Proceedings of the Standing Senate Committee on
Social Affairs, Science and Technology
Issue 50 - Evidence
OTTAWA, Wednesday, April 24, 2002
The Standing Senate Committee on Social Affairs, Science and Technology met this day at 4:27 p.m. to examine the
state of the health care system in Canada
Senator Michael Kirby (Chairman) in the Chair.
The Chairman: Our witness is Dr. Duncan Sinclair, who was the chair of the Ontario Health Services Restructuring
Committee, which preceded three other provincial studies of the health care sector that received a greater coverage —
the Clair Commission in Québec, the Fyke Commission in Saskatchewan and the Mazankowski Commission in
Alberta. Dr. Sinclair's study was done almost two years before any of those.
We have asked Dr. Sinclair to come as the first witness in our move from the conclusions and principles of our fifth
volume toward our final volume on the subject of restructuring, which we will release at the end of October. We will
ask him to begin by giving us his overview comments and then we will ask questions.
During the hour while we waited, you had the opportunity for a conversation with our research staff and Senator
Morin, the former dean of medicine at Laval, who is also a member of this committee.
I should tell honourable senators that Dr. Sinclair is one of the best editors I have ever met. I prevailed upon his
excellent editing skills to look at an earlier draft of our volumes, which he undertook meticulously. I want to thank you
for all the editorial assistance that you have given to the committee.
Would you turn to your opening summary, and we will ask questions after that.
Dr. Duncan Sinclair, Former Commissioner, Ontario Health Services Restructuring Commission: The time is best
spent answering question, so I will be brief. I have read your volume 5 off the Web. I agree with virtually everything
said. It is a very good volume. If I may say so, it is better than some of the others.
I would like to make a few comments about it before we get on with the matter at hand. You opened with a
statement saying that the Canadian health care system is not sustainable without more money, and frankly, I disagree
with that. If you had modified your statement to say that the Canadian health care system, as presently organized and
operated, is not sustainable without more money, I would agree thoroughly. We do not know if the system is over-
funded, under-funded or just about right. Frankly, we just do not have the information necessary to judge.
My one concern about the nature of your report is that it leads the reader to conclude that money is the solution to
the problem. None of us knows that because we do not have the information.
Everyone recognizes that in order to get to where we ought to be, more funding is needed. The amount of that is not
known but it will not be cheap. That is an expensive proposition. The price of change is going to be substantial — I
agree very much with Ken Fyke who said so explicitly in his report, as did Michel Clair and Don Mazankowski. We all
agree with that.
The price of change must be spent in such a way that the providers of the members of health services do not become
lulled into the belief that this is more money in the system. It must be clearly identified as the price necessary to achieve
change. In my experience, Wildavsky's ``law of medical money'' applies — it says that there is never enough money.
Keep that in mind.
You refer in your report to ``ducking the tough financial issues.'' Again, I do not agree. The financial issue is not the
toughest issue; the toughest issue is how we change the system. How do we get people to buy into and contribute to
major change? That is really hard.
You refer frequently in the report to rationing. Let us be realistic that rationing will always be necessary. Rationing
— whether it is of health services or any other service — is a necessary condition. However, we need to be concerned
about the basis on which we ration services.
We have it absolutely right that those services should be rationed on the basis of the need for them, not the demand
for them, and certainly not on the ability to pay. I stand foursquare with every Canadian although there is quite a bit of
slippage coming that would have an increasing number of services paid for on the basis of the ability to pay — that is
creating the multiple tiers.
Your report refers to tax levels and competitiveness. I would ask you to keep in mind the principal argument that
has been advanced over the past many years about automobile manufacturing. It notes that Canada has a competitive
advantage by virtue of having the so-called health system that we do. The cost of manufacturing an automobile in
Canada is so much less than in the United States by virtue of the fact that we have a single payer insurance system that
meets costs in this country, which, in the United States are tacked right on to the price of the automobile. Therefore,
the tax level itself is not the only thing that contributes to competitiveness in a country, however that is obviously
where it is applied.
People can draw the inference from your report that we have to be very careful about increasing taxation less we
interfere with our competitiveness. The way in which we fund health care is a very good example to keep in mind for
``Delisting'' and ``two tiers'' are basically the same. You do not have three options in this regard; there are only two.
One is more money and the other one is delisting or whatever you wish to call it.
You make mention of incentives with which I absolutely agree, but I would ask you to consider how those incentives
are delivered. The only way in which you can deliver incentives is on the ground, that is, face-to-face with individuals
who are affected by them. That, then, couples devolution — not decentralization or de-concentration, but the true
transfer of power and authority — to more local levels. That is the only place where incentives can be exercised. One
size does not fit all. Senator Morin and I were talking earlier about what will work in rural and remote Quebec and
what will work in downtown Montreal are not necessarily even related.
I would argue very strongly for the principle of devolution. However, that should be coupled with the expectation
that the devolved authorities — be they regional health authorities, integrated health systems, primary care groups and
so on — would be held accountable to meet clearly defined objectives. Setting those objectives is in the nature of what
governments will have to do. They should get out of the management business and into the governance business — put
management on the ground where it in fact can be genuinely exercised.
One of the incentives that you stress prominently in your report is that of putting a cap on how long people should
wait. I would urge a bit of caution in that because we do not have very many waiting lists in this country. We have
many people waiting, but we do not know on what basis.
