Sustaining a Canadian Health System
The Empire Club of Canada Addresses (Toronto, Canada), 1 Jun 2000, p. 41-51
Lozon, Jeff, Speaker
Media Type
Item Type
The importance of the issue of health care in Canada. Health-care ministers and their relationship with the federal government. The speaker's own experiences as Ontario's Deputy Minister of Health and Long-Term Care. Addressing a myth about health care. The long-term problem of how we will sustain the system, and why it is going to be such a big problem. Some facts and figures to explain the pressures that exist in the system. Technology as a major driver of the health-care system. Inflation as another driver of health care, with example. The factor of demographics. Some options for solutions. Why it is important to pay attention to these issues now. Time for the debate. A closing anecdote about John F. Kennedy.
Date of Original
1 Jun 2000
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Full Text
Jeff Lozon
President and Chief Executive Officer, St. Michael's Hospital
Chairman: Catherine Steele
President, The Empire Club of Canada

Head Table Guests

John C. Koopman, Principal, Heidrick & Struggles and Third Vice-President, The Empire Club of Canada; Reverend Douglas Kramer, St. Philips Lutheran Church, Etobicoke; Daniel Burns, Deputy Minister, Ontario Ministry of Health and Long-Term Care; Jane Cooke-Lauder, Partner, Johnstone Smith International and Member, Board of Directors, St. Michael's Hospital; Dan Sullivan, Chair, Board of Directors, St. Michael's Hospital and Deputy Chairman, Scotia Capital Inc.; Mary Catherine Lindberg, Assistant Deputy Minister, Health Services Division, Ontario Ministry of Health and Long-Term Care; Willis L. Blair, Vice-Chairman, Toronto East General Hospital Foundation and Director, The Empire Club of Canada; Maureen Quigley, President, Maureen Quigley & Associates; Dr. Jean Moss, President, Canadian Memorial Chiropractic College; and Gilbert Sharpe, Head of the Health Law Group and Partner, Cassels, Brock & Blackwell, LLP.

Introduction by Catherine Steele

It is my privilege to introduce to you now our guest speaker, Jeff Lozon, President and CEO, St. Michael's Hospital.

So much has been said about the state of Canada's health-care system and the challenges it faces that it's impossible to capture all of those thoughts in my brief introduction here today. But there are a few things that are generally accepted as truths when it comes to our health-care system.

Firstly, public opinion polls consistently show that health care is the number-one priority for Canadians.

They want a system they can rely on, get services when they need them and as close to home as possible.

Secondly, the field of health care is changing constantly thanks to new discoveries in research, new technologies and advances in treatments and drugs. While all of these advances are welcome, they can also be costly.

And thirdly, demographics related to the aging baby-boomer population means that the resources of our publicly funded healthcare system are about to experience more pressures than ever before.

In recent months, there have been many debates and much rhetoric about the future of our health-care system. Just this week, the provincial ministers of health met with the federal minister of health to discuss the need for increased federal funding for health.

Yesterday's National Post carried a story about former federal minister of health, Monique Begin, the minister responsible for introducing the Canada Health Act, and her proposal to revise and update this legislation.

And no doubt you have seen the ads on television from the Ontario government highlighting the decreasing financial contribution by the federal government to Ontario's health-care system.

People close to the health-care system like our guest speaker today and several of our head table guests would say that there is a need for the publicly funded system to change so that it can meet the needs of Canadians is a given.

The plans that follow to implement needed change may vary from province to province but one thing is clear. Changes to our health-care system requires leadership from government and political officials as well as those involved in the delivery of services, who find themselves at the centre of the action.

Our guest today can speak firsthand on the challenges and pressures of our health-care system.

Jeff Lozon has spent more than 20 years working in health-care administration. He has worked as Executive Director of the Manitoba Health Organizations Inc. as well as President and Chief Executive Officer of the Glenrose Rehabilitation Hospital in Edmonton.

