Forged in secrecy, Alberta’s new health superboard continues the dismantling of public healthcare.

By Susan Ruttan

Dave Eggen remembers going to the doctor as a teenager in the 1970s, and his shock at being presented with a bill for $20 at the end of the visit. “I didn’t pay,” Eggen says. “It’s funny how the world turns. Here I am now.”

Eggen is now at the centre of the latest battle over public healthcare in Alberta. As executive director of Friends of Medicare—a 30-year-old advocacy group—his focus today is not extra-billing, but the huge shakeup in the provincial healthcare system. In a process that began in May 2008, the Alberta government dismantled the regional health authority system it created 15 years ago and replaced it with a “superboard” called Alberta Health Services (AHS). AHS is now the largest health provider in Canada, employing 90,000 people. Its organizational structure is mind-bogglingly complex, with 45 vice-presidents. It doesn’t just run every hospital in the province, but also replaces the Alberta Cancer Board, Alberta Alcohol & Drug Abuse Commission and the Alberta Mental Health Board. It absorbed responsibility for ground ambulance service from municipalities in April of this year.

The centralized behemoth was created to “streamline governance of the public system [and] improve services and the delivery of healthcare,” according to Minister of Health Ron Liepert. “Streamlining” will be achieved by asking one new board to do the work previously carried out by nine. “Improving services” can be interpreted in various ways; AHS press releases strenuously avoid any mention of “cuts” to services, but superboard CEO Stephen Duckett blogged in August that he had been hired to “look in every nook and cranny, and [make] some difficult and/or unpopular decisions.”

Whatever Liepert’s and Duckett’s plans, problems with the superboard became apparent almost immediately. Less than a year old, AHS is already mired in debt, controversy and bad publicity. Observers have been given the impression of high-handed decision-making by a remote cadre of bureaucrats. Many “improvements”—such as the closure of 350 long-term care beds—look a lot like cuts, say watchdogs of the public healthcare system. The United Nurses of Alberta, opposition parties and Friends of Medicare are pouncing on every AHS announcement. More tellingly, academics and non-partisan groups such as the Alberta Medical Association and the Criminal Trial Lawyers’ Association are voicing concerns as well. 

There hasn’t been such resistance to healthcare change in Alberta since Ralph Klein proposed his “Third Way” in the summer of 2005. What, exactly, has united so many Albertans in opposition to the superboard?

Scrapping the regional health boards wasn’t a Stelmach campaign promise in the last election. However, the huge majority his Conservatives received on March 3, 2008—72 out of 83 seats, albeit with support from only half of the 40 per cent turnout, i.e., 20 per cent of the eligible electorate—convinced Stelmach that he’d received a strong mandate.

He wasted no time in using it. Ten days after the election, Ron Liepert was sworn in as health minister. Liepert had already proven his willingness to play political hardball when he was education minister. He is Stelmach’s pitbull; Eggen calls Liepert “the new Steve West,” referring to the budget-slashing cabinet minister of the Klein administration in the 1990s.

After just two months as minister of health, Liepert announced his plan to create the superboard, effective immediately. There was no public consultation; it was just done. Liepert gave little explanation as to why the regional system had to be scrapped. Clearly, however, the cost of public healthcare was on the government’s mind. Alberta’s total health budget grew from $8-billion five years ago to $12.9-billion in the budget approved last spring.

But while the absolute cost is growing, the relative cost of healthcare in Alberta is actually shrinking. As a proportion of provincial GDP, spending on healthcare has been falling since the early 1990s, when it was nearly 5 per cent. The current level is about 4 per cent; this has remained relatively stable over the last decade. The number of services the system provides has risen. Across Canada, healthcare systems now pay for a myriad of treatments, medicines and procedures that didn’t exist even a few decades ago. For example, 40 years ago there were no hip or knee replacements. In 2006–2007, 61,000 Canadians were hospitalized for hip or knee replacements, double the number of just a decade earlier. Forty years ago there were no colonoscopies; today hundreds of thousands of Canadians get this routine procedure to check for colon cancer.

Axing the health boards wasn’t a PC campaign promise. There was no public consultation; it was just done.

Many of the Albertans in charge of the nine health regions challenged the government on this difference between “cost” and “value.” Some experts, such as University of Alberta health policy professor John Church, think the government’s main motivation in scrapping the health regions was to silence them. “They became too successful at what they did,” Church says. They were “eclipsing the government,” which was simultaneously trying to convince Albertans of its sound managerial skills.