The Western Canada Waiting List Project is a very important one, and I am anxiously looking forward to the results
of that. The Cardiac Care Network of Ontario is successful. It is now being expanded to incorporate some other
cardiac-related services. However, most of our waiting lists are undisciplined founded on an absence of criteria that
have been argued through. Therefore, we have waiting on the basis of need rather than waiting on the basis of demand.
I would argue that currently we do not know the present mixture between need and demand. Many people are waiting
unnecessarily long periods of time.
It is kind of scary that we are heading towards making major policy changes on the basis of waiting lists that are
undisciplined completely. That is scary.
I will make a comment about research. The literature that applies to all business and industries except health care
over the past 50 years shows that the development of new knowledge and technology has resulted in vastly increased
productivity — largely through the substitution of machinery for people and of lower costs for higher cost people.
Speaking of research, we do need research desperately. Why has that not happened in health care? All technology
appears to be additive. That seems to go against the way technology is applied in other disciplines. The situation is
similar with knowledge.
Therefore, I was a little surprised to see your third chapter dealing with technology. I know people are concerned
about the absence of access to MRIs, CTs or radiation treatment. Those concerns are real. I do not wish to belittle
them, but the fact is that before we leap into an increased acquisition of technology, let us find out what we expect that
technology to do.
A reasonable expectation is that technology should increase the productivity as well as the quality of health care. We
do not have sufficient numbers of people devoting their research energies to that fundamental question.
I agree with your technology assessment emphasis, but I would expand it. I would have it applied to research
generally in the entire field.
I would be pleased to try to answer any questions that you may have.
The Chairman: I would like to clarify one point. I think we agreed with you when we were talking about ``not fiscally
sustainable,'' we were talking about the system as it is presently structured. Indeed, we made the same observation as
you, which is that putting more money into the existing system just to drive volume does not make sense. We must
restructure. As well, we agree that restructuring will cost money, and that, at least, would be new money put into the
We also agree that, after looking at some of the relative cost drivers, the odds are that you will certainly need more
money in the short term. It may so happen that you get deficiencies such that in the long term you need less, but our
view was that it would be a mistake to put all our eggs in one basket: to not have a contingency plan available as to
what happens if you do not save enough. It was in that context that we entered into the money issue.
I have two questions, particularly given your experience with restructuring the hospital sector in Ontario.
You have some doubts about whether it is worth putting in place the information systems required to enable a
hospital to know its costs of production. Let me explain what our incentive and rationale for that is, and see if you
have another way of getting at it.
Our view was that once you separate the payer and provider — which we felt was important to put an element of
consumer choice and competitiveness at the hospital clinic level — the only real way to pay hospitals and clinics was, in
fact, to pay them on the basis of what they did. Then, as the insurer you could go to the most efficient providers, or
alternatively you can pay all institutions in the province the same amount and certain institutions, such as tertiary care
teaching hospitals, would find that it does not makes sense for them to do certain things.
I attended a conference on the weekend with senior hospital administrators. The example they gave was it does not
make sense for a specialist at a children's hospital to do tonsillectomies. They are much cheaper and more efficiently
done at the community care level. There are two ways to get hospitals out of doing tonsils. You can use the ``command
and control'' model, which is to tell them to stop doing them, which we do not like. The second way is to price
tonsillectomies in such a way that they will not them because they cannot make any money at it, whereas the
community hospitals will.
Would you talk to us about how we can go about taking the principle of service-based funding to introduce an
element of competition among the hospitals and clinics? How could one implement that principle, what are its pitfalls
and are there particular incentives that would work?
By the way, I like one observation you made, which I thought about indirectly, rather than directly. You are
absolutely right about our moving to incentives being a move to devolution.
Since we are dealing with Ontario, I would like to hear your thoughts on primary care reform, which has been tried
— although not successfully — in Ontario. At least that is the impression we get. We know that will meet some
resistance from family practitioners. Indeed, I ran into some resistance at the discussion I had on the weekend. To
describe my perspective, I used the analogy of talking to bankers who used to think that when banks were open from
ten o'clock in the morning to three o'clock in the afternoon, they were providing real customer service.
To some extent, there is a need to change the thinking of the providers — to have them recognize that their job is not
forcing patients to fit into what is convenient for them, but to design a patient-oriented system and let them fit into the
system. That is a radical thought, although given that so many other industries have changed I would have not thought
that, but on the basis of my small, random sample since last Thursday, it does appear to be that way.
Would you give your comments on that, please?
Dr. Sinclair: First, with the hospital issue and paying them for what they do instead of the global budget. The global
budget concept was meant to have done just that. It was supposed to be based on what they do and be amended year
by year, but it does not work well and we know that.
I have considerable concern that if hospitals and, perhaps, other agencies and institutions go onto what amounts to
a fee-for-service basis, then we may indeed perpetuate abuse of the system — and I do not think that is too strong a
term as we perceive that from some physicians who have exploited the fee-for-service model.
The danger is very much less in hospitals, given that the hospital itself is not the gatekeeper. However, one would
have to be careful to avoid collusion between those who are the gatekeepers of hospital function and the hospitals
themselves. I am thinking particularly of the call back.
When I was at Queen's, we changed the mechanism by which all clinical members of faculty were provided
recompense. We went to an alternative funding model and away from fee for service. Before that, I used to get frequent
calls from referring physicians in the area, from Brighton to Cornwall to Perth, saying: ``What happened to my patient?
