Health reform and privatization in Alberta.
Church, John ; Smith, Neale
Introduction
Over a period of seven years, from 1993 to 2000, the Government of
Alberta responded to the issue of privatization of health care service
delivery through a variety of policy instruments, culminating in 2000
with the passage of legislation to create a regulatory framework. The
choice of relatively narrowly construed legislation allowed the
government to deal with several unresolved policy issues relating to privatization through a single policy instrument, while at the same time
addressing overarching considerations about increased accountability in
the health care system. In addition, the policy choice addressed
long-held concerns by both the federal government and local public
interest groups that some form of legislation was required to regulate
private clinics.
This case study is one of six developed in Alberta as part of a
cross-provincial examination of the determinants of health reform in
Canada. Collectively, these cases cover four policy categories: setting
out governance and accountability arrangements, establishing financing
arrangements, making program delivery arrangements, and defining program
content. (1) Privatization is an example of the third category, where
the policy issue relates to changes in how health care is delivered.
Pertinent documents and public records (e.g., government reports,
the media, Hansard) were reviewed to establish the background for the
case study. These sources were complemented by thirty-two
semi-structured interviews with key informants. The data were analysed
using a coding framework developed from the literature that focused on
key institutional, idea, and interest group concepts, as well as
important external events that may have impacted on or shaped the
policy-making process. After providing an historical overview of events,
we will examine the case in greater detail within the context of the
conceptual framework. (2)
Historical overview
Over the past decade, Alberta has pursued a combination of health
reforms, including the creation of a legislative framework to regulate
contractual arrangements between private providers and regional health
authorities. The decision to introduce legislation was the culmination
of several years of heated public debate, intergovernmental wrangling
and a gradual movement towards more aggressive policy instruments.
Historically, Alberta has favoured a residual approach to social
policy, including a significant role for the private sector in the
delivery of services. (3) The province has allowed and even encouraged a
steady growth since the 1980s in the number of private clinics providing
some form of health service. (4) In efforts to secure their economic
success, these clinics have frequently tested the boundaries of the
Canada Health Act (CHA), the federal legislation meant to prevent
providers from directly charging patients for publicly funded services.
Interpretation of the CHA was a constant underlying question for
Alberta policy-makers throughout the 1990s. It became a political
football that was tossed back and forth by federal and Alberta
politicians when political flashpoints arose from impending or actual
policy decisions taken by the Government of Alberta.
During the early 1990s, health care privatization gained public
visibility when a private members bill, the Gimbel Foundation Act
(Pr-06), was introduced in the Alberta legislature on 9 March 1994. The
purpose of this legislation was to allow an eye clinic to merge with an
existing charitable organization (the Gimbel Eye Foundation). Clinic
profits would then be invested, tax free, into the charity to support
ongoing education and research. The eye clinic, which had been around
since the early 1980s, both billed Alberta Health and charged patients
an additional "facility fee" while offering "enhanced
services packages." The legislative proposal was swiftly met with
opposition from consumers' and seniors' advocates, academics,
and some professional groups, such as nurses. They argued that it was a
step toward privatization and the creation of a two-tier health system
and might allow such clinics potentially to charge patients directly for
insured services. (5) With the emergence of the Gimbel Foundation Act in
1993, the issue changed from being strictly about user fees to being
about the nature of ownership.
While the Gimbel Foundation Act was voluntarily withdrawn, federal
concern about proliferation of private clinics and the use of facility
fees (direct charges to patients meant to meet overhead and other costs)
for insured services became evident following the election of the new
Liberal government in October 1993. In the fall of 1994, a consensus on
regulating private clinics was reached through
federal/provincial/territorial meetings, although Alberta abstained from
supporting this initiative, pending its own review of private clinics.
From this near consensus, the federal position, as expressed in a letter
from the federal minister of health, was that private clinics as a means
of health service delivery were not illegal according to the CHA, but
that they should be regulated within a framework that ensured that the
principles of the CHA were preserved. However, facility fees were
treated as a violation of the act, requiring the provinces to comply by
15 October of that year, or face financial penalties. (6)
In the midst of this federal-provincial dust-up, the newly elected
Klein government announced 20 per cent across the board expenditure
cuts, simultaneous with the creation of Regional Health Authorities
(RHAS). The cutbacks also resulted in decreased staffing levels,
decreased physical plant (especially in Calgary) and eventually
increased wait rimes for major surgical and diagnostic procedures.
Ultimately, this shortage of resources made contracting out for the
delivery of some surgical and diagnostic procedures more desirable for
some regions. The Calgary Health Region emerged as a focal point for
efforts to privatize.
Alberta responded to the federal ultimatum on 11 October 1995 with
a request for further consultations. The federal government refused, and
penalties were subsequently imposed. Alberta ultimately suffered $3.6
million in lost transfers. (7)
At the time, the Alberta minister of health requested that policy
options be developed to respond to the federal imposition of financial
penalties. The idea of incorporating contracts into RHA budgets occurred
as a result of discussions with the federal government about facility
fees and diagnostic services. Contracting was seen as a viable option
because it did not contravene the Canada Health Act (and thus ensured
continued access), while not unnecessarily impeding on the ability of
private clinics to continue to operate.
