Northeast Canadian-American health conference analyses health care budget famine CAROLINE OLIVER
Doctors and other health care professionals must realize that health care policy is no longer the concern only of those who provide the services, says Theodore Marmar, of the center for health studies at Yale University. Speaking at the conclusion of a 2-day meeting of the Northeast Canadian-American health conference in St. Andrews, New Brunswick, Marmar noted that health care policy is now a matter of public concern. "We must start with a more realistic beginning point," he said. "Medical care is now an issue of public policy, although some people are still holding to a notion they can return to the days of the prepublic world." As health care costs continue to rise and governments insist on trying to reduce those costs, the taxpayers who support the system and the general public who receive the services are inevitably brought into the discussion of what kind of care they want and how much they are willing to pay for it. "The crucial thing in the future will be to try to work out an arena in which legitimate adversaries can negotiate," predicted Marmar. "It is legitimate for people to want more and legitimate for the government to think they can't have it. In the future we will have to concern ourselves with procedure, not policy, and worry about the effect of the way we discuss things on the health of the political order." 25% budget cut Speakers at the conference, entitled "Painful Choices for Tomorrow - Health Care on Diminished Budgets", were asked to consider the question "How could you cut back your budget by 25%, and what effect would this have on the health of the population?" Doctors, dentists, hospital administrators and politicians at the conference tried to grapple with the issue of controlling health costs to de1400
termine whether and how costs could be contained. While predicting that restraint and budget cuts in health care are inevitable in the future, Marmar suggested that "budget famine" isn't all bad, because it allows dramatic changes to be made and gives health administrators an opportunity to try things they once thought were impossible. Opposing forces During the sessions, attended by about 150 delegates from the northeastern United States and Canada, it became evident that there are several opposing forces working to make cost control measures ineffective and difficult to introduce. Marmar suggested that in the United States, where funds for medical care come from a variety of sources, "controlling costs is like squeezing a balloon - you might be able to make it smaller in one place, but it ends up getting bigger somewhere else." With Canada's government-sponsored health insurance, costs are easier to control because payment comes through a single agency. Other factors that affect health care costs were brought up at the conference. These included the increasing age of the population, a trend toward healthier lifestyles, the difficulty of defining what is and what isn't part of the health budget, the public's response and responsibility to the system and the effect that therapeutic decisions can have on the overall cost of the treatment. The conference was opened by a speech from David Crombie, minister of national health and welfare, although Crombie was unable to deliver the speech in person. Instead, George Rosenfeld, director of special projects for national health and welfare, delivered the minister's message, in which Crombie noted that health care costs in this country have been kept in line and now represent a constant pro-
CMA JOURNAL/NOVEMBER 17, 1979/VOL. 121
portion of the gross national product (GNP) - ranging from 6.9% to 7.1% between 1972 and now. Crombie said there is a high degree of popular support for Canada's health scheme; however, he cautioned that there could he future problems for it if there is a failure to find clear working definitions of the general principles of the program. Other areas of concern, said Crombie, are the emigration of Canada's physicians and the opting-out of doctors from the agreed-upon fee schedules. Hall review Crombie has asked Mr. Justice Emmett Hall, who wrote the Hall report in 1964 (the framework for our present system), to re-examine this system, and he expects to have Hall's review within 6 months. The minister predicted that by the year 2000 a tenth of all Canadians will be over the age of 65 (compared to 8.1% in 1971), but despite the boom in the senior population, with its need for extensive health care, "we will have to keep costs from rising to the point where they would become intolerable to the wage earners and to society at large." But just how much the public is willing to pay for health care, and what can be considered a reasonable portion of the GNP to spend on it, is open to discussion. No bad thing "I don't really know how much of the GNP should be spent on the health sector," confessed Dr. Maurice McGregor, former dean of the faculty of medicine at McGill University. "There is no doubt that this sector of our economy (health care) is consuming more of the individual's earnings than ever before.., but why is this a bad thing? Why was there no national outcry as the proportion of the GNP spent on other items doubled and redoubled?"