I referred so and so to a specialist six years ago for some particular ailment and he or she, as far as I know, is still
there.'' Sure enough, they were being called back, and their case was being managed as primary care out of the tertiary
centre because there was substantial economic benefit in doing so. When we transformed to the alternative funding
program, I received calls almost every day from referring physicians saying: ``I now recognize Harry once again, who is
now my patient, but quit sending me so many.''
There is a problem with going to that kind of function, but it is not a bad idea to have hospitals paid basically on the
basis of DRG, diagnosis related groups, and the volume related to those, much along the line of what is common in
some provinces, and also in the United States. That is a very good idea.
I have a concern about paediatric hospitals, because one of the things we have accomplished, to our great credit,
since the introduction of medicare is we have very few sick children. We really do have little need for paediatric
hospitals. One of the worst things that can take place — and the data are consistent with that — is that if a given
institution does a few of anything then they are not likely to do it very well. You have to produce economies and the
quality that derives from scale.
The great concern with paediatric hospitals is that if they become very few in number, as this logic would drive you
to, then you would have the displacement of children from their homes, who, if they had to go to hospital, would be
away from their families.
The Chairman: You would need a different set of rules for paediatric hospitals because of the nature of their
Dr. Sinclair: The nature of their clientele — their patient base.
If you were dealing with heart transplants I would not be as concerned, because if we had one centre for the whole
nation, you do have too many and you could go there.
The Chairman: You commented about volume, and I have heard some things anecdotally. The head of the Alberta
Medical Association happens to be an orthopaedic surgeon who now only does shoulders.
He said that he is not only better, but he is much more efficient, because all he does is shoulders. Someone asked, ``If
you needed a bypass, would you rather do it with a doctor who did 10 per year or 200 per year?'' Experience really does
make a difference. Would you verify that on the basis of your own experience?
Dr. Sinclair: Yes.
Senator Morin: In the last issue of The New England Journal of Medicine, two articles state that the best indicator for
quality of anything is volume, whatever you do, whether it is surgery or a diagnostic procedure. That is in the best
medical journal there is, and there were two different papers on the subject.
Dr. Sinclair: The evidence comes out of all other kinds of business and industry as well. One of the productivity
changes we have seen has been attributed to the greater specialization of the production function in all kind of
businesses. I agree thoroughly with you, but in my opinion, one has to be very careful to ensure that you also take into
account the character of the clientele, to put it in those terms. I am particularly concerned about children, who really
do need the close support of their families when they are ill.
Senator Morin: They also need quality.
Dr. Sinclair: Yes, and that is a trade-off.
The Chairman: It also refers to the set of incentives used in terms of pricing mechanisms. To get to your other point
about quality and volume being related, in one major metropolitan area, for example, you might have one hospital that
does all hip and knee replacements. Then you could price things so it would not make sense for any one else to do it
because they are so good at doing it in the one place.
Dr. Sinclair: We followed that logic in Ontario. Ontario's commission was a little different than the others in that we
had the power of the government to direct hospital restructuring and recommend on everything else.
The Chairman: You were an implementation commission as well as, effectively, a planning commission.
Dr. Sinclair: Yes, for that front end, for the hospital restructuring. We operated on that principle. We left open one
of the private hospitals in Ontario, the Shouldice Clinic, primarily because it does such a good job with hernias. It only
does hernias, and it does a lot of them, and it does them extraordinarily well.
The Chairman: Are there any other questions on the service-based funding?
Dr. Sinclair: The primary care reform principles that we articulated in Ontario are not just for Ontario. Our report
was directed at Ontario, but the principles are the same as for every other province. I do not think we are talking only
about Ontario here; we are talking about the country generally.
There are two key things we must do. One of them is primary care reform, and the other one is development for a
capacity for health information management. Unless and until we have that, even primary care reform will not tell us
anything because we need to have the data and information to evaluate how good or poorly we are doing.
You are right. Primary care reform is happening very slowly and tentatively in Ontario despite our reports now
being some three years old. The pilot projects have been running for six years, but they affect very few people. It is
proceeding extremely slowly.
My view is that this is primarily because of the anchors that have been provided to the primary health network.
These anchors are in the form of the framework agreements that were negotiated between the government and the
Ontario Medical Association. Those agreements make it absolutely clear that primary care reform must continue to be
entirely doctor centric and that it is not possible for the implementation committee to operate under the kind of rules
we thought necessary to achieve primary care reform quickly.
The Chairman: What do you mean by ``doctor centric''?
Dr. Sinclair: The network chaired by Ruth Wilson has no money or authority to provide funding for nurse
practitioners, for example, nor for the purchase of existing physical facilities, nor for the construction of new physical
facilities. It really is focused almost entirely on physician recompense.
The Chairman: Are you saying that the issue of primary care reform, its success or failure, has been put in the hands
of the current practitioners to call the shots?
Dr. Sinclair: No, it is put in the hands of the Ontario Medical Association, which negotiated with the government
the two fundamental framework agreements within which Ruth Wilson and her colleagues could operate, and they
apply to urban physicians and rural physicians. They do not apply across the spectrum of primary care reform.
One of the fundamental things about primary care reform is that we did not refer to it as family medicine reform.
We referred to it as primary health care reform, which incorporates a lot more people and skills than physicians alone.
The reform effort in Ontario is going so very slowly because it has been restricted to a focus on physicians, excluding
the necessary parallel focus on other health professionals.
