Michael Rachlis MD

Thoughts about Alberta and activity based funding

25 October 2009, 12:51 PM

After being home for a week from my trip to Alberta speaking on behalf of Friends of Medicare, I have a few reflections:

Activity-based funding

Alberta is moving to pursue a policy named “activity-based funding”. Essentially ABF is fee for service payment for hospital care. Hospitals would be paid a specific free for an episode of care such as a hip replacement. The United States government moved most of its hospital funding through their Medicare program into Diagnosis Related Groups or DRGs in 1983.

Hospitals are funded through a variety of different means across Canada. In fact, in most parts of Canada, hospitals are no longer independent organizations. Rather they are operational units of regional health authorities which receive integrated funding for acute care and publicly funded long term care, home care, mental health, and public health services. In Ontario, 14 the local health integration networks (LHINs) created in 2005, have regional funding envelopes but don’t deliver services. Services continue to be delivered by independent non profit hospitals and the previous array of other providers which include many for profit corporations who are heavily involved in the delivery of long term care and home care in Ontario.

The impacts of activity-based funding or DRGs or other types of prospective payment systems are heavily dependent upon the context of their implementation and their specifics. As always the devil is in the details. For example, if hospitals are paid on a volume basis but there is no accountability for quality, then clearly hospitals would have an incentive simply to discharge patients sicker and quicker. If patients suffer complications which bring them back, then an additional fee can be charged. and how do you assess the correct fee for every patient when some hip replacement patients like marathoners are good risks, will recover quickly, and cost relatively little and some like 80 year olds with emphysema and diabetes are poor risks, will take a long rehabilitation period, and whose care will likely be expensive. If the fee paid is the same or doesn’t properly account for extra social risks such as homelessness, then the new policy can really create bad disparities.

For more on ABF, DRGs etc. see: An analysis of Activity-Based Funding by Canadian Doctors for Medicare.

Stirring up a hornet’s nest: Blunt policy endangers health care reform

My biggest concern about what’s happening in Alberta is that it violates one of health care’s key precepts, primum non nocere, “first do no harm”. The most influential reports on quality in health care are the US National Institute of Medicine’s 1999 To Err is Human and the 2001, Crossing the Quality Chasm. Crossing the Quality Chasm has a nice section on the need to treat complex systems, like health systems with respect and make change gently and deliberately.

The authors of the report, including Dr. Donald Berwick, CEO of the Institute of Healthcare Improvement, suggested focusing on frameworks and “simple rules” to drive reform instead of relying upon so-called big-bang legislative and regulatory solutions. That’s because, big changes, like Alberta dissolving all the individual health regions in 2008 and putting in place a very complicated organizational structure for Alberta Health Services with different roles, responsibilities, and reporting relationships for hundreds of senior managers can wreck big havoc. I’m not an expert when it comes to complexity theory in health care (Google Toronto’s Brenda Zimmerman and Shalom Glouberman for more information), but here’s the essence. There are simple systems, like a pulley lifting a load over a river. Then there are complicated systems which are a series of simple systems like a bunch of pulleys, gears, and wheels, like a car. Then there are complex systems like ecosystems. 

We can know pretty much everything about complicated systems — even one as gigantic as sending a spaceship to the moon. But we can never know everything about a complex system because the second, third, and even tenth order interactions might be crucial but it’s almost impossible to predict these interactions in advance. For example, you might be bothered by some insects in your garden so you kill them off with pesticides. A few years later your oak trees start falling down because those pesky insects were part of a chain of life which controlled an oak tree parasite. You didn’t know that in advance and maybe you couldn’t have known it in advance.

The Institute of Medicine suggested ten simple rules that should guide health care re-engineering.

  1.  Care should be based upon continuous healing relationships instead of mainly in-person visits.

  2.  Care should be customized for individual patients’ needs and values instead of being dictated by professionals.

  3.  Care should be under the control of patients not professionals.

  4.  Knowledge about care should be shared freely between patients and providers and between different providers. This transfer should take maximal advantage of leading-edge information technology. Patients should have unrestricted access to their records.