While the federal-provincial impasse continued, the RHAS were
beginning to explore the possibility of contracting out for the delivery
of certain services. Once this began to happen, Alberta Health realized
that they needed to develop some sort of policy framework in order to
address concerns of the federal government, RHAS, private operators, and
the public. Through several months of consultation with major
stakeholders, a 12-principles policy statement was crafted that had
something for everyone, particularly the RHAS (see Appendix).
Once the framework was drafted and made public, Health Canada identified six of these policy principles (nos. 1, 3, 4, 5, 9, and 11)
that were potentially of concern without further clarification. The
federal government singled out principle 11 as a particular sticking
point, which was also of concern to local interest groups.
Alberta's response was that an medically necessary services
would be insured. From the province's perspective, principle 11 was
intended to deal with the existing reality of physicians who perform
some services that are insured through the fee schedule and some that
are not. (8)
With the 12 principles in place, Alberta did not immediately
consider additional legislation. However, the federal government would
not be satisfied until it saw some form of legislation that would
entrench the compromises that had been agreed to and expressed in the
principles. In January 1996 Alberta Health notified RHAS that the
province intended to have arrangements in place to end facility fees (9)
beginning 1 July, although charges for non-insured services and
voluntary service enhancements would continue to be permitted. As a
transitional measure, the province agreed to pay all facility fees
itself, at existing rates, for three months. After 1 October any such
fees had to be negotiated by contract between private clinics and RHAS.
(10)
While the two levels of governments continued to focus on facility
fees, the immediate impacts of expenditure cuts on Alberta's health
care system had made access to health care services an overarching
concern. Since the advent of regular annual public surveys in 1995,
public ratings on ease of access have shown a consistent decline. In
late 1996, with an election looming, public pressure against maintaining
expenditure reductions mounting, and revenues from oil and gas
rebounding significantly, the government announced a major
"reinvestment" in health care. Yet the perception of crisis
persisted.
In particular, the sense of crisis was exacerbated in Calgary for a
number of reasons. By mid-1997, three of the eight hospitals in Calgary
had been closed. One, the Holy Cross, was sold to private investors in
1998; another, the Bow Valley Centre, was demolished. Overall reductions
in staffing and exponential population growth also contributed to the
lingering sense of crisis. In the midst of this, a number of private
providers began to emerge. Of these, the Health Resources Group (HRG)
would become a political lightning rod for the debate around health care
privatization.
After its incorporation in 1996 and the rental of space in the
former Grace Hospital (the third hospital to be closed), HRG began
lobbying the College of Physicians and Surgeons to certify it to provide
surgery involving overnight stays. While initially the group was
interested in third-party payer markets (e.g., WCB, RCMP, Defence, and
Aboriginal Affairs), it was also interested in the potential market
provided by resource-strapped health regions. The HRG was soon lobbying
the Calgary RHA to contract out for the provision of orthopedic surgery.
(11) Just as the "eye business" in Calgary had boomed since
contracting with the health region had begun, so orthopods and other
surgeons saw the possibilities of an emerging private market. The
emergence of HRG once again raised the spectre of private health care in
the minds of public interest groups.
Two pieces of legislation, bills 21 and 37, emerged from the
conclusion that a policy statement was insufficient to resolve lingering
concerns among the various parties. Bill 21, the Alberta Health Care
Insurance Amendment Act, was intended to address the issue of physicians
or groups of physicians choosing to opt out of medicare (principle 11).
While opting out was permitted under the CHA, the act did not specify
guidelines under which this might occur. In addition to outlining this
process, the bill prohibited the charging of user fees/facility fees by
opted-in physicians for publicly insured medical services. (12) Again
pressure from the federal government and a coalition of consumer and
labour groups was a major impetus for this decision. Bill 21 effectively
addressed the facility fee issue, but the federal government, RHAS,
public interest groups, and the College of Physicians and Surgeons
continued to be concerned about how public safety would be maintained,
since the ministry's guidelines on contracting out were not seen as
being strong enough.
Bill 37, the Health Statutes Amendment Act, was intended to require
private contractors to obtain the approval of the minister before they
could offer inpatient health care services. More specifically, the bill
was intended to formalize the existing policy regarding
"non-surgical hospital facilities" contracting with RHAS;
allow private insurance coverage for the cost of standard ward coverage
in auxiliary hospitals as was the case for nursing home care; and enable
the minister to regulate private treatment facilities. (13)
At the heart of the legislation was the establishment of a clear
definition of what constituted a hospital as opposed to a non-hospital
surgical facility. However, faced with what for Alberta was an almost
unprecedented level of organized resistance and continued public
discontent with health reforms generally, the government withdrew the
legislation.
In the wake of this political failure, a blue ribbon panel was
struck in December 1998 to determine whether Bill 37 would safeguard the
public health system and meet the requirements of the CHA. The panel was
also to determine if the absence of the bill would prevent the minister
from regulating private health facilities. In its final report, the
panel determined that the legislation did not offend the principles of
the CHA or jeopardize the public health system. Failure to pass such
legislation would result in a legislative gap that would allow a
treatment facility to be accredited through the College of Physicians
and Surgeons, while offering unregulated surgical services without
ministerial approval.
