Ontario Health Spending: What's Up and What's Down

 The Canadian Institute for Health Information (CIHI) has released its 2024 National Health Expenditure Trends data and it paints an overall picture of rising health spending.  As I have noted elsewhere, total health-care spending in Canada is expected to increase by 5.7 percent in 2024, after rising 4.5 percent in 2023 and only 1.7 percent in 2022 coming on the heels of the pandemic.  The picture for provincial government health spending is also one of increase but once adjusted for population and inflation, the results are more mixed particularly if one looks at changes since the year before the pandemic.  Over the period 2019 to 2024, British Columbia and Prince Edward Island see the largest increases in real per capita provincial government spending at 17 and 16 percent respectively while at the bottom are Manitoba and Nova Scotia, which over the five years have seen their per capita provincial government health spending stay essentially flat.  Ontario, over this same period saw an increase of just under seven percent.

 

 

Figure 1 plots real per capita Ontario provincial government health spending ($2010) from 1975 to the present and the evidence shows that since 2010, real per capita health spending spending growth was lackluster at best rising from $3,617 to $3,783 - an increase of of 4.6 percent or about half a percent annually.  After 2019, the pandemic saw a ramping up provincial government health spending to a peak of $4,316 in 2021 - an increase over two years of almost 14 percent.  Since 2021, there has been a decline in real per capita spending and in 2024 it is estimated to sit at $4,040 - for a decline of about 6 percent.  Nevertheless, real per capita provincial government health spending in 2024 is still projected to be 6.8 percent higher than 2019.

 

What is quite interesting is how spending by expenditure category has performed over the 2019 to 2024 period.  Figure 2 plots the percentage change in real per capita provincial government health spending by category.  Over this five year period, the largest increase has been for real per capita spending on other institutions - namely, long-term care - at nearly 50 percent.  This is of course understandable in the wake of what transpired in long-term care homes during the pandemic as well as the promise to build more long-term care beds for an aging population.  Next is home and community care at 10.7 percent , followed by public health at 9.3 percent and then hospitals at 8 percent.  Other professionals is next with an increase of 5.3 percent followed by capital at 3.2 percent.  What comes next however is even more interesting .  All other health care net of home and community care spending is down by about a third of one percent.  Spending on provincial government drug plans in real per capita terms is down 4.4 percent while physician spending is down 5.8 percent.  Finally, real per capita provincial government health spending on health administration is down nearly 24 percent. 

 The surprise here is that spending has dropped on two items that directly affects a lot of individuals in Ontario - namely, government paid for prescription drugs and physician services.   Obviously, if one measures availability of physician services by how much is being spent per person after population growth and inflation, it is obvious that Ontario is having trouble keeping up in this category.  With an aging population, the decline in physician and also drug plan spending is definitely going to be felt even if the provincial government asks us to take solace in the increases in long-term care, home care and hospital spending. 

Physician Numbers in Canada and Ontario: Evolution and Ranking

 

The health system in Canada and Ontario is faced with shortages of health professionals in the wake of the COVID-19 pandemic.  Added to this is long-term rising demand for services because of an aging population as well as the impending retirement of large numbers of health professionals given the age distribution of the health work force.  Access to physicians – particularly family physicians - has been a long-standing issue in Canadian health care.  Yet, it remains that despite the constant perceived shortages, physician supply has been increasing.  Figure 1 and 2 present physicians per 100,00 population in Canada followed by Ontario for the period 1978 to 2020.  The plots use data from the Canadian Institute for Health Information/Scott’s Medical Data Base (CIHI/SMDB) and show physician intensity for total physicians as well as specialists and family physicians. 

 

 

 

 

After a period of growth from the late 1970s to the early 1990s, physician intensity showed little growth for nearly 15 years.  Starting approximately 2005, the number of physicians per 100,000 began to increase.  In Canada, total physicians per 100,000 rose from 190 to 242 between 2005 and 2020 – an increase of 27 percent.  Specialist density rose from 93 to 119 (28 percent growth) while family medicine physicians rose from 98 to 123 (a 26 percent increase).  Ontario exhibits a similar profile to Canada except that the 1990s to 2005 saw a more pronounced decline in physician density – particularly in family practice.  Since 2005, the total number of physicians per 100,000 rose from 177 to 232 – an increase of 31 percent.  Specialists grew from 92 per 100,000 to 114 – an increase of 24 percent – while family practice physicians rose from 85 per 100,000 to 115 – a 35 percent increase. 

 

 

 

Ontario was hit harder than Canada by the decline in physician intensity of the 1990s as shown in Figure 3 which plots total physicians per 100,000 population for Ontario and Canada. Up until the early 1990s, Ontario’s physician density was a bit above Canada but since then a persistent gap has opened up.  In 2020, Ontario had about 5 percent fewer physicians per 100,000 relative to Canada as a whole.  But the rest of Canada need not feel too smug.  When compared to the OECD countries or the G-7, Canada and Ontario do not fare particularly well with respect to physician numbers.  As Figure 4 illustrates for the period 2000 to 2020, Canada and Ontario are at the bottom of the G-7 countries as well as well below the OECD average.   

 

 

 

Germany and Italy are at the top of the G7 at 447 and 400 physicians per 100,000 population respectively.  The OECD average is 366.  In 2020, Canada was 34 percent below the OECD average with respect to physician density while Ontario was 37 percent lower. Canada gets by with many fewer physicians relative to other economically developed countries and Ontario gets by with even less.  While there has been substantial growth in physician density in Canada and Ontario since 2005, in Ontario population has also been growing quickly and  actually outstripped physician growth since 2018 actually resulting in a drop in the number of physicians per 100,000. 

Drummond and Health

A large number of recommendations in the Drummond Report have to do with health care.  There is a lot there - much of which we have heard before in terms of things like focusing more on home care, patient centered care and evidence based care.  Indeed, the first recommendation on health care made by the Drummond Report is the most likely to be adopted by the provincial government given its affinity for planning:

Recommendation 5-1: “Develop and publish a comprehensive plan to address health care challenges   over the next 20 years.  The plan should set objectives and drive solutions that are built around the following principles..."

Those principles include being patient centered, a fully integrated system-wide approach, more emphasis on chronic care and home care, disease prevention, etc...A plan to address health care over the next twenty years is definitely something that would appeal to the current provincial government and they would be able to apply the expertise acquired in doing the Northern Growth Plan - which also has a long-term horizon of decades and has yet to yield anything tangible.  Indeed, the propensity to embrace a planning rather than an action culture is one of the things that is wrong with Ontario today and in my opinion a key factor in its poor economic performance.  While planning frameworks are necessary, they appear to have become ends in themselves rather than a means to an end.  But I digress.  Back to health.

While much has been made of Drummond's recommendation to bring in a payment freeze for physicians and the remarks that they are among the highest paid in the country, one recommendation appears to have flown under the radar.  Here it is:

 

Recommendation 5-59: "Compensate physicians using a blended model of salary/capitation and fee-for service; the right balance is probably in the area of 70 per cent salary/capitation and 30 per cent fee-for-service."

The Drummond Report appears to advocate a big move away from fee-for-service.  It will be interesting to see what the reaction to this will be.