Health care is good medicine for Canada's economy

OTTAWA, January 31, 2013 /Canada NewsWire/ - Health care is a large and essentially recession-proof part of Canada's economy, creating more than 10 per cent of the country's total gross domestic product (GDP) annually and supporting more than two million jobs, according to a Conference Board of Canada analysis for its Canadian Alliance for Sustainable Health Care.

HIGHLIGHTS

...At over 10 per cent of GDP, the health care industry in Canada is almost the same size as the entire manufacturing sector.

...Governments get more than 21 per cent of all health spending back in the form of tax revenues.

...Overall wages in the health care sector are $59,300 per job, slightly higher than the national average of $57,677.

"The Canadian health care sector is a major source of spending for governments. Yet it is also an important driver of economic growth—a perspective often overlooked. The health care sector contributes to Canada's wealth by improving health outcomes and creating jobs," said Fares Bounajm, Economist, Canadian Alliance for Sustainable Health Care, and author of The Economic Footprint of Health Care Delivery in Canada.

"It should be considered both as an integral part of the Canadian economy and as a sector that can help to drive economic growth, improve Canada's productivity performance and generate additional wealth for Canadians."

About 1.6 million Canadians are directly employed in the health care sector, representing about nine per cent of the total jobs in Canada. These physicians, nurses, other health care professionals, technicians and support staff pay taxes and purchase goods and services from all sectors of the economy.

An additional 500,000 jobs are indirectly supported by health care spending. These are jobs in the various firms that are part of the supply chain for the health care sector, spanning a large number of industries including retail, communications, wholesale and banking.

In aggregate, health care delivery supported 2.1 million jobs in 2011, with a total labour compensation of $127.2 billion. This represents an average of $59,300 per job, which is slightly above the national average of $57,677.

Unlike most other sectors of the economy, the demand for health care does not fall during a recession. By supporting 2.1 million essentially 'recession-proof' jobs, health care spending can go a long way to mitigate the effects of an economic downturn on Canadians.

More than 21 per cent of all public spending on health care returns to governments in the form of taxes and other revenues. In 2011, the public sector's $141 billion expenditure on health care delivery generated an estimated $30.6 billion in government revenues.

In 2011, health care delivery in Canada contributed $163.4 billion to the domestic GDP, which represents 10.1 per cent of national GDP. As a share of provincial GDP, the economic contribution of health care is highest in Nova Scotia at 13.2 per cent and lowest in Alberta at 7.6 per cent.

This is the first briefing in the series Health Care in Canada: An Economic Growth Engine, which looks at the Canadian health care sector from an economic perspective. The research is produced under the banner of the Canadian Alliance for Sustainable Health Care. Launched in 2011, CASHC is a five-year Conference Board program of research and dialogue. It will delve deeply into facets of Canada's health care challenge, including the financial, workplace, and institutional dimensions, in an effort to develop forward-looking qualitative and quantitative analysis and solutions to make the system more sustainable.

Innovation Procurement Offers a Compelling Opportunity for Canadian Health Care

OTTAWA, July 14, 2011 /Canada NewsWire/ - Governments are the largest purchasers of health care products and services in Canada. Procurement - what governments and public institutions buy and how they buy it - therefore offers huge potential to improve health system performance and value. But a
Conference Board of Canada report finds that Canadians are still hesitating, while others, notably the United Kingdom, use new approaches to procurement to drive fundamental improvements in public health care.

The report, Innovation Procurement in Health Care: A Compelling Opportunity for Canada, calls for action on four fronts to seize these opportunities: federal leadership; targeted funding; regional implementation; and culture and attitudes.

"The sustainability of Canada's public health-care system will depend in large part on innovations that can enhance the efficiency, safety, quality, and productivity of health and health-care services," said Gabriela Prada, Director, Health, Innovation, Policy and Evaluation. "Innovation through procurement offers a compelling opportunity for Canada to generate better value for public health-care spending."

The experience of the U.K.'s National Health Service (NHS) shows the potential for innovation procurement to improve the quality of care, keep a lid on growing costs, and boost the economy in important industry sectors - such as the life sciences - in a relatively short time period. Key success factors include: a steady commitment to innovation from the central government, a regional mandate to advance the innovation agenda, targeted funding for health innovation, and the strategic development of talent at all levels. The end result has been a cultural transformation within the NHS.

