Consumer driven healthcare in Canada

“Single-payer systems control health care costs primarily by rationing services to the 20 percent of the people who account for 80 percent of the costs. The political calculus is cruel but irresistible: 80 percent of the people, the healthy ones, will love their system, while some of the sick, a mere 20 percent, will not” (Regina Herzlinger, 2009).[1]

The single-payer Canadian healthcare system is largely seen as a supply-side economy with an insatiable demand. System capacity is largely based upon the availability of government funds; system quality is controlled by provincial and federal government regulations; system access is determined by a combination of legislation and funding.

Nowhere in the equation do you see discussion of demand and demand-side management. I speculate that consumer demand will be the new buzz word in Canadian healthcare in 2009.

Perhaps some focus on consumer driven demand is appropriate in a marketplace that has stretched its capacity and efficiencies to the absolute extremes. We have studied, planned, implemented, tinkered, and studied some more, a plethora of ways in which to prudently manage the supply of health services. We’ve even gone so far as to expand the scope of practice of para-professionals in healthcare, most recently granting naturopaths certain privileges that were previously reserved for MDs.

However, we haven’t found even a close balance between supply and demand, and continue to see this see-saw out of balance.

In her same article, Herzlinger, a Harvard Professor in the School of Health Policy, suggests that giving control to the consumer will drive pricing, access and quality. She argues that the health care market would best be served by creating a more perfect market where funded demand is met by accessible supply, and competition will improve price, access and quality.

Applied to the Canadian scenario, what if we are to allocate to every Canadian, their share of health dollars and give them the opportunity to use them. They would have to choose their provider – based upon decision factors that they found important including location, quality, price, access and outcomes – and take their health dollars with them. Providers, including hospitals and medical professionals, would have to price their services at an effective price point so as to attract consumers. The market for services, would ultimately drive supply, price and quality. Insurance products for catastrophic illness or injury would be compulsory in some form, so as to ensure coverage.

The concept of shifting control to the demand side of the equation has another benefit – the potential for demand reduction. When the consumer is in control of the health dollars, they are also accountable for how they use them. Perhaps this accountability will expand to better efforts by consumers in health promotion and protection and ultimately, in disease prevention measures.

Alas, shifting the paradigm to demand-driven health care from the current supply system is not likely to happen in Canada in the immediate future. South of the border, this may become the reality, and will be worth watching.


[1] Herzlinger, R. “Can the United States provide health care for all?” What Matters, McKinsey & Company May 18, 2009. Found at http://whatmatters.mckinseydigital.com/health_care/can-the-united-states-provide-health-care-for-all