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Which way should I take from here ? That depends on where you want to get to. I don’t care where. Then it doesn’t matter which way you walk.
-Alice in Wonderland.

Regional Health Care:
P&A Discussion Letter for OISD - an approach to solution. - October 1994
Submitted to the BC Minister of Health and members of the Okanagan health administration
Copyright 1994, all right reserved by P&A Management.

No part of this paper or publication may be reproduced or in any other form stored in a data base or retrieval system or used in any form without prior written permission of P&A Management.

A P&A Discussion Letter..
P&A Management addresses the strategic issues facing private and government organizations and formulates and implements creative solutions across all disciplines from the customer and marketplace to information systems, manufacturing, and technology.
Approach to a new model and system for Health Care..
A Regional Demonstration Project.
The background.
The present health care system is an outdated postwar model from the seventies. Socioeconomic factors are responsible for improved somatic and mental health in our community - not the health care system. The present system is actually hampering further socioeconomic development. In that regard the current system contradicts its own purpose.
The end of the postwar-coldwar economy is now forcing many countries to reorganize fiscal and government programs such as health, social care, and education. Economic reality can no longer be ignored. British Columbia’s decision to reorganize the health care system into regional boards and community health councils is a step in the right direction. However, the decentralization in itself will not solve the strategic issues facing health care, nor will it reduce the nonsensical overall financial burden of health care on our economy which is depreciating the Canadian quality of life.
The Health Care System, while being the most abused, has also been the most analyzed and studied system in the OECD countries. For decades, thousands of health care academics, executives, consultants, politicians, authors, and journalists around the world have made a living by copying each other, and by discussing and debating issues already well known and documented. Despite this, the health care system has continued to be worshipped as a ‘golden calf’ with few significant measures taken to resolve the core issues.
Canada’s health care consumption has increased from three percent of GDP in the sixties to nearly ten percent in the nineties. That does not include the growing consumption of alternative care, treatment, and medicine. As the standard of living increased, the consumption of health care should have decreased, yet in Canada as in many other nations, this has not occurred. The major influence on increased consumption is not an aging population or disease but the utilization of services and capacity by the "trivially’ sick who are out-competing the truly sick for resources.
During the nineties the social and political establishment is being forced to recognize that the consumption of health care does not reflect the state of health in the population and that the increasing financial drain on the economy is severely hampering Canada’s competitiveness. In Canada, reorganization of outdated postwar models and systems such as health care, is crucial for our global competitiveness, job creation, and ultimately for our quality of life.
British Columbia’s decision to decentralize the decision process closer to the community and the user of health care will create a new platform, but will in-itself not solve the strategic issues. Sweden, for example, has had regional managed health care since the sixties but still faces the same problems.
A successful reorganization will require a new model, method, and system for providing and managing health care which interacts and integrates with other programs. This discussion letter proposes that care organizations in the Okanagan form a demonstration project with the purpose of developing and implementing a new model for regional health care.
The purpose of this discussion letter..
This discussion letter addresses the overall strategic issues facing the health care system and formulates a regional approach to solution. It is important to emphasize that this letter does not formulate a solution, only an approach to solution. The purpose is to initiate a discussion around the possibility that the regional healthcare boards and staff in the Okanagan, in the form of a demonstration project, take the initiative to implement a new model and system for regional health care.
Spin-off for other sectors. .
Currently much expertise, technology, and equipment is ‘imported’ from outside of the Okanagan. As regional problems are solved at regional levels there is an opportunity for spin-off development into almost all sectors of the local economy. Much of this development including a successful health care model can be ‘exported’. Across Canada, the United States, and around the globe, countries are crying out for new solutions to common problems.
The Health Care System in Perspective..
Adapted from England, Canada and BC’s health care model was built up during the sixties and seventies period of postwar growth - the ‘growth equals prosperity’ model. Natural resources, manufacturing, and the military sector fueled the consumption, tax base and government programs with low educated, well-paid jobs in an expanding domestic market.
Canada could afford to expand government programs based more on political consideration than the reality in the economy and the community. This expansion created the deception that the health care system held the overall responsibility for the individual’s somatic and psychological health and fostered the entrenchment of current health care values. The result has been a psychological consumption of health care - where consumption is motivated by belief rather than actual need.
