Condition Critical: Restructuring Health Care

Head Table Guests

Ed Badovinac, Professor, Dept. of Telecommunications, George Brown College and a Director, The Empire Club of Canada; Dr. Diane Bridges, Director, Pastoral Care, Peel Memorial Hospital; Paul Gould, Chair, Ontario Health Providers Alliance (OHPA); Sharon Doyle, Assistant Editor, Maclean's Magazine; Ronald Goodall, FCA, Partner, Goodall & Peacock and a Past President, The Empire Club of Canada; Bob Sanders, Board Member and Treasurer, Ontario Hospital Association (OHA); Rino Stradiotto, Partner, Borden & Elliot, Head of Health Law Group and Lead Counsel for HIROC; Douglas Todgham, Vice-President, The Canadian Institute for Advanced Research, and Third Vice-President, The Empire Club of Canada; Kamini Milnes, McMaster University Student at Sunnybrook Health Science Centre; Dennis Bryant, President, MEDEC; David Pattenden, President, Ontario Medical Association; and Rob Stansfield, Senior Vice-President, Greater Toronto Commercial Banking, CIBC.

Introduction by Julie Hannaford

There is a social theory that has evolved out of the proposition that an organisation or a society can cope with only a finite amount of change. Once a society or an organisation is confronted with too many changes, the organisation or society stops responding to change. The social danger created by a society's failure to respond to change arises because a society fatigued by change becomes a passive observer, unable to respond to a crisis associated with change, or adapt to developments evolving out of change.

The best prevention against a passive society is the public forum, for it serves as a means of signalling change whether in the form of crisis or development in society, and through the preservation of debate promotes participation over observation.

Over the last year, The Empire Club of Canada has offered its podium to those leaders in the fields of telecommunications, microtechnology, banking and finance, and biotechnology. The focus of the addresses to date has been how the profound changes in each industry have required essentially a deconstruction of traditional understandings about how business is conducted and services delivered in each of these fields.

Today, David MacKinnon, as President of the Ontario Hospital Association, addresses the issues and challenges within an industry on the threshold of profound deconstruction and reconstruction.

The Health Services Restructuring Commission, established by the Ontario Legislature in April, 1996 had conferred upon it the authority to restructure hospitals in Ontario and to make recommendations to the Minister of Health on restructuring other elements of the health-services system. The Commission outlined its vision in January, 1997, and its first report and recommendations affecting Toronto was delivered on March 6, 1997. The report contemplated closures, mergers, and reorganisations, foreshadowing a dramatic, and multi-tiered reorganisation of the means and facilities of health-care services throughout Ontario. The Commission has effectively placed Ontario on notice that over the next four years, the delivery of health-care services must be reconfigured in communities.

In Ontario, the hospital has historically been defined by something greater than a building which was the repository of illness. Instead, the hospital has come to be understood as the structure that houses a health-care community, including not only patients and those who treat them, but educators, students, financial managers and organisational experts. For many, the hospital operates not only as an extension of a community but also as the symbol of the existence of community within society.

David MacKinnon addresses The Empire Club of Canada today in response to the policy and vision that has evolved for health care to date. He brings to his remarks, as President and Chief Executive Officer of the Ontario Hospital Association, more than 25 years of government and business experience in the fields of planning, business development, research, and public affairs. As President and Chief Executive Officer of the Ontario Development Corporation, David led initiatives in provincial industrial development.

David chaired the Central Agencies Task Force of the Tomorrow Project, which involved a review of the linkages between central agencies and ministries, as well as reviews of management issues in six ministries, including the Ministry of Health.

He has served on the boards of the Ontario Centre for Environmental Technology Advancement, Allelix, and the Association of Provincial Research Organizations. He has studied arts at Dalhousie, business at York, and management at Harvard, Oxford and the European Institute of Business Administration.

There are 215 public hospitals in Ontario and each of them are members of the Ontario Hospital Association. None of the Ontario Hospital Association's 215 members will be untouched by the changes that the Health Services Restructuring Commission has signalled. Few if any citizens of Ontario will be untouched by the changes in the way health-care services are delivered in the next 10 to 20 years.

We are therefore privileged to have David MacKinnon as the representative of Ontario's hospitals offer the benefit of his experience and understanding of the business of health-care delivery to our audience today. The Health Services Restructuring Commission has provided Ontario with a vision for health care in the 21st century. David MacKinnon has a response to that vision.

Please welcome David MacKinnon to The Empire Club of Canada today.

David MacKinnon

I joined the Ontario Hospital Association almost a year ago--a newcomer to health care. I have spent a portion of the intervening months visiting 34 of the 215 public hospitals in Ontario.

This learning experience was wonderful.

• I talked to support staff.
• I reviewed the issues with hospital managers.
• I talked to many patients.
• I have watched a hip replacement.
• I accompanied emergency-room physicians on their shifts.
• I talked with individual groups of doctors about their concerns.
• I've met with many Boards and their volunteer trustees.
• I talked to hospital auxiliaries.
• I have had numerous informative meetings with other health partners and learned much from their perspectives and opinions.