Eggen agrees. He recalls when he was an NDP MLA in the Legislature hearing PC backbench MLAs muttering about how regional health boards were “screwing things up.” He thinks they were annoyed by people like Marv Moore, chairman of the Peace Country Health Region, who publicly criticized the government for providing insufficient funding. During the 2008 election, Calgary Health Region CEO Jack Davis had the temerity to call for an immediate provincial injection of $110-million into the Calgary system to open up more hospital beds.

Today, all regional health boards have been disbanded and their members dismissed, along with many of the formerly powerful regional bureaucrats. Capital Health’s high-profile CEO Sheila Weatherill is gone, as is Jack Davis. Both buyouts came at no small expense to the public: about $2-million for Weatherill and $4-million for Davis. 

“Not only are the original boards gone,” Eggen adds, “but every level of management is in mortal fear for their jobs. So if you do want to continue in your job, you have to keep your mouth shut.” The new code of conduct issued to AHS employees has been under fire from unions and other critics, who say it muzzles staff from publicly raising concerns about healthcare issues. While this will be new to many AHS employees, it won’t be to all; Capital Health in Edmonton tightly controlled what its staff said publicly. No staff member, not even the CEO, talked to a news reporter unless a Capital Health communications official was in the room or, in the case of phone interviews, on speaker phone.

Eggen notes that all senior bureaucrats in the health regions were required to reapply for their jobs if they wanted to keep working for the new AHS. He believes the government is clearing the decks of any opposition in preparation for radical changes to come.

AHS corporate offices are in Edmonton; the board offices and a number of top officials are in Calgary. The new board of AHS is packed with people with business credentials, though most have no background running hospitals. Chairman Ken Hughes is a former Conservative MP and president of an insurance firm. Jack Ady, the sole holdover from the regional board system, is a former Conservative MLA who chaired the Chinook Health Region board. Only two health experts are on the board: Jim Clifford is a health management expert from New Jersey, while Dr. Andreas Laupacis is a respected Toronto expert in health policy management and evaluation.

Less than a year into the job, AHS board members voted themselves a 25 per cent pay raise, from $40,000 to $50,000 a year for the part-time position (in addition to collecting $750 for each board meeting). Hughes’s pay as chair was bumped from $60,000 to $75,000. He receives $1,000 for each meeting he attends (the board meets four times a month). Public outcry was immediate. “Board members shouldn’t get bonuses for attending meetings—that’s their job,” said NDP leader Brian Mason. The Canadian Taxpayers Federation questioned how collecting a raise so quickly fit with board members’ mandate to reduce costs.

Eggen applied to sit on the AHS board. He was interviewed by the headhunting company hired to find candidates. He wasn’t surprised to be turned down. (He was surprised, however, when in November 2008, Liepert revealed to the Legislature that the former MLA had applied for the job, an “outing” that NDP leader Brian Mason called “a real cheap shot and kind of mean… when somebody applies for a job, they apply in confidence.”)

The new board claims to want to hear from ordinary citizens, and promises that public input will be channelled through 12 health advisory councils around the province. However, such citizen councils existed in the regional system and weren’t considered to be particularly effective. Any public input now has to make its way up to one 15-member board charged with overseeing the entire Alberta healthcare system, an unelected board accountable only to Ron Liepert. People with concerns will have to buttonhole their MLA, says Church.

 “There’s really no effective local voice,” in the new superboard structure, Church says. The government, by eliminating the health regions, “has wiped out governance structures at the local level.”

Unquestionably, some health regions were working better than others. In particular, some rural regions struggled to provide the services expected of them. In many cases their boundaries had been set more by politics than by logic. That’s why the original 17 health regions created in 1994 were merged into nine in 2003.

The Health Quality Council of Alberta reported on several questionable practices in rural hospitals. In 2007 it criticized inadequate sterilization practices in East Central Health (ECH) region, which overlaps with premier Stelmach’s own constituency. In July, the Health Quality Council reported on improper reuse of syringes at the hospital in High Prairie.

The government hopes that a centralized administration will deal with these kinds of problems. If it does so by improving standards in rural hospitals, however, that’s going to cost money. Something, surely, has to give between the government’s stated aim to “improve services” and Duckett’s plan to make “difficult decisions.” 

Stephen Duckett, Alberta’s new health czar, is an Australian professor of health policy with experience in health administration. He came to Alberta from a job as CEO of the Centre for Healthcare Improvement, a division of the health department in Queensland state that deals with issues like patient safety. For Duckett, the Alberta job is a big promotion.