The panel recommended that the distinction between a hospital and
non-hospital facility should be based on being able to discharge safely
a patient within twelve hours of surgery. This was consistent with the
new College of Physicians and Surgeons by-law (section 43(2)(k). The
panel also recommended that procedures, whether provided in an
"approved hospital or non-surgical facility" be provided under
contract with an RHA, subject to approval by the minister. Such approval
would require applicants to meet four criteria: serve the current and
future patient needs in the geographic area to be served; have no major
negative impact on the publicly funded health system in Alberta; be in
the public interest; and satisfy any other factors the minister and the
Department of Health considered relevant. (14)
As a result of the panel's recommendation on the 12-hour stay
rule, Alberta Health and Wellness recommended that the term
"treatment facility," which was a new category proposed by the
panel, was in fact "a private hospital offering uninsured services.
(15) Based on this recommendation, internal terminology appeared to
shift. Both the terms "private hospital" and "legislative
gap" emerged in internal discussions:
If private hospitals are prohibited, public focus will likely shift
to scrutiny of the private clinic policy as embedded in Bill 37. There
are several issues related to the policy. The overriding issue is a
legislative gap that leaves the Minister with no mandated course of
action regarding insured diagnostic, medical or rehabilitative services
when the services are provided outside a hospital in a private clinic.
(16)
Three possible policy options were identified: introducing
legislation prohibiting private hospitals; introducing an interim
prohibition on private hospitals until a thorough public consultation
could be undertaken; or introducing legislation to allow private
hospitals as per the draft policy statement and gain public support.
(17)
On 16 November 1999 Alberta released a policy statement on the
delivery of surgical services that proclaimed Alberta's commitment
to the principles of the CHA. Regional health authorities were
identified as being accountable to the minister of health for assessing
the needs of the population, allocating resources, and ensuring
reasonable access to quality services. As part of this responsibility,
regions were responsible for the delivery of all insured surgical
services. Accordingly, they could contract with a private provider for
the provision of surgical services, subject to ministerial approval.
Private coin tractors could not charge any fee (beyond the established
fee schedule) for insured services or allow queue jumping. The statement
declared that "there will be no private hospitals; there will be no
parallel health system." Health regions would make their
recommendations based on the criteria suggested by the blue ribbon
panel. This policy statement became the basis for the development of
Bill 11, the Health Care Protection Act.
The legislation was introduced in March of 2000. It met with fierce
opposition from the Friends of Medicare, a public interest group. Armed
with a response from the blue ribbon panel and compelled by a certain
political urgency to resolve the issue, the government chose to move
forward with new legislation. Amendments were brought forward in April
and by September the legislation had been passed and regulations
drafted. As with its predecessor, Bill 37, the Health Care Protection
Act required all surgical facilities to be accredited by the College of
Physicians and Surgeons and approved by the minister of health. Insured
surgical services could only be provided through contracts with health
regions in which facility fees paid by the health regions to private
contractors would be tied to performance expectations and measures.
When considering an application, the minister was required to take
into account the CHA and the public interest and any possible adverse
impacts on the publicly funded or administered system. The rationale for
approving a contract was to be made public. The legislation also
contained provisions to protect patients from being forced to purchase
"enhanced" services. Finally, the bill prohibited
queue-jumping for insured surgeries.
Analysis
The role of technology
Undoubtedly, the emergence of an increasing number of private
clinics in Alberta (and elsewhere) was a result of advances in medical
technology that facilitated the delivery of an increasing range of
health services outside of hospital settings. By the late 1980s Alberta
Health was aware of the issue. Concern was expressed through the
Watanabe Report and a subsequent discussion paper on ambulatory care.
(18) While the Watanabe Report approached the issue as one of
utilization management, the later discussion paper identified issues
that would emerge around the Gimbel Foundation Act:
Innovations in medical technology are changing the way medical
services are delivered and expanding the range of locations in which
they can be provided. Hospital stays are no longer required for many
procedures that can now be performed on an ambulatory basis ... One
result has been a steady growth in the volume of outpatient services delivered by hospitals. Another has been the development of
free-standing clinics and surgical centres. The new technology presents
an opportunity to provide some services safely and cost-effectively
outside the hospital or inside the hospital on an out-patient basis ...
The risks include concerns about the quality of care and about the
overall costs to the health system ... Some of these charge facility
fees to patients for overhead costs which are not covered by the Alberta
Health Care Insurance Plan ... Fears exist about the possibility that
facility fees might impair access to some services if they should move
entirely from the hospital setting." (19)
The role of ideas
The initial resistance by the Government of Alberta to regulate
private clinics was underpinned by a long-held "residual" view
of the state. In this view, personal responsibility and self-reliance
were desirable human attributes. Individuals were first and foremost
responsible for their own well-being, and accountable for their actions.
Where individuals were not able to take care of themselves,
responsibility fell to other family members. Failing this, the local
community became responsible for the well-being of the individual. Only
as a last resort would the state provide relief and then only on a
short-term basis. The private market was seen as the preferred means of
addressing social policy issues.
