die. As long as a hospital remains close to the mean, no one gets fired.  

Administrators always spend someone else’s money. They worry about efficiency, but only in so far as inefficiency risks reprisal from the ministry of health. As long as performance looks as bad as neighbouring hospitals, you can just ask the government for more money.  

Ford’s plan changes this. It expands services to facilities in which financial failure is a real option.

Short-term gain, Long-term pain?

Ford’s plan should expand services and improve efficiency, at least in the short term. It weakens the corporatist-style iron triangle between government, doctors, and unions, as discussed earlier in The Hub.

However, success depends on the new legislation. It could be an amendment to the Independent Health Facilities Act 1990, or it could be a new bill. Maybe legislators will promise piles of new operational funding, which would make non-hospitals more like hospitals. By the time the bill reaches committee, it may have picked up enough regulatory lint to make the PHA look svelte in comparison.

Even if we get light, enabling legislation, the regulatory state always finds reasons (safety!) to metastasize and control new entities. The corpulent tentacles of policy and protocol always threaten to divert attention toward paperwork and checklists instead of patient care. Finally, public-sector unions will compete to sign up staff, creating its unofficial second layer of management.  

The first change to management in decades

Hospitals can run well, offer industry-leading services, and remain entirely on budget, if not for all the patients to be seen. Non-hospital facilities do not share the luxury of mediocre performance. They must remain efficient—always vigilant and intolerant of waste and sloth.

Ford’s expansion is not private care. It is a shift back to Medicare’s founding principles. Premier Ford has started to slice apart payment for care and management of medicine. He aims to disentangle political risk and service delivery.

The three-step plan could get hijacked. It could be diverted to create an even greater tangle than we have now. But there is solid reason for optimism. Let’s hope Ford can see it through soon.

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