Cost Containment Policies: Select Policy Developments in Canada
Academy Health
13 June 2011
Adalsteinn D. Brown
Ontario has had success – but also significant consequences – from supply side
controls on health spending
$ per capita government expenditure on health, Ontario
$4,000
Health Services Restructuring Commission
begins hospital bed closures and restructuring
Government announces 18% reduction
on hospital funding over 3 years
$3,500
Caps and clawbacks on
physician compensation
$3,000
Social Contract
$2,500
Barer-Stoddart report – reductions
to medical school spaces
Recession begins
$2,000
Steeper rate
of growth than
pre-recession
$1,500
$1,000
$500
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008f
2009f
$-
2
Source: Canadian Institute for Health Information
Despite substantial reductions in capacity, substantial evidence suggests that
some care remains both wasteful and poor quality
•
•
•
•
•
Avoidable hospitalization
– 40,000 ambulatory care sensitive admissions per year; 3x variation across regions
Avoidable re-hospitalization
– 140,000 cases of unplanned 30-day readmissions to hospital per year despite strong
evidence for improvement
Unnecessary surgeries
– Hysterectomies – as much as 24% might be unnecessary; 3x variation across regions
– Prostatectomies – as much as 27% might be unnecessary; 4x variation across regions
Unnecessary diagnostic tests
– Cataract surgeries: 35% receive unnecessary ECGs; 8x variation across regions
– Vitamin D tests – 75-fold increase in tests ordered between 2004 and 2009 (30,000 to
730,000); testing not warranted in average risk population (OHTAC)
Cost variation
– 60% variation in cost per patient episode across large community hospitals
– 50% variation in cost per patient episode across teaching hospitals
Source: OHTQAC and MOHLTC analysis (2009 data)
…presenting significant opportunities to reduce cost and improve the patient
experience
2007/08Cost of Readmission, byType(excl physiciancost)
$40,000,000
$35,000,000
CHF
$30,000,000
$25,000,000
COPD
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$-
Top 10% of readmission types responsible for 60% of cost = $415M
Top 20% of readmission types responsible for 80% of cost = $536M
All readmissions = $705M [upper end costs and excluding physician fee component]
– Providing patients with written discharge instructions has been shown to decrease readmission,
particularly in CHF
– Sault Ste Marie Group Health Centre demonstrated that sustained reduction of CHF readmission of
over 40% is possible through targeted quality improvement efforts
– Enhanced Feedback for Effective Cardiac Treatment (EFFECT) demonstrated that public report
cards on hospital performance can be an effective method for improving the quality of cardiac care4
We know that adoption of evidence has had a significant effect on enhancing
quality through reducing clinical variation in Ontario
OHTAC Recommendations (FY 2005):
 Arthroscopic debridement of the knee has thus far only
been found to be effective for medial compartmental
osteoarthritis. All other indications should be reviewed
with a view to reducing the use of arthroscopic
debridement as an effective therapy
 Arthroscopic lavage of the knee alone is not
recommended for any stage of osteoarthritis
1000
800
600
OHTAC
recommendation
400
200
0
2003
2004
2005
2006
2007
2008
5
… and has had a substantial impact on the projected costs of care
400.0 M
350.0 M
300.0 M
250.0 M
With EBA
200.0 M
Without EBA
150.0 M
100.0 M
50.0 M
0.0 M
Bariatric Surgery
DES
EVAR
PET
PSA
Total
Assumptions:
Bariatric Surgery: 2008 EBA; Based on volumes from the current provincial program in Ontario; Assumed with EBA some bariatric procedures will be in Ontario and some out of country; w/o EBA all bariatric procedures will be out of country. DES: 2003 EBA; Based on predicted volumes from a field evaluation in Ontario; Assumed with EBA only high‐risk patients will receive DES in Ontario; w/o EBA all patients will receive DES as per American experience.
EVAR: 2008 EBA; Based on predicted volumes from a field evaluation in Ontario; Assumed with EBA only high‐risk patients will receive EVAR in Ontario; w/o EBA all patients will receive EVAR as per American experience.
PET: 2005 EBA; Based on incidence/prevalence of disease; Assumed with EBA based only insured services and limited un‐insured through clinical trials will received PET scans in Ontario; w/o EBA all cancer cases and cardiac cases will receive PET scans.
PSA: 2007 EBA; Based on population screening in Ontario; Assumed w/o EBA all males aged 50‐74 would be screened in Ontario.
Source: OHTAC Analysis
As part of a major set of reforms that included substantial controls on generic
drugs costs, prescribing fees, and other controls on drug expenditures, Ontario
passed a law to improve the value (quality/cost) of care
•
•
•
The Excellent Care for All Act (2010)
defines quality and makes boards of
hospitals and other health care
organizations responsible for quality
The Act requires the collection of data
on safety, satisfaction, and workplace
in addition to current data collection
on effectiveness, efficiency, and
access.
