In this discussion paper, Don Philippon, Professor of Strategic Management and Health Policy at the University of Alberta, looks at the motivations for changing regional health structures. —Produced as part of the MUHC-ISAI's 2009 program

In providing this reflection on current health care reorganization initiatives in Canada, I think it is first important to declare my perspective. It is based on experience in the health system across Canada but particularly in Alberta and Saskatchewan, including a term as Deputy Minister of Health in Alberta in 1994 when the regional structure was implemented. My perspective is also that of a Professor who currently studies health care systems in other countries and who serves as a consultant for health system projects, including the Saskatchewan Academic Health Sciences Network.

Canada and other countries with publicly funded universal health systems (in this article reference is made primarily to the United Kingdom/England, Sweden, Australia and New Zealand), have all adopted some form of regional administrative structure over the past two decades, and have all undertaken periodic reorganizations of these structures. Unfortunately, despite our rhetoric about evidence based policy-making, there is little macro level system wide research evidence to support any given model of reorganization. For now, we must rely on historical experience (which is abundant if not codified) in this country and others.

Need for strong central policy framework

All jurisdictions with universal publicly funded health care systems have found that they need an overarching policy framework within government to guide the health system. The power at the centre must have enough clout so that providers perceive and feel real accountability. This is particularly challenging in federations like Canada and Australia where no one government has supreme power to implement a national approach. Countries with both federated and unitary governmental systems have typically then turned over some of the system management functions to regional structures. However, in all countries there is ongoing debate about how much latitude should be accorded to the regions, and about the balance between governance and management functions at the regional level.

Moves in Canada and elsewhere to devolve some responsibility for managing health care to regional structures have been motivated by three fundamental challenges: the intent to achieve integration of health services, the need to assess and respond to needs of the community, and the drive to encourage people to identify with a whole system and access services appropriately.

Expectations of regional structures

Integration of health services

Healthcare systems like Canada’s tended to evolve in a piecemeal, sectorial or silo manner — hospital care, medical care, community care, long term care, public health. The push for regionalization in most provinces in the early 1990s was meant to achieve integration across these service lines. People presenting with health problems are rarely able to have their needs met within only one of these sectors. A patient oriented system requires leadership and capacity to support and guide the patient journey across these sectors. Today, we see an increased need for integration to address record levels of chronic disease. Integration requires healthcare managers with the skills to facilitate interprofessional collaboration and coordination among the various health service sectors.

Integration at a regional level has also been a priority in New Zealand, Australia, the UK and Sweden. While all these countries have ongoing debates about the number of administrative regions that are needed and about the degree of independent decision-making that should be allowed in the regions, the principle of regionally rooted mechanisms to achieve integration is well-recognized.

The biggest issue in all the Canadian models is that physicians remain outside the regional structure and are primarily paid by the provincial governments on a fee-for-service basis. In Sweden, New Zealand and England, physicians are part of the regional structure and are remunerated at a regional level. In England, specialists are salaried within the National Health Service (NHS) Trusts or hospitals, and primary care physicians are paid with a mix of per capita payment plus bonuses for specified outcome measures. The goals are set at a national level, but are implemented regionally.

Assessment of community needs

A second reason for a regional structure is the need to continually assess and respond to the health needs of local communities. To do this requires capacity at the regional level and involves not only documenting the needs of people who present themselves for services, but also looking upstream at risks in the community to see how health promotion and disease prevention measures can address the pattern of illness. This in turn requires capacity for regional priority setting and the ability to reallocate resources in the most appropriate manner from one set of services to another. It also requires engagement of the local communities within a framework they can see and understand.

Appropriate use of services

Finally, a regional structure is necessary for people to see the various parts of the health system as interconnected and accessible. While there will likely always be a strong tendency for people to identify with individual health providers (e.g. their family physician) and individual facilities (e.g. the local hospital), if citizens see the whole system, they can be encouraged to access services appropriately. Reallocation of resources among sectors becomes easier if people see the integration and interconnectedness of services.

All provinces, with the current exception of PEI and Alberta, have a regional structure to oversee the integration of health services, the allocation of health care funding among sectors and the identification of present and future health needs. Even Ontario, a latecomer to the regional approach, is gradually building capacity at the regional level with its Local Health Integration Networks.

Regional approaches

As regional structures are created by government, legislation must set out the definition of the structure. Three definitional features, on which there is little evidence but much debate, are: the size of a region, its scope of responsibility and the extent of regional autonomy.

