ESMAIL, HILL: Alberta should embrace larger role for private health-care providers

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In recent weeks, defenders of the health-care status quo have raised concerns about the Alberta government’s health reforms, including the potential for a larger role for the private sector in the health-care system.

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Clearly, opponents of reform want to maintain the status quo and increase spending. But in fact, private providers are essential for Albertans to access the health-care system they already pay for through their taxes.

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Pricey system

And Albertans are paying dearly. Alberta’s health-care system is Canada’s second-most costly (on a per-person basis, after adjusting for age and sex), while Canada’s health-care system is the developed world’s third-most expensive universal system. Put differently, Alberta is a relatively high spending health-care province in a relatively high spending health-care country. Yet despite this high spending, wait times in Alberta are longer than the national average, while Canadians endure some of the longest waits for health care in the developed world.

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So, if we’re already spending much more than others to get much worse access to health care, more of the same won’t solve Alberta’s problems. Thankfully, it seems the provincial government finally understands this reality.

According to the Smith government, it will soon move away from the outdated lump-sum budget approach to funding hospitals, and pay hospitals for the services they actually provide. Essentially, this means money will follow patients to hospitals and surgical clinics that compete for patients. By making patients a source of revenue for hospitals, rather than a cost, this reform will help improve access to health care in Alberta. This policy has long ago been proven successful in universal health-care countries such as Germany, the Netherlands, Switzerland, Australia and many others.

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Importantly, these countries, which have more successful universal health-care systems than Canada, also embrace the private sector as a partner in delivering publicly-funded care.

In Switzerland, for instance, Swiss citizens enjoy some of the timeliest access to health care in the developed world for a similar level of spending to Canada. Nearly two-thirds of hospitals are private for-profit, providing roughly half of all hospitalizations and hospital beds in the country.

In Australia, for less money than we spend, Australians get more timely access to many more physicians, hospital beds and medical technologies than Canadians. Private hospitals deliver more than 40% of all hospital care and more than 70% of non-emergency surgical care.

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The story is the same in Germany and the Netherlands. Both countries top international rankings of timely access to care (alongside Switzerland). And in both countries, private for-profit hospitals play a significant role, comprising 43% and 64% of hospitals, respectively.

Missing opportunities

Despite what the opponents of reform say, the problem in Alberta is not the risk of privatization negatively affecting the system, but rather the risk that a misinformed opposition might discourage the provincial government from further reforms based on proven approaches that would benefit Alberta patients.

While defenders of the status quo argue that governments should increase spending while “defending the system” from the private sector, the experiences of higher-performing universal health-care countries prove the problem in Alberta is not money but rather how it’s spent, and a dearth of private-sector involvement and innovation.

Albertans already pay for a world class health-care system. But for Albertans to actually get a world-class system in return, the government must embrace a larger role for private providers and entrepreneurs in health care.

Nadeem Esmail and Tegan Hill are policy analysts at the Fraser Institute.

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