The coalition of consumer and labour interests challenging the
government position favoured a limited or restricted role for the
private sector in health care and a commitment to the principles of the
Canada Health Act. They wanted an open debate and argued that policy
should be based on sound evidence. Fear was expressed that private
clinics would be less accountable for performance than the public
sector. (20)
The role of federal-provincial relations
Historically, relations between Alberta and the federal government
have often been conflict-based. From the Depression experience of
eastern bankers foreclosing on western farmers to the raiding of Alberta
coffers during the National Energy Program, Alberta political elites
have exploited a mythology of political persecution as a means of
galvanizing local political support on intergovernmental issues. The
current political elite in Alberta have been particularly predisposed to
challenge publicly the federal Liberals on any policy impinging upon
provincial jurisdiction. In the case of health care privatization, while
other provincial jurisdictions were pursuing policies that might have
violated the CHA, Alberta seemed to attract federal attention, due in
part to the province's overt challenges to Ottawa.
At the federal level, the Liberal Party has had publicly funded
health care as a major plank in its political platform since 1919. In
more recent times, it introduced the Canada Health Act as a means of
garnering political support. (21) The elevation of the CHA to iconic
status has allowed all governing federal parties to portray themselves
as the defenders of publicly funded health care.
The desirability to single out Alberta was further complicated by a
perceived lack of consistency in federal interpretation of the CHA. As
early as 1994, the exclusion of diagnostics (MRIS) was seen by Alberta
as a major error by the federal government, in terms of handling the
privatization issue. However, from the federal perspective at the time,
there were relatively few MRI clinics in operation and they were not a
priority concern. Facility fees and somewhat later the HRG initiative
were of greater concern in relationship to the provisions of the CHA.
By the time Bill 11 was being debated, the federal government
position was perceived to be increasingly unclear. From Alberta's
perspective, Ottawa seemed to vacillate over what limits it wanted to
see on private clinics or cataract surgery. For Alberta government
officials and proponents of private clinics, this lack of consistency
served to delay or block interesting reforms. Within a broader
intergovernmental context, the provinces were pushing the federal
government to establish some sort of mechanism to remove the arbitrary
and unilateral nature of interpreting the CHA. (22)
The role of interests
Politicians. Ai the federal level, the change from a Progressive
Conservative to Liberal political regime in 1993 triggered a
reinterpretation of the Canada Health Act. Where the Conservatives had
been willing to tread lightly around enforcement of the CHA, the
Liberals chose to take a stronger position on compliance with the act.
The Gimbel Foundation Act and the subsequent focus it drew from local
interest groups provided a public opportunity for the federal government
to demonstrate its resolve.
At the provincial level, the relationship between bureaucrats and
elected officials in Alberta had undergone a significant change. During
the late 1980s and early 1990s, particularly during the tenure of Nancy
Betkowski, the relationship of Health Department officials and the
minister was largely positive. With the arrival of Ralph Klein as
premier, a growing level of distrust by the political executive of the
motives of bureaucrats generally, and health bureaucrats in particular,
surfaced. In part, this fed into the general thinking at the time that
bureaucrats and other "knowledge workers" had become too
powerful and needed to be reined in by the politicians, who, after all,
had been elected to make decisions on behalf of the public. (23) This
sentiment was institutionalized in two ways: the use of MLA-led policy
committees or outside consultants to provide advice (as opposed to
ministry officials in a number of key policy areas, especially health
reform; and centralization of the communications apparatus of
government. (24) The depth of mistrust of Alberta Health officials
became increasingly apparent throughout the 1990s, as the department
constantly found itself in hot water with the Premier's Office over
the policy advice it offered. The increasingly unfavourable environment
was punctuated in 2000 with the dismissal of the entire level of senior
management because of a failure to provide evidence in support of
private health care during the Bill 11 debate.
The impetus from within government for privatization in health care
seemed to come from a core of government MLAS, including the premier and
a number of key cabinet ministers. (25) As for the broader government
caucus, they were sceptical about Bill 11 because of what they were
hearing from their constituents. Ultimately the caucus and the premier
saw eye to eye on a larger issue--the need to save political face after
previously backing down on Bill 37. The premier took a personal interest
in the health file and was quietly supportive of initiatives such as
HRG. He was frustrated by the status-quo thinking of his colleagues and
their reluctance to think outside of the box. None of them had brought
him a plan for health reform that he could sell. Nor was Klein averse to
publicly contradicting his health ministers. One of the suggested
reasons for revisions to Bill 11 was the confusion caused by
contradictory statements coming from the Health Department and the
premier.
Klein also used the privatization issue as a means of highlighting
the tendency of the federal government to make unilateral decisions
affecting the provinces/territories. To remedy this problem, the
provinces/territories were pressuring the federal government to agree to
an arbitration process for grievances related to the Canada Health Act.
Klein's personal relationship with Prime Minister Jean Chrtien was
important to developing consensus around the Social Union Framework and
in relieving pressure on Alberta over the privatization issue. (26)
Civil Servants. The capacity of the Health Department was
significantly reduced during the 1990s through expenditure reductions,
external health system restructuring, rolling internal departmental
restructuring, and constantly shifting departmental leadership. The
department had been created in 1988 through the amalgamation of the
former Hospitals and Medical Care Department with the Community and
Occupational Health Department. Between the date of its creation and the
onset of health reforms in the early 1990s the department was engaged
internally in sorting out roles and responsibilities.
