Lecture 26 - 12/9/99  Canadian Health Care System Cont'd...

Financing Hospitals: Operating Budget

• Fixed sum received by hospitals for year: increment over last year's adjusted for current expenditure trend in provincial budget
• Some special allocations for (1) small hospitals, (2) hospitals with increased inpatient and outpatient volume, (3) hospitals with new and expanded programs
• Financing Hospitals: Operating Budget, cont.
• Fixed sum almost all of operating revenue
• Other sources (examples): philanthropy, parking fees, surcharged for private rooms
• Hospitals given discretion over budget allocation: some monitoring but no detailed hospital cost reports as in U.S.
• Positive incentives: (1) conserve inpatient use, (2) bulk purchasing, (3) contract out
• Financing Hospitals: Operating Budget, cont.
• Negative incentives: (1) bed blockers, (2) government has no data on individual patients

Hospital Financing: Capital Expenditures

• Integrate project approval and expenditure
• Provincial approval linked to receipt of operating funds: if denied, project must be financed from hospital's global budget
• Allocation of capital funds often political issue

Paying for Physicians' Services

• Fee-for-service payment in full
• Fee controls led to volume increases
• Constrain volume increase with negotiated expenditure increase

Performance: Access

• Reasonably good access to primary care
• Queues for certain specialized services (evidence from 26 teaching hospitals in Ontario - Table 4.1: GAO)
• Practitioners stratify patients, putting higher risk at head of queues
• No queues said to exist for treatment of life- threatening conditions

Performance: Access, cont.

• Reasons for Queues
• Global operating budget
• Limited supplemental funding to cover operating cost of special services (CT 8 hrs./day
• Constraints on capacity
• Some labor shortages (Ontario)

Performance: Cost

• Administrative overhead of system lower than U.S.
• Single payer eliminates expense of selling, billing, collecting premiums, evaluating risk
• Each province issues "charge card" to each legal resident (see Table 3.1, GAO Report)

Performance: Quality

• Evidence on health outcomes: Mark et al.
• Anecdotal accounts: pain/discomfort, psychological problems, work loss
• Little bordercrossing: (1) AMA survey of border U.S. hospitals found <1% Canadian, (2) hospital with most had 3% Canadians, (3) Ontario spent $100 mil. on U.S. care in 1990

Cost Performance 
Redelmeier/Fuchs

Study's Questions
• What factors contribute to higher expenditures on hospital care in US than in Canada?
• Why are hospital expenditures per admission higher in US and hence hospital expenditures per capita population higher?

Potential reasons pertain to:

• casemix complexity
• input prices
• service intensity per admission
• administrative cost per admission
• other

• Hospital expenditures per capita population (unadjusted) are higher in U.S. than in Canada: 26% higher U.S.; 23% higher Cal.
• U.S. has lower bed/population ratio: 28% lower U.S.; 40% lower Cal.
• U.S. has lower admissions per capita: 9% lower U.S.; 25% lower Cal.
• Only for one age group are admission rates the same 65+: 1% higher U.S.
• Mean length of stay much lower in U.S.: 36% lower U.S.; 40% lower Cal.
• Inpatient days per capita much lower in U.S.: 32% lower U.S.; 55% lower Cal.
• Emergency room visits per capita lower: 53% lower U.S.; 57% lower Cal.
• Expenditures per admission higher in U.S.: 39% higher U.S.; 63% higher Cal.

Adjusted Expenditures per Admission

• Expenditures per admission unadjusted: U.S. to Canada 1.39; California to Ontario: 1.63
• Adjust for higher casemix in U.S.: U.S. to Canada 1.14; California to Ontario: 1.11
• Adjust for higher input prices in U.S.: U.S. to Canada 1.04; California to Ontario: 1.05
• Adjust for proportion of expenditures used in inpatient care; inpatient resources per adjusted (for above) admission: U.S. to Canada 1.24; California to Ontario: 1.46

• Since LOS higher in U.S. and California, differential in inpatient resources per adjusted patient day must be even relatively higher in U.S..
• What explains our relatively high cost per admission and per day, given that we have adjusted for casemix and input prices?
• Does differential reflect:
• greater provision of clinical services? higher amenities? higher administrative cost? lower capacity utilization? pure waste?

Other reasons for difference in inpatient resource use per admission:

• Administrative cost- perhaps half of remaining difference
• Hotel services/amenities - hard to observe but authors doubt this important
• Capacity utilization: capacity use of high tech equipment much higher in U.S.

Cost Performance
Fuchs/Hahn

• Compared to U.S., and after adjusting for population and purchasing power of Canadian $; Americans spent 72% more on physicians' services than Canadians (1985)
• Why?
• more quantity: higher volume of services per capita in U.S.?
• higher fees in U.S. --do higher fees in U.S. reflect use of more inputs per unit of service?
• higher prices for these resources (higher physician income, nurses' salaries, etc.)?

Methods

• Developed fee indexes for U.S. and Canada and for Iowa and Manitoba
• Divided expenditures on physician services by fee indexes to derive volume of service
• Divided expenditures on physician services by resource price index to get quantity of resources used in practices

Key Results

• Much higher expenditures on physicians' services fully explained by differences in fees
• Volume of physicians' service per capita population actually higher in Canada
• Underlying higher fees is higher real net income of physicians in U.S.
• Differences in other input prices much less

Ratio of quantity of resources to quantity of services 84% higher in U.S.

Use of Medical Resources and Quality of Life After AMI in Canada and U.S.

Mark et al.
 
 

Purpose
 
 

• Compare quality of care in U.S. and Canada using comparable patients
• Use data from the Global Utilization of Streptokinase and t-PA for Occluded Coronary Arteries (GUSTO) trial of 41,000+ patients. This substudy of 2 of the 15 countries in trial.

Methods
 
 

• Patients had hospitalization for AMI within 6 hours of onset of symptoms
• 2,600 U.S. and 400 Canadian patients in this substudy of GUSTO
• Substudy patients contacted by telephone 30 days, 6 months, and 1 year after AMI
• Consumption of resources recorded from hospital records and from telephone interviews
• Measured various dimensions of quality of life, including functional status, bed days and restricted activity days, general perception of health, depression, employment status

Results
 
 

• Clinical characteristics of patients with AMI in two countries similar at entry. Table 1.
• Consumption of medical resources during index hospitalization: much more cardiac catherization, angiography, &CABG in U.S.
• Consumption in followup period: Canadians had more visits, but Americans more likely to see specialists
• Survival higher in U.S. after adjusting for baseline health, but differences do not appear to be large
• In-hospital reinfarction occurred in 3.7% in U.S. and 4.5% of Canadian patients
• In-hospital stroke in 1.6% of U.S. and 1.5% of Canadian patients
• Do see some differences in functional status after 1 year--more favorable to U.S.
• Time to return to work quicker in U.S.
• Presence of chest pain and dyspnea at one year higher in Canada than in U.S.
• In general, see much more difference at one year than at 30 days

Discussion
 
 

• Results challenge contention that greater use of cardiac procedures in U.S. has no effect on health outcomes
• Authors consider several possible confounding factors. Defend results well
• Is possible that pharmaceutical use in U.S. higher and this not measured directly