Alberta bails out private clinic. Is Kevin Falcon paying attention?

On April 12, Kevin Falcon, Minister of Health Services, announced that the province is funding some hospital care in B.C. in a new way. According to ministry, several pilot projects using “patient-focused funding” in metro Vancouver emergency departments led to more patients getting faster treatment. In medicine, that may or may not be a good thing. But let’s assume the patients were treated appropriately and well. For better statistics, the hospitals received more funding.

The announcement went on to describe initiatives in the Lower Mainland for improving access to breast cancer evaluation and for spinal surgery. Both projects, which had special funding, have resulted in shorter wait times for patients. I am familiar with one of these programs, and I know that the quality of care is excellent.

These are examples of innovation within the publicly funded and non-profit health care system, which the minister explained as “patient-focused funding.”  Falcon suggested that a new budgeting scheme would bring more of the same in coming years. Let’s all cheer!

The B.C. health ministry, however, used the term “patient-focused funding” to describe disparate approaches. In one, achieving quicker emergency-department treatment triggered incentive payments for hospitals. In another, breast-cancer clinics were a specially funded reorganization of care based on a European model. Karen Palmer, a health policy analyst who teaches at Simon Fraser University, said that Falcon conflated two ways to fund medical care. “He apparently doesn't understand the difference,” she said.

Whatever the ministry calls it, the heart of the new proposal involves paying for individual health-care activities. Compared with block funding, which is the current approach to hospital budgets, activity-based funding facilitates outsourcing. Falcon told the Globe and Mail that commercial clinics would be able to compete with public hospitals for contracts to perform operations. 

The directors of the two leading commercial surgery clinics in Vancouver told the Globe reporter how pleased they were with Falcon’s comments. Both are doctors who have long advocated for private health care. Their organization, the Canadian Independent Medical Clinics Association, has sued the province to allow commercial health insurance, which would encourage Canadians to buy private health services.

The Vancouver clinics know that B.C. has hesitated more than Alberta when it comes to public funding of for-profit health care. According to Don Braid of the Calgary Herald, since the 1990s Calgary was ``a health-care laboratory operated by the Klein government.``  Several public hospitals were closed, and one was actually razed. Surgery was handed over to commercial hospitals. The experiment is now yielding unfortunate results.

The Health Resource Centre, a for-profit hospital that provides one-third of hip and knee operations in Calgary, is close to bankruptcy.  In order to prevent a crisis, the Alberta government has taken legal action to prevent the real-estate holding company that owns the facility from liquidating the clinic. In the meantime, the government is building a new operating suite at the publicly managed Foothills Hospital, where hip and knee operations will take place starting in 2011.

The tenuous situation with joint surgery in Calgary is one problem that commercial health care presents. Investor-owned health-care has to satisfy investors. If profits falter, employees and patients are in jeopardy. Furthermore, making a profit in health care requires reducing risk. Sick people are risky, so commercial hospitals often aim to treat healthy patients who need straight-forward operations. The complex cases are left to the public system. Furthermore, transaction costs are higher with competitive, market-based health care. Close cost-tracking, advertising budgets, and high executive salaries all come with the territory.

Although the future of outsourced surgery in Alberta is murky, in B.C. it looks bright. It seems that this province may have to learn about investor-owned health clinics from home-grown misadventures.