The reason, suggests McGregor, is that the public, which sees few results for the increase in health spending, feels it is paying more but getting less for the money spent. According to McGregor, there are several reasons for rising health care costs, one of which is the growing public demand for health care. "If our public were ready to undergo confinements, sickness and death in the home or in poorhousetype institutions, a 25% chop in budgets would be no problem.... The public of both our countries (United States and Canada), however, has decided that free access to doctors and hospitals and the best available treatment under conditions of comfort and dignity are a citizen's right." Another cause, said McGregor is what Lewis Thomas refers to as "half-way" technology, technology that provides costly equipment to manage diseases that are not yet fully understood. Pacemakers, artificial kidneys, coronary bypass surgery and cancer therapy all fall into this category. A third cause is the very success of this expensive technology, because it allows patients to live longer, but only with continued use of this expensive care. "If we banned the artificial kidney, if we agreed that cancer therapy was largely palliative, expensive and a luxury the state could not afford, we could save massively.... Death is relatively cheap." While the doctrine is generally accepted that one way to reduce health costs is to encourage the population to pursue a healthy way of life, this may not necessarily reduce the overall cost of the health care system. Care, responsibility
According to Milton Orris, director of the health administration program in the community health division at the University of Toronto, that idea is misleading. "We have the idea that the individual can reduce health costs by being responsible - but those who need the care can't be held responsible." "Fitness activities," added Orris, "have led to an increase in sports injuries, low back problems and an
increase in the number of annual check-ups - people who are there to brag about how well they are." Improved Jifestyles, while perhaps allowing people to enjoy their lives more, are really a cost-deferral program, because they mean the inevitable expenses of caring for the aged are simply put off as the population gets older and longevity increases. "But," suggested Orris, "the potential over time to defer these costs gives us some breathing space to reconsider [our programs]. We have followed a series of activities that has put money into hospitals and doctors, and that has a momentum that is hard to change." George Lythcott, an administrator of the Health Services Administration in the United States, argued instead that "in terms of cost efficiency, staying healthy is to be preferred to the best of health care." He quoted Julius Richmond, surgeon general of the United States, who estimated that by 1990 the national death rate could be reduced by 20% if people could be led to improve their personal habits and way of living. "We have to discard the book keeper's mentality and begin to think of ourselves as professionals in partnership with people and their aspirations for a better life," he added. "Your Lalonde report and our surgeon general's report have mapped out the challenge.... Our task is to get moving." Can't afford it, redefine it
One of the most effective ways to control health care costs is simply to redefine what is meant by health care, or to shift some of the responsibilities now handled by some physicians onto other health professionals. Dr. Bertram Brown, assistant surgeon general of the United States Public Health Service, said that, in psychiatry, about 50% of the treatment given is for clear biologic problems and about 50% of the psychiatric treatment given is related to the problems of living. "We could reduce 50% of our costs by renaming the problems," quipped Brown. He predicted that psychiatrists could find themselves dropping cer-
tam services from the health budget, "casting out what has been cast in". But, he cautioned, "this in no way changes the number of unhappy people." Echoing these sentiments, Ronald Barriault, family physician with the Kellogg Centre for Advanced Studies in Primary Care, suggested that once medicare was introduced in Canada, physicians began assuming more and more responsibility for work that had previously been done by paramedics. "From the onset [of medicare] we saw the physician getting paid for some services that were previously being done by other health care professionals," he noted. "The physician was soon getting paid for social work, financial counselling, marital counselling, sex counselling and minor nursing procedures, and all of these at fees originally designated for acute illnesses or health crises. Under the present fee-for-service arrangements, he observed, doctors are unlikely to use other health personnel to do that work, because to do so would be to cut off their own source of income. Payment incentive
Instead, Barriault proposed that alternative methods of payment be made, to give physicians the incentive for change. During the conference it became apparent that Canadian and American experiences with budget cuts have produced quite different results. Under a government system like Canada's, the government can put a ceiling on spending and costs are automatically kept to a certain level. But in the United States with funds for health care coming from several sources, the system is less easy to control. In New York, for example, the state government wanted to reduce the cost of institutionalized care; it did so by introducing new legislation and "a bewildering array of regulations" to limit reimbursement rates, reduce the use of inpatient facilities and reduce capital investments. According to Dr. David Pomrinse, president of the Greater New York Hospital Association, the net result was that hospitals, to defend themselves, had to create extensive