Subsequently, the launch of health reforms in 1993 had a major
impact on its policy capacity. First, the devolution of responsibility
for service delivery to health regions and the subsequent significant
reduction or elimination of staffing in many program areas left the
department without expertise about the day-to-day workings of the health
system. (27) Between 1994 and 2004 a total of eight deputy ministers
were rotated through the department. Several reorganizations also
ensued, leaving the department with little policy capacity. Therefore,
when combined with the general political mistrust, department officials
increasingly found themselves left out the loop on the privatization
issue. In the case of Bill 11, the decision was taken at a political
level and caught the ministry by surprise. For their part, Health Canada
officials faced a somewhat similar quandary to their provincial
counterparts. Federal health ministers were given to making policy
statements that contradicted the advice of department officials.
Having said this, communication between Alberta Health officials
and Health Canada officials was continuous from the initial foray around
facility fees to the passage of Bill 11. At each stage in which the
Government of Alberta was contemplating policy action, Alberta Health
officials were interacting with their federal counterparts in a
cooperative fashion to ensure that contemplated action did not
contravene the Canada Health Act.
Physicians. Physicians were involved in the health care
privatization issue through various formal and informal channels.
Although the Alberta Medical Association (AMA) was not particularly
vocal on the issue because of internal divisions, the organizational
continuity of the association and its formalized interaction with
provincial bureaucrats ensured that organized medicine was consulted on
major policy developments (for example, the 12-point policy statement).
On Bill 11, the AMA voted to oppose the legislation unless it was
amended. The doctors disputed the province's claims that the bill
would ease wait list pressures, noting it did nothing to increase the
supply of trained providers--a more pressing issue, in the profession s
view. (28)
As the organization responsible for the regulation of organized
medicine, the College of Physicians and Surgeons of Alberta played a key
role during the Bill 11 debate. With a mix of public and provider
representation, its board was divided on the issue of privatization. The
idea of increasing the presence of private providers in the delivery of
surgical services in principle did not appeal to the public members of
the board. However, to the extent that private providers met the quality
standards established by the college, the board supported the HRG
proposal.
One of the early sticking points for the college was its perception
that HRG by definition was a "hospital" and so beyond its
jurisdiction. Determining what was a hospital was by legislation the
prerogative of the minister of health. The response from Alberta Health
was that HRG was a "non-hospital surgical facility." With
increased public pressure and close scrutiny of the college, it was
stuck with determining what constituted a reasonable stay in a
non-hospital surgical facility. However, on the issue of how initiatives
such as HRG should be defined and how these organizations should be
regulated, the college deferred to the government.
Within the Calgary Health Region, a number of physicians with
senior decision-making authority also had significant ties to private
service-delivery interests. Dr. Steve Miller, chief of orthopedic
surgery at Calgary Foothills Hospital, was a member of the HRG board of
directors. Dr. Kabir Jivrag, who became chief medical officer for the
region in 1999, was also one of the owners of Surgical Centres Inc.,
which had received a significant acute-care service contract with the
health region only six weeks prior to his appointment. (29)
At the individual level, a number of entrepreneurial physicians
with close political ties to the political executive continually lobbied
the government to expand the role of private providers in health care.
Prominent among these physicians were Howard Gimbel (eye), the HRG
physician group (joints), the Huang brothers (throat and eye), and
Dennis Modry (heart). With the exception of Modry, who was based out of
Edmonton, an of the other physicians were Calgary-based, and had a
direct business interest.
Through their company, Enterprise Universal Inc., the Huangs
purchased the Holy Cross Hospital from the CHR at what appeared to be an
unusually low price. "At the time Peter Huang was the head of
ophthalmology for the health region and had been awarded a contract to
do all Foothills Hospital's cataract surgeries." (30) Peter
Huang was also a major contributor to Premier Klein's political
campaigns.
Dennis Modry appeared to be tied into the policy inner circle as a
source of ideas about the potential role of the private sector, and
financial contributor to the provincial Progressive Conservative Party.
As president of the Cardiovascular and Thoracic Surgeons of Alberta he
came out on behalf of his colleagues in support of Bill 11, in
opposition to the official AMA position. At the time, the medical
specialists were attempting to derail attempts to redistribute fees
among specialist groups that would have seen them have their fees cut
while other specialists saw an increase.
Regional Health Authorities. Most regional health authorities were
not enamoured with the notion of privatizing service delivery. The real
push appears to have come from the provincial government political
executive. Having said this, Calgary was more predisposed to pick up on
the suggestion of the political executive for several reasons.
Historically, the political culture of Calgary has favoured a
free-market, entrepreneurial ideology that closely aligns with the core
ideology of the current provincial government. The city boasts a
significant population of expatriate Americans, many of whom are senior
executives with the oil and gas industry. In essence, within Alberta,
Calgary is viewed as the centre of large corporate interests, whereas
Edmonton is viewed as the centre of public sector activity.
