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outsourcing of health care isn’t privatization

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Screenshot 2023-06-29 140840. jpg

Screenshot 2023-06-29 140840. jpg

By Åke Blomqvist

Following passage of the Ford government’s Bill 60, Ontario’s ministry of health now has the option to contract out to independent clinics the provision of certain kinds of health-care services normally provided in hospitals. Its opponents have cast the bill as favoring “privatization” and as a threat to the Canadian model of public health care. An emotionally charged television commercial commissioned by the Ontario Public Service Employees’ Union (OPSEU) conjures up a dystopian future where stone-faced capitalists in dark suits push a gurney with a teary-eyed post-surgery patient through dim hospital corridors and present her with a touch screen that she must push to pay for pain relief. In case anyone missed the message, the camera pans to the patient’s face when an automated voice and the touch screen repeat the phrase “insufficient funds” over and over.

The commercial’s cynical use of emotional imagery mirrors some of the crude tactics of conspiracy theorists who imply the government has a nefarious secret agenda. But its basic message is simply wrong. Bill 60 is not about privatization. Nor is it a threat to publicly funded health care. All it does is give the government more flexibility in how it contracts for the production of health-care services.

Under the Canada Health Act, the cornerstone of Canadian medicare is that the cost of all “medically necessary” physician and hospital services should be paid for by each province’s insurance plan, with no out-of-pocket payments from patients. But while services must be paid for publicly, they can be supplied by private firms, or in privately owned facilities. In Ontario, the production of most health services has long since been out-sourced: it takes place under contracts with private providers. Most physician services are delivered by physician-owned practices, and most hospital services by facilities legally classified as private non-profit entities (most of them charities, in fact). Bill 60 simply widens the scope of this contract so the government can buy medically necessary “hospital services” either from traditional hospitals or from free-standing specialized clinics. Such clinics could be organized as private for-profit firms, but when treating publicly funded patients they would not be allowed to charge them: Their only revenue from such patients would be contracted amounts they would receive from the provincial plan. Bill 60 gives the government more than enough tools to prevent the kind of nightmare scenario the OPSEU commercial conjures up.

Surgeons and others who are interested in starting free-standing clinics presumably think they can provide services more efficiently than traditional hospitals can, even given the detailed rules they would have to comply with regarding the quality of care. For one thing, new independent clinics would not be bound by the collective agreements existing employers had negotiated with their unions and would therefore have more flexibility in both hiring and managing their human resources. This is likely one major reason why OPSEU and other unions are so adamantly opposed to Bill 60: If the province can outsource more services to new private clinics or other independent firms, unions representing hospital workers and other traditional suppliers will very likely have less bargaining power when they negotiate terms and working conditions for their members. Plus, they may lose members to the private clinics. But if new providers can produce more efficiently and at lower cost, patients and taxpayers gain, and health-care workers may be able to negotiate less stressful working conditions than many of them have in today’s system.

The government of Ontario should think about how to contract for insured services with private clinics without causing staffing problems for traditional providers but should definitely start experimenting with this model in the specialties and places where the prospects seem most promising. And it should monitor outcomes. If Bill 60 supporters are right and the result is shorter wait times and lower costs, the model should try more widely; if the critics are right, the government can simply go back to traditional providers. But the only way to find out which model works best is to allow the new model to compete with the old one. If ideology and scare-mongering commercials prevent that from happening, we will never know which works best.

Åke Blomqvist, an adjunct research professor at Carleton University, is also a research fellow at the CD Howe Institute.