Curing Canada's Sick Health-Care System

Robert J. Dechert, Senior Partner, Gowling Lafleur Henderson LLP, and Past President, The Empire Club of Canada; Helen He, Grade 12 Student, North Toronto Collegiate Institute; Reverend David Harrison, Incumbent, St. Thomas' Anglican Church, Brooklin; Earl A. Cherniak, QC, Partner, Lerners LLP; Valerie D. Wise, LLB, LLM, Associate, Miller Thomson LLP; Stanley H. Hartt, Chairman, Citigroup Global Markets Canada Inc.; The Hon. Wilbert Keon, Senator, The Senate of Canada; Ann Curran, Director, Corporate Relations, AIC Limited, and Past President, The Empire Club of Canada; Patrick J. Monahan, Dean, Osgoode Hall Law School, York University; Cathy Needs, Total Compensation Programs Executive, IBM; Caroline Blouin, Director, Pensions and Benefits, RBC Financial Group; and Kevin Dougherty, President, Sun Life Financial Canada.

Introduction by William Whittaker

Senator Kirby is the third speaker in our luncheon series on the future of Canadian health care, sponsored by Sun Life Financial, a leading international financial-services corporation chartered in Canada in 1865. Dr Ruth Collins-Nakai, President of the Canadian Medical Association and George Smitherman, Ontario's Minister of Health and Long-Term Care spoke to us late last year and invitations have been extended to others to participate in this series.

Canada's man of letters, John Robert Colombo, wrote the following tongue-in-cheek description of Canada in his 1965 essay entitled "O, Canada."

"Canada could have enjoyed:
English government,
French culture,
and American know-how.
Instead it ended up with:
English know-how,
French government,
and American culture."

How apt an analogy to describe our well intentional publicly funded Canadian health-care system today with the great gap between its original concept and the present reality of waiting times and the non-uniform delivery of publicly funded medical services and drug programs among the provinces. Mr. Colombo's views regarding American culture echo Canadians' concerns about Canada moving toward the American model of private health-care delivery.

We are told that social programs such as medicare are now part of our identity. David Frum's counterpart to this view is succinctly set out in his October 12, 2000 column in the National Post.

"Social programs are all very well, in moderation. But they hardly constitute a national identity. Medicare did not climb the cliff to the Plains of Abraham in General Wolf's knapsack. We copied it from Britain three years after we imported the twist."

However, Premier McGuinty, in his May 2004 health-policy speech to a joint meeting of the Empire Club and the Canadian Club, stated succinctly that Ontarians support a universal publicly funded system of health care "anytime they are asked in a poll or at the polling booth." The debate for Ontarians, he said, is how to improve the delivery of publicly funded health care.

For the past few years, health policy, given the polarity of these philosophical viewpoints, has become the most fertile aspect of public-policy debate in Canada, with the question of sustainability being paramount both from a financial and demographic viewpoint. The status quo defence is set out in Roy Romanow's 2004 report entitled "Building on Values--The Future of Health Care in Canada." The question of financial sustainability has been trumpeted by the Fraser Institute among others, their most recent missive in this regard being their November, 2005, study measuring the sustainability of provincial public-health expenditures in Canada. In October 2002, Senator Kirby's Standing Senate Committee on Social Affairs, Science and Technology published its report entitled "Recommendations for Reform" concerning the long-term financial sustainability of health care.

There is now a new player involved in the Canadian health-care debate--the courts--and in particular, the Supreme Court's recent judgment in Chaoulli v. the Attorney General for Quebec. The Chaoulli decision is based on the Canadian and Quebec Charter of Rights and it is ironic today that our speaker has had a dual involvement in this case. We all know that Senator Kirby and his fellow committee senators were interveners in Chaoulli and all four of their lawyers grace our head table today--Messrs. Cherniak and Hartt, Dean Monahan and Ms. Wise. These lawyers are to be commended for working pro bono on this case, which involved much preparation time.

