The Canadian Healthcare System and Reimbursement Environment. Ryan Clarke and Paul Bradley Tuesday, March 6, 2018

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1 The Canadian Healthcare System and Reimbursement Environment Ryan Clarke and Paul Bradley Tuesday, March 6, 2018

2 Overview Overall Structure Role of the Federal Government Role of the Provincial/ Territorial Governments Delivery vs. Financing Key Players in Delivery Financing in Canada vs. World

3 Overall Structure In general, health care in Canada is publicly funded, but privately delivered This means that while the vast majority of health care services are free at the point of use, they are delivered by private providers i.e. physicians The provinces are constitutionally responsible for the administration and delivery of health care services under s of the Constitution Act, 1867: The Establishment, Maintenance, and Management of Hospitals, Asylums, Charities, and Eleemosynary (charitable) Institutions in and for the Province, other than Marine Hospitals

4 Federal Role The role of the federal government is to: House of Commons Assist in financing provincial and territorial health care services through fiscal transfers Set standards and principles upon which transfers are contingent Deliver health care services to specific groups Provide and fund other health-related functions

5 Canada Health Act, 1984 The Canada Health Act (1984) is Canada s federal health insurance legislation It establishes the criteria and conditions related to insured health care services the national standards which the provinces and territories must meet in order to receive the full federal cash transfer contribution Historically, insured services are largely restricted to care delivered in hospitals or by physicians

6 Canada Health Act, 1984 The Act states that "the primary objective of Canadian health care policy is to protect, promote and restore the physical and mental well-being of residents of Canada and to facilitate reasonable access to health services without financial or other barriers To do so, the Act lists a set of criteria and conditions that the provinces and territories must follow to receive their federal transfer payments: public administration, comprehensiveness, universality, portability, and accessibility There is also a requirement that the provinces ensure recognition of the federal payments and provide information to the federal government

7 Provincial/Territorial Role BC legislature Ontario legislature Administration of their health insurance plans Planning and funding of care in hospitals and other health facilities Services provided by physicians and other health professionals Planning and implementation of health promotion and public health initiatives Negotiation of fee schedules with health professionals

8 Delivery vs. Financing Health care delivery refers to the manner in which medical services are organized, managed and provided In large measure, health care is delivered through private providers The health care industry is the second largest employer in Canada (over two million people) They can be divided into three types of services: Primary care Secondary care Additional care

9 Delivery vs. Financing Health care financing refers to how medical services are paid for In large measure, health care is financed through public funds, but that is evolving Total health care spending in Canada was expected to reach $242 billion in 2017, averaging $6,604 per person Financing comes from three primary sources: Public Private Out-of-pocket

10 Key Players in Delivery Hospitals representing almost 30% of total health care expenditures While independently operated, all hospitals in Canada are regulated by the provinces and territories (even the private ones) Drugs representing just over 16% of total health care expenditures Includes brand and generic, those delivered inside hospitals (publicly funded) and outside hospitals (mixed funding) Physician services representing just over 15% of total health care expenditures

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13 Before we Begin: Some Considerations The innovation must offer clinical improvement over the current standard of care. Benefits to acquiring the innovation should be accrued within the same care setting; as this provides the most compelling value proposition. At this time, cost savings are not aggregated at the system level or realized across care settings. Cost savings are more compelling than cost avoidance. Primary evidence is more compelling that third party evidence. Healthcare in Ontario is transactional. Be prepared to measure how your innovation can reduce the cost of, and/or the number of, transactions within a care setting.

14 Connecting The Evidence Economic Impact Clinical Impact Healthcare Stakeholders Patients, Providers & Funders

15 Clinical Impact Identify the clinical impact of the innovation (new medical device, surgical procedure, treatment process, enabling technology) What are the key benefits Are there any risks or harms associated with the innovation? How does the innovation impact patient outcomes? Mortality, patient-reported health status, adverse events, clinician-reported health statuspain, quality of life, etc. How does the innovation affect Health System Outcomes along the patient pathway? Length of stay in hospital, readmission rates, etc.

