Everybody lit their hair on fire when the Vancouver Coastal Health Authority announced it was cutting back on surgeries to save money. The provincial government even fired the chairman for it.

I wonder why. The province couldn’t have been too surprised. It’s their funding system that forces hospital management to make ridiculous decisions like that.

They give hospitals their budgets at the start of the year. Hospitals work like crazy to stay within them. Then, at year end, if they can’t meet their bottom line, their only choice is to do less.

Vancouver’s decision was a dramatic, very public one. But decisions to ration health care go on in smaller, less dramatic ways every day.

Hospitals keep their costs down by limiting the number of operations they do. That’s why we have long waiting lists.

As I said in this space last week, part of the solution is to fund hospitals based on the amount of work that they do. Encourage them to do more, not less. Get them thinking of patients as clients they want to help, rather than as potential cost burdens they want to send somewhere else.

But encouraging hospitals to increase the volume of patients they treat has two very big downsides. Downsides we see in spades in America.

First, if you just reward volume, you’ll be spending a lot more. U.S. hospitals compete hard to attract as many patients as they can and work to sell them on as much treatment as possible. The result is that Americans spend way more on health care.

In Australia and the U.K., they’ve avoided that trap by basing only a third of a hospital’s budget on fee for service. It builds in incentives to be efficient, but it doesn’t make them viciously competitive.

Second, getting more patients through faster could get hospitals pushing patients out the door too soon. Stories about patients who are sent home too fast, only to come back with severe complications, are even more common in the U.S. than here.

That’s because the Americans don’t do much to reward quality. But, then again, neither do we.

The government has “performance agreements” with health authorities, but enforcing them means publicly admitting when hospitals provide substandard treatment. Governments just won’t do it.

There is another way. If we want to make sure hospitals deliver high-quality care, we should measure their results and reward them for it.

How about paying hospitals extra for every patient who goes home healthy enough that they don’t come back for the same problem?

How about paying hospitals more for treating problems early — before complications arise while sick, desperate patients wait and wait and wait in the queue?

Quality and quantity go hand in hand. If we want a better health-care system, we should figure out how to reward both. Sadly, right now, we reward neither.

This entry was posted on Sunday, February 4th, 2007 at 8:38 am and is filed under Columns. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.