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Government & policy

Drummond urges health technology changes

TORONTO – Economist Don Drummond (pictured) has recommended several technology-related measures for healthcare that will be required to balance Ontario’s ballooning budget. The Drummond Commission was established by the provincial government to recommend ways of reining in spending – in particular, to figure out how to balance the books by 2018.

As the Drummond Report notes, “Action must begin very soon. The deficit is expected to be $16 billion this year. By 2017-18, it will almost double – and the debt will climb to more than half of gross domestic product – if the status quo is left in place.”

Whether the provincial government implements all or any of the suggestions is a moot point. Ontario’s finance minister, Dwight Duncan, will produce a new budget next month. So far, he has not said yea or nay to the Drummond Report’s 362 recommendations.

On the healthcare technology side, Drummond’s commission strongly urges the government to:

Centralize all back-office functions such as information technology, human resources, finance and procurement across the health system.

There is redundancy and duplication in the current system design, with hundreds of independent organizations having some level of administrative/corporate structure and back-office models that result in higher-than-necessary administrative costs. These structures could build on some of the procurement mechanisms in place now (e.g., Plexxus, 3SO, Shared Services West) but need to go further and move forward faster to create stronger single enterprise solutions for all central back-office functions.

They should be integrated at a LHIN level (and possibly across all LHINs) to reduce the percentage of overall spending on these services to benchmark levels that have been achieved in other provinces. Assuming a savings benchmark of six to eight percent of total spending on administration costs, the potential savings in Ontario could be up to $1 billion. In addition, leveraging purchasing power, standardizing procurement practices and managing inventory more effectively would generate savings through lower costs for goods and services purchased.

Establish a central mechanism to oversee the creation of a “spot market” for goods and discretionary services, such as diagnostics, infusions and specialist consultation services.

A spot market is a system whereby if a hospital or other institution has an overstock of a particular supply, they can instantly locate and quickly transfer goods to other institutions in the province that are running short. If there is a need for a particular service in an institution, the system would be able to quickly identify service providers and provide a portal through which a price can be efficiently negotiated. This would achieve economies of scale across the system.

Put a wider array of specialist services to tender based on price and quality, while remaining under the single-payer model.

Build on the success of the Kensington Eye Institute in treating cataracts quickly and efficiently. This model could include private for-profit clinics that operate within the public payer system. Government should continue to determine what services are offered and set the fees paid by OHIP.

Put to tender more service delivery, but with the criteria for selection based on quality-adjusted metrics rather than just price.

Accelerate the adoption of electronic records, working in a bottom-up fashion.

Begin with doctors, clinics and hospitals and ensure that they use compatible systems. Then build bridges within a region, and then across regions. Currently, 60 percent of physicians keep e-records. Incentives should be used to encourage physicians to adopt e-systems through the development of usable data and analysis tools.

Also, Ontario has a wealth of information contained in the Health-based Allocation Model database that is currently underutilized. All HBAM data should be improved through integration with the e-records system so that LHINs and healthcare providers can use data to support evidence-based decision-making. (HBAM is a management information system developed by the LHINs for decision-making, planning and funding.)

Adopt the Nova Scotia model in which emergency medical technicians provide home care when not on emergency calls; this requires integrating municipal and provincial funding structures.

Provide better information to individuals and families to facilitate self-care, for people with conditions such as diabetes.

The report adds that: “We believe these recommendations can guide the healthcare system over the period to 2017-18 in a way that meets our target of a 2.5 percent annual increase in healthcare funding by the province. In light of our recent past, this is a tough goal; it implies that real inflation-adjusted spending per person on healthcare would have to fall by a total of 5.7 percent in the seven years from 2010-11, or 0.8 percent per year. But there are many opportunities we can seize to reform the system in ways that bring better care to more people at less cost.

“The reforms we recommend matter most. Lashing out with major spending cuts solves little. In the 1990s, the health budget was not only restrained, but cut for a few years. Because thorough underlying reforms were not implemented, however, pressures built and spending took off again, beginning in 1999. The experience left the public even more leery of moves to save money or raise efficiency.

“Beyond 2017-18, when a higher proportion of the baby boomers have reached the age at which healthcare costs begin to escalate, spending will probably accelerate. But this is where our recommendation for a 20-year plan and full public debate is crucial.

“The tone of such a debate over our healthcare future matters. The government should describe the challenges ahead that are posed by demographic and lifestyle changes. It should highlight the potential to make the system more efficient in terms of both quality and cost. It should discuss financial issues squarely. It should present the fundamental choices clearly.”

Ontario is spending $47 billion on health in 2011-2012 and that is 42 percent of its total spending on programs. Of that, operating hospitals accounted for nearly 35 percent of healthcare spending.

If the pattern continues, Ontario’s health budget will rise to $62.5 billion by 2017-2018 for an average annual increase of 4.9 percent from 2010. But it should be held at a 2.5 percent increase, Drummond said.

Privatization is not on the table, he said.

Posted February 23, 2012