The Chairman: How could we do that? Forget about Ontario for a moment. If we were to suggest something to a
province that is just embarking on this, what are the two or three things that you would tell them to do or not do to
avoid the problem?
Dr. Sinclair: If I were the federal government, I would not tell them how to do anything. If we are going to get from
where we are to where we want to go, we will need full and enthusiastic federal-provincial partnership in this business.
The Chairman: I meant, ``suggest'' rather than ``tell.'' What would you suggest to them?
Dr. Sinclair: Primary care reform must focus on the spectrum of health professionals who must be involved in this
provision. This includes physicians, nurses and nurse practitioners — of whom we do not have nearly enough to
provide services — pharmacists, occupational therapists, physical therapists, dieticians and clinical psychologists.
Primary health care is a much bigger thing than medical, and that is absolutely key.
Physicians now are involved in the provision of a range of services that precludes their utilizing their very long
training and experience to the full. Many are not now providing anything close to comprehensive care. A relatively
shrinking numbers of physicians are providing primary care obstetrics, for example. This has been referred to
obstetricians for a very long period of time. Many provide for counselling, and frankly, having been a medical
educator, we do not equip our medical graduates as counsellors very well. Many other health professionals are better
qualified at that, including nurses.
The Chairman: Why do they do that?
Dr. Sinclair: It is easy work. Many physicians who, as recent graduates, do not start up practice for many years; they
spend the time working in walk-in clinics and providing services at regular time intervals. If you can schedule your
work from 9 to 5 or 8 to 4 and not see anyone who is sick, that is easy.
Senator Pépin: You said it has to be teamwork. Your approach is similar to the report of Mr. Clair in Quebec. He
said that everyone has to work as a team. Listening to you, I am hearing the same thing.
Dr. Sinclair: Michel Clair and I have been on several platforms together, including just last week in Montreal. It was
a waste of money, because you get the same opinion from both of us. Only spend your money on one.
Senator Fairbairn: I would like to go back to your comments on waiting lists because we certainly hear a great deal
about waiting lists. Who would you suggest should set out the well-understood criteria?
Dr. Sinclair: Those who provide the service should do that. They are the experts and when they get together, locked
in a room, they will develop the criteria just as it happened with cardiac care in Ontario. We had waiting list problems,
and one of the solutions was to bring the consultant cardiologists and the cardiac surgeons together and ask them to
develop the rank order of criteria that should be applied to produce a disciplined waiting list. They came up with that
information and soon, the list was categorized into three bundles: urgent, necessary and can wait for a while. Within
those three categories, definitive criteria were established and the waiting list disappeared.
Senator Fairbairn: Those criteria would govern the suggestion of the physician who is, for example, ordering an
Dr. Sinclair: Yes.
Senator Fairbairn: Would there be criteria that could override the physician's sense of urgency for the patient to
have that MRI.
Dr. Sinclair: Yes, but the criteria ``would'' override.
The Chairman: Dr. Sinclair, the system you describe is a cardiac care network in Ontario whose members
collaborated and developed the criteria, which resulted, in large measure, in the elimination of the biggest waiting list
problems. Is that correct?
Dr. Sinclair: Yes. When the Cardiac Care Network said they had a waiting list problem, they said it with such
credibility that the government quickly invested in new capacity.
The Chairman: My question is self-evident. Everyone points to that as not only the best illustrative example of
waiting line management but as the only illustrative example. It works well, and that seems to be acknowledged by
people inside and outside of the profession, so why has this not become common practice?
Dr. Sinclair: The criteria interfere with the professional judgment of the individual about the urgency of need. They
have created a very disciplined waiting list that is much like a clinical guideline, in fact. It represents a collective
opinion of the best experts and there will always be people who do not agree with it. We have operated in a system
where we respect the judgment of the individual physician very highly, and so we should respect the physician.
However, in this case we decided collectively that we would apply collective judgment that would override individual
Senator Morin: Cardiac care and cardiac surgery are different from any other medical situation. Those waiting lists
throughout the country are well-managed.
Senator Pépin: If we discuss cancer cases, there are two issues to be considered: the cancer cases themselves and the
available beds for cancer patients. In my province, they reduce the number of beds available for two or three months
during the summers. I agree that people are competent enough to know whether it is urgent or it can wait. However, on
the other hand, it becomes necessary to send some of our cancer cases to the United States for treatment. If they reduce
the number of available beds, then they have to work in collaboration with the directors of the hospitals to determine
who should be treated where. The number of available beds is important for those cases.
Dr. Sinclair: The point I am making, senator, is that regardless of the resource — a bed in a cancer ward,
radiotherapy, chemotherapy or cardiac care — it has to be rationed. It is a fact of life that we have to ration everything.
There will not be open-ended access to everything. Fairness demands that the rationing device to determine who
receives access first, second or third, should be disciplined by collective and good judgment about the criteria that
should apply. I do not agree that cardiac surgery is different from all other kinds of treatment. In fact, I believe that it
is illustrative of every procedure.
Senator Pépin: I have to admit that I like to be rational, but we have to work together with what is available to us.
However, it has been shown that there have been urgent cases of cancer requiring radiotherapy and they could not
provide that service. That is why the patients were sent to the United States. If we want to keep our people in Canada
for treatment and we want to work to establish a good system, then I agree that the only way to accomplish change is
to have people learn to adapt. On the other hand, I am still struggling with that.