In 1992, Jeff took on the role as President and CEO of St. Michael's Hospital here in Toronto and is credited with leading the hospital, which had a $63-million debt-load, through a remarkable financial, organisational and strategic turnaround.

From March 1999 to March 2000, Jeff was appointed Deputy Minister of Health and Long-Term Care for Ontario. As the province's most senior health-care administrator, his mandate was to manage the budget of more than $21 billion, ensure delivery of health-care services to more than 10 million Ontarians and lead the Ontario health system through a period of unprecedented change.

Jeff is also President of the Canadian Association of Accredited Health-care Organizations, President of the St. Michael's Hospital Foundation, Chair of the Toronto Academic Sciences Council and Associate Professor with the Department of Health Administration at the University of Toronto. He is also a member of the Board of Directors for Canada's Top 40 under 40.

Ladies and gentlemen, please welcome Jeff Lozon to The Empire Club of Canada.

Jeff Lozon

The other morning I was eating breakfast and reading the paper and I came across the following quote: ""Frankly, this issue is so important that we feel that we have no choice but to make it our number-one issue. And I think it is recognised by most Canadians that it is probably the single most important issue we must resolve as a nation.""

Who was the speaker, and what was the issue? Was it the economy, international competitiveness, our tax burden, the environment or traffic jams on the way to cottage country?

The speaker was talking about sustaining the healthcare system and the speaker was David Chomiak, the Minister of Health for the Province of Manitoba. He was speaking on behalf of his fellow health ministers following a meeting of provincial and territorial health ministers in Quebec this week.

They promised to put health care in the forefront of the agenda of the next federal election campaign--which might not be that far away. They were putting Ottawa on notice that the feds either increase health-care funding or deal with the consequences.

Now, that's a pretty strong stance. Is it just political posturing? Is it a lot of rhetoric? Are the health-care ministers trying to make themselves more important than they really are? Or do they know something that we don't? I think they know something that we don't. I think they understand the seriousness of our health-care problem.

This statement by the provincial health ministers is only the latest of a number of signals that have been made by many across this country about the need for us to have a dialogue on where our health-care system is going.

I recently spent a year as Ontario's Deputy Minister of Health and Long-Term Care. Some would say after only a year what credibility does that give him? Well, in an environment where ministers of health normally have 11 months' tenure and deputy ministers of health have an average 14-month tenure, I'm a fairly experienced public servant. In the time we have together today, I want to talk to you a little bit about the stresses and strains in the system that I have seen, and some high-level directions that we might pursue. But most of all I want to sensitise you to the importance of the debate and the fact that we have to consider some very fundamental and profound changes in our health-care directions.

Let me begin by addressing a myth. It goes something like this: ""If we simply organised our health-care system better, the problems would go away."" That's palpably absurd. Yes, in a $90-billion health-care system, there are efficiencies to be made and maybe they would save us a lot of money. But that alone certainly will not address all the problems.

Besides, every province in the country has attempted efficiencies and has been through a lot of health-care reform: closing hospitals, expanding long-term care, developing regional structures, dealing differently with their doctors' fee structures, and addressing nursing shortages. And still the long-term problems persist.

The long-term problem is: ""How will we sustain the system?"" Not just for the foreseeable future, not just between now and the next federal or provincial election, but over the long term.

This is not a crisis that we will ever see on the front pages of the national dailies. But it is a serious problem, and there are enormous opportunities open to us, if we work at it together. If we don't work at it now-if we procrastinate to the point of crisis-those opportunities are going to dwindle.

Why is sustaining health care going to be such a big problem? Let's think about it. We live in a society where you can get a pizza ordered and delivered in 30 minutes and where the world's fastest mode of communication, the Internet, is not fast enough using telephone lines. We have to have cable access so we can get on the Internet even faster. We live in a society where we measure how we spend our time down to the minute and our cell phone bills down to the second and where we can transact business-buy virtually anything in the world-without interacting with any other person or even leaving our homes. The baby boomers--the majority of our population--are consumers who are unaccustomed to waiting for anything. And yet, when they go to the emergency room, they will be put in a long queue. And when they want an elective procedure, say for a cardiac problem, they'll have to wait. They have to wait two, three or four months to get a hip or knee replaced. In our society, you don't have to wait for a pizza. But if you have a broken leg--take a number.

