Toronto Globe and Mail, March 7, 2000
http://globeandmail.ca/gam/Commentary/20000307/COMEDI.html

Decline Klein's Medicine
Alberta's Premier has made a completely wrong diagnosis
of what ails our health system, say five analysts

MORRIS BARER, ROBERT EVANS, STEVEN
LEWIS, MICHAEL RACHLIS and GREG STODDART

Tuesday, March 7, 2000

You've heard it before: Health care has become "a nation-wide crisis."
Seldom a day passes without some "horror story."

But that wasn't the essence of a recent Globe and Mail story. That was
the gist of a Boston Globe story last August in which Harvard professor
Bernard Lown denounced the results of for-profit medical care in the
United States as "morbid." Yet Alberta Premier Ralph Klein persists in
efforts to import these results into Canada. His latest effort, Alberta's
Bill 11, would open up in-patient surgical services to private, for-profit
hospitals. (An overnight "surgical facility" sounds a lot like a hospital,
despite the air-brushing in the bill.)

The Premier says his moves are necessary and cites "shortages of beds
and doctors, waiting lists, crowded emergency rooms, and streams of
wealthy Canadians heading to the U.S. for treatment." Yet in the
mid-1990s, his government cut per-capita funding for public hospitals
by 30 per cent. The Alberta government spends significantly less on
public hospitals than the rest of Canada. If there are shortages, it's easy
to see who is to blame.

Mr. Klein says "Money alone won't fix the problem. It never has." He's
right: improving the efficiency and effectiveness of medicare is the
critical task. Can we look to private, for-profit hospitals to help?
Ideology says yes; the evidence says no. On reflection, this should not
be surprising. For-profit institutions are just that. In the normal
commercial world, there are a number of competitive and regulatory
mechanisms that harness profit incentives to more general public
benefits. In health care these are absent. That is why all countries
except the United States have tried to limit the role of for-profit firms in
providing health care.

Advocates of for-profit health care suggest that private contracting
avoids costly public investment in facilities and equipment. But this is an
illusion, as the Private Finance Initiative in Britain has rather expensively
demonstrated. There, private financing of health facilities has been much
more expensive. That shouldn't come as a surprise. For-profit firms are
not charities. Their charges must include a return on investment, and
their costs for raising capital are significantly higher than those of
governments.

Another potential source of savings, it is argued, is reduced labour
costs. If the same work can be done, to the same standard, with fewer
people, then the economies are real. But if they are the result of paying
the same people less money for the same work -- as for example by
moving services from a union to a non-union environment -- then there
is no real improvement in efficiency even though costs of production
have fallen. Income has simply been transferred from workers, to either
government (and ultimately taxpayers) or profits (and ultimately
shareholders). And remember, the same powerful profit incentives that
encourage cost control also strongly discourage passing savings on to
purchasers in lower prices. They tend instead to be absorbed in various
forms of higher overhead -- including profit.

The private sector knows that the most profitable strategy, however, is
to find ways of extending product lines and increasing prices. And this
is exactly what is happening in Calgary, where (same-day) cataract
surgery is now entirely provided by profit-making clinics. "Insured"
services are fully reimbursed by Medicare, but physicians are "offering"
patients allegedly superior-quality lens implants -- which cost about
$25 to manufacture -- and charging them several hundred dollars.

Bill 11, despite appearances, does nothing to discourage this practice.
Instead, it will increase the range of services for which such extra-billing
is possible. Nor does it address the practice of selling "uninsured"
services as a means of queue-jumping for insured services. What
well-off patient is going to refuse that offer?

Private health-care providers also try to profit from patient selection or
"cream-skimming." Facing fixed prices, for-profit firms will if possible
channel the straightforward, low-cost patients to the private facility,
leaving the complex case load in the public hospitals. And this will
happen in Alberta, because the same physicians can work in both the
public and the private sector, and have an equity interest in the latter.

The essence of professionalism is placing the patient's interests above
one's own. But for-profit objectives are furthered by shifting the
balance of professional and commercial motives in clinical
decision-making. As potential patients, each of us should be deeply
concerned.

Most sobering of all, the Alberta proposal risks undermining Medicare
across the whole country by exposing it to the full force of current
international trade agreements. The North American free-trade
agreement and the General Agreement on Trade in Services have as
their overriding objective the removal of all barriers to international
trade. Any sector of the economy not explicitly and exclusively
reserved for public action is to be open to global competition. Opening
up the hospital sector to a mix of public and private ownership risks
losing that exemption for health care. And once a sector is no longer
eligible for exemption, it is extremely unlikely that eligibility could ever
be restored.

Given the overwhelming mismatch between the risks associated with
the Alberta legislation, and its putative benefits, one is forced to ask:
Why make the changes? Could there be a deeper agenda -- despite
repeated assurances to the contrary -- to transform Medicare into a
two-tier system on U.S. lines?

There is a great deal of money to be made by wrecking Medicare. It
would open all sorts of opportunities for marketing private services, the
value of which most patients cannot judge, at prices unconstrained by
public negotiators. And it would dramatically expand the market for
private insurance and other financial and marketing services -- adding
further to total costs.

But while total costs would increase, the share borne by the wealthy
would go down. Financing from taxation draws a larger share of the
cost of care from those with higher incomes; private payment shifts it to
those who need care -- disproportionately those with lower incomes.
Moreover, those who need care and have more money get preferred
access without having to support a similar standard for everyone else.
The healthy and wealthy gain; the unhealthy and unwealthy lose.
Canadians -- and Albertans -- have made it clear that they do not want
such a system. What are the Premier's assurances worth?

Here's what Prof. Lown concluded: "For-profit health care is an
oxymoron. The moment care is rendered for profit, it is emptied of
genuine caring. This moral contradiction is beyond repair. It entails
abandoning values acquired over centuries of professionalizing health
care into a humanitarian service."

Bill 11 promises one giant leap further down that path of abandonment.

Morris Barer and Robert Evans are professors at the University of
British Columbia's Centre for Health Services and Policy
Research; Michael Rachlis and Steven Lewis are health-policy
consultants, the former at the University of Calgary, the latter at
McMaster and University of Toronto. And Greg Stoddart is a
professor at McMaster's Centre for Health Economics and Policy
Analysis. Their joint report is at http://www.chspr.ubc.ca.

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Dennis Raphael, Ph.D.
Associate Professor and Associate Director,
Masters of Health Science Program in Health Promotion
Department of Public Health Sciences
Graduate Department of Community Health
University of Toronto
McMurrich Building, Room 101
Toronto, Ontario, CANADA M5S 1A8
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