Dr. Sinclair: Senator Pépin, we do not know. I agree it is absolutely clear that there are people with very urgent
needs who have been sent to the United States or to other provinces. We do not know the relative urgency of the need
of those people who are already occupying the beds or time on the radio therapy machine, et cetera. Are the very
urgent cases gaining the priority that they need to avoid the necessity of travelling to the United States, for example?
We do not have that knowledge.
Now, the cancer groups are trying to generate that knowledge, but we are still walking along like babes in the
woods. The Canadian Institute for Health Information, CIHI, estimated that we spent, in total across Canada last
year, $108 billion on health and health care. Yet, we are operating this so-called system on the basis of an information
system that would be considered seriously deficient by an owner of an ordinary corner store. We just do not know what
we are doing because we have no measure of benefit whatsoever.
We have no records about the total number of interactions that occur between consumers and producers of health
care. We have reasonable records for hospitals, but we have no collective records for any of the other areas. The
homecare records, for example, are completely incompatible — where they exist — with hospital records. Who knows
what the range of record systems is in physicians' offices? Before I would spend much money to resolve a waiting list
problem, I would first want the data so that I could know if I have a problem.
We certainly have the manifestation of a problem that some individuals who require services urgently are waiting
too long. However, we do not know why they are waiting too long. Are there people with less urgent needs ahead of
them in the line? We do not know the answers.
The Chairman: That is why you place great emphasis on information systems, and I presume patient records
constitute part of that.
Dr. Sinclair: Yes, that is part of it.
The Chairman: It is only a small piece of it.
Dr. Sinclair: The information system is not a technology issue, as you pointed out well in your report. It is a
discipline and management issue. Ask any businessperson what his or her most precious resource is and they will tell
you that it is information about the interaction of their business or industry with their customers. We do not have any
of that. We have no mechanisms in place even to identify our customers or our providers.
The Chairman: How much of that is because we do not think of them as customers? The mentality is not one of
customer service; the mentality is one of looking after the patient because the patient is sick, but not that the customer's
view ought to be taken into account.
Dr. Sinclair: The system we are trying to build is concerned about patients, but it is also concerned about people
who are not patients. As one wag put it, ``We are concerned about a prospective patient seeking to avoid becoming the
real thing.'' If we move to capitation funding, we then put the focus of the health services system on the people, some of
whom will be patients and some of whom will not be patients.
Senator Roche: Thank you for your testimony, Dr. Sinclair. We are embarking today on volume 6, dealing with
financial recommendations. I was struck by your opening comment that we should be careful about the emphasis we
put on money alone being the solution and tying that to restructuring needs.
Can we recommend that a certain amount of money is needed in the health care system before having restructuring
implemented? Do we first restructure and then get the money needed for the restructured health care system or do we
put the money in and try to restructure at the same time?
Dr. Sinclair: I do not believe that we will be able to get change — much less productive change — in our so-called
system without paying for it. In other words, the restructuring itself will cost a substantial sum of money.
With regard to financing for the restructured system, none of us knows what an effectively restructured system that
operates efficiently would cost. We have to leave the question of what such a system would cost until we know that,
and we will not know that until we have restructured. It is a chicken and egg situation.
I would focus attention almost entirely on the cost of restructuring, which will cost a substantial amount of money.
It will also require a change in the way in which the provincial and federal governments work together. I believe
entirely what you have said in your report. The majority of Canadians are looking for leadership on this. They are
looking to the federal government and also to the provincial governments. Given the nature of Canada, the federal and
provincial levels have to solve this together. Unfortunately, solving the issue of federal-provincial tension may be a
greater problem than finding additional money.
Another cost of change will be that some of the vested interests will not like it because they will have to share the
hilltop with others, and some of them may slip off the hilltop. People do not like that. It is not only what they earn; it is
their status, power and all of those things.
In addition to health care, primary health care includes nursing, occupational therapy, clinical psychology and so
on. Therefore, the role of team captain will have to be shared, and some people will not like it. Many changes will have
to be made and not everyone is amenable to that, although a little money often helps.
Senator Roche: This issue is unclear in my mind. You said a couple of times that a substantial amount of money is
needed and that the restructuring process itself will take money. Our schedule mandates that we produce a report
making recommendations for the expenditure of money.
Can you say in general terms how much will be required for the restructuring process itself? A restructured process
would require a certain amount of money to maintain it with the values of the Canada Health Act intact. I believe that
the Canadian government is injecting $27 billion over the next five years. Will that be enough?
Dr. Sinclair: Let us say that in round figures, including both private money and public money, we spend $100 billion
a year on health care services in Canada, although that is a slightly low estimate. Approximately 70 per cent of that is
public money. We do not want the share of private money to grow. Frankly, it does not matter much whether it comes
from public money or private money; it comes out of the gross domestic product, out of the pockets of all Canadians.
We know that it is more efficient to take the money from the public pocket, because we then have one insurance
company. This allows for government efficiency, which may be a big allowance.
Using the figure of $100 billion per year, public funding is about $70 million. Let us estimate that the cost of change
— the price of restructuring — will be approximately 10 per cent of that, or $7 billion a year. I suggest that it will be
necessary to secure federal-provincial collaboration and that those costs should be shared evenly — that is, $3.5 billion
from each level.