Size of a region

A key question is how big the regions should be in terms of population. The view in New Zealand is that 21 health districts are too many for a country of 4 million. The UK/England has 10 Strategic Health Authorities for about 51 million people, but in that system the real power is with the Primary Care Trusts that number about 150, with populations ranging from less than 100,000 to over 2 million. Again there is a prevailing view that 150 Trusts are too many. In Sweden, there are 21 County Councils or regional systems for 9 million people, and once again the view is that this number is too high.

While there is no hard science on this and geography plays a role, a population range of 200,000 to 1.2 million seems to be the number around which most comfort exists. The upper number appears suited to larger concentrated urban centres and the lower number to more dispersed rural populations. This population size provides the basis for a good array of services and allows for a realistic approach to identifying community needs.

Scope of responsibility

For larger more populated centres, there is the dual challenge of creating a region that serves local needs but also meets the complex care needs of the entire jurisdiction. Typically, these are the host regions for large academic health centres and there continues to be some debate as to whether these organizations should be part of a region at all. On balance, there appears to be an advantage to including them in a large regional structure as they are often the organizations that can create new models of care and to do that they need to be involved in and connected to the full range of health services. Separating complex care from the regional structure only serves to reinforce the silo approach, despite the fact that use of a continuum of services becomes even more important with complex care.

Regional autonomy

In a publicly funded system, issues such as cost, quality control and standards need to be decided centrally in order to assure consistent care for all residents. The central planning and policy framework is essential, but once this is established, regions can be given some latitude to make sure the system responds to the needs of a particular community.

In systems where the regional structure includes regional governance, (i.e. management reports to regional boards versus the central authority) there is a risk of creating a conflicting set of incentives, promoting competition between regions as managers seek to advance their own programs and secure larger budgets without accountability to the larger provincial framework. It can also lead to duplication of efforts between regions.

In Canada as in the other countries being referenced, legislation gives Ministries significant power to make regions more responsive to central provincial direction but this is not always fully exercised. The time and effort to keep regions in line is often too demanding and this becomes even more difficult when the economy is performing well and there is a public perception that identified health needs should be funded.

The Alberta experience is a case in point. The legislative power did exist to rein in the health regions, but doing so became increasingly difficult as the major regions gained prominence. The regional system in that province was introduced in a period of economic difficulties and the overall need to achieve a balanced provincial budget actually resulted in major funding reductions in the first two years of the regional approach. However, the complete turnaround in the economy with major budgetary surpluses in later years coupled with a major population growth resulted in competing demands from health regions.

To be effective, regional structures need to complement the central policy framework. The region must have the managerial capacity to integrate heath services and the latitude to allocate resources between service areas so there is a good continuum of care for patients, but this must be done within a policy of accessibility and quality set at the central level. Close dialogue between the central and regional structures is needed to avoid creating unjustifiable differences in accessibility from one region to the next. In short, regional structures that accord governance responsibilities to the regional level run the risk of creating dysfunctional tension between the regional and central level unless that governance role is very clearly circumscribed.

Pitfalls of reorganization

Health care continues to be one of the highest priorities for Canadians. The 40+ years of experience with universal and publicly funded health care is now well engrained in Canadian society. However, the Cana?dian “system”, which is really a set of 14 interlocking provincial, territorial and federal plans, is faced with a number of challenges, including rising costs, access issues and quality issues.

While there are many ideas on how to address these challenges, provincial governments for the past decade have placed great faith in structural reform.

Structural reform

Government expenditure on health has grown and the hopes that a regional structure would control costs have not been realized. So it is not hard to understand that Ministers, Cabinets and Governments tire of being held accountable for a system that seems to charge along at its own pace without regard for government’s fiscal realities. The health system is an anomaly in that while Government has ultimate accountability, it has very few levers of direct control over the system. Physicians are the main gatekeepers to the system and they essentially operate as private entrepreneurs with Government paying their fees. Healthcare facilities are structured as non-profit corporations — under the regional system they come close to becoming crown agencies. So it is not unnatural for Governments to resort to the one tool they have that no one else has and that is the legislative power to bring about system change.

Canada is not alone in its experimentation with regional reform. Australia’s largest state, New South Wales, totally dismantled its regional governance boards in 2004 but retained regions with local administrative capacity to manage the system. The regional structure was maintained but with a much greater accountability to the state.