He brought with him a plan to introduce a new kind of hospital funding to Alberta and to Canada. It’s called activity-based funding, and it’s controversial. In activity-based funding, hospitals no longer receive a global budget, but are paid for each procedure they do—each appendectomy, for instance. Those hospitals more efficient in handling patients will get more money. It’s a carrot-and-stick budgeting system.

The former president of the Canadian Medical Association, Dr. Brian Day, is a big fan of activity-based funding. However, since Day operates one of Canada’s largest private clinics (Vancouver’s Cambie Surgery Centre), his endorsement is not reassuring. Canadian Doctors for Medicare, a national physician organization “advocating for reform and innovation within Medicare and the rejection of two-tier health care,” says activity-based funding should only be introduced in a limited, experimental way in Canada.

Duckett, who helped introduce activity-based funding in Australia’s Victoria state in 1993, has appointed a vice-president responsible for activity-based funding to roll the system out in Alberta. Such a system, he said in a May 25 speech, will hold hospitals responsible for meeting their budgets and spending no more on an activity—such as a hernia operation—than any other hospital in Alberta.

Duckett would like to see activity-based funding implemented by April 2010. Globe and Mail health reporter André Picard writes: “If Duckett succeeds, the centralized corporatist model he is trying to introduce will likely be copied across Canada; if he fails, it will likely take decades for Alberta to recover.”

Duckett started as president and CEO of AHS last March. Faced with inadequate financial support from the province, he immediately began “making unpopular decisions.” More than 100 management positions were eliminated. Nursing positions were left unfilled, prompting angry protests from the United Nurses of Alberta. UNA spokesperson David Harrigan says that AHS press releases have shown “an absolute lack of transparency and a refusal to explain what their real plans are.” In August, AHS announced that it wouldn’t proceed with the redevelopment of the Alberta Hospital Edmonton, reneging on a four-year-old pledge and prompting AHE’s Dr. Andrea Gambetti to warn that moving patients into the community could create “mental-health ghettos in the inner city.” The Criminal Trial Lawyers’ Association and the Edmonton Police Association called on AHS to reverse its decision. 

The new board is packed with people with business credentialsbut only two are healthcare experts.

“Living within our means is not something that AHS is used to,” Duckett said in a biting speech earlier this year. In health regions such as Calgary and Edmonton, he said, “it became a matter of pride almost to see that you did actually overspend your budget. In fact, as far as I can work out, it was one of the key skill sets of the management in those areas.”

The health regions did overspend their budgets, year after year. Those cost overruns resulted from a growing population—Alberta gained 400,000 people in the last five years—an aging population and more expensive health care services. And it’s hard to see what a centralized superboard can do to change any of that. Duckett hopes for operational efficiencies from things such as activity-based funding, but critics argue that possible savings should not be overestimated. 

In fact, Duckett and the AHS board got their own dose of reality when they set their budget last June. That budget had a 13 per cent rise in spending, far more than the money provided by the provincial government. The superboard projected a shortfall of $1.1-billion. Already this year, the Royal Alexandra Hospital was forced to cut its surgeries by 15 per cent to meet a budget order from the superboard. Two other Edmonton hospitals had to cut back on MRI diagnostic imaging tests, for the same reason. AHS announced the closure of 350 acute care beds in Calgary and Edmonton in mid-September, which UNA president Heather Smith pointed out is “a full hospital’s worth of beds.” Eggen calls these changes “being set up for failure.” 

Whatever hopes Duckett and his team have to remake the health system, AHS may end up doing nothing but hacking at hospital budgets in an effort to live with insufficient provincial funding. (For his part, Liepert points out that AHS decisions are made independently of the government. AHS, however, is completely funded by and accountable to the government.)

The Alberta Medical Association, which speaks for physicians, has been openly critical of the new AHS. The AMA normally leaves to nurses the role of noisy advocate for public health. Earlier this year, however, AMA president Dr. Noel Grisdale released two public letters critical of the centralization process. “Rapid-fire budget cuts may short-circuit the proposition for a sustainable system—and AHS may become identified with reduced access and reduced quality before having a chance to prove itself,” Grisdale warned in one letter. Any reduction in the number of nurses, doctors or therapists will leave those with chronic health problems with worsening conditions that will need more expensive care later on, he added.

