Money Alone Cannot Save Healthcare 

Change to the Canadian healthcare system can only come through innovation 

Last month, the Winnipeg Free Press ran a particularly sharp critique of Manitoba’s healthcare system, decrying provincial healthcare budgeting as “parsimony” and stating that monetary decisions made by the government since 2015 have created a healthcare crisis in Manitoba. It strongly implied that the solution is … more money. 

If only it were that simple. And if only the healthcare crisis was limited to Manitoba. 

Unfortunately, universal healthcare woes, from extended waiting periods to doctor shortages, are no strangers to Canadians. Recent data from the Canadian Institute for Health Information (CIHI) underscores the grim reality: 

According to the report:  

• about 12 percent of Canadians are without a family doctor 
• waitlists for medical procedures have soared from a median of 19.4 weeks in 2015 to a staggering 31.5 weeks in 2021  
• 743,000 fewer surgeries were performed during the first 2.5 years of Covid. 

The report also documented 18 million overtime hours in public hospitals between 2020 and 2021 – the equivalent of 9,000 full-time jobs, so, of course, healthcare workers are burning out.  

Healthcare chaos, in other words, is not a problem in any one province – it’s a Canadian problem. 

And, as Canadians have observed over and over again, pouring more money into a broken system is not a solution. Canada already has the second most expensive healthcare system in the world. Healthcare will cost the average family (of two parents and one child) about $17,000 in 2023. It’s difficult to imagine how much more of a tax burden Canadian families are willing to endure.  

So, what are some ‘systemic’ solutions that could improve Canadian healthcare?  

One idea that seems to be gaining traction is changing hospital funding from huge, black-box global budgets to activity-based funding. 

Hospitals represent the largest healthcare expenditure in Canada. With global budgets, each patient represents an expense and encourages hospitals to do what they can to reduce access and expenditures. They are also notoriously inefficient in containing costs. By contrast, under activity-based funding, each patient represents a source of income and adds to the hospital’s financial resources. Hospitals are paid based on the number of people treated and procedures performed; this has been shown to increase access to, and cost efficiency of, healthcare. 

Activity-based funding is already in place in some hospitals in Canada – but the vast majority still fall under global budgets. This is just one of many reforms suggested by a task force of emergency department physicians in Canada. Their report has been two years in the making, and the draft report is available online.  

It will be a significant contribution to the conversation about healthcare because Canada’s Emergency Departments serve as the nadir for the constellation of crises that now constitute the Canadian healthcare system. 

Emergency Departments are the first place patients go when they can’t access a family doctor. They are where hallway medicine begins as a shortage of hospital puts patients who need to be admitted on stretchers in busy hallways. They are where geriatric patients find themselves when they have chronic conditions and need the kind of care that should be provided in a long-term care situation or by a family doctor. No wonder the Emergency Department report says, “For us to survive, our entire ecosystem must change.” 

Another systemic reform that has proven successful in other countries is the “purchaser-provider split.” As the name suggests, this is a model of healthcare delivery in which the payer for the service is separated from the service providers. That doesn’t happen in Canada – under our public healthcare system, the government both pays for and provides the service. One can easily see how inefficient this can be.  

Healthcare reform is desperately needed, but our federal and provincial governments are out of money. Change can only come through innovation.  

By Susan Martinuk 

Susan Martinuk is a Senior Fellow at the Frontier Centre for Public Policy and author of Patients at Risk: Exposing Canada’s Healthcare Crisis. 

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