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Kensington Health Centre president Brian McFarlane, right, laughs with clinical director Donna Punch and patient Medhat Abdou. (Tim Fraser/Tim Fraser for The Globe and Mail)
Kensington Health Centre president Brian McFarlane, right, laughs with clinical director Donna Punch and patient Medhat Abdou. (Tim Fraser/Tim Fraser for The Globe and Mail)

Part 4: How the factory floor inspired a new model for health care Add to ...

When Canada's premiers pledged six years ago to shorten the queues for cataract surgery and hip replacements, one of the answers put forward was private health care. Many of the promises have been delivered, through a combination of public and private actors that found new ways to improve services and lower costs within the publicly funded system.

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A key inspiration came from an unexpected place: the shop floor. Health-care practitioners are borrowing techniques from manufacturers by streamlining operations and spinning off bits of their businesses as separate, specialized units. Clinics dedicated to one medical procedure are slowly but steadily emerging in Canada with a "focused factory" approach that produces better care for less money.

One payoff has yet to come, though. Motivated by an injection of competition, doctors have found ways to perform certain surgeries far more quickly and cheaply than before. But provincial health bureaucracies have been slow to make similar adjustments to the fees they pay for those procedures.

On a recent Wednesday afternoon, Jane Swarney is relaxing in the recovery room at the Kensington Eye Institute, feeling relieved that the operation to remove a cataract from her right eye went so smoothly.

The retired nurse has worked in hospitals in Toronto, New York and Honolulu. She says her experience at Kensington was "first class," from the staff who patiently told her what to expect to the wood-panelled reception area that looks like a hotel lobby and her comfortable reclining chair that folds back to become an operating room table.

"It was just a non event," she says. "I would gladly come and have this done all over again."

Ms. Swarney was one of 27 patients that Wednesday, a slow day for one of the country's busiest cataract clinics. It has single-handedly made a huge dent in the waiting list for cataract surgery in the Toronto area, where the wait is now 127 days for the surgery, down 60 per cent from 2005.

Kensington is a leader in adapting manufacturing practices to medical care. From its unassuming perch on the sixth floor of a medical building in downtown Toronto's eclectic Kensington Market neighbourhood, the private, not-for-profit clinic is quietly bucking the trend of health-care costs that seem to go nowhere but up.

When Kensington opened its doors in January, 2006, it received $5-million in funding to perform 6,700 cataract surgeries a year. Two years later, the clinic had increased its caseload to 7,200 patients a year with the same budget.

"We did that through operating efficiencies," says Brian McFarlane, chief executive officer of the clinic.

Kensington also owes some of its success to the vision of Alan Hudson. In 2004, the same year the federal government reached an historic deal with the provinces to inject an additional $18-billion into the medicare system to cut waiting times, Premier Dalton McGuinty appointed Dr. Hudson to lead the push in Ontario. The former neurosurgeon and hospital president led the drive to reduce the number of patients stranded on waiting lists for joint replacements, cardiac care, cancer treatment and sight restoration.

Dr. Hudson came up with a novel approach to deal with patients who were waiting a year or more for treatment. He created internal competition within the system by asking hospitals and clinics to submit bids.

"This worked like a charm," says Dr. Hudson, giving his first interview since resigning last year as chairman of embattled eHealth Ontario, an effort to accelerate the switch to electronic records that ran into a storm over fees paid to outside consultants. "It's been a test case, a terrific success. It's hard to find people who aren't happy."

Hospitals already allocated a portion of their global budgets for the surgeries on Dr. Hudson's list. But now they could receive additional money under the wait-time program, if only they could promise to deliver a given number of procedures.

That financial incentive within the public system, says Dr. Hudson, was enough to encourage many public hospitals to find ways to cut the cost of cataract surgeries, through a combination of technology and reorganizing resources.

The strategy also enriched some of the ophthalmologists who specialize in cataract surgery. The Globe and Mail has reported that 259 doctors charged the Ontario Health Insurance Plan $1-million or more in the fiscal year ending March 31, 2009. One out of every five doctors in Ontario who made that million-dollar list was an ophthalmologist.

Health-care experts say the waiting-time strategy would never have succeeded without incentives for doctors to perform more surgeries. But the fee structure has not kept pace with technological advances that have dramatically reduced cataract surgery time. At Kensington, it takes 20 minutes on average to do a cataract surgery; the same procedure took an hour in the 1980s.

Dr. Hudson spent time visiting hospitals to see how they could improve their cataract surgery operations, and concludes that the fee for what has become a short, repetitive outpatient procedure is too high. But doctors still bill Ontario's public health insurance plan $388.30 for extracting a cataract (a fee that does not include consultations, diagnostic testing or follow-up visits).

"It's a commodity now," Dr. Hudson said. "How come the price hasn't come down?"

He awarded the Kensington Eye Institute the largest contract for cataract surgeries because it came up with the most competitive bid. The clinic receives $695 in funding for each cataract surgery. Hospitals, by comparison, receive $750.

Performing the same procedures over and over again helps Kensington reduce its costs and increase volumes. Instead of having an anesthesiologist in each of its four operating rooms, it has just one on the premises, resulting in huge savings. It has streamlined patient flow by wheeling patients around in reclining chairs that folds into an operating table.

The efficiency of "focused factories" like Kensington also help traditional hospitals by freeing up resources to focus on more complicated cases. Toronto Western Hospital, part of the University Health Network complex, transfers most of its routine, low-risk cataract patients to the clinic, said Dr. Robert Bell, the health network's chief executive officer. The patients most at risk of developing complications, including those with underlying medical conditions, are treated at the hospital, which has more resources available.

Other hospitals in large urban centres should follow this example, say health care experts. But the idea has been slow to catch on in Canada. While four out of five surgeries are done on an out-patient basis, the vast majority are done in hospitals.

"We are really crying out now for innovation," Dr. Hudson says.

What holds Canada back? Health care experts blame the controversy about the perils of two-tier health care.

Many Canadians are reluctant to allow private, for-profit organizations to get a foothold in health care out of fear that they might undermine a system that guarantees universal coverage.

Debates about patients paying private clinics to jump the queue may obscure the fact that private clinics such as Kensington can operate within the public system.

This confusion became apparent in the last federal election campaign, when NDP Leader Jack Layton came under fire for having a hernia treated in the mid-1990s at Shouldice Clinic, a Toronto-area private, not-for-profit hospital that bills OHIP.

Jeff Turnbull, president of the Canadian Medical Association, said private entities that bill the public purse can play a bigger role.

"The private sector has shown creativity and a willingness to provide services," Dr. Turnbull said.

"I think that this is an area where we can take advantage in the future of their expertise more so than we currently do."

True, such clinics might not be a realistic option in sparsely populated regions, because there would not be enough demand for their services.

But, at a time when political leaders are worried about the sustainability of health care, the Kensington experience shows that, at least in larger centres, they can offset ballooning costs with productivity gains and efficiencies, says former Ontario deputy health minister Michael Decter.

"The assumption that health-care costs are just going to rise forever," he says, "isn't actually true."

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