The Act identifies our Quality Council
as responsible for communicating
best practices to providers and
recommending funding for best
practices to government
Ministry sets quality targets for
LHINs
LHINs (regions) set targets for
hospitals
Hospital Boards establish Quality
Committees
Quality Committees release public
improvement plans with targets
Boards compensate executives
based on achievement of targets
However, the system of hospital financing needed substantial updating as well
given a continuing heavy (and unsuccessful) reliance on global budgeting
•
•
Early implementation of DRG based system linked to efficiency pay-off; higher
casemix per cost ratio = higher bonus
– 20% of all hypoalbuminemia cases in Canada show up in one Ontario hospital
as a post-admission comorbidity
– Case costing system participation declines; MOH pays for data submission
DRG based adjustment of global budget withdrawn and replaced with incremental
volumes of care purchased at different institutions
– Single price model followed by selective contracting based on price per case
– Pay for cost data stopped and replaced by one time support for increase in use
Hospital global budgeting
system introduced in
Ontario
81969
Transitional Funding
introduced
1988
JPPC
established
1992
IPBA used to IPBA used to
allocate $93M in allocate $240M in HBAM
hospital funding hospital funding developed
2001
2004
2007
Ontario’s patient-based payment approach will draw from over 25 years of
international funding policy evolution that begins to link quality and cost
Australia: 3% reduction in adverse events among complex
patients
Germany
England: Introduction of ‘Best Practice Tariffs’ based on costs of
clinical best practice treatment for a patient condition
2004
France
2003
England
United States: Associated with decreases in mortality; nonpayment policies for never events
2000
1998
1997
1995
1993
1992
1983
Patient-based Payment Adoption Timeline
2005
Denmark
Norway: 40% reduction in wait times over 2 years
Japan
Finland
Denmark: 17% reduction in wait times one year after
implementation
Norway
Spain
Ontario (Wait Time Strategy): Reduced 90th percentile wait
times for hip replacement from 351 to 153 days, knee
replacement from 440 to 184 days
An emerging
focus on quality
and evidencebased care
Improving
access and
reducing wait
times
Italy
Australia
Sweden
United States: 14.1% decrease in cost per admission, 2.4%
reduction in overall system costs over 4 years; 6.7% decrease in
average LOS)
United States
Australia (Victoria): Up to 25% reduction in cost per admission
over 5 years
9 reduction in total costs
Sweden (Stockholm): 1%
Emphasis on
cost
containment
And the link between evidence, measurement, and management will be
strengthened throughout all aspects of the health system
Ontario Health Technology
Advisory Committee (OHTAC)
•
•
•
Role and Reporting
Relationship
Goals
OHTAC (2005)
Within government, advice to
senior management
Ensure technology diffusion is
consistent and evidence-based
OHTAC (2010)
Within Health Quality Ontario, best Ensure that financial incentives
practice advice to field, funding
support quality
advice to government
OHTAC (201?)
Independent entity to review
effectiveness of pre-market
innovations
Ensure that economic
development opportunities are
realized in Ontario
The evolution of the Ontario Health Technology Advisory Committee to a larger and larger scope of
practice underlies the need for a tight connection between evidence, measurement, and management.
At the same time, the Excellent Care for All Act ensures that hospitals link measurement, evidence, and
improvement with clear incentives for improvement
Changes in funding re-enforce the importance of evidence and improvement
Building on this notion, Quebec has taken a broader economic approach to cost
control in the health care system and has explored changes in revenue
Long-term cost to Québec’s real GDP of each $1-billion
increase in taxes and user fees
(billions of dollars)
Source :
Advisory Committee on the Economy and Public Finances, Québec and its challenges, Document 2,
Possible solutions: spend more effectively and better fund our public services, January 2010.
11
And has developed a framework to help guide decision-making about who
should pay for different services
Agencies responsible
of products and services
Choice of
funding method
Users fees
Taxes
Source of
funding
0%
User fees
-
+
100%
+
Types of public
goods and
services
100%
Taxes
0%
-
Public goods
Mixed goods
Private goods
Justice
Security
Heath
Education
Mass transit
Automobile insurance
Electricity
Ferry service
Source : Ministère des Finances, Assurer la qualité et le financement des services publics, budget 2009-2010, page 6.
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Thank-you
Adalsteinn D. Brown
Inaugural Chair in Public Health Policy and
Scientist, Keenan Research Centre, Li Ka Shing Knowledge Institute, St. Michael’s Hospital
Dalla Lana School of Public Health
6th Floor, 155 College Street
Toronto, Ontario
M5T 3M7
facsimile
phone
Email
(416) 978-8299
(416) 946-0911
adalsteinn.brown@utoronto.ca