  5.  Clinicians should make decisions on the basis of the best scientific evidence. Care should not vary illogically from clinician to clinician or from place to place.

  6.  Safety is the responsibility of the whole system not individual providers.

  7.  The content of care is made transparent instead of being held in secret. The health system should give as much information as is required to patients and families to enable them to fully participate in clinical decisions, including where to seek care.

  8.  Patients’ needs should be, as much as possible, anticipated and not treated in a reactive fashion.

  9.  The health care system should continually decrease waste (goods, services, and time) instead of focusing on cost reduction.

10.  Providers should cooperate and work in high-functioning teams instead of attempting to work in isolation. Concern for patients should drive cooperation among providers and drive out competition based upon professional and organizational rivalries.

I think these would be good rules to follow, especially in Alberta. There is so much innovation within the public system; the question should really be why is the government making such drastic changes that risk serious untoward effects?

The answer in Alberta as well as other provinces seems to be that a lot of the Canadian elite decided about 10 years ago that our country should have the for-profit sector deliver much elective surgery. I was told this in 2001 by a senior health administrator in Alberta and recently by a senior health ministry official in another province. When I asked given the risks, given the current public sector best practices which could be easily spread, why was he pursuing activity-based funding. He said that activity-based funding was inevitable and he was resigned to trying to implement it is such a way as would cause the least harm.

It's the Wild Rose West: My week in Alberta

18 October 2009, 9:48 PM

I got back Saturday (the 17th) after a fun week in Alberta. I spoke to a number of events organized by Alberta Friends of Medicare. There were over 500 people who attended a raucous public meeting at the Polish Hall in Edmonton on Tuesday night. See the coverage in the Edmonton Journal. Kudos to Dave Eggen Friends of Medicare coordinator, Della Drury his campaign worker, economist Diana Gibson, research director at the University of Alberta’s Parkland Institute who also spoke, and dozens of other folks who helped organize the meeting.

On Wednesday morning Dave Eggen and I flew to Calgary but our plane to Medicine Hat was cancelled because of snow so we rented a car and started our southern Alberta road trip. We had a wonderful crowd of 150 that night. Thanks so much to Jan Bunney chair of the Medicine Hat Chapter of Friends. It’s an amazing group of folks. Amongst other things they participate in Medicare Mondays where they go to places like Tim Horton’s and talk to people about health care in their community. Here’s a picture of Dave Eggen, Jan Bunney, and me.

Then it was on to Lethbridge where Michael Cormican and his chapter organized a terrific meeting Thursday night at Southminster Church.

We drove to Calgary on Friday morning where I talked to a meeting of the Health Sciences Association of Alberta.

I will be writing up my analysis of my Alberta trip in the next few days but you can read the op ed I wrote before the trip here. It is quite frightening how quickly Alberta seems to be eroding the public system.

Happy Canadian Thanksgiving Canadians and Americans

12 October 2009, 3:15 PM

I’m touring Alberta next week and the US Senate Finance committee may vote for a health bill

There is lots of exciting health policy doings on both sides of the border. In Ontario the Ehealth problems have caused health minister David Caplan to resign and left boards and CEOs quivering in anticipation of being the opposition’s next target.

In Alberta, the government has cut public coverage for a variety of services and is claiming the current economic crisis means the end of the single payer system. See my op-ed, “Repair Medicare, don’t privatize” in today’s Edmonton Journal: I will be speaking in several Alberta locations next week. Here’s my schedule or check with the Alberta Friends of Medicare   

Tuesday, October 13^th

Edmonton

3 p.m.  Media availability with Michael Rachlis @ Polish hall 10960 104^th St. NW Edmonton

7 p.m.  Town Hall Meeting @ Polish hall

Wednesday, October 14^th

Medicine Hat. 

7 p.m. Town Hall meeting @ Public Library 414 First Street S.E.

