A new prescription for Nova Scotia health care

Whenever the topic of health care comes up in conversation, someone will shake their head and say ‘government should give it more money’. Whenever a major infrastructure project is mentioned, the same chorus will sing out for money to go to health care. Everyone assumes that a lack of money is the problem with the system. Why else would anyone close beds and ERs, deny drugs, or make it so difficult to find a doctor?

And that message is compounded by local health authorities who tell us a lack of money, government cutbacks and spiraling costs prevent them from doing what they want or is needed.

So the public gets the impression these bodies are cash starved. And politicians aren’t very good at dealing with health authorities because it costs the politician too much political capital to challenge how the health authorities work. A case in point was the parade of Nova Scotia health authorities who went to the media in June and July claiming they had to make cuts to services because their budgets had been cut by the province. In fact, budgets hadn’t been cut, they had been frozen which to the cash-addicted health authorities was a cut.

And like spoilt children who didn’t get their way four of the province’s 10 authorities lined up to point the finger and blame the big bad government for forcing the nice people at the health authorities to make nasty old cuts to service.

Capital Health and South Shore Health responded by instituting a two-tier system, charging fees to some patients and not others. Capital, South Shore, the IWK and Annapolis Valley Health (AVH) all cut staff. AVH, which complained about a $3.9 million shortfall, also cancelled surgeries and reduced clinic hours and services in Berwick. AVH president Janet Knox was quoted in a press release complaining that the provincial health authorities are being asked to absorb new and rising costs including increased costs for medications, wages, medical and surgical supplies and higher utility costs without additional funding from the province.

Reading Knox’s list of challenges reminds me of the election debate between Brian Mulroney and John Turner. Mulroney pointed his finger and said, “You had a choice!” And the choices these health authorities made are questionable because they resorted to cutting health care – their reason to exist – but not their executive overheads.

There is an irony to Knox’s list. According to figures released by Kings West MLA Leo Glavine, AVH’s administrative costs are 8.3 percent of their budget. That’s 60 percent above the national average. Why? Could it be all the duplications – like the two sets of executive offices in Kentville – that bloat their overhead?

Capital Health has administrative costs of 4.5 percent, which sounds good until you realize that two blocks away is a totally separate health authority at the IWK with another president and set of six vice presidents. That’s two presidents and 22 vice presidents in HRM alone.

In Nova Scotia we have 10 health authorities with 10 presidents and 42 vice presidents. Using the figures posted on the Capital Health website, and assuming wage parity among executives, that works out to $3.25 million for the presidents and $8.7 million for the vice presidents, plus perks, benefits, offices, travel and support staff. That’s a figure well in excess of $12 million to support this bureaucracy. Had AVH cut one vice president surgeries in Kentville this summer wouldn’t have had to be cancelled and the reduced services in Berwick avoided.

Why do we need so many health care executives?How much duplication can Nova Scotia afford? Why can other jurisdictions do it for less? For example, the Fraser Health Authority on the lower mainland of British Columbia services 1.6 million people (compared to our 940,000). It has 2,500 doctors (Nova Scotia has 2,200) and 2,350 acute care hospital beds (we beat them with 2,930). Fraser Health is overseen by a president and six vice presidents. Why can seven executives in BC do more than 52 executives in Nova Scotia?

If Nova Scotia cut its administrative bureaucracy to those of rest of the country we would have the money to keep clinics and ERs open; we would have more money for doctors and nurses and treatments and drugs without adding a penny to the budget. And that would be a more effective way to spend the health care budget.

When you look at the choices our health authorities have made, you wonder if we have the best people in the jobs or if they have run out of ideas. Simply having a background as a nurse or doctor doesn’t qualify someone to be an inspired executive. By career and educational choice they have shown their real gift and focus is for front-line, hands-on care. Maybe that’s where they would be best employed? Medical training doesn’t necessarily translate into having the best management skills for dealing with building maintenance, finance, human resources management, transportation and purchasing issues. We have business people in Nova Scotia who have worked with Sobeys and Nova Scotia Power and other organizations who have the experience of dealing with billion-dollar budgets, multiple locations and tens of thousands of employees who could probably handle these functions very well and find ways to reduce overheads, thereby freeing up more of the budget for actual patient care.

When the most recent service cuts were announced I wondered if our executives had run out of ideas or were in such a closed information loop that they couldn’t see other options. I was reminded of Newfoundland’s negotiations over the provincial share of off-shore oil revenues. When the provincial negotiators brought the deal they had done with the oil companies to then-premier Danny Williams he rejected it. Conventional wisdom was that the premier had finally lost it. His ego had gotten in the way. This was a good deal and if he and the province didn’t accept it, the oil companies would walk away.

