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Health Economics 101

On Friday, July 8th I traveled to Toronto for the 8thWorld Congress on International Health Economics. The world congress is organized by the International Health Economics Association (iHEA). It takes place in a different country every year (next year it will be held in Australia) and fortunately for us, Toronto was this year’s chosen destination (although I wouldn’t mind having to go to Australia either…just saying).

The conference was an intensive five days filled with presentations and debates on all areas of health economics.  I heard 21 presentations by at least 63 different presenters. The sessions I chose the attend focused mostly on public versus private or mixed hospital systems, hospital ownership, pharamacare and drug pricing policies, long-term care options, homecare options, team-based versus single practices, and models of insurance and payment options for health care systems from across the globe. It was an incredible week!

Below I have organize the material I heard by topic. I’ve used headings to make it easier for those of you wanting to scan this blog.

And please recognize that I’ve condensed a lot of material into a few short paragraphs. If you’re looking for more information on the presentations I’ve added links and footnote references to abstracts. The abstracts are also available on iHEA’s website at: http://ihea2011.abstractsubmit.org/schedule/2011/jul/11/

Some of the presenters were interviewed by global health tv, check it out at: http://www.globalhealthtv.com/conference_tv/v/creating_what_health_care_can_be/#/v/8th_world_congress_on_health_economics_begins/

National Drug Systems, Pharmaceutical Policies, and Prices

With pharmaceuticals being the second largest and fastest growing expenditure in the health care system across Canada[i], it’s no wonder that many Economists focus their research in this area. Canadians hear that health care spending at current or increasing levels isn’t “sustainable”. As Livio Di Matteo said at the iHEA conference: sustainability should be defined by looking at equitable access to quality drugs for all Canadians, not only as financial affordability. We need to find ways to make healthcare across Canada financially affordable with equitable access to high quality drugs and services.

With that background introduction, Sunday afternoon was spent discussing different pharmaceutical pricing options available for Canada. Several options were presented and most received either support or strong support from the audience.  These options were: establishing a health impact fund to reward innovation (55% supported or strongly supported)[ii], using Health Technology Assessment to price drugs based on value (77% supported or strongly supported)[iii], using a sliding scale to reimburse generic drugs and drive down prices (77% supported or strongly supported)[iv].

Professor Raisa Deber debunked the myth that medical savings accounts (MSAs) would be a valuable contribution to Canadians because of its: “use it or lose it” approach which encourages marginal care, and because many of the necessary/expensive services are not included. Dr. Peter Smith from London made an impassioned speech to the crowd against MSAs, calling them a smokescreen to “break up pooled public health care”. He pledged his support to oppose any move towards MSAsfor Canadians. Great questions coming out of this conversation was: what do you do when an MSA runs out? Are people who have been paying into the system now left to cover their own expenses? Do you cover more people withmarginal needs? Or do you cover those with the most expensive needs?  76 per cent of the participants opposed or strongly opposed the use of MSAs to provide for Canadians health care needs.

A form of bulk purchasing for drugs and other pharmaceuticals was strongly argued for by several presenters and discussants (Aidan Hollis, Chris G. Cameron). Canada pays the highest prices for generic drugs of any country in the OECD[v]. We also pay extremely high costs for brand name pharmaceuticals and have very little of those revenues reinvested in research.  A bulk purchasing programme (that I think should be have national standards attached to it) would give Canada the power to negotiate for better prices from pharmaceutical and generic manufacturers. As it stands, a province-by-province negotiation leaves everyone with divided bargaining power and high prices.

Public, Private, and Mixed Public and Private Systems

According to Jing-Jing Li who examines the Australian health system, a mixed public and private system is more costly than a strictly public or strictly private system for several reasons:

1. the public provides subsidises to those who choose to be private patients

2. Those who have private insurance may still use public services. The public and private doctors are usually not in communication with one another and therefore any tests that need to be done are often completed twice.

The efficiency of the public and private system was measured by several presenters. Many of the results varied from the public being more efficient to the private system being more efficient. Often this was the case when a presenter had defined “efficiency” only through resource use and cost. When the public system proved to be more “efficient” it was often (but not always) because quality of life had been factored in. Many of the presenters admitted that further study needed to be done into the quality of life factor and that could dramatically alter their results (see: Jeremy Hurley , Terrence Cheng, Katherine Cuff, Jongsay Yong)

Another factor in the public vs. private debate that several presenters (Chiara Canta, Brigitte Dormont) mentioned was the issue of cherry-picking. This occurs when the private sector is able to determine who they will take-on as patients and who they will not. In a mixed health care system the private practices will often refuse chronic care patients (or create criteria for which those who need chronic care couldn’t qualify to be a patient) and chose those who are healthier. Less complicated patients give doctors time to see more patients and ultimately a higher income-earning potential.  In France, for-profit patients often have longer in-hospital stay times after their operation possibly because for-profit doctors can also be part-owners of the hospitals. Increasing the stay time of less complicated patients means increased earnings for the doctor and the hospital.

