B.C. set to prescribe health contracts pegged on performance

Vancouver — The Globe and Mail

Surgery at Mount Saint Joseph Hospital in Vancouver September 22, 2010. Mount Saint Joseph Hospital is one of Providence Health Care's hospitals. (John Lehmann/The Globe and Mail/John Lehmann/The Globe and Mail)

B.C. is launching its offensive against swelling health-care budgets, promising faster treatment for patients with a new pay-for-performance plan in its hospitals.

Health Minister Kevin Falcon announced on Wednesday the first instalment in new "patient-focused" funding contracts. Just $23-million - a drop in the bucket in B.C.'s $15-billion health-care budget - is expected to transform into 33,000 surgeries and MRI exams.

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Modelled on similar funding formulas in Europe, it is the first of its kind in Canada, and the initial, small wave of funding is set to expand within two years to make up one-fifth of funding for clinical services in B.C.

Mr. Falcon said it will mean shorter waiting lists for patients needing back surgery, knee replacements, prostate surgery and a host of other in-demand treatments. As the funding expands, the number of services covered will also be broadened.

In addition to reducing waiting lists, he said the change is designed to help "bend down the cost curve" of health care, which has steadily consumed an ever-larger portion of the provincial budget.

The first round of contracts signed with the province's health authorities applies to only a tiny portion of their overall budgets - one-half of one per cent. The cash, which is being controlled by a new agency, will be paid out according to how many surgeries are performed and how fast patients are discharged.

Hospitals - or private clinics - can bid to do the work and will be paid a set fee for each procedure. If the facility can perform those surgeries or exams for less money, they'll be ahead. At least one health authority has opened up bidding to private clinics.

Mr. Falcon said he doesn't care where the procedures are done - as long as more patients are served.

"I absolutely refuse to get pulled into the phony argument people want to have about private-public health care," he told reporters. "What I care about is patients getting the service they need as quickly as they can. … as long as it's publicly funded."

Mr. Falcon said the current system doesn't offer the right incentives to drive more efficient health care.

"I believe very strongly that patient-focused funding is one of the best options to keep our health system sustainable by raising productivity and improving health-care outcomes," he said. "We're not just handing these dollars over to the health authorities and hoping for the best. We are buying specific outcomes and specific performance."

He said the money is in addition to increased funding to health authorities.

Les Vertesi, who is executive director of the new BC Health Services Purchasing Organization, which will oversee the contracts, said he is confident the changes will mean better service to patients.

"Our funding system has been an obstacle to quality, not a help," Dr. Vertesi said. "I know that $23-million sounds like a lot to some people, but believe me in health care it can be gone in a flash, often without having any idea of what you got for your money. This time, we know exactly what we are getting for our money."

The backdrop for Mr. Falcon's announcement was a surgical operating theatre used for training purposes at Vancouver General Hospital, where a patient dummy blinked and appeared to breathe on a gurney behind him.

The fake patient was appropriate, according to Adrian Dix, the New Democratic Party health critic, who dismissed the new funding formula as a sleight-of-hand confidence trick.

"So it's a game of three-card Monte they got going here. They are clawing back money from one place and putting it in another. And in the interim there are tens of thousands of more patients waiting for MRIs," he said.

"It's an attempt to make the same appear better but there is a waste and disruption to the system."