CMA JOURNAL/NOVEMBER 17, 1979/VOL. 121
1401
financial departments to sort out the complicated reimbursement program, to set up utilization review groups to assure that as few days in the hospital would be denied patients as possible and to expand the hospital's legal departments. "Any administrator worth his salt," concluded Pomrinse, "could think of far more productive ways to spend money than on these areas that do not contribute to the wellbeing of patients." In contrast to the New York experience, the Canadian system has vested all payment responsibilities, and therefore all cost control measures, in the government. But according to Yves Morin, former dean of the University of Laval faculty of medicine, this government control has led to depersonalization and fragmentation of the health care system. "By trying to obtain universal health care, the state has decided to take full control of all health institutions," he said. "This state monopoly has depersonalized health care.... The triple power of the bureaucracy, corporations and the unions have now taken over the whole field of health service to exclude the person who should be at the centre." Thus the curious anomaly exists that in a free-enterprise system, such as the United States, the administrators have more control over their institutions but must spend a good deal of their time dealing with the plethora of regulations that apply to them. In Canada, although there is less paper work for the administrators and fewer regulations, they have less control over their institutions. Quality no longer sought? "I have no doubt that Western societies are now at a crossroads," concluded Morin. "The governments no longer want to assure more citizens of a higher level of health care. They now want to contain costs. .. Official statements emphasize the reduction of our resources." Like other speakers, Morin observed that the final decision for health care in the future will rest with the public. "Can society as a whole accept
a reduction in health services?" he asked. "Will we accept inferior health care or will we see citizens demanding new solutions?" William Morrisey, deputy minister in the New Brunswick department of health, agreed that while governments have a powerful tool at their disposal to control costs, the use of that tool will only be effective if the government has the cooperation of the health professionals who provide the services. "Governments in Canada... control the purse strings and can insist on their point of view being accepted," he said. Legitimate aspirations "They also clearly have the support of the people for what they have done in the past - a fact not often recognized by providers [of health care]. However, unilateral government or provider insistence on having their way ultimately sets the two groups as antagonists.... What both sides must recognize is that each has legitimate aspirations... and neither can solve the problem single-handedly." Several participants suggested that doctors have an unusual role in the cost control debate, because although they select the course of therapy, they are often unaware of the financial consequences of their decisions. "Cost is rarely a component of that decision," observed Morrisey. "Thousands of Canadian doctors have grown up completely unaccustomed to considering the financial implications of their treatment decisions .. . . If costs are to be effectively controlled, it cannot remain irrelevant in the future." Patrick Tidball, director of British Columbia's pharmacare program, said that doctors, who prescribe all medication, are unaware of the relative costs of the medicines they choose nor do they know what their patients actually do with the prescriptions after purchase. "Whether payment of a prescription is made by the patient or a third party insurer the buyer is in fact the physician, but the normal market forces of any industry do not apply," explained Tidball.
"Neither during a physician's training nor in clinical practice is he normally exposed to the economic structure of the system or held accountable for most of his purchase decisions." Tidball suggested this be altered in the future by making physicians aware of the relative costs of different drugs and keeping them informed about the extent to which their patients follow the proper regimen for the drugs prescribed. "The critical issue surrounding cost containment of pharmaceuticals through physician involvement is information," stated Tidball. "Given information as to what patients are doing with prescriptions, given relative cost information on existing or alternative services, the physician can be made a knowledgeable buyer and be in a position to alter the costs and quality of his health care decisions." If those working in the health care system and those who pay for it and benefit from it could agree on the need to control costs, the extent to which they should be controlled and what direction health care policy should take, the "legitimate adversaries" described by Theodore Marmar would be well on the way to cooperation. But, Marmar noted, it is important to avoid pointing the finger at any one section of the system and laying the blame on any one faction. "I hope scapegoats like CT scanners are not the principal preoccupation," he said. "They are not the central issue - they are a central symbol that has taken on a life of its own." Robertson on cooperation Brenda Robertson, minister of health for New Brunswick, summed it up when she said that cooperation is necessary in both planning the system and providing the services. "We must understand what the people expect, and the people must understand what we can give," said Robertson. "The process must be a participatory one to arrive at the right answers. The government can't do it alone .. . Those delivering the services are perhaps the ones to best understand how our system will go."E