We have built a huge set of consumer expectations in our country around health care. And we have to examine those expectations. The provinces recognise the problem and some are responding. This year, in Ontario, the Ministry of Health and Long-Term Care's budget has been increased by $1.4 billion.

A $1.4-billion increase notwithstanding, there are huge pressures that still exist in the system. Let me give you some facts and figures, with apologies for my Ontario-centric figures.

• The annual cost of health care for someone under 14 years of age is $500. The annual cost for someone 65 years of age and over is $7,000.

• The annual cost for drugs for a 64-year-old is $80. For a 65-year-old, the first year of eligibility for the Ontario Drug Benefit Program, it's $500.

• Last year, for the first time ever in our country, the amount paid out for drugs for eligible individuals (under the Ontario Drug Benefits Program) was greater than the payout for physician services. I don't think that Tommy Douglas or Emmett Hall ever anticipated such a scenario.

That brings me to another major driver of the healthcare system: technology. This is becoming an incredibly important aspect of our health-care system, yet we know very little about the likely impact. We live in a remarkable time for human sciences. With human genome mapping, and with the revolutions in technology, the sky is the limit. Today, we have about 400 classes of drugs. When the human genome is fully mapped out, there will be 5,000 classes of drugs.

Think about this for a minute. This technology revolution is unprecedented in any society at any time. And you know what? We have no idea how much this is going to cost. We just don't understand the implications of this technological revolution for our health-care system. However, history shows that every advance in technology in our health-care system costs more. The normal rule in health care is that technology is never a substitute; it is always an add-on.

Let's think now about inflation as a driver of health care.

Consider that between 1975 and 1997, expenditures for health care in this country doubled. That's notwithstanding the fact that for almost the entire decade of the 90s, the amount of money spent in health care was fairly flat.

Now look ahead over a 20-year period and assume a conservative 2.5-per-cent real average growth between 2000 and 2020. We find that in 20 years' time, our healthcare expenditures will be two-and-a-half times what they are today. That is just a little bit shy of $250 billion per year. That's not a sum that's easily reversed.

And we all understand that as the provincial and federal financial pictures get better, the likelihood of health-care inflation increases.

Here's an example. Last week, in Alberta, a strike involving health-care workers lasted about 48 hours. It's my understanding that the settlement was for a 16-percent increase in wages over two years. That is an example of health-care inflation. It's an important issue for us to think about; we are coming out of a period of very flat expenditures, and expectations will be high.

Then there is another driver of health care, that I touched on earlier: demographics. In 11 years, the first of the baby boomers will reach 65. And every year after that until about 2025, boomers will be entering the high years of health-care consumption. If they live the current average life expectancy-which is 76 years for men and 81 years for women-we have 40 years of high demand for health-care services ahead of us.

But what does all this mean for us, as taxpayers? Having painted a picture of all these big drivers, what should we do about it?

Well, first of all, I feel it is important that the federal government return to the table with a substantial federal investment. You cannot take the moral high ground when your contribution is 11 cents on the dollar, or even 20 cents on the dollar. You must be part of the debate in very much more meaningful way from a financial perspective.

Beyond that, perhaps as a nation we should be thinking about spending more on health-care services. Presently we spend about 9.2 per cent of our Gross Domestic Product on health care. Maybe we should spend 10.5, 11, maybe 12 per cent. (Every percentage point, at this time, is about $9 billion.) Maybe we, as a country, think that this is so important to us, that we want to make that investment. It may require us to squeeze out other public services. It may require us to raise taxes. But it is a legitimate option for us, as a country, to pursue.

Another option would be to revise the insurance model of health-care services. For those of you who remember when it was first begun, the Ontario Health Insurance Plan started as insurance for all Ontarians against catastrophic illness and the economic ravages that could result. This has evolved into a system where we pay for everything, for everyone.