Williams with his usual diplomacy said bullshit. They’ll be back. As a self-made multi-millionaire he knew how hard he could push the oil companies. The provincial negotiators didn’t have the rough-and-tumble, school-of-hard-knocks experience Williams had. He was right. The oil companies came back and a much better deal was struck with the province. Newfoundland and Labrador got both royalties and an equity stake in the off-shore oil business. And that moved the province from a have-not to have province.

Do we have people with the best business experience handling business decisions within the health care system? Or do we just have a lot of people moving paper about? Or are the people in these positions there in name only and lack any real authority to do anything? That’s a not unheard of situation in large organizations.

For example, the three health authorities in SW Nova have a pool finance office in Kentville. According to corporate flow charts there are over 50 people working in the finance department. Additionally each hospital operated by these three authorities have on-site finance people. Why?

When you get a large pool of people working like this, it requires management. This can easily mutate beyond the original goal. Wouldn’t it be cheaper to put this function out to private contract? That way the health authorities could reduce their administrative office costs. Staffing could be at market, ie competitive rates, and the authorities wouldn’t need to pay for all the office space they have in the industrial park in Kentville. Plus, on the rare occasion when things go wrong – like the two recent incidents of embezzlement – the costs would be shifted to the private contractor. The contractor would be responsible for promptly repaying stolen funds, as well as any investigative, recovery and prosecutorial costs. The health authorities would merely say, you owe us this and go back to running their health care operations.

In June 2010 Nova Scotia’s health authorities announced they were investigating the benefits of operating a pool drug purchasing system. Why? Is this not going to be another bureaucratic boondoggle? Why do we need another agency? Who’s going to work in it? Is this another white-collar make work project? In 2004 when the current Canada Health Accord was signed, one of the issues raised was the cost of drugs. People knew then that we were paying 40 percent more for drugs than we needed to. The government regulates all manner of prices, why can’t they simply say this is what we will pay for this drug and leave it at that? Why do we need an office or agency to buy drugs? Ours is a single-payer system so it should be very simple for the government – whether provincially or federally – to say this is the Nova Scotian or Canadian price for this drug. And don’t believe that drug makers aren’t going to serve one of the richest markets in the world. That’s just more bullshit.

The reason for a study into a central buying authority is their fear of how a majority Conservative government will put the screws to health care in the upcoming round of negotiations set for 2014. The majority win by the Conservatives, who are not adverse to shaking up the status quo, put the fear of god into an administrative class who seem to some of us as complacent.

In August the Canadian Medical Association released a report which among other things said, “Patients are too often lost in the shuffle in health care”

The CMA’s survey found that 87 percent of respondents strongly support a mechanism for citizens to complain about poor health service. Our support for universal health care remains solid, but our faith in the system has deteriorated to the point where 80 per cent of us agree that the number of complaints against a jurisdiction should be publicized so we can compare quality of care. Right now health care authorities are able to use the privacy laws to hide their failings.

Everyone– including the doctors – knows the system is in need of a major shake up. Why pretend otherwise. Let’s do something and do it now. If we don’t do it, Ottawa may do it for us and that won’t be pretty.

In Nova Scotia we’ve cut school boards. We’re going to cut the size of HRM and Sydney city councils. The Canadian Taxpayers’ Federation recommends cutting the number of MLAs from 52 to 32. Why not reduce the number – and costs – of health authorities?

So let’s us get rid of some of the administration, amalgamate the overheads into three authorities (one for Cape Breton, one for HRM and one for the mainland) and bring in business people who really understand non-medical costs like purchasing, building maintenance, transportation, human resources management, service delivery and administration. Doing this would free millions of dollars for front-line health care without adding a penny to the provincial budget.

If Nova Scotians are to be annoyed with the government about anything to do with health care, let’s be annoyed that government tolerates the current level of waste and duplication.

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8 Responses to A new prescription for Nova Scotia health care

  1. feretrius says:

    Eloquent, thorough and to the heart of the matter. Well done! Now, let’s see whose paying attention!

  2. More Equal Than You says:

    RE: AVRH:It’s high time someone started to question these mandarins in their ivory towers. If any health employee dared to ask questions concerning the validity of these massive dynasties,their employment status would be on thin ice.