Senior decision-makers within the Calgary Health Region were also
ideologically-aligned and well connected. For example, Bud McCaig, a
successful Calgary businessman and personal friend of the premier who
was appointed as the first chair of the board for the Calgary Health
Region, had previously benefited through significant financial support
from the provincial government. (31) Jim Saunders, who was chief
operating officer, was recruited in 1997 by HRG to become its chief
executive officer. In the run-up to the introduction of Bill 11, McCaig
was replaced by Jim Dinning, the former provincial treasurer, often seen
as the mastermind behind the fiscal crisis message that underpinned the
first wave of government reforms. Following closely behind Dinning was
former deputy minister of health and deputy to cabinet, Jack Davis, as
regional CEO. Rod Love, former executive assistant and long-time
political confidant to the premier, was hired to coordinate regional
communications. In the end, Calgary was publicly touted by government as
an exemplar of how private contracting worked to provide cost-effective
care.
Health Resources Group. This group was formed for a variety of
reasons. First, its founders believed that certain health care services
could be delivered through a cooperative partnership with the public
system--private contracts within the publicly funded system. Related to
this sentiment was a belief that the broad range of services covered
under public health insurance was probably inappropriate. Dr. Steve
Miller, a prominent Calgary orthopedic surgeon who ran an ambulatory
rehabilitation program that served primarily Workman's Compensation
Board (WCB) patients, was frustrated by the lack of operating time in
Calgary. The radical reduction in capacity in Calgary because of
expenditure cuts and regionalization made the idea even more feasible.
Moving from delivering services in an ambulatory clinic to an inpatient
facility seemed like a good way to address the issue.
HRG'S business plan identified four target markets or
potential client groups: those seeking uninsured services, out of
country patients, those with third party insurance (such as WCB), and
patients seeking insured services under an agreement between HRG and a
public payer. According to this document, "start-up priorities will
concentrate on clients of third party insurers and those seeking
uninsured health services. Marketing of services to out-of-country
clients and the persual [sic] of contracts and services agreements with
funding agencies such as Regional Health Authorities will be phased-in,
in the future." (32) The closure of the Holy Cross and the Grace
hospitals and the subsequent sale of those facilities to private
investors added to the feasibility of pursuing contracts with RHAS.
The costs for these procedures would be higher than through the
publicly funded system, but for organizations like WCB, the faster
turnaround meant faster return to work and thus an overall cost savings.
HRG had access to three operating theatres devoted to doing WCB
procedures and elective day procedures such as face lifts, liposuction,
and breast implants. While the above mix of procedures provided a
break-even scenario, the greatest potential profit was in procedures
requiring overnight stays. HRG had thirty-seven beds that could be
filled at a profit. Strategically, surgeries listed by the College of
Physicians and Surgeons as requiring a stay of less than two days were
the target market.
When HRG opened in 1998, the initial response from the Calgary
Health Region was lukewarm. To enter into a contract with a high-profile
private provider would have been to admit that the public system had
failed. Also, the region was still running large deficits because of the
failure of provincial funding to keep pace with exploding population
growth in Calgary. Although waiting lists were climbing, the province
was not responding. Thus, the RRA did not have the financial resources
to expand its capacity, either through public or private means.
While a process was in place through which the region could get
approval from the College of Physicians and Surgeons to contract with
HRG, at the time the region was not interested in sitting down with the
group to look at the numbers. One of the sticking points was that Dr.
Miller wanted to do full hip replacement surgery, which by its nature
would have required on average a nine-day stay after surgery.
Public Interest Groups. A variety of public interest groups
coalesced around the issue of health care privatization. Working both
individually and collectively, these groups were successful in
influencing the legislative outcome of the Bill 11 debate. During the
early 1990s, the Consumers' Association of Canada became aware that
clinics were charging patients for certain services. While the Alberta
government framed the issue at the time (and arguably subsequently) as
one of facilitating choice and access, the Consumers' Association
saw the issue as one of impeding access through direct user charges. At
the time the federal government seemed either unaware or unconcerned
with the issue. Repeated efforts by the association to provide the
federal and provincial health ministers with information were met by a
lack of concern or silence. The federal government did not wake up to
the issue until the association met with the federal health minister
during a visit to Edmonton. Subsequently, the research on private
clinics that the association undertook, which clearly documented the
increased costs of contracting out for ophthalmology services, became a
major source of information for opponents of increased health care
privatization both within Alberta and across Canada. (33)
The Friends of Medicare (FOM), which had emerged in the mid-1980s
during the debate over the CHA, became actively engaged in the
privatization debate in the spring of 1996 when private initiatives
began to spring up in local communities around the province, From this
point forward, FOM became a rallying point for a variety of interests
concerned about perceived government intentions to privatize health
care. While the organization was primarily concerned about the impact of
privatization on access and quality of services, a variety of labour
unions expressed concerns about quality, the ability to advocate on
issues of safety and job losses. A general concern among members of the
coalition surfaced around the commercialization of health care within
the context of the North American Free Trade Agreement, and
neo-conservatism internationally.
The coalescence and overlap of concerns among major public interest
groups and major labour organizations created a capacity to raise public
awareness and attract the attention of the federal government to the
issue. This capacity to mobilize quickly and effectively was repeatedly
demonstrated and took provincial politicians by surprise. Support for
the locally organized opposition to health care privatization also came
from the national network of health policy experts. Several
evidence-based critiques of health care privatization were released at
strategic times during the debate. The Consumers'
Association's own report on the proliferation of private clinics
received national recognition during a abc interview with Dr. Michael
Rachlis.
Conclusion
Despite the ideological preference for market solutions in social
policy, the Alberta government was compelled to choose an
interventionist policy instrument for several reasons.