In the early seventies the postwar macroeconomic ‘growth equals prosperity’ model (G=P) showed the first signs of exhaustion. As global competition increased and environmental problems constrained activities the Canadian and US resource and manufacturing sectors could no longer fuel the economy. The G=P model could no longer generate and distribute broad wealth, resulting in the postwar recession of the early eighties. However, instead of recognizing and meeting the increased competition and changes in the global marketplace, the Canadian and US governments compensated for the decay in the industrial sector with monetary measures - stimulating the economy with government deficit and borrowing. That masked the decay in the job and wealth-creating and export-oriented sectors, discouraged research and industrial investment, while encouraging investment in the non-export oriented, low-tech service sectors. The result is a current account deficit. In Canada, since 1981, we have been paying out more than we take home and have been forced to borrow abroad to cover the deficit. The most negative effect of this fictitious financial balloon and artificial ‘flip’ economy is that it prevented necessary structural changes and preserved outdated systems in both the private and government sectors including the health care system.
Every party has an end - during the nineties we are experiencing the terminal stage of the post and cold-war economy. We are facing the shift from a consumption to an education and research driven economy and marketplace, characterized by more rapidly changing conditions than ever.
Private or Public is not the issue.
Privatization will not solve the strategic issues facing the health care system and reduce the nonsensical financial burden.
Whether health services are provided privately or under the auspices of the government, our nations competitiveness and the foundation for our standard of life lies with the ratio of health care to GDP. If health care is too large a percentage of our GDP then it could effectively decrease our standard of living by draining resources from other sectors of the economy. If the health care burden continues to grow it will utilize funds needed for other support services and for the job and broad wealth generating sectors. The depreciation of these areas can directly impinge on the quality of life in Canada. It is the overall service expenditure that is important - not who provides the service.
The reality of our economic system is that the cost for our consumption of services ultimately must be carried by the export-oriented industrial sector. The task for the supporting sector - health, social care, and education - is to support the revenue generating sector to be able to secure the tax base and hence provide financial support for the services. The present system has been built up during the coldwar and postwar economic and market conditions which no longer exist. The health care model (whether public or private) is no longer compatible with the reality in the economy and in the community at large.
The United States, despite a private insurance and health care system, has the most disgracefully abused system and the highest health care and social cost of the OECD, at the same time as the number of poor is increasing. This overall economic drain hampers US industry’s competitiveness in the global marketplace. Therefore there is no proof that privatization in itself will improve health care or lower the cost.
On the other hand, the experiences in Sweden, Britain and here in Canada fail to demonstrate that a public managed system can develop and manage a cost effective health care system.
Sweden’s nationalized insurance and decentralized health care system represent one extreme - the United States with its fragmented private and public system represents another. Canada can consider itself in-between these two systems and faces the same fundamental strategic issues as both Sweden and the United States. The present health care system in Canada is a direct threat to our competitiveness, job creation ability, and consequently the quality of life.
The strategic issues and formulation of an approach to solution
The formulated approach to solution is in the form of a demonstration project in the Okanagan developed to implement a state-of-the-art health care model.
Utilize experience from other sectors..
While the socioeconomic conditions, environment, and lifestyles do vary slightly and do affect the state of health, there is no fundamental difference between the health care needs in Sweden, Germany, Japan or any other industrialized country. Don’t reinvent the wheel. There is no need to repeat the mistakes of the Swedish, Danish or the Swiss health care systems. Furthermore it is time for health care to better utilize and accept expertise from the business sector and community.
A demonstration project should utilize the experience of other health care organizations and business.
The present model is a consumption treatment model and lacks prevention incentive..
The current health care system lacks any incentive for the health care provider or user to practice prevention. The reality is that the health care provider’s market is built on accidents, disease, and a ‘pound of cure’ rather than ‘an ounce of prevention’. Through fault or accident, our system contains incentives that artificially inflate the utilization of ‘curative’ services while providing disincentives for preventative approaches. With decreasing ability to finance health care consumption the incentives and their affect must be reviewed.
Sweden is one example where the lack of incentive has jeopardized all attempts to improve the system and reduce the cost. Sweden has one of the highest living standards in the world, no slums or poverty and virtually no immigration. In spite of that, the cost of health care does not reflect the increased health of the population. Despite many attempts in recent years, through budget cuts, closing of hospitals and increased user fees, Sweden has not been able to lower the overall cost of health care. The problem is not aging population or the required investment in new technology - the problem is the lack of incentive to decrease consumption of health care or limit unnecessary accessibility. Whether it is in Sweden, Canada, the United States, or elsewhere, the insured user lacks any incentive to prevent disease and accidents, other than the fear of being sick or ending up in hospital.
Rethink Health Care..