What is not as well known is that Senator Kirby was also involved in the 1982 repatriation of Canada's Constitution and the incorporation therein of our Charter of Rights. Indeed in that famous picture of the Queen and Prime Minister Trudeau signing the Constitution Act of 1982 in front of the Centre Block, our speaker is the individual holding down the papers while they were being signed on that very windy day!

Michael Kirby's first federal government appointment was as Assistant Principal Secretary to Prime Minister Trudeau from 1974 to 1976. In 1980, Mr. Kirby, as he then was, was appointed Secretary to the Cabinet for Federal-Provincial Relations where he was the senior bureaucrat responsible for the constitutional negotiations which led to the 1982 patriation of our Constitution. In early 1982, Michael Kirby took on the additional role of Chairman of the newly created Task Force on Atlantic Fisheries whose report laid the basis for a new fisheries policy--one which continues largely intact today.

Senator Kirby, who was appointed to the Senate in 1984, is the present Chairman of the Standing Committee on Social Affairs, Science and Technology. From 1994 to 1999, he was Chairman of the Standing Senate Committee on Banking, Trade and Commence.

Senator Kirby is currently a member of the Board of Directors of the Bank of Nova Scotia, Extendicare, Ontario Energy Saving Corporation, Indigo and C.P.I. Plastics. He is also Vice-Chair of the Accounting Standards Oversight Council of the Canadian Institute of Chartered Accountants.

Please join me in welcoming Senator Michael Kirby, Chair of the Senate's Standing Committee on Social Affairs, Science and Technology to our podium today.

Michael Kirby

I thought this would be a tough audience, so I brought my team of lawyers--and a cardiac surgeon too!

This is the first time I have had the pleasure of addressing the Empire Club, although my old boss Pierre Trudeau spoke here in 1972 on Canada's foreign policy, and my mentor and fellow senator, Michael Pitfield, also addressed the Empire Club in 1983. I am honoured to be following their distinguished footsteps.

Over the past five years your club has heard from a number of people on health care, ranging from St. Mike's CEO and former Ontario deputy minister of health Jeff Lozon to former federal health minister Allan Rock.

Looking through the club's record of speeches, it is interesting to see that Tommy Douglas, the father of medicare, spoke here four times, but never about health care. Clearly I am joining a most remarkable group of Canadians in speaking here today. I thank you for this opportunity.

As we saw in the recent federal election, health care and wait times remain a hot political issue. The public--and hence politicians--seem more focused than ever on the wait-times issue. Or perhaps I should say, as most Canadians would, that finally national political leaders are focused on shortening wait times.

In October 2002, the Standing Senate Committee on Social Affairs, Science and Technology, comprised of seven Liberals, four Conservatives and one independent senator, released its final report on the acute health-care system in Canada, "The Health of Canadians." That report unanimously recommended that governments adopt a health-care guarantee. This guarantee would ensure that Canadians get timely access to medically necessary health services.

Twenty months later, in June 2004, essentially the same group of senators intervened in the Chaoulli case before the Supreme Court, with the help of the expert legal counsel who are at the head table with me today. One year later--almost to the day--in June 2005, the Supreme Court released its decision on the Chaoulli case. That decision was precisely what the committee had predicted it would be in its 2002 report. Indeed, the majority judgment relied heavily on the committee's report and on the factum we submitted as intervenors in the case.

More recently, during the last federal election, both the Conservatives and the Liberals included a health-care guarantee in their platforms, although they differed somewhat on its details.

Clearly the health-care guarantee is an idea whose time has come.

The health-care guarantee is a simple concept, but one with far-reaching implications. The concept is that health-care professionals would set evidence-based maximum wait times for various procedures. Once this maximum wait time had been reached, a patient would be entitled to immediate care, paid for out of public funds, even if that care had to be provided in another province or in another country.

I stress that the committee defined timely in a very precise way. Timely access is an evidence-based point in time at which a patient's health begins to deteriorate significantly if treatment is not received. Thus, it is not a subjective standard determined by a patient's anxiety.

