Alberta spends $2.4M an hour on health care —​ how do we reduce spending?

In the coming year, the Alberta government will spend about $22 billion on health care. That’s almost 40 per cent of the provincial government’s total budget. Foothills Medical Centre, Alberta Health Services

By Brooks DeCillia, CBC News Calgary March 25, 2018

Every hour, Alberta spends $2.4 million — $59 million per day —​ to keep the province’s health-care system running.

In the coming year, Alberta will spend $22.1 billion on health care. That’s almost 40 per cent of Alberta’s total budget.

The provincial government knows it needs to slow costs to bend the ever increasing upward line on health-care spending. The governing NDP must, in fact, contain health spending to help balance the province’s books by 2023-24.

To that end, health spending will grow by only three per cent over the next year.

But, with an aging population, and increasingly complex — and costly — diagnostic procedures, there are tough choices to be made.

So, what to cut?

Each year in Alberta we pay doctors $5.1 billion.

On top of that, facility-based patient services (think hospitals) cost about $5.5 billion a year.

And then there’s the  $2.2 billion we spend each year on drugs.

Then there’s all the testing.

The bill for all diagnostic and therapeutic patient services in Alberta last year was $2.4 billion. Not all of it necessary.

Each year, Canadians undergo more than a million medical tests or treatments that don’t help, and may even be harmful, according to the Canadian Institute for Health Information (CIHI).

In Alberta, many X-rays, CT scans, MRIs, and other tests may be unnecessary. And all those tests cost the health system. This is one of the problems the government is trying to fix. (Not just because it will save money, though that’s a benefit, but also because they can cause harm).

So with numbers like those above, trying to bend the curve of increasing health-care costs is a challenge.

What we’ve cut already

Since coming to power in 2015, the NDP embarked on a number of reforms, including increasing home care and long-term care to reduce hospital stays.

The government has also moved to cut drug costs.

Canada’s generic drug industry recently agreed to cut prices by 25-40 per cent for provincial and public drug plans.

Alberta Health estimates that reduced generic drugs prices have saved taxpayers $100 million over the past three years.

In addition to slowing prescription drug costs, the province recently negotiated a new deal with the Alberta Pharmacists’ Association aimed at saving the government about $150 million over two years.

Then there is the question of wages.

The government has put the brakes on what had been accelerating wages for doctors and nurses.

The province estimates that changes to the compensation model for doctors — agreed upon by the Alberta Medical Association (AMA) and the province two years ago — will save taxpayers $500 million.

Physician compensation was rising by seven to nine per cent each year before that deal. The 2016 agreement limits new increases to the range of two to five per cent.

The health minister says that in contrast to the previous PC government, the NDP has tried to work with health-care unions and physicians to contain health costs.

“We’ve taken a different strategy,” said Health Minister Sarah Hoffman. “We’ve brought people to the table and said let’s do this in a sustainable way.” So far, these changes have helped slow the growth of health spending.

Health Minister Sarah Hoffman says the NDP has tried to work with health-care unions and doctors to contain health costs. CBC News

Since getting elected, the NDP has decreased the annual increase in health-care spending to 3.5 to four per cent. Next year, the health budget will grow by three per cent. The Alberta Treasury Board expects growth to drop to 2.5 per cent by 2020-21.

In comparison, between 2009 and 2015, when the Progressive Conservatives were in power, health-care costs rose on average by six per cent — though that was when Alberta was in a different fiscal reality.

Recent savings aside, there is pressure for the government to do more.

Last year, the auditor general warned that, “further funding increases in line with those of the past decade may not be possible.”

The AG’s report concluded that “profound changes will need to be made” to Alberta’s health-care system.

Some of that thinking is already underway.

What we can cut in the future

A desire to bend the curve of health-care spending is sparking different, more economic ways of thinking about health spending.

Health economist Chris McCabe came to Canada from the U.K. — where questions of scarcity, trade-offs and risk have been at the forefront of health-care decision-making for decades.

The influential Commonwealth Fund often ranks the U.K.’s National Health Service (NHS) as one of the best, safest and most affordable health systems among 11 advanced countries.

McCabe says health-care decision-makers in Alberta are increasingly applying economic thinking when deciding where and how to spend money.

“That Rubicon has been crossed intellectually,” said McCabe, the executive director and CEO of the Edmonton-based Institute of Health Economics.

Fiona Clement, director of the Health Technology Assessment unit at the University of Calgary, says the NDP government deserves credit for thinking differently about health care. University of Calgary

“This [NDP] government, in particular, has really been receptive to improving value, thinking differently about the way we allocate costs and making some tough decisions around the budget for health care,” said Fiona Clement, the director of the health and technology assessment unit at the University of Calgary.

Part of that “thinking differently” has involved embracing different — perhaps wiser — health choices.

And with that, we are back to questions around testing and procedures.

What to keep but cut down on

“I like the concept of Choosing Wisely,” said Dr. Ted Jablonski, a family doctor in northwest Calgary.

Choosing Wisely Canada, a campaign of medical officials and practitioners, is a bid to get doctors to cut down on sometimes needless medical treatments and tests, such as X-rays, CT scans and MRIs.