CMA JOURNAL/NOVEMBER 17, 1979/VOL. 121 *-For Rx summary see page 1381
1403
Doctors and other health care professionals must realize that health care policy is no longer the concern only of those who provide the services, says Theodore Marmar, of the center for health studies at Yale University. Speaking at the conclusion of a 2-day meeting of the Northeast Canadian-American health conference in St. Andrews, New Brunswick, Marmar noted that health care policy is now a matter of public concern. "We must start with a more realistic beginning point," he said. "Medical care is now an issue of public policy, although some people are still holding to a notion they can return to the days of the prepublic world." As health care costs continue to rise and governments insist on trying to reduce those costs, the taxpayers who support the system and the general public who receive the services are inevitably brought into the discussion of what kind of care they want and how much they are willing to pay for it. "The crucial thing in the future will be to try to work out an arena in which legitimate adversaries can negotiate," predicted Marmar. "It is legitimate for people to want more and legitimate for the government to think they can't have it. In the future we will have to concern ourselves with procedure, not policy, and worry about the effect of the way we discuss things on the health of the political order." 25% budget cut Speakers at the conference, entitled "Painful Choices for Tomorrow - Health Care on Diminished Budgets", were asked to consider the question "How could you cut back your budget by 25%, and what effect would this have on the health of the population?" Doctors, dentists, hospital administrators and politicians at the conference tried to grapple with the issue of controlling health costs to de1400
termine whether and how costs could be contained. While predicting that restraint and budget cuts in health care are inevitable in the future, Marmar suggested that "budget famine" isn't all bad, because it allows dramatic changes to be made and gives health administrators an opportunity to try things they once thought were impossible. Opposing forces During the sessions, attended by about 150 delegates from the northeastern United States and Canada, it became evident that there are several opposing forces working to make cost control measures ineffective and difficult to introduce. Marmar suggested that in the United States, where funds for medical care come from a variety of sources, "controlling costs is like squeezing a balloon - you might be able to make it smaller in one place, but it ends up getting bigger somewhere else." With Canada's government-sponsored health insurance, costs are easier to control because payment comes through a single agency. Other factors that affect health care costs were brought up at the conference. These included the increasing age of the population, a trend toward healthier lifestyles, the difficulty of defining what is and what isn't part of the health budget, the public's response and responsibility to the system and the effect that therapeutic decisions can have on the overall cost of the treatment. The conference was opened by a speech from David Crombie, minister of national health and welfare, although Crombie was unable to deliver the speech in person. Instead, George Rosenfeld, director of special projects for national health and welfare, delivered the minister's message, in which Crombie noted that health care costs in this country have been kept in line and now represent a constant pro-
CMA JOURNAL/NOVEMBER 17, 1979/VOL. 121
portion of the gross national product (GNP) - ranging from 6.9% to 7.1% between 1972 and now. Crombie said there is a high degree of popular support for Canada's health scheme; however, he cautioned that there could he future problems for it if there is a failure to find clear working definitions of the general principles of the program. Other areas of concern, said Crombie, are the emigration of Canada's physicians and the opting-out of doctors from the agreed-upon fee schedules. Hall review Crombie has asked Mr. Justice Emmett Hall, who wrote the Hall report in 1964 (the framework for our present system), to re-examine this system, and he expects to have Hall's review within 6 months. The minister predicted that by the year 2000 a tenth of all Canadians will be over the age of 65 (compared to 8.1% in 1971), but despite the boom in the senior population, with its need for extensive health care, "we will have to keep costs from rising to the point where they would become intolerable to the wage earners and to society at large." But just how much the public is willing to pay for health care, and what can be considered a reasonable portion of the GNP to spend on it, is open to discussion. No bad thing "I don't really know how much of the GNP should be spent on the health sector," confessed Dr. Maurice McGregor, former dean of the faculty of medicine at McGill University. "There is no doubt that this sector of our economy (health care) is consuming more of the individual's earnings than ever before.., but why is this a bad thing? Why was there no national outcry as the proportion of the GNP spent on other items doubled and redoubled?"
