A look at where Ontario healthcare dollars are going

A new report by researchers at the Institute for Clinical Evaluative Sciences released yesterday provides an eye-opening look at how our healthcare dollars are being spent in this province.

This is an in-depth look at our healthcare spending at the level of each individual in the province. Researchers tracked every hospital admission, physician visit, home care visit, lab test, and drug prescription for 14.9 million Ontarians between 2009 and 2011.

They accounted for $30 billion, or 75 cents out of every healthcare dollar spent in this province, and found that 43 per cent goes to hospital care, 27 per cent to doctors, 15 per cent to drugs and lab tests, and 15 per cent to long-term care.

As it turns out, “high-cost users” consume a disproportionate amount of these resources. Ten percent of the population accounted for 77 per cent of spending and 1 per cent accounted for 33 per cent of spending. Each person in that top 1 per cent consumed almost $45,000 a year, compared to a maximum of only $333 a year for each person in the lower 50 per cent cost bracket of the population.

In fact, we’ve known for years now that this type of clustering of costs happens in both US and Canadian healthcare systems, but this study also shows that 45 per cent of the people in the top 5 per cent for healthcare spending stayed in the top 5 to 10 per cent for the whole 3 years. This suggests that the things that are driving up those expenditures, such as chronic diseases or an acute event like a hip fracture, have sustained long-term costs.

The bulk of expenses in these high cost users are related to being in hospital or at a long-term care facility, and the most common reasons for hospital admission are chronic diseases like heart failure and chronic obstructive pulmonary disorder (COPD), and infections like urinary tract infections and pneumonia.

The reason we need reports like this is that we desperately need ways to maximize value in our healthcare system. The good news is that if we focus in on just 1% of patients, we can address 33 per cent of costs. The bad news is that this 1 per cent of patients had a very broad range of conditions, which makes it hard to target specific quality improvement programs. We also know that these so called high users are very sick. I know from my own practice that when patients with COPD get admitted to hospital multiple times, it’s not because they’re not getting the best medicines and advice, but rather because they’re just that fragile.

What this report confirms is that hospital care is a major driver of costs. So the key is preventing and shortening hospitalizations by increasing community care, which his cheaper. Provinces around the country are now trying to figure out just how to do this.