Perhaps the main driver was changes to technology during the 1980s
that allowed an increasing number of medical (surgical) procedures to be
performed outside of traditional hospital setting. When coupled with
government resistance to intervention in the market, a robust,
unregulated, private health clinic market emerged in Alberta during the
1980s and early 1990s.
A change of leadership with the election of Ralph Klein as
Conservative Party leader and premier accelerated the pace of change. In
an effort to clearly distinguish the new Conservative regime from the
previous unpopular government, Klein embarked on a radical program of
fiscal austerity aimed at eliminating the provincial deficit and debt.
Part of this program involved carving out a larger role for private
providers in health care. The reduced capacity in the health system
created by radical expenditure reductions and restructuring created an
opportunity to put political ideology into practice. In this
environment, local health service entrepreneurs found business
opportunity and political receptivity.
Private medical entrepreneurs such as Gimbel and HRG acted as a
lightning rod for all those opposed to health care privatization.
Initial policy responses from Alberta were directly related to media
attention focused on these entrepreneurial activities in Calgary.
Conversely, the ideological alignment of private interests in Calgary
with the views of key government MLAS and cabinet ministers likely
constrained the speed with which the government responded to the issue.
Thus, the policy responses, the 12-point policy statement, the rolling
of facility fees into health region contracts, and the adoption of a
regulatory framework represented a gradual progression in the selection
of policy instruments from less to more coercive.
The pattern of policy instrument choice was driven largely by
pressure from a broad coalition of interests in Alberta, which alerted
the federal government to potential violation of the Canada Health Act.
Ultimately, the effectiveness of this coalition was essential in forcing
the government to pass legislation that was far more restrictive than
originally anticipated.
As the chosen policy option, the Health Care Protection Act served
a number of useful purposes for government. Being a single piece of
legislation, as opposed to the amendment of three existing acts proposed
through Bill 37, the legislation was easier to administer and to amend.
Government was able to roll all existing, unresolved policy issues
related to privatization into the single bill. The legislation also
addressed the overarching concern about increased accountability in
public expenditures by extending this accountability to some private
providers outside of public hospital settings. Finally, the legislation
responded to the long-held federal government and local interest groups
concern that a legislative framework was required to regulate private
clinics.
In this respect, Alberta's response was consistent with the
response of most other provinces, although not as quick. When forced to
choose a policy instrument that it didn't favour, the province
construed this instrument in relatively narrow terms to affect only the
most controversial, and most visible of private sector activity in
health care.
Appendix: Public/Private Health Services: The Alberta Approach
1. Ensure reasonable access to a full range of appropriate,
universal, insured services, without charge at the point of service.
2. Alberta retains the authority and responsibility to manage the
publicly funded health care system in the province.
3. Recognize the demands from both the public and health
professions for an approach to health services that is consistent with
long term sustainability and quality.
4. Ensure a strong role for the private sector in health care, both
within and outside the publicly funded system.
5.) The public and private sector should work together to provide
patient choice, quality of service, and effective outcomes as the first
priority.
6. Regional Health Authorities assess health needs in their regions
and be funded to provide appropriate health services in accordance with
the health needs assessment.
7. Consumers have the right to voluntarily purchase health services
outside assessed need.
8. Maintain the restrictions on the role of private insurance,
while introducing measures to expand the opportunities for the private
sector to deliver services within the single-payer envelope.
9. Private clinics should have the option of becoming completely
private (patient pays), or allowing them to enter into a variety of
funding arrangements with the public sector to cover the full costs of
insured services.
10. There is a place for medical training in both public and
private settings, however, care must be taken to ensure there is no
deterioration in the world class training physicians currently have.
11. Recognize that physicians can receive payment from both the
publicly funded system and fully private sources. *
12. The province must at all times be able to demonstrate
"reasonable access" to insured health services with no fee at
point of services or penalties would apply. An understanding is
necessary on the mechanisms to determine and measure "reasonable
access".
Source: Alberta Health, 16 October 1995. The original principles
are cited in full Cathy Scott, Tammy Horne, and Wilfreda Thurston, The
Differential impact of Health Care Privatization on Women In Alberta
(Winnipeg: Prairie Women's Health Centre of Excellence, 2000), p
42.
* Principle 11 was subsequently reworded to read: "The same
physician can practice in both the public and private systems if he/she
is offering insured services which are fully paid for by the public
system and the non-insured services which are paid for privately."
Alberta Health/Canada Joint Document, 17 May 1996, cited in Richard
Plain, The Privatization and the Commercialization of Public Hospital
Based Medical Services within the Province of Alberta: An Economic
Overview from a Public Interest Perspective (Edmonton: Medicare
Economics Group, Department of Economics, University of Alberta, 2000),
p. 10.
Notes
(1) John N. Lavis, Suzanne E. Ross, Jeremiah E. Hurley, et al,
"Examining the Role of Health-Services Research in Public
Policymaking," Milbank Quarterly 80, no. 1 (2002), pp. 125-54.
(2) For purposes of this analysis, ideas refer to underlying values
and information contributing to policy choices. Interests refers to the
various actors--interest groups, politicians, bureaucrats, and policy
entrepreneurs--who influence policy choices. Institutions refers to the
formal and informal structures and processes involved in public policy
decision-making.