That is back-of-the-envelope thinking, but I do not think it is off the wall. In fact, you may want to front-end load
that a bit. Perhaps in the first couple of years, the federal government would contribute $5 billion because a particular
concentration of that money needs to go into the development — as rapidly as can be done — of a capacity for health
The Chairman: That is capital intensive.
Dr. Sinclair: Yes.
Senator Roche: Thank you for that. Suppose the federal government put in $3.5 billion and the provinces do the
same, then we would have a system that is restructured.
Dr. Sinclair: If you did that for 10 years, you would have a restructured system.
Senator Roche: This has to go on for 10 years?
Dr. Sinclair: I would think for 10 years.
Senator Roche: That is interesting. At the end of a certain period of time, we would then have a restructured health
care system that would be reasonably adequate in meeting primary health care needs and the other things we have
If the system is costing $100 billion now, and even when you allow for inflation, would a restructured system mean
that we could spend less money on health care, because it has been restructured and more efficiency has been built into
the system? If my thesis is correct, allowing for inflation and population growth, instead of the $100 billion jumping
each year, it might hold or be slightly less as a result of efficiencies brought about by a restructured system. The money
put into restructuring would be returned at the other end of the pipeline. Does that make sense to you?
Dr. Sinclair: Yes. Again, none of us has the information to know. My conviction is, on the best evidence I can
muster, that if we had a genuine system that was structured and operated efficiently, we are spending enough of the
gross domestic product on health care services to optimize the health of the population. It would not, in the long run,
cost more money.
There would be a bump in between. I think it would take 10 years. My caution is, do not put that into general
revenue but into a restructuring fund, or something similar, and put it in the hands of someone who will provide
consistent governance of that restructuring fund over a period of however long it takes. It cannot be subject to the
whims of the moment. It has to be a very focused long-range attention on restructuring the system. The range must
exceed the range of the normal political focus of four years maximum.
Senator Roche: Finally, is it correct then to say that restructuring and money go together?
Dr. Sinclair: Yes. It is the price of change.
Senator Roche: You said 50-50 in the restructuring. In your view, would it be realistic for us to try to persuade the
government to take those numbers, 50-50?
Dr. Sinclair: That is where I would start. I might even go beyond that. Given the provinces are, in the main,
genuinely strapped, I would ask the federal government to create a technology fund like the old health resources fund. I
would work at investment in such things as MRIs, CTs and radiotherapy machines for the next 10 years.
I might go so far as to say let us offload from the provinces the price of providing the population with better access
to prescription drugs and create a kind of national pharmacare program. It is a tough problem for every province to
deal with, and I think you might get agreement. That would enable the provincial and federal governments to make the
investments and changes. I appreciate that those things are easier said than done, but I would have a go at it.
Senator Cook: Thank you for your wisdom. I live in Newfoundland, where there is one tertiary care hospital. In the
early 1990s, we reduced five physical sites to one hospital with two sites. If memory serves correctly, at that time the
deficit at the main tertiary care hospital was about $1 million. Recently I read an article that says it is $11 million.
Perhaps the figure of 10 per cent is close.
If today their wish list was granted, are they at the point where the change is complete and they can move on to be
self-governing or self-supporting?
Dr. Sinclair: I am not particularly familiar with the circumstances in Newfoundland, but I would ask Sister
Elizabeth Davis and she will be able to tell you whether they are or not.
I come back to a comparison with other businesses and industries, where the principle of economy of scale applies
and the principle of higher quality deriving from a scale of operation also applies, as Senator Morin has pointed out,
from the recent articles in The New England Journal. We must be able to achieve the same things from not only
hospitals but also provision of other kinds of care throughout the whole health services system. To a degree, that is also
what primary care reform is about.
I cannot imagine circumstances, in a municipality such as St. John's where access to services is not really an issue,
where a consolidated enterprise cannot operate more efficiently and cost-effectively than the institution separately.
Senator Cook: At the time, the sister gave five years. In that time, she felt the change would be complete and we
could move on.
On a different area, are you saying that we need to look at the gatekeeper of the system, the physician, in order to
bring about meaningful change?
Dr. Sinclair: Yes. I am not particularly concerned who they are, but I think it needs to be gatekeepers other than
physicians. We need to have in place incentives so they actually keep the gate instead of waving everyone through.
The Chairman: The gatekeeper needs to be a screen as well.
Dr. Sinclair: Absolutely. There are those who will say that is contrary to the role of a physician, which is to seek to
optimize the care of his or her patient. In that case, the gatekeeping function is inimical to that.
The Chairman: If it is not the physician, who is it?
Dr. Sinclair: That is a very good question. I believe that physicians and nurse practitioners and nurses, those
providers to whom people come for primary judgment whether or not they need care, and if so, what care, have to
accept the responsibility of being both advocates for their patients and effective gatekeepers for the system. Otherwise,
we run the risk of replicating the worst of the American HMO system where you have what amounts to an insurance
executive keeping the gate. That is rationing on the basis of ability to pay, not necessarily the individuals but of the
companies, which in my opinion, is wrong.
The Chairman: That would require, then, that in developing these incentives or payment schemes for primary care
reform, you need to develop them in a way that would encourage the appropriate use of the gatekeeper function.
Clearly, fee for service does not do.
Dr. Sinclair: Absolutely. Having said that, I am prepared to rest my confidence in the professionalism of physicians
and other health professionals to do this well. They would keep the gate on the basis of their assessment of genuine
need assisted by the availability of agreed-upon criteria, particularly for expensive categories of need, such as open-
heart surgery, angiography, radiation therapy, and so forth.