The reason, suggests McGregor, is that the public, which sees few results for the increase in health spending, feels it is paying more but getting less for the money spent. According to McGregor, there are several reasons for rising health care costs, one of which is the growing public demand for health care. "If our public were ready to undergo confinements, sickness and death in the home or in poorhousetype institutions, a 25% chop in budgets would be no problem.... The public of both our countries (United States and Canada), however, has decided that free access to doctors and hospitals and the best available treatment under conditions of comfort and dignity are a citizen's right." Another cause, said McGregor is what Lewis Thomas refers to as "half-way" technology, technology that provides costly equipment to manage diseases that are not yet fully understood. Pacemakers, artificial kidneys, coronary bypass surgery and cancer therapy all fall into this category. A third cause is the very success of this expensive technology, because it allows patients to live longer, but only with continued use of this expensive care. "If we banned the artificial kidney, if we agreed that cancer therapy was largely palliative, expensive and a luxury the state could not afford, we could save massively.... Death is relatively cheap." While the doctrine is generally accepted that one way to reduce health costs is to encourage the population to pursue a healthy way of life, this may not necessarily reduce the overall cost of the health care system. Care, responsibility
According to Milton Orris, director of the health administration program in the community health division at the University of Toronto, that idea is misleading. "We have the idea that the individual can reduce health costs by being responsible - but those who need the care can't be held responsible." "Fitness activities," added Orris, "have led to an increase in sports injuries, low back problems and an
increase in the number of annual check-ups - people who are there to brag about how well they are." Improved Jifestyles, while perhaps allowing people to enjoy their lives more, are really a cost-deferral program, because they mean the inevitable expenses of caring for the aged are simply put off as the population gets older and longevity increases. "But," suggested Orris, "the potential over time to defer these costs gives us some breathing space to reconsider [our programs]. We have followed a series of activities that has put money into hospitals and doctors, and that has a momentum that is hard to change." George Lythcott, an administrator of the Health Services Administration in the United States, argued instead that "in terms of cost efficiency, staying healthy is to be preferred to the best of health care." He quoted Julius Richmond, surgeon general of the United States, who estimated that by 1990 the national death rate could be reduced by 20% if people could be led to improve their personal habits and way of living. "We have to discard the book keeper's mentality and begin to think of ourselves as professionals in partnership with people and their aspirations for a better life," he added. "Your Lalonde report and our surgeon general's report have mapped out the challenge.... Our task is to get moving." Can't afford it, redefine it
One of the most effective ways to control health care costs is simply to redefine what is meant by health care, or to shift some of the responsibilities now handled by some physicians onto other health professionals. Dr. Bertram Brown, assistant surgeon general of the United States Public Health Service, said that, in psychiatry, about 50% of the treatment given is for clear biologic problems and about 50% of the psychiatric treatment given is related to the problems of living. "We could reduce 50% of our costs by renaming the problems," quipped Brown. He predicted that psychiatrists could find themselves dropping cer-
tam services from the health budget, "casting out what has been cast in". But, he cautioned, "this in no way changes the number of unhappy people." Echoing these sentiments, Ronald Barriault, family physician with the Kellogg Centre for Advanced Studies in Primary Care, suggested that once medicare was introduced in Canada, physicians began assuming more and more responsibility for work that had previously been done by paramedics. "From the onset [of medicare] we saw the physician getting paid for some services that were previously being done by other health care professionals," he noted. "The physician was soon getting paid for social work, financial counselling, marital counselling, sex counselling and minor nursing procedures, and all of these at fees originally designated for acute illnesses or health crises. Under the present fee-for-service arrangements, he observed, doctors are unlikely to use other health personnel to do that work, because to do so would be to cut off their own source of income. Payment incentive
Instead, Barriault proposed that alternative methods of payment be made, to give physicians the incentive for change. During the conference it became apparent that Canadian and American experiences with budget cuts have produced quite different results. Under a government system like Canada's, the government can put a ceiling on spending and costs are automatically kept to a certain level. But in the United States with funds for health care coming from several sources, the system is less easy to control. In New York, for example, the state government wanted to reduce the cost of institutionalized care; it did so by introducing new legislation and "a bewildering array of regulations" to limit reimbursement rates, reduce the use of inpatient facilities and reduce capital investments. According to Dr. David Pomrinse, president of the Greater New York Hospital Association, the net result was that hospitals, to defend themselves, had to create extensive