(3) Dennis Guest, The Emergence of Social Security in Canada, 3rd
ed. (Vancouver: University of British Columbia Press, 1997).
(4) Wendy Armstrong, Canada's Canary in the Mineshaft: The
Consumer Experience with Cataract Surgery and Private Clinics in Alberta
(Edmonton: Consumers' Association of Canada, 2000).
(5) A. Johnson, Robert Walker, "Medical foundations
backed," Calgary Herald, 26 October 1994, p. A1.
(6) Canada, Health Canada, 1995, letter to provincial premiers, 16
October 1995, http://
www'hc-sc'gc.ca/hcs-sss/medi-assur/interpretation/index_e.html.
(7) Sujit Choudhry, "Bill 11, the Canada Health Act, and the
Need for Institutions," in Timothy Caulfield and Barbara von
Tigerstrom, eds., Health Care Reform and the Law in Canada (Edmonton:
University of Alberta Press, 2002), pp. 37-84.
(8) The example of the dermatologist who will do a biopsy for skin
cancer, but also do something cosmetic that is not covered.
(9) Alberta, Alberta Health, letter to RHAS, 8 January 1996.
(10) Through this process, the provincial government was able to
substantially reduce the facility fee and to control the volume of
services. This did not make all private providers happy.
(11) Kevin Taft and Gillian Steward, Clear Answers: The Economics
and Politics of For-profit Medicine (Edmonton: University of Alberta
Press, 2000).
(12) Alberta, Hansard, 2 April 1998.
(13) Alberta Health, "Agenda and Priorities Briefing
Materials," 17 June, 1999.
(14) Panel, Executive Summary, p. 4.
(15) Alberta Health and Wellness, "Agenda and Priorities
Briefing Material," 17 June 1999.
(16) Ibid., "Current Private Clinic Policy," 28 October
1999.
(17) Ibid., "Policy Options," 28 October 1999.
(18) Alberta, "Report of the Advisory Committee on the
Utilization of Medical Services," 1989.
(19) Alberta Health, "Discussion Paper: Ambulatory Care
Services in Alberta," 14 February 1991, p. xx.
(20) We acknowledge that government probably shard some of these
concerns, but had to seek a balance between competing values.
(21) Stephen Heber and Raisa Deber, "Banning Extra-Billing in
Canada--Just What the Doctor Didn't Order," Canadian Public
Policy 13, no. 1 (1987), pp. 62-74.
(22) Thomas A Hockin, Government in Canada (Toronto: McGraw-Hill
Ryerson, 1976), pp. 58-60.
(23) David Taras and Allan Tupper, "Politics and Deficits:
Alberta's Challenge to the Canadian Political Agenda," in
David. M. Brown and Judith Hiebert, eds., State of the Federation 1994
(Kingston: Queen's University, 1994), pp. 61-83.
(24) Shannon Sampert, "King Ralph, the Ministry of Truth, and
the Media in Alberta," in Trevor Harrison, ed., The Return of the
Trojan Horse: Alberta and the New World (Dis)Order (Montreal: Black Rose
Books, 2005), pp. 37-51; Don Martin, King Ralph: The Political Lire and
Success of Ralph Klein (Toronto: Key Porter Books, 2003), pp. 185-86.
(25) Interestingly, no health minister had publicly expressed
strong support for increased privatization.
(26) Martin, King Ralph, pp. 212-14.
(27) For a discussion of this, see John Church and Tom Noseworthy,
"Health Care Reform in Alberta: Market Rhetoric and Reality,"
in Thomas Sullivan and Daniel Drache, eds, Globalization and Health
Reform: Public Success, Private Failure, (London: Routledge, 1999), p.
192.
(28) Rick Pedersen, "Doctors vote against Bill 11,"
Calgary Herald, 11 March 2000, p. A3.
(29) Kevin Taft and Gillian Steward, Clear Answers: The Economics
and Politics of For-profit Medicine (Edmonton: University of Alberta
Press, 2000), pp. 67-75, 90-91.
(30) Ibid., p. 90.
(31) Ibid., pp. 42-48.
(32) HRG Health Resource Group, Inc., "A plan for the
organization and delivery of complementary health services In
Canada," May 1997.
(33) Armstrong, Canada's Canary in the Mineshaft.
(34) Martin, King Ralph, p. 210.
The study on which this paper is based was funded through an
operating grant from the Canadian Institutes of Health Research and a
grant from Health Canada. We thank members of the Cross-Provincial
Comparison of Health Care Policy Reform in Canada project, which
includes Harvey Lazar, Pierre-Gerlier Forest, John Lavis, Alina Gildiner
Aaron Holdway, Stephen Tomblin, Tom McIntosh, Claudia Sanmartin,
Marie-Pascale Pomey, Elisabeth Martin, and Vandna Bhatia. Josh Marko,
David Schaaf and Kevin Wipf provided research support for Alberta.
Last, but not least, we thank the seventeen individuals who agreed
to be interviewed for this paper.
John Church is associate professor, Centre for Health Promotion
Studies and Department of Political Science, University of Alberta,
Edmonton. Neale Smith is a Research Coordinator in the Faculty of Health
and Social Development at UBC (Okanagan).