August 7, 2005
Shrink Waiting Lists the British Way
The recent appointment of Winnipeg’s Dr. Brian Postl as the head of a national commission to reduce healthcare waiting lists has raised alarms with some. But the move should be viewed as an opportunity. It coincides with important efforts by Britain’s New Labour government to reduce their waiting lists, with reforms that Postl should consider as a template for Canada.
After Prime Minister Paul Martin announced his pick to chair the commission, various pundits challenged Postl’s credentials. As CEO of the Winnipeg Regional Health Authority, the critics pointed out, Postl oversaw a tripling of its budget for bureaucrats even while waiting lists for joint replacements and diagnostic tests soared. The slams hit editorial pay dirt, but so what? The best people to fix problems are often the ones most intimately acquainted with them.
Dr. Postl’s performance will depend not on past failures, but his ability to appreciate the nature of the malaise that afflicts Medicare. The well-intentioned people who created the system misjudged the importance of an important principle, contestability. Monopoly appears to confer benefits of a sort but in reality imposes costs of another kind. We “save” money by streamlining administration—with the result that we have little information about the costs, quality or quantity of services. Confusion between the different incentives that motivate purchasers and providers cripples performance. The two must be split.
On July 25, Britain’s State Secretary for Health, Patricia Hewitt, expanded the National Health Service’s successful reforms in that direction. Starting in November, patients who have waited longer than 20 weeks for non-urgent diagnostic tests like MRI and CT scans—about 80,000 people at last count—will be given a choice. They can have the tests done by another provider, even a private one. By 2008, Hewitt claimed, no one will have to wait more than 18 weeks for such tests. (Urgent cases are already given a high priority.)
Canadian healthcare orthodoxy holds that more consumer choice unnecessarily raises costs. That may or may not be true, but it does make spending much more effective. It’s far from pie-in-the-sky speculation that it worked well in Britain. According to Reform, a London-based think tank that wants to invigorate public services with managed competition, the introduction of similar reforms three years ago for heart patients succeeded spectacularly.
Those who had waited longer than six months for treatment were allowed to choose between an NHS provider and one from the private sector. “The result,” Reform reports, “was a significant reorganisation of NHS provision to free up capacity and very great reductions in waiting times. . . . Choice was also introduced in London for patients waiting more than six months in certain specialities between 2002 and 2004,” the organization adds. “Waiting times fell significantly and some hospitals actually advertised for patients.”
What happens when the purchaser and the provider wear the same hat sounds surreal, but is nonetheless true. Hewitt discussed the problem on BBC radio’s Today show the morning she announced the new policy. Budget constraints dictated that MRI scanners in government hospitals could only be used from eight or nine o’clock in the morning to four or five in the afternoon, Monday through Friday. Despite a doubling of technicians since 1998, cost constraints hobbled the system’s ability to reduce wait times. Does this sound familiar?
In February, Reform issued a scathing study (Cancer Care in the NHS, available at www.reform.co.uk) that described the same dynamic at work: “Many radiology and radiotherapy units close at 5:00 p.m. and argue that the reason for this is the lack of staff. The same staff, however, would often be pleased to work overtime and allow the scanning and radiotherapy facilities to continue to operate late into the night and on weekends, provided they were paid adequately. . . .The cost would be relatively small as the equipment and other facilities have already been purchased.”
Exactly that sort of thing is happening here. A Manitoba entrepreneur, John Buhler, donated some expensive equipment to Winnipeg’s Health Sciences Centre. He was disappointed to learn that the machines would only be operated a few hours a day because of a shortage of operating money. Buhler got his name prominently displayed on a new building, but he wanted results, not glory.
There’s the challenge for Brian Postl. This nonsense, which happened under his watch, is typical across Canada. Letters of reprimand to the underlings who make such unproductive decisions will accomplish little. The problem is structural, and the way out is to shake up incentives.
First, institute patient guarantees that open up access to the private providers constantly demonized by Medicare demagogues. Second, ditch the global budgeting system which pays hospitals irrespective of results. As in the more sophisticated single-payer systems throughout Europe, pay facilities based on the volume of services they produce. You want use Buhler’s expensive equipment only a few hours a day? Then you will be paid only for that time. In short order, bureaucrats will find ways to make the machines run 24/7 and shrink waiting lists.
We can’t afford expensive orthodoxies. If the system can’t deliver, change the system. It’s working in Britain, the model for Medicare, under a left-wing government. If Postl points us in that direction, his time will be well spent.
The Frontier Centre for Public Policy
is an independent public policy think tank whose mission is "to broaden the debate on our future through public policy research and education and to explore positive changes within our public institutions that support economic growth and opportunity."