CMA JOURNAL/NOVEMBER 17, 1979/VOL. 121
1401
financial departments to sort out the complicated reimbursement program, to set up utilization review groups to assure that as few days in the hospital would be denied patients as possible and to expand the hospital's legal departments. "Any administrator worth his salt," concluded Pomrinse, "could think of far more productive ways to spend money than on these areas that do not contribute to the wellbeing of patients." In contrast to the New York experience, the Canadian system has vested all payment responsibilities, and therefore all cost control measures, in the government. But according to Yves Morin, former dean of the University of Laval faculty of medicine, this government control has led to depersonalization and fragmentation of the health care system. "By trying to obtain universal health care, the state has decided to take full control of all health institutions," he said. "This state monopoly has depersonalized health care.... The triple power of the bureaucracy, corporations and the unions have now taken over the whole field of health service to exclude the person who should be at the centre." Thus the curious anomaly exists that in a free-enterprise system, such as the United States, the administrators have more control over their institutions but must spend a good deal of their time dealing with the plethora of regulations that apply to them. In Canada, although there is less paper work for the administrators and fewer regulations, they have less control over their institutions. Quality no longer sought? "I have no doubt that Western societies are now at a crossroads," concluded Morin. "The governments no longer want to assure more citizens of a higher level of health care. They now want to contain costs. .. Official statements emphasize the reduction of our resources." Like other speakers, Morin observed that the final decision for health care in the future will rest with the public. "Can society as a whole accept
a reduction in health services?" he asked. "Will we accept inferior health care or will we see citizens demanding new solutions?" William Morrisey, deputy minister in the New Brunswick department of health, agreed that while governments have a powerful tool at their disposal to control costs, the use of that tool will only be effective if the government has the cooperation of the health professionals who provide the services. "Governments in Canada... control the purse strings and can insist on their point of view being accepted," he said. Legitimate aspirations "They also clearly have the support of the people for what they have done in the past - a fact not often recognized by providers [of health care]. However, unilateral government or provider insistence on having their way ultimately sets the two groups as antagonists.... What both sides must recognize is that each has legitimate aspirations... and neither can solve the problem single-handedly." Several participants suggested that doctors have an unusual role in the cost control debate, because although they select the course of therapy, they are often unaware of the financial consequences of their decisions. "Cost is rarely a component of that decision," observed Morrisey. "Thousands of Canadian doctors have grown up completely unaccustomed to considering the financial implications of their treatment decisions .. . . If costs are to be effectively controlled, it cannot remain irrelevant in the future." Patrick Tidball, director of British Columbia's pharmacare program, said that doctors, who prescribe all medication, are unaware of the relative costs of the medicines they choose nor do they know what their patients actually do with the prescriptions after purchase. "Whether payment of a prescription is made by the patient or a third party insurer the buyer is in fact the physician, but the normal market forces of any industry do not apply," explained Tidball.
"Neither during a physician's training nor in clinical practice is he normally exposed to the economic structure of the system or held accountable for most of his purchase decisions." Tidball suggested this be altered in the future by making physicians aware of the relative costs of different drugs and keeping them informed about the extent to which their patients follow the proper regimen for the drugs prescribed. "The critical issue surrounding cost containment of pharmaceuticals through physician involvement is information," stated Tidball. "Given information as to what patients are doing with prescriptions, given relative cost information on existing or alternative services, the physician can be made a knowledgeable buyer and be in a position to alter the costs and quality of his health care decisions." If those working in the health care system and those who pay for it and benefit from it could agree on the need to control costs, the extent to which they should be controlled and what direction health care policy should take, the "legitimate adversaries" described by Theodore Marmar would be well on the way to cooperation. But, Marmar noted, it is important to avoid pointing the finger at any one section of the system and laying the blame on any one faction. "I hope scapegoats like CT scanners are not the principal preoccupation," he said. "They are not the central issue - they are a central symbol that has taken on a life of its own." Robertson on cooperation Brenda Robertson, minister of health for New Brunswick, summed it up when she said that cooperation is necessary in both planning the system and providing the services. "We must understand what the people expect, and the people must understand what we can give," said Robertson. "The process must be a participatory one to arrive at the right answers. The government can't do it alone .. . Those delivering the services are perhaps the ones to best understand how our system will go."E
CMA JOURNAL/NOVEMBER 17, 1979/VOL. 121 *-For Rx summary see page 1381
1403
