Doctors are unemployed, while patients wait for care

The health- care system isn’t responsive to market signals, William Watson writes.

Does Canada have the right number of restaurants per 1,000 people? It’s a silly question, of course. The “right” number establishes itself as Canadians decide how much to eat out. If we dine out less, the number of restaurants falls. If we dine out more, it rises. The “right” number is whatever demand and supply produce. So many Canadians are temperamentally antagonistic to markets I won’t colour the issue by saying “the market decides.” But we probably all understand intuitively how entry and exit into the restaurant business works.

The restaurant question may be a silly one, but it’s what came to mind as I read a recent C. D. Howe Institute report by economists Åke Blomqvist and Colin Busby about unemployment among recently graduated health specialists, people like heart surgeons, hip specialists and so on. That’s right. Doctors and others that we’re training at very high cost are under- or unemployed. This when there are still long waiting lists for many medical procedures in Canada.

Blomqvist and Busby attribute this essentially bizarre situation to funding practices. Most specialists are paid on a fee- for- service basis by provincial governments that negotiate standard fees with their professional associations. But specialists usually can’t work without hospitals. They need operating rooms, anesthetists, nurses, hospital beds and so on to help them. The problem is, these are all funded by a different budget. In most provinces, hospitals get a global annual sum related not to how many services they actually provide, but to what they got last year, how effective they and their supporters are in lobbying the minister of health, and so on.

It’s as if restaurants and chefs were paid under separate budgets, the number of restaurants was fixed, and chefs had to shop around for cooking

You’ve got to wonder whether tinkering with a system so inherently dysfunctional will really produce better results.

space, with some possibly being left out in the cold because would- be diners aren’t deciding restaurant numbers, an appointed restaurant czar is.

Blomqvist and Busby say the way to fix this problem is to have one budget. Either pay the specialists a fee that reflects their all- in costs and then let them buy services from the hospitals. Or give the hospitals the all- in costs and let them buy the services of specialists.

Well, maybe. But you’ve got to wonder whether tinkering with a system so inherently dysfunctional will really produce better results. Maybe we should instead let demand and supply have more to say about what gets provided.

Canadians still go a little crazy when anyone suggests health care should be more marketbased. There are two big problems with that, opponents say. The first is poor people. However, it should be possible to find ways to reinforce poor people’s purchasing power when it comes to buying expensive services that bad luck or bad genetics forces them to buy. Bad behaviour on their part is a tougher question, but Canadians tend to be sympathetic to people in distress whatever its cause. The other problem with a market for health care is that “health care is different.” The supplier is usually the demander. The person who’s going to perform the operation tells you whether you need it or not. It’s as if the chef ordered for you: We’d all end up over- eating.

But in the Internet age, with half of humans already walking around, as the Economist says, with supercomputers in their pockets, there must be ways to track and sanction unethical practitioners. Bad restaurants get reviewed out of business. Why not bad doctors?

It’s hard to see how it could be worse than graduating desperately needed specialists who then languish in underemployment.