16 Economic Impact Cost Minimization Is used to identify the differences between two equally clinically effective treatments Outcomes are measured in dollars Cost Effectiveness Used to measure the cost per outcome Identifies the incremental cost per outcome i.e. dollars per redo avoided Cost Benefit Measures whether monetary benefits outweigh the costs Measured in dollars Cost Utility Analysis Identifies the cost of adding one year of perfect health to a patient s life Measured in incremental cost per additional quality adjusted life-year (QALY)

17 NEW INNOVATION COST Willingness To Pay Grid Higher Cost Lower Effectiveness Higher Cost Higher Effectiveness New Innovation Lower Cost Lower Effectiveness Lower Cost Higher Effectiveness NEW INNOVATION EFFECTIVENESS

18 Patient Journey Look For Opportunities To Impact Clinical & Economic Impact Management, Screening, Support Hospital, Long Term Care, Rehab Medication, Surgery, Minimally Invasive procedures Remote, Compliance, Treatment Efficacy, Safety Declining Health Admittance Treatment Monitoring Well Triage Diagnosis Discharge Health Maintenance Physician, First Responders, Urgent Care POC, Lab, Imaging, Assessment, Decision Support Home, Community Care, Nursing, OT/PT, Psych 18

19 Disruptive vs. Incremental Innovation Does it enable earlier disease detection? Does it speed patient discharge? Does it shift site of care? Does it lower patient cost of treatment? Does it enable lower-skilled practitioners? Does it reduce patient pain/discomfort? Is there collaboration with physician co-inventors? Is your innovation going to require a different funding model? 19

20 The Flow of Funds FEDERAL GOVERNMENT Consolidated Revenue Fund MOHLTC LHIN EMS PHU AGENCIES OHIP FLOW OF FUNDS HOSPTIAL LTC COMMUNITY Other PRIMARY CARE

21 Canada Health Transfer ~ $38B FEDERAL GOVERNMENT MOHLTC ~ $52B ~ $14B Federal Government responsibilities: Setting and administering national standards (Canada Health Act) Financial support to Provinces Supporting health care services to specific groups Provincial Government responsibilities: Meet the standards described in the Canada Health Act to access their full payment under the Canada Health Transfer. The Ministry of Health and Long-Term Care (MOHLTC) provides overall direction and leadership for the Ontario healthcare system.

22 Transfer Payments to LHINs Local Health Integration Act Ministry LHIN Performance Agreements MOHLTC LHIN There are 14 Local Health Integration Networks (LHINs) across Ontario LHINs are responsible for hospitals, long-term care homes, Community Care, Community Support Services, Community Health Centres and Addictions & Mental Health Agencies. LHINs are not responsible for physicians, Public Health, ambulance services, or provincial networks (e.g., Cancer Care Ontario). Accountability agreements are established between MOHLTC and each of the 14 LHINs and define each group's responsibilities and obligations.

23 Hospital Funding The Patients First Act Commitment to the Future of Medicare Act Hospital Service Accountability Agreements LHIN HOSPTIAL Retained surplus! Funding Categories: Health Based Allocation Model (HBAM) HBAM is a population health-based funding methodology that uses population and clinical information to inform funding allocation. Quality Based Procedures (QBPs) This approach will reimburse health care providers for the types and quantities of patients they treat, using evidence-informed rates that are associated with the quality of care delivered Provincial Priority Program Services (PPS) E.g., Cardiac surgery, organ transplant, bariatric surgery, etc. Procurement: Local procurement office within the hospital. Shared Services Organisations and Group Purchasing Organisations.

24 Regarding The Job to be Done Distribution of Health Authority Expenses 24

25 Regarding The Job to be Done Are there ways that you can help innovate clinical and management practice to reduce other cost, quality and productivity factors? Distribution of Health Authority Expenses 25

26 Typical Market Access Approach High level business opp. Environmental scan Stakeholder mapping Develop plan Risk analysis SWOT analysis Contextualization Position statement/ communication tools Execute plan 26

27 Setting yourself up for success Gather evidence early in the product development life cycle. Understand the funding model for the care setting that will use your innovation. Speak with both influencers (e.g., users) and decision makers (e.g., budget holders) Generate the appropriate evidence to demonstrate clinical effectiveness and economic effectiveness. Clinical trial for regulatory purposes Clinical trials for adoption

28 Provincial Federal PDLC International Government Based Support Landscape for MedTech Firms US DoD (e.g. MRMC, DARPA, BARDA) SBIR CIIP, Eureka! NIH grants Genome Canada (e.g, Genomic Applications Partnership Program (GAPP)) GAC SSHRC, CIHR, NSERC primarily academic but some grants require industrial partners. NRC- IRAP FedDev and FedNor BDC Ventures PWGSC (e.g., BCIP) BDC EDC MEDEC Economic Development Agencies Incubators, Accelerators, RICs, CECRs OCE (Incuding the HTF) OICR EXCITE & REACH OCHIS Industry Associations (i.e. OBIO, MEDEC, CME) MEDEG & MRI Research Concept Planning & Definition Design & Implement Clinical Testing Reg. Filing Launch Post Market 28

29 Accelera Canada Ltd. Contact Information: Ryan Clarke, LL.B Paul Bradley

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