Editor's note: All dollar figures in this story are in Canadian dollars.
Although often touted as a model for American reform, the 25-year-old Canadian universal healthcare system is severely traumatized by dwindling public funding, fraud and overuse by patients, and physicians who order too many tests.
The $67.6 billion system is a prenatal-to-postmortem spectrum of "free" medical, laboratory, prescription drug and hospital services for 28 million citizens. But with a battered Canadian economy and dwindling federal and provincial tax bases unable to keep up with runaway costs, its value as model for the U.S. healthcare reform effort is questionable.
Ontario, which accounts for nearly 40% of Canada's population and some 45% of the national economy, has been hit hardest of all the provinces. The Ministry of Health budget increased 10% a year between 1982 and 1992, doubling during that decade to $17.8 billion-a third of the entire provincial budget.
Backed into a fiscal corner, the provincial government reluctantly enacted "social contract" legislation last summer, cutting wages for its 900,000 public-sector workers by $2 billion over three years. The province's 23,000 physicians took a 5% pay cut and will be forced into taking a total of 27 unpaid days off over three years, saving $390 million.
A three-year wage freeze affects 164,800 unionized and non-unionized hospital workers. Some 3,000 hospital workers face phased, incremental layoffs during the 1993-94 fiscal year.
The cost-slashing exercise also includes trimming $253 million out of a total hospital sector compensation base of $6 billion across 221 hospitals and $10 million from outpatient diagnostic services, also over three years.
On top of all this, the federal government lopped $160 million in aid to Ontario's 1993-94 fiscal year medical services support allocation.
Hospitals will be deactivating 5,000 out of about 28,800 acute-care beds across Ontario in the next year, after closing out 2,094 beds in the previous fiscal year.
Meanwhile, hospital administrators are scrambling to balance economies without sacrificing standards of service. They're also bracing for further financial pressures over the next two years.
For example, inflation-estimated to continue at about 11.9%-will add $50 million to hospitals' costs. New pay-equity adjustments, health and safety regulations, workplace substance-control regulations and pension plan contribution increases will add still another $240 million.
Administrators are performing whatever fiscal liposuction is left to be done, while "rationalization" studies are under way in more than 30 communities throughout the province, said Brian O'Riordan, director of government relations for the Ontario Hospital Association.
The health ministry, a district health council and hospital administrators are jointly, as well as independently, looking at:
Decreasing patient stays even more through day surgery and outpatient care. From 1979 to 1992, day surgery, as a percentage of all surgeries in Canada, increased to 37% from 22%.
Sharing laundry, food and other services and facilities.
Eliminating or merging departments, particularly emergency services.
Placing greater reliance on shared central bulk purchasing and increases in such ancillary fees as patient telephones, television and parking.
Freezing senior salary levels.
Mr. O'Riordan said the $7 billion in federal government funding to Ontario hospitals for fiscal 1993-1994 has been unchanged since 1990.
There also will be basic changes in the way hospitals function, said Wilma Dare, M.D., a past chairperson of the OHA's board of directors.
"Patients who enter hospitals as inpatients will be sicker than before, whether it is from an acute condition or trauma, or from instability in a chronic condition," Dr. Dare told an OHA audience in Toronto in November. "The ability of hospitals and other providers to care for people on an outpatient or home-care basis will increase, as a result of new technology and drugs, resulting in a significant drop in the number of beds required in the system.
"This opens up a range of possibilities ... hospitals without beds and hospitals without walls, or what is sometimes called the `virtual hospital,' a hospital that does not have a physical plant but coordinates and manages a range of services through a small administrative unit." she added. "We clearly see the trend to smaller, more specialized hospitals, but excellence in these centers, too, must be a priority."
Ontario Health Minister Ruth Grier has warned that if hospitals don't close, merge or otherwise downsize to reorganize their services more efficiently, her ministry will do it for them.
"We need a new kind of hospital, and we need to create a new place for hospitals within a changed health sector," Ms. Grier said.
