Module 1: Foundations of Value & Quality

The Canada Health Act (1984)

• The legislative foundation of Canada’s publicly funded healthcare system is not a blueprint for care delivery, but a framework for funding.
• To receive full federal transfer payments (the Canada Health Transfer), provincial and territorial health insurance plans must adhere to five core principles.

The Framework in Practice: Financial Leverage

• The Process: The federal government does not directly manage healthcare delivery, rather it uses the Canada Health Transfer (CHT) to ensure adherence to the CHA.
• The Mechanism: The CHT is the largest major federal transfer to provinces and territories.
• The Penalty: If a jurisdiction permits extra-billing or user charges for insured services, the federal government is legally obligated to deduct an equivalent amount from their CHT cash transfer.
• The Implication: This framework relies on economic conditions and federal-provincial fiscal relations to maintain health system resilience and equity.

Healthcare Expenditure (Macro Context)

• To understand the fiscal framework, we must benchmark Canada against peer nations.
• How much of our national wealth is dedicated to health?

Health Expenditure as a Percent of GDP (Macro Context)

Expenditure v. Population Health (Macro Outcomes)

Key Empirical Insights:

• U.S: The highest cost per capita, yet lags behind peer nations in baseline outcome measures like life expectancy.
• Canada: Demonstrates solid performance relative to the U.S., but often struggles to match the efficiency of top-performing European systems that spend less per capita.
• The Insight: High expenditure does not guarantee high value. A robust funding framework is necessary, but sufficient quality requires optimizing how funds are deployed.

Expenditure v. Population Health (Macro Outcomes)

• If the United States outspends Canada, and Canada outspends the OECD average, do the population health outcomes scale proportionately with the financial input?

Structural Governance

Evaluating Governance Models: Trade-Offs

• To lead effectively, we must evaluate how the structural organization of a health system directly impacts the Value Framework:

Governance and The Value Equation

Governance - The “Postal Code Lottery”

The Canadian Paradox

• The Myth: Canada’s health system is frequently mischaracterized as a purely public.
• The Reality: A publicly financed system heavily reliant on private delivery mechanisms.
• Primary Care: The majority of physicians operate as independent contractors.

The Financial Interface

• To understand the public-private interface, we must visualize both the allocation of capital across sectors and the origin of that capital.
• Canada’s total health expenditure exceeds CAD$330 Billion (~11.2% of GDP), sitting between the UK (~11.1%) and the US (~16.6%).
• For more information on Canadian healthcare spending and trends, the Canadian Institute for Health Information (CIHI) is an excellent source and can be found at the link below:

Sector Allocation & Source

The Private Sector Footprint

Background:

• The private sector extends far beyond independent clinical practice into critical system infrastructure.
• Private insurance and out-of-pocket payments fund approximately 30% of total health expenditures in Canada.

Key Domains of Private Innovation:

• Pharmaceutical development and the generation of Real-World Evidence (RWE).
• Digital infrastructure, electronic medical records, and analytical platforms.
• Extended health services not covered by the CHA (e.g., dental, vision, physiotherapy).

Evaluating the Interface: Economies of Scale

Costing the Interface: A PPPY Perspective

• When public funding meets private delivery, evaluating treatment costs Per Patient Per Year (PPPY) is essential to determine true value.
• Analyzing facility-level data allows health system leaders to identify precisely where private delivery models optimize costs without sacrificing the quality of care.

International Comparators: The Interface Abroad

• To understand Canada’s position, we evaluate the public-private mix of peer nations.

Optimizing the System Interface for the Future

• Identifying Systemic Barriers: Requires synthesizing the relationship between potential access and realized utilization across both sectors.

• Moving Past Ideological Debates: Requires evidence-based integration is required to successfully implement large-scale interventions.

• The Leadership Challenge: How can public regulators effectively incentivize private innovation without widening health disparities?

Defining Value in Health Care

• In healthcare, the overarching goal must be to maximize value for patients, not simply to lower costs or increase the volume of services.
• Value is defined as the health outcomes achieved per dollar spent.

• Strategic Implication: Value encompasses both efficiency and effectiveness. If costs are reduced but outcomes suffer, value is destroyed. If outcomes improve but costs become unsustainable, value is equally compromised.

Deconstructing the Numerator

Health Outcomes:

• Outcomes are the health states achieved that matter most to patients, not just isolated clinical or biological markers.
• In a value-based system, outcomes are inherently multidimensional and should be measured across the full cycle of care.

Outcome Tiers:

1. Health Status Achieved: Survival rates and the degree of health or clinical recovery.
2. Process of Recovery: Time to recovery and the disutility of care or treatment.
3. Sustainability of Health: Long-term consequences of therapy.

Deconstructing the Denominator

• The denominator represents the total costs incurred over the full cycle of care for the patient’s medical condition.
• It is not simply the cost of a single intervention (e.g., an individual surgery or a monthly pharmaceutical prescription).

The Value Plane: Visualizing the Ratio

Value vs. Volume

Primary Driver of Inefficiency:

• The misalignment of funding models with the Value Framework.

Quantifying Value for Leadership

• Theoretical frameworks are insufficient without robust empirical measurement.
• To operationalize the Value Framework, health system leaders must rely on longitudinal health outcome data and facility-level cost analyses.

The Data & Analytics Connection:

• In our R-Laboratory sessions, we will transition from defining value conceptually to measuring it quantitatively.
• We will learn how to analyze raw datasets, visualize potential access versus realized utilization, and isolate outcome-to-cost ratios to drive evidence-based strategic decisions.

Module 1 Summary: Macro Governance to Micro-Level Value

• The Canadian Health Act: Explored how federal transfer payments (CHT) use economic leverage and the Five Pillars to maintain system-wide equity.
• Governance Models: Analyzed the structural trade-offs between centralized standardization and decentralized responsiveness.
• Public-Private Interface: Canadian paradox - Publicly funded care delivered primarily through Private mechanisms.
• Value Framework: Established the foundational equation contrasting volume-driven fee models with patient-centred, value-based care delivery.

Student Evaluation

Following our Week 1 R-Laboratory, we will dedicate the last 10 minutes for student participation in a Week 1 Evaluation.

Objective:

• Students will complete a short Evaluation of the Week 1 curriculum (i.e., Lecture & R-Lab).
• Student responses are anonymous and are critical for improving the delivery and structure of future lecture Modules & R-Laboratories.

Capstone Taskforce (Group Work)

Following the Week 1 Student Evaluation, we will dedicate the last 30 min of the class for the Capstone Taskforce formation.

Capstone Task Force

• Objective: Form a Taskforce of 5 members.
• Deliverable: Email the instructor of your Taskforce members.

Email Instructions

• Subject Heading: MHIA 6160 Capstone Taskforce
• Email: Dr. Chiarot
• Note: Only one Taskforce member is required to email the instructor.

Next Steps: Getting Ready for the R-Labs

Software Prerequisites

1. Install R: Download the version matching your OS.
2. Install RStudio Desktop: Download the free desktop edition from Posit.
3. Verify Setup: Open RStudio and ensure the R version prints in the console.