Why is Canada's healthcare system so bad?
When the bar you set is "at least we have universal healthcare", you're likely to languish in mediocrity.
This topic has nothing to do with startups but it’s something I’ve been thinking about lately:
Why is Canada so bad at providing healthcare?
This question came up for me recently when I tried to find a family doctor and just… failed to do so. Couldn’t be done. There are literally none available within an hour drive of where I live in Vancouver. I’m not sure there are any available over an hour drive either, I just stopped looking. Compounding that, there used to be dozens of walk-in clinics in Vancouver, now there’s only a few that actually still accept patients.
There are myriads of articles about these doctor shortages all across Canada. Apparently they’ve even started calling some places “doctor deserts”. I’m a sucker for alliteration, but seriously, what’s going on? Where are all the doctors?
I’ve only recently become a responsible enough person to try to find a family doctor, so at first I thought maybe this is a problem stemming from the pandemic. Perhaps healthcare systems everywhere have crumbled and just never recovered? I asked a friend in Houston what his experience was like, and he said he hadn’t noticed any change where he lives and that it’s still very easy to get in front of a doctor. The data backs that up too—the OECD ranked Canada at #1 for longest wait times to see a doctor out of a study of 11 member countries.
It doesn’t get better for specialists, either. Canada is also number one for the percentage of people who need to wait over a month to see a specialist.
And Canada’s ranking hasn’t changed since before the pandemic. So, maybe it’s gotten worse, but we were always the worst.
The Commonwealth Fund did an analysis to provide overall scores for various healthcare systems, and Canada came in 9th out of 11, beating only France and the United States.
In terms of overall access to healthcare, something Canadians are generally quite proud of, Canada was ranked the second-worst, beating only the United States.
Why is our system struggling?
The obvious answer is, as is often the case for these questions, found in the laws of supply and demand: we just don’t have enough doctors relative to our population. There’s 34% more doctors per capita in the US compared to Canada.
It’s not just the United States that has Canada beat, either. At roughly 240 doctors per 100,000 people, Canada is getting trounced by other similarly wealthy countries. Australia has almost double at 405 doctors per 100,000. The U.K. has around 515!
With this shortage of doctors, Canada is coming up with a number of creative solutions to try to still provide some modicum of healthcare to the population. For example, in the province of British Columbia, they are working to let pharmacists prescribe some medications.
This is actually the exact opposite of the Western tradition dating back to the Holy Roman Emperor Frederick II when he separated the professions of doctors and pharmacists to provide protection to patients from doctors who might otherwise be tempted to overprescribe for financial gain.
In fact, the separation of prescribing and dispensing is currently underway in parts of Asia which doesn’t share this centuries-old tradition. South Korea introduced laws to stop doctors from selling medicine in 2000 (which caused a series of doctor strikes as their income took a hit). Malaysia is working towards it as well, but currently only enforces the rule in hospitals.
Rolling back those protections (which, I can’t stress enough, other countries are actively working to introduce) due to a shortage of doctors sounds like a desperate bandaid fix to me.
Are we just not spending enough?
Canada is a pretty wealthy country. Our GDP per capita, while not as high as the juggernaut that is the United States, is higher than the United Kingdom, Germany, or Japan. Furthermore, we spend more as a percentage of our GDP than many other countries.
Canada spends more than almost any other country on this list as a percent of GDP. Of course, the United States blows us out of the water in terms of spend, which is perhaps a testament to the buying power of universal healthcare systems compared to the American system, but I’ll leave that as a future discussion.
There’s another large group of health providers that I haven’t mentioned yet: nurses.
Unfortunately, the narrative doesn’t change significantly when we account for nurses.
So Canada is still hanging out in the bottom end of the wealthy countries. In raw numbers, Canada is actually beating Germany when you sum up nurses and doctors, but those two professions aren’t fungible and Germany has many more doctors. As we saw from the previous charts, Germany’s wait times and access to healthcare are handily beating Canada, so I’m going to give them a pass on not hiring as many nurses.
Where is all the money going?
So, Canada spends more than most and gets less than just about anyone. If we normalize the number of doctors relative to the healthcare spend as a percentage of GDP, we can easily see how poorly Canada is performing.
We actually do worse on a cost basis than the United States despite the financial advantages of a single-payer system because we just have so few doctors.
It’s not brain drain to the US hurting Canada, either. Because American physicians typically get paid more, the common wisdom is that Canadian doctors leave in droves to practice in the US. But that’s just not true. Inflows and outflows of doctors into Canada roughly net out.
I don’t see any evidence that Canadians cost more to serve than people from other countries. It isn’t doctor pay making up the difference either, Canadian doctors are paid pretty on-par with other members of the OECD in terms of wages.
They often do make more in raw dollars than salaried doctors in most other OECD countries, but that’s because Canadian family doctors are self-employed and have to manage running a small business and all the expenses that come from that rather than have those expenses covered by the government. When looking at countries that follow a similar self-employed model, Canadian doctors are paid decidedly quite average.
The answer, it seems, lies in where the money gets spent. If you zoom in on hospital headcount, Canada has one of the worst ratios of physicians to total hospital workers in the OECD.
At first glance, the above chart is fairly innocuous, Canada has about the same total number of hospital staff as Germany, who have, as we mentioned above, a strong healthcare system compared to Canada. But if you isolate it in terms of just doctors, the picture becomes clearer.
At just 5.85% of hospital staff being doctors, Canada is one of the worst performers compared to the OECD average which is around 15%.
The United States being right there at the bottom with Canada makes sense—they are famous for the administrative bloat in their system. They almost exactly match Canada on the earlier chart of number of doctors normalized per % of GDP spend, so it’s not surprising that they jockey for worst-place on this chart too.
Belgium is a bit of an interesting case, as they have a famously strong healthcare system. The difference might be that they have a much higher ratio of nurses than most other countries, whereas Canada’s ratio of nurses to hospital workers is almost exactly average. Belgium appears to be making up for fewer doctors by having more nurses, while Canada makes up for fewer doctors with… nothing.
We don’t need more or less spending, we just need a reallocation of existing spending
In political debates in Canada regarding healthcare, discussions usually revolve around boosting healthcare budgets or migrating to a private model. One side says the system is underfunded, the other side says the system is overfunded.
The solution is simpler than that. For the same amount of dollars Canadians already spend on healthcare, we should have more doctors and less administrative staff. Given the advantages that should come with Canada’s single-payer system, there’s no reason to be sitting so close to the United States in the myriad healthcare system rankings. There’s massive efficiency gains just sitting there ripe for the taking, with over a dozen other countries to look to as examples for how to achieve it.
Canadians don’t like to complain about our healthcare because we live right next to the United States and, with that as the alternative most visible to us, we are satisfied that we at least have universal healthcare. But, when taking a broader view to the rest of the developed world, most of whom beat Canada on almost all important metrics for the same price, we should ask ourselves: is this really good enough?
I don't know why this person went through such a roundabout method to try and conclude that our healthcare problems are due to administrative costs. There is no need to try and infer what is happening, the spending data is readily available.
Relatively, Canada spends very little on healthcare administration and falls between Belgium and Sweden.
https://www.statista.com/statistics/1264127/per-capita-health-administrative-costs-by-country/
That there are more staff at hospitals who are not doctors does not equate to a proportional impact on the budget because not everyone gets paid the same.
Also many hospitals in Canada are research institutions where funding is not necessarily dependent on government monies. Although I do not know what the proportion of that is in Canada to other countries.
Healthcare reform is badly needed in this country but this isn't it.