The rationale for the health-care guarantee is that since, under medicare, governments have assumed responsibility for being the monopoly supplier of an essential service--health care--then governments have an obligation to meet reasonable service standards. The maximum wait times define the required service standard.

The health-care guarantee has come to the forefront of political and public-policy debate, not only because it resonates so strongly with Canadians, but also because of the Supreme Court decision in the Chaoulli case.

In the Chaoulli decision, the Supreme Court concluded, as did the Senate Committee, that--contrary to popular belief--Canadians do not have a Charter right of access, timely or not, to medically necessary care. But Canadians do have a right to not be prevented from solving the access problem on their own, if the medicare system does not provide them with timely care.

That is, the Supreme Court and the Senate Committee both said that if governments cannot meet reasonable service standards, then they cannot block access to a health-care system. They must allow the patient to pay for the service using his or her own money, or to have the service paid for out of an insurance policy whose premiums had been paid by the patient or by an employer.

Thus government cannot prevent you from accessing care outside the publicly funded system when timely access to care in the public system is not available, since the failure to provide timely access violates a patient's section seven rights--the right to life, liberty and security of the person--under the Charter. This was the argument that we made as interveners in the Chaoulli case, and which was supported by the Supreme Court.

In the past couple of years, health appeals tribunals in both Quebec and Ontario have also ruled on the timely access issue. These appeal tribunals made the only decision they could make which was consistent with their mandate: they forced governments to pay the cost of the patient getting the service in another province or another country. That is, they adopted precisely the same remedy that the Senate Committee proposed with its care guarantee. Unfortunately the remedy, when it was granted by the appeals tribunals in Quebec and Ontario, came long after the patient had paid for the service out of his or her own pocket and received the service in another country.

The recent Ontario case of plaintiff Adolpho Flora in Ontario is, however, quite different. Mr. Flora personally paid the cost of a lifesaving liver transplant in Britain. Flora received a live donor transplant from his brother in January 2000. At that time, Ontario had no program for performing live liver transplants between adults. Thus, receiving the treatment in Ontario was not an option. In 2002, the Ontario Health Services Appeals Review Board ruled that the Ontario government did not have to reimburse Mr. Flora. This case is now before the Ontario divisional court.

This case is quite different from the Chaoulli case. Mr. Flora is trying to establish that he has a right to a particular medical procedure even though that procedure was not available in Ontario at the time that his treatment was undertaken in Britain. Clearly the Appeals Review Board is correct. Governments are not required to pay for a service, which is still at the experimental stage in Canada.

Dr. Chaoulli, on the other hand, was trying to establish the right to pay personally, or through insurance, for a service, which is available in Canada but not provided to a patient in a timely manner. The Supreme Court said that he had that right.

Even though technically legally the Chaoulli decision only applies in Quebec, the practical political reality is that it applies everywhere in Canada. Canadians abhor a two-tier health-care system. Nothing would be more two-tier than allowing Quebeckers to buy insurance and denying residents of other provinces this same right. To do so would be politically impossible.

It is worthwhile reflecting upon the reaction some people have had to the Supreme Court decision in the Chaoulli case. Many on the political left, who usually cheer the court's decision with respect to protecting individual rights, have sharply criticized the court in this case. Indeed, they have called the Chaoulli decision the decision of an "activist court."

What does "activist court" mean? It simply means that they strongly disagree with the decision.

Just as the adjective "political" attached to the word "decision" means a decision with which we disagree, so does the adjective "activist" when it is attached to the word "court."

None of us call a government decision with which we agree a "political decision." No one calls a Supreme Court decision with which they agree an "activist decision." The words political and activist are meant to be pejorative.

The fact is that the Chaoulli decision was no more "activist" than, for example, the Supreme Court decisions on same sex marriage, abortion or native rights issues. Yet people have criticized the Chaoulli decision as being an "activist decision," even though these same people supported the court's decision on these other issues.