The art of medicine is to cure the sick, consequently the demand and need for medical attention and treatment should only be present when the patient is truly sick or injured. Good somatic and mental health depends on socioeconomic factors such as: jobs, the economy, and how we manage our community and life, not on the health care system. In its socioeconomic content the present health care system has created a psychological form of consumption in which the utilization of services is driven by conditioning rather than by actual need. Since psychological consumption is influenced by motivation, perception, learning, belief and attitude, it can be reversed. Significant resources can, and must be, saved by moving resources from psychological consumption to prevention and treatment of the truly sick. The present system offers no incentive to break these patterns.
The development of incentive systems which will reduce the psychological consumption should be an important part of a demonstration project.
The health care system is reactive and lacks proactive strategic planning and clear socioeconomic objectives.
"The future will require a proactive health care system".
In a private corporation the relationship between the stockholder, owner, and the employee, is facilitated by the director of the board and the executive management. The shareholder and owner expect the board and management to deliver the objective as stated in the strategic business plan. That requires a strategic analysis and clear market, quantity, and economic objectives and a plan on how the organization intends to achieve the objective. The present health care system lacks a strategic analysis, planning process, and clearly defined objective for the stockholders approval. The future will require a proactive system.
A demonstration project should develop and implement a strategic analysis, planning, and control process.
Personnel groups, staff, and management lack vested interest in the health care system..
The health care system shares the same problem as any private and government organization where the relationship between staff and organization is based on direct remuneration, benefits or pension in exchange for work or service. Broadly, motivation can be divided into a relative scale ranging from short to long term motivation. The owner of a company will generally utilize long term motivation and may be prepared to suffer during the short term to attain long term gain. On the other hand the employee on payroll is short-term-motivated, based on the exchange of a paycheque for work. Long term motivation requires: satisfaction, prospect of keeping the job, promotion opportunities, and pension. Wages, benefits and professional duty and dedication cannot compensate for the staffs lack of long term vested interest in the health care organization.
A demonstration project should develop an equity participation system for the stakeholders in the health care system. .
The health care system lacks economic connection with the user and community that it serves.
A decentralization of the system must include a decentralization of the responsibility for both revenue and expenditures. The community, user, and direct stakeholder the system is serving must know, and be directly involved, in the revenue and expenditure of health care.
The regional and local community must receive a direct benefit from both increased health and decreased consumption of health care. It is P&A’s opinion that a successful reorganization of the health care system must include replacing the present financing system with a direct municipality health care charge. Communities with a less fortunate tax base and special health care or social needs should be assisted via a transfer system dealing with the specific problem.
A demonstration project should develop a regional financing and transfer system for health care. .
A successful reorganization must include both primary care and the hospital..
"It is the overall conditions and cost of doing business in the economy that counts".
The principal motive to regional health planning is to close the gap between user and provider and develop mutual incentives to improve the care and reduce consumption of health care. The mutual benefit is lower overall cost, more resources available for research and development, and improved competitiveness for our business and industry. In principle, a reorganization must therefore include a coordination of all health care services in the region.
The demonstration project should develop and implement a model for integration and subcontracting of health care in the region.  
Capital intensive and specialist treatment must be centralized..
Significant savings, improved service and quality can be achieved through centralizing of certain services.
The demonstration project should include a reorganization of capital intensive and specialized service. 
The integration of emergency and ambulance service and the hospital’s emergency organization must be refined.
The demonstration project should include an analysis and refinement of the emergency and ambulance service.
 Extended and special care. . .
A demonstration project should include a detailed analysis of the extended and special care requirement and organization and should implement the necessary changes in the existing organization.  
The present system lacks a computerized patient health care support system.
There is no integrated system that provides encapsulation of patient records, history, appointments and treatment. The opposition to such a computerized support system has claimed privacy would be jeopardized. This is no longer valid since systems can now fully protect the confidentiality of patient information and identity. A patient support system would have immense advantages to the patient and physician.
The demonstration project should include the implementation of a computer health care patient support system.
 Final remarks..
The preceding discusses some of the more important areas involved in a reorganization of our health care system. Reorganization of the health system needs to let real, not artificial, demand guide the process and to let experience and competence establish the framework. The management and staff in BC’s health care system is highly qualified to adapt the system to new conditions. It is important in a reorganization not to let the pendulum swing from one extreme to the other; "throwing the baby out with the bath water" and destroying the qualities in the present system.
It is the future of our competitiveness and the well being of our community that is at stake.

P&A for OISD 
October 1994