Bringing market forces into the hospital

I headed into the local hospital for a quick day treatment in a clinic last week.
Two doctors were waiting to see a cluster of us. But the nurse who usually worked that clinic room was on holidays, which had been scheduled for some time.
The hospital hadn't arranged a replacement nurse. One doctor decided he couldn't work without nurse support. So half the patients were sent home to be scheduled for an appointment in another month or two.
That's a good example of the kind of problem the government hopes to fix with "patient-focused funding."
It makes sense. Now, the Health Ministry sets a budget and provides funds for the health authority. The authority allocates the money to different services, including hospitals, and decides how many surgeries, for example, it can do with the cash.
So there are no consequences for cancelling treatments because someone in the hospital didn't arrange a replacement nurse. The patients still have to come back. The hospital doesn't lose any funding.
Under patient-focused funding, that changes. The government holds back more of the block funding it once sent to health authorities. Hospitals and health authorities get paid a set amount per treatment on a per-patient basis.
Under that approach, the failure to get a nurse would be costly. Those cancelled treatments would mean lost revenue. So there would be an incentive to solve the problem.
Just as there would be an incentive to do things faster and at less cost, bringing in more revenue.
A hospital might decide to set up two adjacent operating rooms to do the same procedure, for example. While one patient is being operated on, another can be prepped for surgery. As soon as they're done, the teams switch places and the process starts again.
That would mean lower costs per patient. If the government were paying a set fee, the hospital or authority would have extra money for other projects.
It could even ask hospitals to bid for right to provide hip surgeries, for example, and pick the most cost-efficient.
There are catches, of course. The most obvious is the risk that corners will be cut. The B.C. Medical Association supports the idea, but wants safeguards to make sure cheap and fast doesn't take priority over patients' health and safety.
And the incentives, so far, aren't individual. It's hard to say if the person who didn't line up a replacement nurse would be motivated to act differently by the promise that the hospital would get more money as a result.
The bigger problem is likely that there are no real rewards for success.
The government is still rationing services. So even if a hospital is brilliant at some surgery, getting better results at a much lower cost, the Health Ministry will tell it to stop when the quota is done for the year.
Everyone involved can do great work, with no real reward.
There are solutions. The government, for example, could provide guarantees to medical service plan clients. Hip surgery in six months, or we fly to you to Seattle for the operation and pick up all the bills. Hospitals would know it was worth getting really good at hip replacement, because the ministry wouldn't want to fly patients to the U.S.
The whole initiative is just getting going. The government has set up a Health Services Purchasing Organization, headed by Dr. Les Vertesi (who is also Gordon Campbell's brother-in-law) to manage the process and is looking to have a large share of health spending managed this way.
By next year, the government hopes about $170 million will be taken out of health authority budgets to be spent by the purchasing organization.
There is another issue in all this, large enough to warrant a second column. Vertesi has been a strong advocate of a allowing a private health care alternative for people who can pay more for speedier treatment. And the patient-focused funding, Health Minister Kevin Falcon, could be used to buy services from private clinics.
That's not necessarily a bad thing. But it does raise some serious questions, which I will look at in a future column.
Footnote: Falcon announced an extra $23 million in "patient-focused funding" for tests and surgeries. Up to 33,000 patients would benefit, he said. Which means the $800,000 the government spent on the pro-HST flyer it tossed in the garbage would have helped 1,150 patients on waiting lists.