Senator Morin: Mr. Chairman, I had the opportunity to talk with Dr. Sinclair for quite a time before the meeting, so
some of my questions were answered.
You talked about the HMOs. I am sure you are not talking about all the American HMOs. We had a chance to talk
about them. There are some outstanding examples that we could follow in Canada, such as the Kaiser Permanente. I
am saying that for the record because I am a strong proponent of the Kaiser Permanente. You more or less told me
that this was the model that you had suggested in your report.
Dr. Sinclair: As the old saying goes, if you have seen an HMO, you have seen an HMO. The range is from the
wonderful to the awful. I believe that Kaiser Permanente, Puget Sound and the Intermountain Health Care systems
live on the wonderful side. They generate very high patient satisfaction and data. Recent articles comparing Kaiser's
performance with the National Health Service in the United Kingdom, for example, point to an effective operation.
Having been there and having seen it in operation, I am very impressed. We need to take some lessons.
Senator Morin: I am interested in your conclusions and the basis of your remarks that restructuring the system is a
major cost-saving operation. I would be interested to have more details. I know you recommend primary care, as well
as some restructuring on the hospital side. I think these are the two major points of restructuring that you recommend.
Could you give us more detail at to where you see major cost savings could be accomplished? How do you see this?
Do you see this more at the primary care level or more at the hospital level?
Dr. Sinclair: In my view, it must begin with primary care, with effective gatekeeping and with the utilization of the
many health professionals to the full extent of their training. Thus, we have primary care physicians who are doing
genuinely comprehensive practice. They are delivering babies, doing minor surgery and the full range of things for
which they are qualified and trained. We have nurse practitioners who are offering comparable services and so on.
When the commission was operating in Ontario, we did a study of the billing structure in Ontario by both specialists
and primary care physicians. The conclusion of this international panel of physicians was that a little over 20 per cent
of the services provided by specialist physicians were in fact primary care. Approximately 80 per cent of the billings by
family physicians were for services that could and should be provided, and in many countries are provided, by other
health professionals. That is a big saving.
In fact, the model we developed in Ontario for primary care reform — if imposed over a period of five years —
would result in increases in income and substantial increases in the benefits available to primary care physicians and to
nurse practitioners and others, would transform us from a physician shortage to a physician surplus just like that. That
has to be a major source of savings.
Senator Morin: Why? Where?
Dr. Sinclair: In the rate constants. If you are substituting lower cost labour for higher cost labour, you are saving
Senator Morin: You probably know about the Quebec experience. As soon as they were thinking of, for example,
having pharmacists give drugs without prescription, they immediately asked for an increase in professional fees
approaching about $30 per prescription because they were now doing clinical work. Therefore, they asked for a 50 per
cent increase. Nursing practitioners now want double the salary of an ordinary nurse.
If you give them additional responsibilities, they want additional compensation, and I do not blame them. When
you give people additional responsibilities, they want increased pay. I am not sure that after five years we will have
what you describe. I am not saying that I am strongly in favour of the concept. I do not disagree with you; you are the
I am not sure the savings will be as great as we think they will be because the salaries will creep up. As soon as you
throw money at the system, immediately everyone goes on strike because they want more money. I am not sure that the
system will not keep creeping up as it is. However, I hope you are right.
Dr. Sinclair: I would not pretend to be an expert on this. In my experience, we do know that we have added money
to the system — most recently a year and half ago in the amount $23.4 billion, which disappears into rates very quickly.
Without a discipline on the rates structure, we are lost. Frankly, the absence of that discipline results from
governments trying to manage rather than govern the system.
Devolution is the way to go. We should not bargain province wide the rates of anyone. In fact, we should get out of
the payment business. Let people figure out how much and for what to pay themselves. The responsibility is there.
All these people are human beings, just like you and me. They want to improve their status in life. They also want to
do a good job in caring for people who are ill, which is why they became health care professionals in the first place.
Given a relatively local capacity to set rates, I believe that we would be a lot better off than we are now.
Senator Morin: Your report is based from 1999. It is the best report I have seen on primary care. It is still the Bible
as far as I am concerned. No other report has gone as far and extensive and in such detail as yours. It is still the basis of
our recommendations as far as primary care reform is concerned.
Dr. Sinclair: Thank you, Senator Morin.
Senator Pépin: It is well recognized right now that nurses are underpaid. I went to a recent medical meeting where we
were told that more and more women are going into medicine. I am not sure that they will be as well paid as male
doctors are right now because everywhere it happens the salaries have been decreasing.
That is only a remark. However, I have to tell you that because it worries me.
I agree that we have to be rational. We have to have better information to function better. However, it is very hard
for me to deal with sick people in a business way. I agree with you when you say we should deal with the services in the
way that people deal with business, because we will be more efficient. Perhaps it is my nursing background, but it is
difficult to deal with sick people and say we have to have priority and we have to deal with it as a business. That it is my
own problem, but I think that is very difficult.
You talk about the waiting list. That should be the first step. If you say they can prioritize the waiting list and after
that decide they have so many urgent cases, they will probably be able to get the number of beds they need and also the
number of staff they need. If the professionals all work together and if they say we have 10 urgent cases, they will have
to find 10 beds and the personnel required to look after those people.