Finally, of course, I have enjoyed a number of discussions with the Minister of Health and have had frequent consultations with his Deputy. I am grateful to all of these people for their help and assistance.

Today I will talk about several things. I will first paint a picture of our hospital system--a picture that has been shaped by my encounters in the course of those visits. Second, I will describe the consequences of current government policies relating to hospitals and health care as they are felt by those who work in the hospital system. Third, I will address some of the problems that appear to be associated with how those policies are developed. Finally, I will make some suggestions about how, by changing direction, we can evoke the best from the system and reduce the level of public concern about health issues.

First, what do we have in our hospital system? We have a system which, measured in outcomes by the nationally recognised Accreditation Council, is excellent. We also have quite a remarkable talent base. From everything I have seen, the management and skill base in Ontario hospitals and the health-care system generally is unique in our public sector--and I have seen a fair bit of the public sector in my previous career.

There is no question that there are problems. In hospitals, we haven't done nearly enough system thinking or system decision making. The teamwork that works so well with physicians, nurses, other health-care professionals and managers on the front lines is deficient with respect to the overall system. The linkages between hospitals and other providers of health care are strong in some areas, weak in others. But these relationships are improving rapidly as a result of a recently formed alliance of 19 major health-provider organisations in the province.

Ontario hospitals have made major progress over the past 10 years. They have accommodated vast clinical and technological change and, with the co-operation of other providers, have emerged as broadly structured health enterprises. Many of them now offer a very wide range of services and programmes that extend far beyond the traditional acute, chronic-care and rehabilitation services.

For most citizens of Ontario our health-care system works well. The fact that 13 million visits to hospitals are made each year confirms that hospitals are, for most people, the retail front end of the health system and people make a conscious choice to use it. This is one of the key strengths of the system. Let's build on this strength. But let's continue to make it better.

Notwithstanding the successes they have achieved in recent years, many people on the front line delivering care are deeply troubled on several fronts.

Many of them feel that they are being unfairly maligned by the government. For many months, government ministers have been characterising hospitals as being top heavy in terms of facilities, management and general administration. The Ontario Hospital Association has been arguing about that, as you might expect. In very general terms the excess capacity Mike Harris points to on his TV commercials is the result of the success of hospitals in doing more with less. This is a success we should celebrate.

Management levels in hospitals have been dramatically reduced over the past decade and our overall cost performance is consistent with other Canadian provinces and comparable, in broad terms, with leading U.S. health-management organisations.

After careful study, including figures which we have shared with government ministers, I can safely say that nearly everything that the government has said about the administrative costs of hospitals and their excessive layers of management is wrong. It is based on out-dated knowledge or very misleading statistics, or both, and this kind of labelling must stop. It helps nobody.

On a broader issue, people in hospitals are worried about the current restructuring process because they know, as does nearly everyone else, that budget cuts should follow from the efforts of the Health Services Restructuring Commission and not precede them. At every level, from support staff to Board Chairs, they know the present process can't work. I am pleased to see recent strong indications that the government has come to understand that point of view. We are also encouraged that the Minister has decided to re-examine the approach in rural and remote areas so that this sequencing problem can be avoided in smaller communities.

At an even more fundamental level, hospital people are worried because they see large transfers of funds from hospitals to other programmes and providers without detailed analysis or evidence about who does what best, or whether the result will be improved service for consumers.

The government intends to take money from hospitals and transfer it to other organisations to provide home care and other kinds of care outside hospitals. All hospital leaders believe--most of them emphatically--that health services should be provided by those best equipped to perform them, at the best price and quality. But we do not see the evidence on which these decisions are based. Without that evidence, making the transfers is unwise.

Even those who support the substance and scale of the transfers have genuine concerns about the lack of planning associated with them. There is no plan to relate the pace of transfers of funds from hospitals to other parts of the system to the actual readiness of other providers to manage them. By readiness, I mean having in place the information systems, management structures, cost-control procedures, human resources and quality assurance mechanisms that are needed.

This mismatch in terms of planning spells serious problems for patients and jeopardises the overall stability and sustainability of the health system. All the problems we have seen in Ontario health care in the past two years could be but a prelude of what is to come if the desirability, scale and practicality issues associated with these transfers are not addressed immediately.

How did we get here? And how did these problems originate? The first problem stems from failure to collect evidence before setting policy. We have reviewed the evidence behind the decision to redirect two thirds of the funds being cut from hospitals to other providers. There is a consensus among those who have studied this matter in detail that no overall conclusion can yet be reached about who does provide the best in quality, price and appropriateness of care. More specific information and research is needed to ensure governments and policy advisers promote sound policy rather than ideology.

A second reason for the difficulties we face is that the government is proceeding with policy directions even when those implementing that policy may know it to be wrong. The Ontario government, for example, has long been aware of the risks of across-the-board cuts--indeed the present Minister of Health repeatedly warned against it--but essentially across-the-board cuts have been made last year and this year anyway, in spite of the fact that we and the government know it can't be done without affecting quality of care and access to care.