She isn't bluffing. Her ministry recently created an interdisciplinary panel to review 19 non-essential medical services that may be eliminated from Ontario Health Insurance Plan coverage. That could mean an end to "free" procedures such as reversal of sterilization, surgery to correct snoring, cosmetic procedures, annual physical examinations, penile implants and in vitro fertilization.
The review panel is looking to save $57.7 million, $11.1 million of which would come from hospital costs associated with those medical services. Critics have suggested that dropping those kinds of services will be inconsistent with the "comprehensive" aspect of the federal legislation that has enshrined that doctrine as a right, not a privilege.
Ms. Grier said the panel, drawn from her ministry, the medical profession and the public, will provide "an objective, arm's-length process of looking at what should be covered by the insurance plan."
At hospitals' discretion, not by government fiat, medical services were reduced to bare-bones level all over the province during the holidays in December.
At 20 Toronto-area hospitals, it lasted up to three weeks. Virtually all surgery was canceled, except for emergencies. At least 1,000 beds were temporarily closed and outpatient clinic services were restricted, with hundreds of hospital staff taking some of the unpaid days off as required under the social contract legislation.
For St. Michael's Hospital in Toronto, a holiday break wasn't going to make a significant difference. It has been digging itself out of a $63 million hole, the largest debt load of any provincial hospital. Administrators have slashed that figure by half and expect to retire the rest within five years.
Hospital President Jeff Lozon streamlined services, cut 350 of 2,300 jobs, shortened the average hospital stay to 7.5 days from 9.1 days and beefed up outpatient services. He credits consultation with staff for the savings. He said the hospital wasn't paying close enough attention to the way it was overspending during the preceding three years, but it has since learned to keep within its $170 million annual budget.
Elsewhere in Canada:
Quebec is mid-way through a five-year reorganization of its $13 billion-a-year healthcare program; one of the proposed measures is a $5 "disincentive fee" intended to divert patients from hospital emergency departments to regional community health clinics. In a poll conducted last May by a local newspaper, 73% of respondents favored such a fee, 42% supported privatizing some hospitals, and 33% supported a $25 fee for each night spent in a hospital.
Privatization of hospital management is coming to neighboring New Brunswick. By late 1994 the provincial government will have turned over medical care insurance administration to a consortium of private companies, led by the provincial Blue Cross organization.
New Brunswick Premier Frank McKenna estimates the move will trim as much as $300 million from the province's healthcare bill over the next five years. Spending was about $1.1 billion for the 1992-1993 fiscal year.
In an attempt to cut abuse of the system, New Brunswick will introduce personal identification cards with magnetic stripes that process computerized medical claims.
"We may find out through this technology that a patient has been to four doctors on a single day, or physicians who over-prescribe or who send too many patients to specialists," Mr. McKenna said.
Winnipeg, Manitoba's Seven Oaks General Hospital is closing 30 of its 330 acute-care beds without reducing the patient load, at a savings of up to $3 million, through better management of length of hospital stays.
In Alberta, two members of the Legislature who consulted with more than 5,000 people in roundtable discussions recommended that Albertans over 65, except for the demonstrably needy, pay $30 a month for a single person and $60 for families for coverage under the government-financed healthcare system-which is what other adults pay-to produce revenues of at least $83 million a year. Alberta and British Columbia have been charging its citizens premiums for health coverage since 1963 and 1965, respectively, the only two provinces that still do.
Opposition Liberal Party health critic Grant Mitchell said such user fees would put the province on the path toward a U.S.-style system, which favors the rich and penalizes the poor. "It would destroy the very nature of the healthcare system that makes this province and this country very special," he charged.
University of Alberta economics professor Richard Plain criticized the user-fee plan and calls for insurance deductibles. Either plan would oblige the federal government to deduct the amount of that income from money it makes available for healthcare in transfer payments to the provinces under the Canada Health Act, he said.
In remarks to the Dallas-Fort Worth Hospital Council last April, Dennis R. Timbrell, president of the Ontario Hospital Association and a former health minister, summed up the subject:
"We know our system isn't free; the cost is shared, through taxes. We have no choice but to control costs. We are also committed to preserving universality. The only way we can do that is by maximizing the value we get for every dollar spent on healthcare."