Clearly, these critics do not understand the history of the Charter.

In 1981, when the Constitution was being negotiated, first ministers discussed at length the issue of the supremacy of Parliament and legislatures versus the supremacy of the courts. Premier Lougheed of Alberta and Premier Blakley of Saskatchewan argued strongly for the supremacy of Parliament and the legislatures. Premier Davis of Ontario and Prime Minister Trudeau argued that the rights of Canadians should not be subjected to the whims of politicians.

The compromise reached at the 1981 constitutional negotiations was to include in the Charter of Rights and Freedoms a notwithstanding clause. This clause enables Parliament or a legislature to override a court decision for a period of five years.

Those of us involved in the federal side of the 1981 constitutional negotiations believed that it would be virtually impossible politically for a government to use the notwithstanding clause. So agreeing to it was not a problem for us. History has shown we were correct: the notwithstanding clause has only been used once outside Quebec in 25 years.

The point of this brief history lesson is to show clearly that anyone who disagrees with the decision of an "activist" court should not blame judges for using the power they were consciously and deliberately given by the nation's leaders in 1981.

Moreover, the history of the Charter shows clearly that major social changes caused by government inaction--inaction because the issue is highly emotionally charged and hence politically risky--frequently requires the courts to intervene: same sex marriage, abortion and aboriginal rights are examples.

In addition, common sense says that the Supreme Court decision in the Chaoulli case was the only reasonable one the court could have made. It cannot possibly be just and reasonable in a free and democratic society that government has a right to so severely ration the supply of health-care services that a patient suffers, and perhaps even dies, waiting for access to care, while simultaneously the government denies the same patient the right to solve the problem for himself in Canada. Yet this is precisely what our current system does.

Following the Chaoulli decision, and indeed, following the recent federal election, many commentators, and Canadians in general, are asking where to from here on the health-care issue. I believe that the future will include a combination of two distinctively different strategies, plus, potentially, some much more radical changes to the system. The objective of Canada's publicly funded health-care system must be to ensure that Canadians get timely access to the quality care they need, and that those responsible for the funding and delivery of that care are held accountable for meeting that goal.

Currently, our health-care system allows governments and providers to shift the consequences of excessive wait times onto the backs of patients. Sadly, at present, doing so costs governments and providers nothing.

The bite of the health-care guarantee lies in the requirement that governments pay for treatment wherever it is available, including outside the country, should the maximum wait time be exceeded. Governments must incur a penalty--the cost of sending a patient for treatment in another jurisdiction--for their excessively tight rationing of the supply of health-care services in order to deter them from continuing to download the consequences of excessive wait time onto patients.

Cost is not the only thing about the health-care guarantee which government will want to avoid. They will also want to avoid the inconvenience, and added stress, to patients and their families, which will be caused by travelling to another jurisdiction.

Therefore, some form of a health-care guarantee will be one of the strategies governments will adopt.

The second strategy will necessitate major changes in the delivery of health care in Canada. The hospital monopoly on service delivery will have to end. There has to be a substantial increase in the number of specialized clinics; most notably in fields such as orthopedics, imaging and ophthalmology. All of these procedures will increasingly be done in clinics, which are much more efficient, and hence less expensive then a full service hospital.

In many cases these clinics will be privately owned, as are virtually all doctors' offices. And, also like doctors' offices, the services provided at these private clinics will be paid for out of public funds.

As part of the changes in service delivery, the funding structure for health care will also have to change dramatically. There is a strong need to move towards service-based funding (marginal cost pricing), particularly for elective procedures for which wait times are the longest: hip and knee replacements, cataract surgery and so on. Service-based funding will require hospitals and clinics to bid competitively against each other to provide the required number of operations.

This combination of service-based funding and competitive bidding will cause some hospitals to lose revenue and some providers to lose income. However, it will make the system much more efficient, help to significantly reduce wait times and provide a strong incentive for scarce providers to restructure the delivery system.