Perhaps one alternative to our current model is to redefine what it is we will pay for as a society, what we can afford to pay for as a society. We would need to make sure that the most vulnerable in our society are always protected and always covered. But maybe we should be thinking of restricting, rather than thinking of expanding, the level of service.

And then the third option, the one that no one talks about very much except in the most rhetorical terms, is to have a greater private-sector involvement in our health-care system.

Presently, about 70 per cent of the health-care system is public expenditure and 30 per cent is private. Is that the right split? Should it be 75/25? Should it be 60/40? I am not sure. But I do know that it is important for us to talk about it.

I want to be clear that I am not advocating any one of these options, but we should be thinking about them all in a very public, very thoughtful way.

This is a tough debate for our elected officials to engage in. As soon as they raise these options, as soon as they raise these spectres, the finger-pointing and the name-calling begin; people are backed into corners; and they end up concentrating on some small twist in the debate, instead of talking in a reasoned and non-political way. I would like to applaud people like Hugh Scully (president of the Canadian Medical Association) and the Conference Board of Canada and the C.D. Howe Institute for trying to advance this debate in a careful and reasoned fashion.

You could ask: ""Why do this now? Things are good; the economy is robust; federal, provincial coffers are certainly better than they ever were.""

I think we have to pursue it now because right now is when there is the most room for a debate. One of the immutable laws of change is: ""When people have the latitude to change the most, they change the least."" And the flip side of that law is: ""When people wait to change until they have to, they have the least room to make change happen.""

My experience at St. Michael's Hospital, and more recently at the Ministry of Health, was that in the face of public expectation when you have a real opportunity to engage in a constructive debate and you have the time to think about all the options, you are least inclined to do it. That's because, while the question to be addressed may be an important question, it is not an urgent question. In this instance, I think that will spell very dire consequences for our health-care system.

It took us five years at St. Michael's Hospital to get a culture growing where people were friendly to change. It took the federal and the provincial governments about five or six years to understand they can no longer continue to fund on a deficit basis.

Think about how long it will take us to deal with our most important social programme in a constructive and an open way. We must begin this discussion, and we must begin it quickly, because if we don't, our options in the future will dwindle.

What we will come up with will be something that is uniquely Canadian. We will not adapt someone else's model. We will not have a Swedish system. We will not have an American system. If you look at health-care systems across the world, they are all ethno-centric. They spring out of the values and the hearts and the minds of their individual nations.

It's time for us to have this debate. It is important for us to explore all the options in a cogent, open way, and chart our long-term future. I know it is a tall order. It is so much easier to deal with our immediate problems, than to look ahead to the long-term ones. But if we don't deal with this issue soon, we will have a very small window of opportunity to effect the kinds of changes that need to be made.

To illustrate my point, I would like to close with a little story about John F. Kennedy. When he went into the White House, he looked around the grounds and said to the gardener: ""I think we should plant a tree over there."" He suggested a particular species. The gardener said: ""I don't think you should. That tree takes forever to grow. It won't mature for at least a hundred years."" Kennedy said: ""In that case, there's no time to lose. Plant the tree this afternoon.""

Thank you, Catherine for the opportunity to address the Empire Club. Good afternoon.

The appreciation of the meeting was expressed by John C. Koopman, Principal, Heidrick & Struggles and Third Vice-President, The Empire Club of Canada.

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Sustaining a Canadian Health System

The importance of the issue of health care in Canada. Health-care ministers and their relationship with the federal government. The speaker's own experiences as Ontario's Deputy Minister of Health and Long-Term Care. Addressing a myth about health care. The long-term problem of how we will sustain the system, and why it is going to be such a big problem. Some facts and figures to explain the pressures that exist in the system. Technology as a major driver of the health-care system. Inflation as another driver of health care, with example. The factor of demographics. Some options for solutions. Why it is important to pay attention to these issues now. Time for the debate. A closing anecdote about John F. Kennedy.