Alberta Liberal leader David Swann, himself a physician, fears the “orders-from-on-high” approach AHS is taking is already damaging the morale of health workers. “I see a tremendous frustration in the professionals on the front lines,” he says. He’s heard from doctors, nurses and others that the superboard isn’t listening and doesn’t value their input. “People have stopped making recommendations (about how to improve healthcare). They do their job and they go home.”

Fundamentally, Swann says, the Stelmach government doesn’t understand how healthcare works. They see it as a business enterprise, ignoring the human factor. They don’t understand that the provision of healthcare doesn’t lend itself to market forces—to services being provided by the lowest bidder, to charging patients the true cost of their treatments, to “letting the buyer beware.” Health care is a right of citizenship in Canada. And is a highly emotional matter, Swann adds. If things worsen—if services aren’t available, or more physicians move out of the province—the public could react with unprecedented anger.

The most serious criticisms of the health minister and his decision to amalgamate the health regions are levelled by Eggen. The head of Friends of Medicare believes Liepert has an agenda to change the very nature of healthcare in Alberta; the creation of AHS is merely the first part of that plan.

Eggen fears the superboard has been set up for failure, part of a ploy to introduce increased privatization of Alberta’s public healthcare system. “The superboard is there as a foil, as a Vichy government when really they’re doing all the work in Berlin,” says Eggen. In other words, as Duckett answers to board chair Ken Hughes, and Hughes to Liepert, it is Liepert who will ultimately choose the direction taken by AHS more than anyone else. And many in the Conservative government are ideologically opposed to universal public healthcare, Eggen says. They’d like to see medicare cut back to an emergency care system for the indigent, leaving the private sector to do the rest.

But if the government’s agenda truly is to diminish public healthcare and have private providers fill the gaps, it will be a strange role for Stephen Duckett. He authored a paper published in the Canadian Medical Association Journal in 2005 outlining the damage that Australia’s two-tier health system does to equity and efficiency. He listed the many disadvantages of having a health system that is part public and part private, such as the growing wait lists in the public sector as physicians concentrate on their for-profit business.

Duckett wrote: “A further worrying aspect of policy direction in Australia has been that those with private health insurance have become a group with political influence. Private health insurance lobbyists have mounted a successful campaign over decades to obtain government financial support for their industry; now, that support is greater than subsidies to agriculture, manufacturing and mining combined.”

Even if Duckett is committed to a truly public healthcare system—and even if he has the authority or the temerity to stand up to Liepert—he will have to guide AHS not only through this organizational shakeup but through the current recession and far beyond, through every provincial budget and every annual battle for every dollar from the government.

Public health advocates still call the shots. It’s likely AHS will have to reverse of at least modify its plans.

This much we do know: every few years the Conservatives decide to shake up the healthcare system, as former premier Ralph Klein did with his “Third Way” efforts to promote more private care. Yet despite being unchallenged in the Legislature, they don’t always succeed. The Third Way, for instance, never got off the ground.

The superboard was created in secrecy and its new board members were given sweeping powers. And yet the superboard has already backed down in the face of criticism and anger from public healthcare advocates. A classic misstep was the July order from on high closing helipads at eight hospitals around the province. Critics were livid; the helipads were reopened shortly thereafter. Both Duckett and AHS board chair Ken Hughes admitted the closure was a mistake made on bad information.

Observers such as the Journal’s Graham Thompson says public healthcare advocates still have influence. “So many voices have raised so many legitimate concerns that it seems likely the AHS will have to reverse itself, or at least modify its plans,” he wrote in August.

All of this is because Alberta has the most vocal and organized medicare lobby in Canada. Eggen says organizations in other provinces are envious of the passionate defence of medicare that Albertans are able to mount. Friends of Medicare and its close ally, the United Nurses of Alberta, are the heart of that defence, but doctors, seniors groups and many ordinary Albertans are also part of the pro-medicare fight.

“We’ve resisted successive waves of attempts to privatize the health system,” Eggen says. Those fights over the past decades have educated citizens here about concepts like extra-billing and two-tier medicine. In his year and a half at the helm of Friends of Medicare, Eggen has seen a rising concern among Albertans as they sense another assault on public healthcare is coming. The new superboard, not yet two years old, is the focus of much of that concern.

“The Stelmach government is playing with fire,” Eggen says. Breaking a healthcare system is easily done, he says, just as losing the public’s confidence is easy. Restoring either once they’re broken—infinitely more difficult. 

Susan Ruttan is an Edmonton writer. She was the health reporter for the Edmonton Journal from 2002 to 2006.


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