As an illustration of the point I am making about the need to change the way health-care services are delivered, consider the results of a recent pilot project in Alberta.

The Alberta project was targeted at reducing wait times for hip and knee replacements--elective operations for which there is a very long wait list in every province.

The government of Alberta dedicated $20 million to the pilot project. The project included opening up central assessment clinics. The advantage of setting up the central assessment clinics is that a patient could avoid the wait list to see a specialist, then the wait list to get an MRI, before joining the orthopedic surgeon's wait list to get the actual surgery.

A second major advantage of a central assessment clinic, combined with a region-wide wait list, is that it ensures that the most urgent cases get treated first. This does not happen when individual doctors control their own wait list.

The pilot project also dedicated specific operating rooms to hip and knee replacements. This reduced prep times and ensured that all the operating room staff, including nurses, became specialized and hence more efficient in their work.

The use of specialized service facilities (or production lines) has long been used in the business world to reduce service or production costs. The Alberta example clearly illustrates that the same principles should be adopted by the health-care system.

The only change required by patients is that they agreed to be operated on by whichever member of the team of orthopedic surgeons was available.

In an interim report released in December, it was found that the wait time for these hip and knee operations went from 82 weeks under the old system to 10.7 weeks currently; a reduction of 86 per cent!

Surgeries were done in public hospitals in Edmonton and Red Deer, while in Calgary they were done in private clinics. Both were found to be equally efficient in terms of cutting wait time. Both were found to provide equal quality of outcomes. And both were paid out of public funds.

The committee was not surprised by this result. We argued in our report that health-care services should be provided by the most efficient service provider, no matter what their ownership structure was. The committee does not care if the service facility is public or privately owned. It is quality and timeliness of service, combined with efficient service delivery, which we believe should determine who provides a health-care service.

The process used in the Alberta pilot project is precisely the same process which the Ontario Cardiac Care Network has been using successfully for more than a decade. It is the principal reason that wait times for cardiac treatment are no longer an issue in Ontario, as they were in the early 1990s, before the Cardiac Care Network was created.

Note that the success of both the Ontario and Alberta examples depends critically on specialists giving up control over their individual patient wait lists, and all patients being assessed using the same numerically based assessment criteria. Greater efficiency and greater fairness to patients is the result of such a process.

Now that local health integration networks (LHINs) have been established in Ontario, the question becomes: are specialists in this province prepared to give up control over their individual wait lists? Are they also prepared to support a region-wide assessment system in order to ensure that the most urgent patients get treated first?

Cardiac surgeons in Ontario enthusiastically answered yes to these questions more than a decade ago. It is high time that other specialists did the same!

Moreover, if other specialists are not prepared to change, government should consider overriding these objections and implement the more efficient system anyway. No single interest group should be able to block the restructuring of the health-care system.

These are but some of the changes that service providers will have to make in the very near future, if the Canadian system as we know it is to survive.

Other required changes include reducing the monopoly power of service providers, both professional and non-professional. The power of various groups to control, by way of rigid scope of practice rules, who can and cannot perform various procedures must be weakened.

This monopoly power is why, for example, the profession of nurse anesthetist does not exist in Canada, even though it exists in other major OECD countries. In those countries, nurse anesthetists have proven extremely useful in helping to alleviate the shortage of anesthetists.

A few moments ago I said that, in addition to the strategies I have just outlined, some potentially more radical changes may result from the Chaoulli decision.

The Supreme Court gave Quebec until June of this year to put in place a system which would allow an individual to buy insurance which would pay for services which are available under publicly funded medicare. The Quebec government was due to announce its new policy in December, but wisely withheld the announcement until after the federal election. While no one knows the kind of change Quebec will propose, one can envision many possibilities.

Let's take an example. Consider a system which allowed individuals to buy insurance to pay for some high-volume relatively routine services, particularly those services which currently have the longest wait times and which could be performed in specialized clinics better than in a full-service hospital. These services would be supplied by doctors, done in clinics and paid for by the insurance company.