Cutting down on unnecessary tests not only reduces potential harm to patients — but also cuts costs.

Jablonski says medicine has evolved a lot in recent years. And there’s now a recognition that “more” is not always “better.”

Dr. Ted Jablonski is a family doctor in Calgary’s northwest. Brooks DeCillia CBC

No longer, he says, do patients get tested as they did in the past.

“Every patient got a variety of tests when it really wasn’t indicated. We’ve come a long way from there. We don’t do that anymore.”

“I like trying to look at different things that we do, and actually putting it under the microscope … is it something we can make a case for, that actually is helping the health of our patient?” Jablonski asked.

“If you order tests when they are not indicated,” said Calgary emergency physician Eddy Lang, “you’re not only going to incur costs on the system, but you’re going to cause harm to the patient.”

Lang, the chief emergency doctor in Calgary, is spearheading a project to cut down on CT scans ordered by ER physicians.

Cutting down on CT scans

Every year, according to Alberta Health, there are about 400,000 CT scans done in the province.

The average cost for the special X-ray that produces a cross-sectional image of the body is $256. Last year, Alberta spent $103,890,420 on CT services.

Health officials point out that Alberta has the lowest CT scan rate in Canada, and that CT scans are an “invaluable tool” for accurate diagnosis and treatment.

But often CT scans are unnecessary.

Dr. Eddy Lang, head for emergency medicine in Calgary, is spearheading efforts to get physicians to choose wisely when ordering CT scans. Brooks DeCillia CBC

And Choosing Wisely points out that needless CT imaging exposes patients to unnecessary radiation, potentially increasing a risk of cancer. And sometimes CT scans can even lead to misdiagnosis.

And so, Lang wants his emergency room colleagues to be more judicious about ordering CT imaging for patients with mild traumatic brain injuries and suspected pulmonary embolisms. He says doctors can use less invasive tests or tools to rule out serious conditions.

As well, Lang points out that CT scans for pulmonary embolism, a blockage of an artery in the lungs, can identify very tiny clots that are of no significance but that can lead to patients being prescribed blood thinners, which can come with side-effects.

Lang’s Calgary-based research found that educating doctors about when — and when not — to order a CT scans decreased scans for head injuries by five to 10 per cent. But the program did not reduce CT scans significantly for suspected pulmonary embolisms.

“We’re thinking that by having physicians see this information, they’ll be able to calibrate — or position themselves — and ask themselves, well, maybe I’m not ordering enough or maybe I’m ordering too much,” said Lang.

“We’re looking at these at these kinds of report cards as a way for physicians to reflect on their practice, to see how they can make their test ordering more appropriate or more consistent with their peers,” added Lang.

Clement, who crunched the Calgary CT scan numbers, singles out Lang’s efforts to reduce unnecessary tests.

“We’ve improved care, we’ve reduced cost and we’ve also freed up space within those CT machines for people who really need it,” said Clement.

Bending the curve, before it bends back

As he announced this week’s provincial budget, Finance Minister Joe Ceci said he was pleased with his government’s efforts to bend the curve of health spending.

Ceci says the NDP was elected on a promise to, “maintain the strong health care that Albertans have come to enjoy.”

“We’ve been achieving great results and that will help us get to [a] balance[d] [budget].”

Alberta President of Treasury Board and Minister of Finance Joe Ceci says the NDP was elected to protect the province’s public health-care system. Jason Franson, The Canadian Press

That’s the politics of health-care budgeting.

Still, some health economists are encouraged by the government’s attempts, and the health-care community.

“One of the great things that we can see in Alberta over the last few years,” said McCabe, “is that people really are working on addressing … the issues of current inefficiencies in order to release resources.”

And Alberta will no doubt need those resources, as the population continues to age and add to the cost of health care.

In fact, the recent provincial budget predicts health spending will start growing faster than three per cent again in only three years.

Brooks DeCillia is a longtime journalist. He was a national reporter with CBC News for a decade. He can be reached at

Source CBC News

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More from this series:

Also see
2016-17 Health Annual Report PDF Government of Alberta
Health funding: Budget 2018 Alberta Health
Thousands of Albertans get unnecessary — even harmful — medical tests and procedures, report says CBC News
Generic drug industry agrees to cut prices up to 40% in 5-year deal with provinces CBC News
Government achieves health savings Alberta Government
Alberta’s new pay deal with doctors ‘could be revolutionary,’ health expert says CBC News
No immediate wage increases for Alberta nurses in terms of mediated settlement CBC News
‘Risk-sharing’ at centre of Alberta’s modified doctor pay deal CBC News
Better Healthcare for Albertans. A Report by The Office of the Auditor General of Alberta, Research Material May 2017 PDF Alberta Auditor General
Bend it like Ceci: Finance minister tries to flatten health-care cost curve in CBC News
Mirror, Mirror 2017: International Comparison Reflects Flaws and Opportunities for Better U.S. Health Care The Commonwealth Fund
Choosing Wisely Alberta aims to reduce unnecessary medical tests and treatments CBC News
Ten Things Physicians and Patients Should Question Choosing Wisely Canada
Alberta betting on pipelines to balance budget CBC News

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