From the Montreal Economic Institute

Autonomous non-profit hospitals tend to perform better than government-run hospitals, shows a study published this morning by the Montreal Economic Institute.

“Interminable waits in Canadian hospitals show that our healthcare systems are struggling to deliver basic services to the population,” says Emmanuelle B. Faubert, economist at MEI and author of the study. “By allowing independent non-profit hospitals to open, our governments would help increase treatment capacity, to the benefit of patients.”

In 2023, the median wait time in Quebec ERs was 5 hours and 13 minutes, up 42 minutes from five years earlier.

It is estimated that as a result of chronic overcrowding in Canadian ERs, there are between 8,000 and 15,000 avoidable deaths each year.

The Canadian health care system ranks 10^th out of 11 comparable industrialized countries, just ahead of the United States, in the Commonwealth Fund’s ranking of healthcare systems. The French, German, and Dutch systems are 8^th, 5^th, and 2^nd respectively in the same ranking.

While the Canadian system has no independent non-profit hospitals according to the OECD’s definition, such facilities account for 14 per cent of French hospital beds, 28 per cent of German hospital beds, and 100 per cent of Dutch hospital beds.

The researcher attributes a portion of the success of these facilities to their greater managerial autonomy and to a funding method that encourages the treatment of more patients.

“One of the strengths of these hospitals is how quickly they can adapt, contrary to facilities micromanaged by government ministries, as is the case in Canada,” explains Ms. Faubert. “Since their financing depends on the type and the quantity of ailments treated, administrators see the sustainability of their facilities as being directly linked to their capacity to treat patients.”

Although Canadian hospitals generally have their own boards of directors, the management of their daily activities and their funding are subject to strict government control.

Aside from certain limited experiments, notably in Quebec, Canadian hospitals still depend largely on a global budgeting model, in which funding depends entirely on the level of activity in the previous year.

Since the annual budgetary envelope is fixed, each additional patient is seen as a cost, says the researcher.

In Europe, in contrast, hospitals are largely financed according to an activity-based funding model, whereby a hospital receives a set amount of money for each treatment carried out within its walls. With this system, each additional patient treated represents an immediate source of revenue for the facility, says the researcher.

“It’s clear that our healthcare system can and must do better, and that means changing the incentives of those who manage it,” says Ms. Faubert. “By introducing non-profit hospitals, with a better funding model, and by granting health professionals more flexibility, we will be able to provide better care to more patients, as they do in Europe.”

The MEI study is available here.

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The MEI is an independent public policy think tank with offices in Montreal and Calgary. Through its publications, media appearances, and advisory services to policymakers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.