Hospital Ownership

I’ve put a section on hospital ownership immediately after discussing mixed health care systems because they have similar difficulties. In the same study conducted in France (above), for many of the reasons listed, public hospitals were deemed more efficient than privately owned hospitals. However, public hospitals have lower productivity likely because of cherry-picking. Public patients are more likely to need chronic care, or they have a more severe diagnosis which isn’t financially attractive to private doctors and their hospitals.

****Additional: When speaking to communities and individuals about health care in Canada, I often hear comparisons to the health care system in France. There were some great presentations on the French health care system, and for those looking for a more in-depth discussion, please see: Zeynep Or’s abstract at: http://ihea2011.abstractsubmit.org/presentations/168/****

Team-Based Primary Care

Shammima Jesmin(The University of Western Ontario) presented an argument in favour of team-based care in hospitals. She wasn’t alone. Presenter Mousquès Julien also found positive results when studying team-based care. Some of these findings were: doctors are able to create a focus to their practice (e.g. youth, elderly), they had more leisure time, and patients scored their experience with team-based practices higher than those of single-practice general practitioners.

A team-based approach to care is something the Council has argued in favour of in the past. For more information on our opinion on team-based care, please see: http://canadians.org/media/council/2011/02-Jul-11.html

Long-Term Care

Long-term or continuing care is certainly on the minds of Canadians. Almost every conversation I have about health care with health care experts, doctors, nurses, patients, family and friends somehow ends up being a conversation about continuing care. There were some really interesting presentations on how to improve the continuing care system. I especially enjoyed the ones which focused on quality of life indicators and not just prices.

One study asked the question: are long-term care patients having their level of care re-assessed, not to get more adequate services, but rather to save the health care system money? Tobias Hackmann’s study seems to suggest that this may indeed be occurring in Germany.

The European Centre for Social Welfare Policy and Research, Health and Care, released a handbook on quality management by results-oriented indicators which included quality of life, not just quality of care. They discovered several interesting trends across Europe:

a) People want to stay in their homes, but the government spending mostly goes to facilities.

b) In theory there is lots of room for people’s preferences. In reality people have very little choice.

c) The Netherlands has a great website called: “choose better” that allows people to view their options for care.

Home Care

Several studies looked at the systems of formal and informal home care provision. One study determined that those who are provided with informal care have access to more formal care and this lead to a higher quality of life. This seemed obvious to me. With my own family members I have found that if you have an informal care provider you’re more likely to be able to go to get the person requiring care to their appointments, there’s someone else noticing changes that may be occurring and can suggest additional services, and there are other people involved in researching the formal services that are available.

Many people in the room were surprised to hear Gustavo Mery’s presentation next which explained the home care systems in Canada. Because we do not have one health care system across the country, access to and delivery of services such as home care can vary widely depending on which province or territory someone resides in. This makes it difficult to assess how readily people across the countryhave access to homecare services. It also reminded me of the need for national standards from our federal government so that we can ensure quality formal and informal health care services to every Canadian in need of them.


I hope that gives you a fairly comprehensive overview of the conference. I tried to make this blog as short as possible, while still giving you an idea of the incredible options we have to improve our current health care system. For more information on any of the presentations, please see the iHEA website and follow the links: http://ihea2011.abstractsubmit.org/schedule/2011/jul/11/

[i] Canadian’s spending on  pharmaceuticals increasing by 2,3% per year. Ontarian’s increase in pharmaceuticals spending rises by 2% per year. (Livio Di Matteo and Adalsteinn Brown, respectively).

[ii] Aidan Hollis, Department of Economics, University of Calgary.

[iii] Chris G. Cameron, Canadians Agency for Drugs and Technology in Health.

[iv] Aidan Hollis, Department of Economics, University of Calgary.

[v]Canadian Institute for Health Informantion. http://www.cihi.ca/CIHI-ext-portal/internet/en/Document/spending+and+health+workforce/spending/spending+by+category/RELEASE_05MAY11