A third systemic problem relates to the quality of overall planning for health care. In the last three months three separate and different visions prepared by different organisations within the health-care system have been dropped on my desk with a thud. Some, including the recently released Health Services Restructuring Commission's Vision paper, do not contain significant evidence relating to any of the fundamental issues driving health care. Nevertheless the vision proceeded directly to a series of organisational recommendations for the structure of the industry. We think form should follow function and not the reverse.

A final reason for the problems we face is a propensity to manage big issues of health and well-being using rigid, mechanical formulas.

The world of commerce, while it uses all those techniques for decision making, never relies exclusively on them. Human behaviour is too complex for that. Every mathematical template for health must reflect local conditions, including socio-economic factors and demographics. We must also be prepared for the imponderables of the future, chance occurrences and many other variables.

In summary, we have a system grounded in quality, but with fundamental problems. The question today really is: "Where do we go from here?"

This is a question that cannot easily be answered. But two comments in the weekend press support our position that there are alternative approaches to health planning. Columnist Terence Corcoran of the Globe and Mail wrote last weekend about how restricted the analysis of the Health Services Restructuring Commission is, and how unrealistic the result would be if the same techniques were applied to private industry.

Another relevant comment comes from Monique Jerome Forget, President of the Institute for Research of Public Policy. Commenting upon the recently released report of the National Forum on Health she discusses the myths that currently drive health-care reform in Canada. One of the myths she describes is that provincial health authorities are capable of micro-managing the health-care delivery system to the satisfaction of patients and providers. Policy makers, she says, must transcend this dogma, or we will lose any opportunity for meaningful health-care reform.

If one accepts the views of these commentators--and others like them--where might we go in terms of the future of hospital policy and health-care policy generally? There is another way!

We can build on the consumer relationships which already exist. We can encourage hospitals to continue their evolution into broadly structured health enterprises because that is what customers are demanding. Hospitals can then build on existing relationships with other providers in the communities and with the consumer base. In this way, capital and physical plant can be redirected within existing institutional boundaries. The result will be a much more incremental and far less destructive process than the present one of reallocating budgets among separate and distinct "silos" within the system.

Other health providers including physicians will then take the same approach. They may form joint ventures and partnerships with hospitals and community groups to become more broadly structured health enterprises and they should be encouraged to do so. Hospitals will support them in their efforts.

We might go even further. These new health enterprises can become the cornerstone of integrated health systems with funding based upon the population served rather than the provider. This is about the only goal on which all serious students of our system seem to be agreed.

We might, to take this logic a further step forward, develop a competitive process to encourage providers of all types to build their partnerships and to come forward with proposals for new integrated health enterprises. The goal would be to adopt as much as possible from the private sector, while remaining within the limits of the Canada Health Act.

Government could help significantly by developing legislation and policy and processes which encourage proposals of this kind, while ensuring proper public accountability for these new health enterprises.

We believe this practical approach is preferable to asking the Health Services Restructuring Commission or District Health Councils or any other government agencies to present visions and recommendations on the overall shape of health services in Ontario. Why? It's very simple. Because, even with consultation and the best intentions in the world, no one individual or group of individuals is smart enough to do it.

Let me explain!

No one body is smart enough to produce a dynamic vision for the Ontario health-care system, because we cannot today adequately interpret the rapid changes in technology, finance, human skills and consumer preference into a detailed vision of how the system should function.

The government of Ontario has a huge opportunity before it if it transcends the urge to "vision" and micromanage. Its alternative course is to let health policies evolve based on present capabilities and consumer patterns and to accelerate that evolution through appropriate and flexible process. The inevitable results will be both better service and lower cost. A change of this kind might have the very beneficial effect of turning down the thermostat of public concern.

At present, the Ontario government is busy making many re-investments of some of the money taken out of hospital budgets and it makes an announcement a day. It is a process of reactive micro-management. Everyone can see that there is no game plan. Brush fires break out everywhere. If I could sum it up in one sentence it is: If you micro-manage the decisions, you attract all the risk and generate much controversy. If there is one message I'd like to leave with the government, it is this one, and I hope you don't mind if I repeat it: Micro-managing the decisions is the surest way of wearing all the risk and ensuring a continuing higher level of public controversy.

In summary, we have a hospital system in Ontario that is delivering quality outcomes; one that has demonstrated this by its performance, its flexibility and adaptability; and one that has put the province in a good position to realise savings.

However, hospital people are still concerned, because government is making decisions that are not evidence-based and not consumer-focussed. We have now an exciting opportunity to do things better by applying approaches drawn from the private sector to the management of the system. Inventing new bureaucracies, conjuring up new visions or insisting on micro-managing--all prominent features of the Ontario health landscape today--must be discarded. They belong in the past.

By taking the pathway I have just outlined we can deliver better quality health care at an affordable cost. A very big win is possible in Ontario health care, if the government starts to push decisions down into the system. Its basic role then would be evocative--to draw the best ideas from all providers and build a new system based on the strengths of the system that now exist and on lessons we can learn from the industrial economy around us.

Thank you.

The appreciation of the meeting was expressed by Ronald Goodall, FCA, Partner, Goodall & Peacock and a Past President, The Empire Club of Canada.