    I’ve been around the system long enough to see how absolutely nothing ever gets done by this administrative bunch….anything and everything is forever delayed, delayed, delayed. The simplest request like turning on a light is …..”that’s a concern to all of us…we’re very interested in your opinions….that’s something we’re looking at now” …. and the old standby…”we’re going to form a committee.” (That’s their favourite)

    I guess they realize that if decisions were ever made then everyone else would realize that there is no need for this over-inflated empire building of executives. It’s time for the provincial gov’t to step in and cut, cut, cut. Don’t leave it up to the execs to make the decisions…..cut them the way soooo many “ordinary” workers are cut…..”here’s your notice and 5 weeks pay….get off the property”

  3. Liberty says:

    Thoroughly inaccurate in some respects….what’s the source of the claims?

    From Lynch: I read the websites of all ten health authorities in Nova Scotia. I keep a paper and electronic clipping file of all health stories. The executive staffing numbers come from adding up just the president and VPs listed on health authority websites. I did not include all the directors, there were just too many of them.

    The administrative cost percentages come from an article quoting Kings West MLA Leo Glavine. The number of doctors in Nova Scotia comes from Doctors’ Nova Scotia. The number of hospital beds comes from the NS Department of Health. The figures quoted about Fraser Health in BC come from their public relations manager. The pay figures come from Capital Health’s website, since they are the only health authority in the province to meet the requirement to post salaries in excess of $100,000.

    The references to the oil negotiations come from clippings of the news as reported in newspapers of record and archived on electronic media websites.

    The overpayment for drugs comes from a variety of traditional media sources (newspapers, CTV, CP, various studies published, etc.)

    If you have a specific question, feel free to ask. And if you can point to specific inaccuracies, then do so.

  4. Hire one administrator and something will get done. Hire two and you get half the useful work done, but a lot more dissipation. Basically, they are their own make work project and they love to clone themselves. I bet they are also making unnecessary work for those who they lord over. This isn’t specific to health care, it’s generic… and it’s been well-known for a long long time.

    Gilbert said it best.
    “And I polished up the handle of the big front door.
    I polished up that handle so successfullee
    That now I am the Ruler of the Queen’s Navee.”

  5. amyngraves says:

    Great post ! I will be bringing this to the table next time I meet with AVH.

  6. “According to corporate flow charts there are over 50 people working in the finance department. Additionally each hospital operated by these three authorities have on-site finance people. Why?” Usually this sort of thing is a symptom of the people at the working end of the arrangement not being given the authority to actually do stuff… with many layers of supervision, diffusion of responsibility, and a fundamental disconnect of costs and outcomes from the task at hand. Thus, the “system” reacts to a budget freeze by cutting services to patients because patients are seen as a cost to the “system” and so the wagons are circled to protect the “system”.

    A part of the solution would be to only pay the “system” only according to the services they render to patients (with a deduction for poor outcomes). If they cut operating hours then cut their budget. I recall reading, some time ago in the CH, about a surgeon who was leaving for greener pastures because he couldn’t get sufficient access to an operating theatre. I recall a neurologist begging (again in the CH) for the province to get a 3 Tesla MRI… OK, a 3 Tesla MRI is going to cost a couple of million, but still less than the excessive administrative costs.

  7. Kate Pocock says:

    Great post Allan. My father, who now has Alzheimer’s, was a big believer in changing the entire health care system. As a trained economist and scientist, he looked at facts and figures rather than people’s feelings and sentiments. He looked at all the health care figures and budgets, as well as outcomes, for all the countries in Europe as well as US and Canada. He drew charts and graphs to show that despite the amount of money that we are throwing at the system, we are definitely not getting our money’s worth in health care.

    He advocated to hospitals that they should follow the model of France (where he felt health care was delivered in a very competent manner). But he became super frustrated when nobody wanted to look at his charts or graphs showing how the provincial bodies in Canada could do it better — and cheaper. He consistently insisted that it was not a matter of money. It was a matter of competence and accountability. He would go into hospitals and ask, “Who’s in charge here?” and nobody knew.

    Yes, we do supposedly have one of the best health care systems in the world, but the amount of money is astronomical, and our system needs vast improvement. We should be looking at other parts of the world and seeing what works. Just one example, although Swedish health care is supposedly “Free,” everyone pays a fee of $5 to see a doctor, and only if a nurse allows it. This may not be wise, but nevertheless, it does allow a doctor to maximize his time. There are things that could be tried, but the system is way too cumbersome to allow such small changes and indpependant trials.

    Nevertheless, keep up the good fight!

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