How New Brunswick spends its health care dollars

In a previous post, we saw that if provincial government spending in New Brunswick over the past few decades is adjusted for inflation, non-health care spending has not increased since the mid-90s. Rising health care expenditures are largely responsible for spending increases since then. And how are those health care dollars being spent? The numbers below suggest that NB is not doing as well as some other provinces with respect to hospital operations costs; that might mean there are some potential savings to be had there. But I expect those ‘savings’ to be reallocated to other health care spending issues (e.g. wait-time reductions). The goal should not be to reduce spending by a certain amount, or keep increases at a particular rate, but to improve services while spending the same proportion of tax revenue.

Let’s start with a re-post of this chart (using data from Statistics Canada and CIHI’s National Health Expenditure Database), where spending (EXP) and revenue (REV) patterns for the past few decades are adjusted for inflation:


 

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When we adjust for inflation, non-healthcare spending (Other) has been flat since the mid-90s. Much of the total increase in inflation-adjusted expenditures seems to come from health care spending (Health). That suggests to me that cutting non-healthcare spending is likely to cut into service delivery, not ‘waste’ or ‘fat’. It might be more fun to talk about civil service wages and benefits, but are there savings to be found in healthcare spending?

The second chart shows public health care spending by selected provinces from 1975 to 2010. Expenditure nunbers come from CIHI. These were then adjusted to account for inflation using the Statistics Canada CPI values. By dividing the adjusted value by population we obtain the per capita expenditure numbers for each year. Note that, while NB and NS were spending the least per capita of the provinces listed here in the 1970s, we now fall in the middle of the pack. QC now has the lowest expenditure per capita of these six provinces, with ON close behind. MB and AB spend the most per person overall; AB is accelerating its spending rapidly. Perhaps there are some lessons to be learned from how QC and ON spend their health care dollars. Are they getting more bang for the buck?

 

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How are those healthcare dollars spent? The charts below show how healthcare dollars in different provinces are distributed. ‘Admin’ refers to administrative costs, ‘Hosp’ – hospital operations, ‘Cap’ – capital expenditures (new or rebuilt buildings, large equip purchases), ‘Drugs’ – drug costs, ‘Phys’ – physician billing, ‘Pub’ – public health. ‘Other’ – nursing homes, rehab and addiction facilities, physio, etc. All data come from CIHI’s National Health Expenditure Database.

 

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Note that NB and other provinces have similar admin costs (as a percent of total). NB in fact seems to track a bit lower than NS and Quebec in that regard, and is similar to AB in terms of administrative overhead costs. Not much evidence there for the idea that ‘bilingualism’ or ‘duality’ is driving up admin costs to a significant degree.

Nova Scotia, Quebec, Ontario and Manitoba are reducing the percentage of spending on hospital operations more successfully than NB. Why is that? Centralization, i.e. fewer hospitals per capita? Better management (whatever that might mean)? Alberta, on the other hand, seems to be going in the opposite direction, although AB’s spending distribution has a lot of ‘wobble’ from year to year. All provinces have similar spending on physician billing, but trends differ; NB, ON, MB and NS are holding the line while QC and AB show upward trends. I expect that we will see NB attempt to reduce the proportion of dollars spent on hospital operations via centralization. The stated goal will be ‘savings’ and bringing NB’s spending per capita down to the Canadian average, but I expect we will see a re-allocation of spending in order to address wait-time and other issues rather than spending reductions per se.

The ‘Other’ category has increased its percentage substantially since the mid-70s in NB, NS and QC. In NB and NS that probably is a reflection of demographics and increased demand for nursing homes. Nursing home operations are largely contracted out – is that driving up costs (each nursing home operator would have its own administrative overhead, plus there might be a loss in purchasing powere where operators are negotiating separately with suppliers)? This category appears to be increasing in proportion to declines in the proportion of hospital operations costs. I am not sure if rising ‘Other’ costs in, e.g. QC and AB, have the same cause, as each province’s health care system provides different levels of coverage, and this category also includes non-physician professionals (physiotherapy, chiropracters,etc). Similarly, drug coverage varies from province to province; moves by provinces to jointly negotiate prices with manufacturers might help hold those costs down but pending trade deals between Canada and Europe might cause some drugs to rise in price.

Perhaps 45-50 years ago we could have expected some innovation in health care policy and spending from New Brunswick’s public service. I am not sure that is likely now – the ship appears to be adrift.

 

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