To ensure that doctors continue to work the major part of their time in the publicly funded health-care system, a doctor could be restricted by law from taking such private-pay patients until he or she had treated a specified number of patients in the publicly funded system.

Currently, the income of specialists is capped in most provinces. (It was capped in Ontario until the most recent contract was negotiated with the Ontario Medical Association a few months ago).

Capping a specialist's income has been used across the country as a means of controlling health-care expenditures. The practical affect of capping is to ration the supply of a specialist's services.

Rationing has also been achieved by prohibiting a doctor from treating both public and private-pay patients. This would have to change in the system I am describing.

Under this system, the doctor's productivity would improve as he or she would be seeing more patients and doing more procedures. Moreover, wait times would be shorter in the publicly funded system because the insured patients, which the specialist treated, would no longer remain on the publicly funded wait list.

In addition, the human resources available to serve medicare patients would not be reduced, as all specialists would be required to work up to their capped income in the publicly funded system.

On the surface, this system appears to be appealing. But many Canadians will be strongly opposed to it because it would be the start of a parallel privately funded health-care system in Canada. That is services, which are currently publicly insured would be available to be paid for either by government or by private insurance.

In summary, the system would have the advantage of reducing wait times, and the disadvantage of creating a parallel privately funded health-care system.

In spite of this disadvantage, it is important to note that the system I have just described would be very similar to health-care systems in most of Western Europe and Australia, where both a universal publicly funded and a privately funded health-care system co-exist.

Despite what groups such as the Canadian Healthcare Coalition and the NDP argue, Canada's choice is not between the status quo or going to an American-style system. Clearly, Canada will never go the American route. But equally clearly, Canadians need to seriously consider what we can learn from health-care systems in other OECD countries--other than the United States.

I have given you this example of a radically different system, not because I necessarily support it, nor because I know that it is what Quebec will propose, but because I think that the Chaoulli decision must cause everyone involved in health care to think differently about how to structure the system. The Supreme Court has said that the unchanged status quo is no longer an option.

Resistance to change will come from a variety of corners; hospital unions, members of the medical profession and health bureaucrats will all be forced to relinquish some of the monopoly power they currently have.

But in spite of this resistance, major change is inevitable. The Supreme Court has said that excessive rationing of the supply of health-care services cannot be justified; that the health-care system must stop violating an individual's section seven rights, or else give individuals the opportunity to pay privately for their health-care services.

The Senate Committee's preferred solution is the health-care guarantee, which ensures that an individual's section seven rights are never violated.

What I have tried to illustrate today is that there are other ways of meeting the conditions set down by the Supreme Court--ways, which are similar to the health-care systems of Western Europe and Australia.

I have done so because I believe that it is absolutely essential that a full range of practical options be explored as Canada embarks upon fundamental change to its health-care system.

Canadians must not allow themselves to be intimidated by aggressive defenders of the status quo. Nor should they believe the fear mongers who say that changing the Canadian system will automatically lead to U.S.-style health care. Most importantly they must not be blinded by dogmatic devotion to the icon of the Canada Health Act.

All practical policy changes, which would satisfy the Supreme Court decision, must be unemotionally assessed.

The Chaoulli decision will not destroy Canada's publicly funded health-care system. But it will put significant pressure on hospitals, health-care workers and doctors to improve the efficiency of the service delivery system.

It will also put great pressure on those responsible for setting health-care policy to think more creatively, and to be willing to consider policies, which are outside the box defined by the Canadian Health Act. The Supreme Court has said that such policies must be considered because the government must stop violating an individual's section seven rights.

The end result, whatever it is, will be here very soon. I believe that no matter what its details are, it will lead to better health care for all Canadians.

The appreciation of the meeting was expressed by Ann Curran, Director, Corporate Relations, AIC Limited, and Past President, The Empire Club of Canada.