Reorganization can suck energy out of the system in a number of ways. System instability and uncertainty creates a leadership vacuum in addressing the real issues in the system. Provinces have a long way to go in the areas of primary care reform, improving waiting list management, developing tools for payment by results, implementing an electronic health record and greatly improving chronic disease management. Initiatives in these areas require time and testing, and long-term resource commitments to produce results. These challenges remain despite repeated organizational efforts. There is a risk in Canada that we have now reached the point where continual reorganization is becoming dysfunctional and harmful in most provinces.

It is refreshing to see one province, Saskatchewan, that is taking a different approach to health reform. The new Government in Saskatchewan, that no doubt shares many of the same health system issues, has chosen to use the “Patient First” approach to guide policy making. By focusing on the patient journey and consulting with patients and providers, Saskatchewan hopes to determine the nature of bottlenecks and continuum of care issues in the system. It is still too early to predict the outcomes of this process, but looking at the real issues faced by patients is a promising starting point.

The importance of leadership and management

There is compelling evidence in the literature that leadership and management are critical to health system renewal. Yet the preoccupation with reorganization or structural reform often destroys or seriously jeopardizes the very infrastructure required to achieve new models. Changeovers in personnel are disruptive and expensive.

The healthcare system in Canada has not placed a high value on leadership and managerial development. Evidence shows the health sector devotes far less attention to this area than do other sectors. There is a dearth of effective succession planning and very spotty leadership development. Reorganization efforts usually sideline these initiatives.

In arguing for a regional management role, the importance of skilled managers and administrators becomes critical. While it may be politically popular to portray managers as fat that can be cut out of a system to allow for more direct patient care, the various professional groups involved in health care will not, without management, be able to serve the population effectively or efficiently.

Good health care leadership and management at the regional level can create dynamism within all institutions in that region and contribute to improved performance and better outcomes. Renewal of our health system is far more limited by our capacity to demonstrate good leadership than it is by technical abilities. The ability to create strong teams among the many health professionals, to identify new models of health care delivery and to jump ahead of the curve by identifying and addressing emerging health issues can all have a profound impact on the health outcomes in our system. Physicians, nurses and other health care professionals cannot work productively in a system that is not well organized and managed, and change — especially the development and implementation of new models of care — becomes virtually impossible without capable leadership and management that can work across professional groups and health sectors.

We need to remember that managers respond to the culture and direction of their leadership and that there is much potential to change the course of a ship without actually mooring it and building a new one.

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Health services delivery in Alberta: A timeline

Before 1994 : The provincial health ministry managed 128 acute care hospital boards, 25 public health and 40 long-term care boards.

1994: Seventeen health regions were established by government with appointed boards to manage operational decision-making at the local level.

2001: As part of municipal elections, two-thirds of board members were elected and the remaining one-third were appointed.

2003: The 17 health regions were reduced to nine regions on April 1, 2003 with board members appointed by government. Mental health services and associated budgets were transferred to the regional health authorities.

2008: Alberta’s nine regional health authorities and their boards were disbanded. Government established the Alberta Health Services Board to deliver health services for the entire province and be accountable to the Minister of Health and Wellness.

Consolidation in Alberta: Why and how?

Challenge: Reduce costs, eliminate discrepancies in access and quality, end competition between regions and centralize governance.

Preparation: Following the Health Minister’s announcement dismantling the regional health authorities (RHAs), government engaged McKinsey Consulting to review health delivery services and provide options for improvement. McKinsey’s report was informed by visits to all nine of the province’s former health regions, and discussions with over 200 executives and clinicians. In December 2008, the Ministry released its Vision 2020 document outlining priorities. In June 2009, Alberta Health Services released its strategic plan and aims now to tour the province to get reactions.

Approach: In May 2008, Alberta’s Minister of Health and Wellness dismantled all regional structures and formed the new Alberta Health Services (AHS) organization to report directly to the Ministry of Health. A transitional provincial board made up of a chair and six members was appointed by the Minister, who also established a process to recruit additional members for a permanent competency-based, compensated 15-member provincial board of directors, and a CEO for AHS. Ground ambulance service was added to its responsibilities. AHS will create different administrative “zones”, but these will not have separate governance boards. The functioning of zones remains unclear.

Alberta Health Services is tasked with coordinating the delivery of health supports and services across the province. It brings together 12 formerly separate health entities in the province, including nine geographically based health authorities offering a wide range of health supports and services and three provincial entities working specifically in the areas of mental health, addictions and cancer.