Thursday, October 15^th

Lethbridge

11:30 a.m. media availability @ the Ramada hotel, 2375 Mayor Magrath Drive South

2 - 4 p.m.  Speak @ University of Lethbridge

7 p.m. Town Hall meeting @ Southminister United Church, 1011 4th Avenue South

Friday, October 16^th

Calgary

12: noon  Speak to Health Services Association of Alberta pubic engagement conference @ Sheraton Cavalier Hotel. 2620 32nd Avenue NE

1 p.m. media availability @ Sheraton Cavalier Hotel Calgary. 

Meanwhile in the Excited States…

The health policy debate continues apace in the United States. The first bill to be voted on will likely be the Senate finance committee bill.  It reflects the right wing of the Democratic Party and doesn’t include a public option. The endgame may well focus on two aspects. First, what public support will be offered for the formation of health care cooperatives which could turn into a public option through the back door if everything went exactly right - or wrong according to your perspective? Cleveland Democratic representative, Dennis Kucinich is hoping the new legislation will incorporate his plan for states to choose a single payer option. But will the health insurance industry let this one pass. A good rule is whatever the insurance industry will tolerate won’t be effective.  

Second, how tough will congress be on insurance regulation? US health insurance companies will have to be regulated tightly if costs are to be controlled and coverage expanded. This mean community rating for premiums, no rejection for so-called pre-existing conditions, limited variability in the type of policies offered to better facilitate meaningful comparisons, etc, etc. That’s how countries like the Netherlands and Switzerland manage single-payer efficiencies and universal coverage. Of course it costs them in the long run. Switzerland’s system is the second most expensive after the US.

My prediction is: The insurance companies have been careful to appear supportive of Obama’s principles for a health bill but this weekend they have started to show their true colours. After watering down the president’s initial intentions pretending they would support the final diluted product, they are now going to war against the compromise. Today the America’s Health Insurance Plans released a PricewaterhouseCoopers report which asserts that the current bills being discussed will massively increase in health insurance premiums.

The companies like Obama’s plans to give them extra customers through a universal mandate for all US citizens to purchase health insurance. But, my guess is that the eventual legislation will have enough loopholes that the less than scrupulous companies (and that seems to be quite a few of the big ones) will use to get around the intent of universal coverage.

Resources for understanding the bewildering US health policy debate include:

Nobel laureate, Princeton Professor, and very occasional debate partner of yours truly (once actually) Dr. Paul Krugman’s prolific blog. I wish I could blog as much as this fellow. And he still has time to write a regular column in the NY Times and teach first year through PhD students and author three books in the past two years.  Search his blog by topic and you will get the best evidenced material on health care economics, policy, and politics. In person, he’s like the kid you knew when you were growing up who was the smartest kid in school except he’s pretty much the smartest person in the whole country.

By the way, you can watch the entire debate which took place in New York on September 16, 2008 on YouTube. Dr. Krugman, Emory University ER doc, Dr. Art Kellerman, and I show that New Yorkers like a single-payer system.

The Commonwealth Fund is a private non profit organization based in New York City. The organization’s mission statement includes the goal, “…to promote a high performing health care system that achieves better access, improved quality, and greater efficiency, particularly for society’s most vulnerable, including low-income people, the uninsured, minority Americans, young children, and elderly adults.”

This website has excellent academic-level analysis of the US health care debate. The Fund also sponsors, in my view, the most useful international comparative research.

Physicians for a National Health Program represents 17,000 doctors, medical students, and other health professionals. PNHP has advocated for a US single payer system since 1987.

Here are some other sites of interest to folks interested in a progressive perspective on the US health care debate

Healthcare-NOW!

All Unions Committee for Single Payer Healthcare - HR 676

California Nurses Association/National Nurses Organizing Committee

Progressive Democrats of America

1payer.net

Single Payer Action

www.medicareforall.org.

http://healthcare.change.org

Leadership Conference for Guaranteed Healthcare: The National Single Payer Alliance