Health monopoly shuts out entrepreneurs

For the past 15 years, increases in health-care spending have outpaced the growth of the Canadian economy. As a result, this spending takes up almost 40% of provincial and territorial government budgets.

In an efficient industry, greater expenses are not necessarily a source of concern. This is especially true if the quality of goods and services obtained is higher. There is also nothing unusual about a population demanding more of a certain kind of service when its income levels rise.

It's another story when increased expenses do not buy better services. Despite the torrents of cash pumped into the health-care system over the years, the Canadian population is not getting its money's worth when compared with the vast majority of OECD countries. Worse still, in many respects the situation does not show any signs of improvement.

In Quebec for instance, nearly 1.7 million people, or 25% of the population, still have no family doctor. Patients wait an average of 17.6 hours in the emergency room, nearly two hours more than a decade ago. Throughout Canada, the median wait time between seeing a general practitioner and treatment by a specialist has almost doubled from 1993 to 2010, going from 9.3 to 18.2 weeks.

In most sectors of the economy, the many problems facing the health-care system would be seen as opportunities by entrepreneurs. However, since hospital and medical services deemed to be "essential" are monopolized by government, entrepreneurs are by definition excluded from a large portion of the health-care sector. Even in areas in which the private delivery of services is allowed, numerous regulations and obstacles handcuff entrepreneurs and undermine their drive to initiate new ventures.

Legal and administrative constraints are so burdensome that many entrepreneurs have been forced in recent years to look to other markets. This is precisely what happened to Myca Health, a company based in Quebec City that is now a leader in the virtual consultation field in the United States. After bumping up against what they called a "disheartening bureaucracy" while trying to set up their project, the two main shareholders gave up on the idea of developing their business in Canada.

Furthermore, the emergence of new entrepreneurial initiatives is held up by numerous interest groups in the field of health care, first and foremost the unions and professional associations, which benefit economically from the current system. These groups generally oppose all health reforms aimed at modifying the status quo.

The representatives of these groups very often use language that sets the principles of efficiency and fairness in direct opposition to each other, as if the two were irreconcilable. These political pressure tactics often end up blocking initiatives involving private-sector entrepreneurs. The Ontario government's rejection in 2007 of the private Don Mills Surgical Unit's offer to carry out knee operations for $5,800 each or $1,082 less than the cost in public hospitals is a notorious case in point.

Yet entrepreneurship brings with it undeniable benefits. In almost all sectors of our economy, significant numbers of entrepreneurs have been willing to take risks and innovate in order to offer consumers better products and services, more choice, and lower prices.

Why couldn't we rely more on entrepreneurship to bring these same benefits to the health-care sector? After all, in those areas of health care in which entrepreneurial initiatives are encouraged, the market is dynamic, innovations abound, and the quality of service and care is constantly improving.

Take laser eye surgery, for instance. For more than a decade, a growing number of clinics across the country have been competing to offer this service, and the results are conclusive. While 10 years ago, surgery for both eyes cost around $5,000, the price is now between $1,000 and $2,000. Contrary to the situation that prevails in the public health-care system, prices have fallen despite the adoption of more and more advanced technologies over the years.

Ultimately, there is no doubt that entrepreneurs could be called upon to take up the challenges posed by the aging of the population and the growing costs of health care in this country. But unless governments decide to loosen the public monopoly's grip on essential services and try to make life easier for entrepreneurs, they will unfortunately seek opportunities elsewhere, and patients won't get the services they deserve.

Yanick Labrie is an economist at the Montreal Economic Institute and author of Health Care Entrepreneurship: Overcoming the Obstacles.

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