Dr. Sinclair: I must say that I always feel a little uncomfortable using either the term ``health industry'' or comparing
health care to an industry in business. However, the fact is that we describe ourselves as having a system. If in fact we
do have the ambition to have a genuine system, we have to think about it in systemic terms and that leads us to
considering comparability to other systems.
I share your discomfort in talking about waiting lists with people who are on those waiting lists but as I have said
many times, I do not have the information to argue with you about the waiting list. You do not have the information.
You know that you want the service faster, but I do not know who is ahead of you or who is behind and why they are
ahead and behind. Until I do, I cannot discuss it with you. We cannot even approach the need of a system unless and
until we have that information.
I want to say one other thing with relation to beds. We do know that we here in Canada are still pretty profligate in
terms of our use of the hospital bed per se relative to other countries. Most other countries have fewer hospital beds per
unit population and the evidence is that their health status is not less than ours. In fact, in many of them their health
status is worse than ours. We do not have those data. I know the Kaiser Permanente use of the hospital bed is much
less than ours. The satisfaction of their patients, and those who are not patients but who are members of Kaiser
Permanente, is very high. They do not have a higher incidence of cancer.
I do not think we should be satisfied until we have gained the data to know why it is that we are different from these
other jurisdictions. We should be as efficient. There is no reason we should not. We are a well-developed and rich
country. We are not stupid. We have as many powerful minds in this country as other countries so there is no reason
we should not do as well.
Senator Morin: We had a witness appear before us in Toronto concerning the waiting lines, and he said specifically
that the provincial health ministers forbade him to give any public information about the province's waiting lists. They
were quite prepared to do a study on the waiting lists of various provinces and compare the waiting lists but the
provincial ministers prevented that. It is not as simple as all that. There are all sorts of impediments at all levels.
Dr. Sinclair: I will leave that impediment to you since you are far more expert than I.
Senator Fairbairn: I would like to carry on this discussion by asking you a ``what if'' question. What if a person with
a very distinguishable disease such as cancer — and as you said at the moment we may not know who is ahead and why
and why someone should be behind — whose physician or specialist believes they should be getting a certain kind of
treatment or surgery. The system, as well as it can be constructed, says you will have to wait for this because it does not
quite meet the criteria, but you can be assured that within some months something will be available.
You still have a physician who honestly believes that you are in trouble and so you reach into the Mayo, or some
place in the United States, and wherever you are in Canada you are told there will be no compensation for you because
the treatment is available in Canada. What would be your response in a new regulated system of health care that we
would have? Would it be that there must be a change in provincial attitude towards compensation under these
circumstances, or are you really in control of the system and if you wish to go and get that treatment you finance it
Dr. Sinclair: My answer right off the top of my head — and I would like to think my way through that scenario
perhaps a little more deeply than I have time for — is that your idea in volume 5 of paying for an alternative, for an
urgently needed problem, is a good one.
However, I would not have the government pay for it, I would have the organization that refused the service pay it
in the first instance. If they say they are absolutely at capacity then I would ask that you show me that in fact that you
are operating at maximum efficiency and you may well be right. In that case, I would reimburse them for the additional
charge but I would not hold up the patient as a consequence.
Senator Fairbairn: That goes back to the sense of the original questions that concerned both Senator Pépin and
myself. In fact, the suggestion I am making is pretty close to a real situation of which I am aware. When it comes down
to that crunch you either do it under your own funding or you cannot. If you do not have the funding then that is the
Dr. Sinclair: Absolutely.
Senator Fairbairn: That is a terrible wall to even contemplate.
Dr. Sinclair: I quite agree. The problem with the second tier — which we can access just south of the border — is
that many do not have access for financial reasons. That is unfair and we should not allow that. I am with you.
To pursue that further, I would want the institution concerned to demonstrate that if OR time is the limiting factor
and the limiting factor is that there are not enough anaesthetists, I would ask: Why are we not using nurse
anaesthetists? Other countries use them; they expand the use of time. The evidence is that they are doing an excellent
job. Why are we not using nurse anaesthetists in Canada? The same holds true for other categories such as
rehabilitation technicians. Utilizing these categories more would make the work of physicians and others go further.
There was a good paper in the journal Health Affairs about two months ago that compared the primary care
provided by physician assistants, nurse practitioners and primary care physicians. Data are not great, but reasonable.
There was no apparent difference in the quality of care or the satisfaction of the patient concerned. The two differences
that were outlined were that the physician assistants and nurse practitioners ordered fewer tests and spent more time
with their patients.
Senator Cook: Do you have any statistics in regard to the cost savings that would be accrued for home care
following a surgical procedure in comparison to a patient recovering in hospital?
Dr. Sinclair: We do know that the hospitals have the highest rate in the system. One says intuitively that we should
get people out of hospitals as quickly as possible and into home care. However, we also have examples where people
were given service through home care that was more expensive than would be experienced in a hospital.
We need to collect data by class of procedure, but we also need the capacity to modify the application of those rules,
if you will, by the individual. If the individual goes home to a remote community in the Avalon Peninsula, or elsewhere
in Newfoundland, where homecare is really not available, then we must deal with that as an issue of care, not as a
Frankly, I believe that if we put more investment in greater capital capacity for nursing home care and financed
nursing home care on the strength of not how many bodies there are, but on the relative abilities of those people to
manage daily living, we would be much better off.
Senator Cook: I should have interjected the words ``appropriate home care.''
The Chairman: Dr. Sinclair, thank you for coming.
The committee adjourned.