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Patient Focused Funding
By Dr. Brian Day
 Canada is now the only remaining OECD country that funds public hospitals almost exclusively through block budgets. Block funding was popularized in the early 1970s as a means of simplifying hospital reimbursement by governments. In that pre-computer era, when waiting lists did not exist, there were reasonable arguments for this.
However, times have changed, and we must rediscover what I prefer to call Patient Focused Funding (PFF). This was one of many recommendations of Kirby's Senate Committee and was supported in a June 2006 policy paper by the BC Medical Association (BCMA). In our enthusiasm to come up with cures for our ailing health system, this reform has not received the priority it deserves. It should be our number one focus.
The British have recently changed the way they fund hospitals. Service-based funding has replaced block funding and wait lists have been dramatically reduced. Britain is close to realizing its goal of an 18-week maximum wait by 2008. In 1997, there were 284,000 patients waiting over six months for hospital care in Britain. By 2006, there were none.
When public funding is attached to patients, they can exercise choice. In Britain, patients may choose from five providers, one of which may be independent. The fees for services provided have been calculated and are set by the government paying agency. Hospitals compete to attract patients based on service, not price. There is increased co-operation between workers and managers, and technologies that improve the quality and efficiency of care are embraced. Every hospital admission generates revenue from government. Canada can benefit from the U.K. experience, learning from their successes and mistakes.
Governments must recognize that it is cheaper to treat patients quickly. A recent BCMA-Canadian Medical Association review revealed that, aside from the pain and suffering, the cumulative economic costs in B.C., Alberta, Saskatchewan and Ontario of waiting for joint replacement, cataracts, coronary bypass and MRIs would exceed $1.8 billion in 2006.
Governments lose $500 million in revenue from the reduced economic activity of patients waiting for care. This conservative analysis addressed only the wait time after the specialist had been seen. And, despite its superior performance on wait times, Britain spends less of its GDP on health care (8.5 per cent to Canada's 10.3 per cent).
In B.C., the introduction of PFF by the Workers' Compensation Board, resulted in the elimination of wait lists, reduced health care costs (they have remained constant at around $200 million per year for the past 10 years), and in savings of up to 70-80 million dollars a year in wage loss benefits, not to mention the reduced pain and suffering of injured workers.
Finally, Canadians who travel abroad for health care represent a real export of jobs and funding. The elimination of wait lists would reverse this exodus and allow public hospitals in Canada to generate revenue by engaging in "medical tourism" themselves. The Royal Marsden Hospital in England generates 25 per cent of its revenue from treating offshore patients. The 100-bed Frank Pais Orthopaedic Hospital in Havana generates USD$20 million a year treating Latin Americans; this money is used to fund care for Cubans.
Canadian hospitals could offer services to patients from abroad, including the U.S., where health care is a USD$2 trillion-plus industry. Health care, instead of being our biggest expense, could become our greatest source of national income.
Canadian initiatives on PFF must occur at the provincial level. I believe that governments, health workers and, most importantly, patients will support the concept. Studying wait lists was a good start. Now it's time to eliminate them. The potential downside of introducing PFF is that productive, efficient and patient-focused hospitals will be rewarded at the expense of others. In the words of Star Trek captain Jean-Luc Picard of the USS Enterprise, "Make it so."
Dr. Brian Day is president-elect of the Canadian Medical Association. This article deals with a topic that is not yet official CMA policy. The opinions represent the author's personal viewpoint, as presented at the B.C. government's Provincial Conference, October 10, 2006.
Reprinted from the Medical Post, March 2007.
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