In stark contrast to the U.K. experience, the concepts of innovation and procurement are still poorly connected in Canada's health-care system. A survey of Canadian health executives, conducted as part of this research, suggests that the driving force behind procurement practices in health care continues to be cost control - rather than increasing value.

Respondents were almost unanimous in agreeing that innovation is essential for improving organizational performance in the health sector and for the sustainability of Canada's health-care system. They were much less likely to say that innovation is a recognized priority within their organizations or to see procurement as a lever for innovation. Strikingly, although 60 per cent of respondents agreed that innovative products and services were very important or important in achieving their organizations' goals, over half said that procurement approaches in their organization do not support the development and uptake of innovative products and services.

Unlike the U.K., responsibilities in the Canadian federal system are divided. However, Canadian efforts to revamp primary health care demonstrate that it is possible for jurisdictions to work together.

In Canada, action can be taken on four fronts:


Federal leadership - The expiry of the current federal-provincial/territorial health transfer agreement in 2014 provides an opportunity for the federal government to ensure that the next agreement is structured to encourage innovation.

Targeted funding - New approaches to procurement aimed at driving innovation in health care will require funding up front to: encourage greater risk taking, shift the focus of procurement to value generation, and invest in the development of the skills needed to manage a more innovative process. Governments also should consider the use of competitive funding mechanisms that would reward those who lead the way in achieving key health outcomes.

Regional implementation - While there is a need for a coordinated federal and provincial/territorial policy framework for innovation procurement, the U.K. experience suggests the need for a strong regional focus. Governments should give health regions an explicit mandate as health-care innovators and should support the development of regional innovation hubs.

Culture and attitudes - The survey responses in this study point to the need for a more fundamental shift in the culture of Canadian health care. A more innovative and entrepreneurial culture would drive a higher-quality and more cost-effective health-care system and could make the health-care sector a key factor in building a more competitive Canadian economy.

The report is published by the Centre for the Advancement of Health Innovations (CAHI), which is a joint initiative of The Conference Board of Canada and the Canadian Health Industries Partnership (CHIP). CAHI, which has the support of governments, academia, industry, and health care organizations, aims to identify strategies and options to develop a supportive policy, legislative, and regulatory environment in order to advance Canada's health innovation system.

The Canadian Health Industries Partnership (CHIP) is a voluntary collaboration between the federal, provincial and territorial governments and the leaders of Canada's industrial health innovation sector. The Chair of its Board, Mr. Mark Lievonen, President of Sanofi Pasteur Limited (the recipient of the 2009 Premier's Catalyst Award for Company with the Best Innovation) is also a Co-chair of CAHI.

The publication is available at www.e-library.ca.

Rich Canadians Are Getting Richer

OTTAWA, July 13, 2011 /Canada NewsWire/ - The richest group of Canadians increased their share of total national income while poor and middle-income individuals lost ground since 1993, according to The Conference Board of Canada's How Canada Performs analysis of income inequality. Even though income levels for the poorest group of Canadians also rose, albeit minimally, the gap between the rich and poor in Canada widened.

"While the poor are minimally better off in an absolute sense, they are significantly worse off in a relative sense," said Anne Golden, President and CEO of the Conference Board. "High inequality raises two questions. First, what is the impact on the economic well-being of a country? The answer is that high inequality can diminish economic growth if it means that the country is not fully using the skills and capabilities of all its citizens or if it undermines social cohesion, leading to increased social tensions. Second, high inequality raises a moral question about fairness and social justice."

The average Canadian is better off than he or she was a generation ago. In 1976, average income was $51,100; by 2009 it was $59,700—an increase of 17 per cent over 33 years, after adjusting for inflation. But average income does not necessarily reflect how the majority of people are doing; instead, some analysts suggest using median income—the income level that divides the group into two equal parts. Median income grew by only 5.5 per cent over the same period.

The most commonly used measure of income inequality is the Gini index, which calculates how the distribution of income among individuals within a country deviates from an exactly equal distribution (a Gini index of 0 means that every person in the society has the same amount of income; whereas, 1 would indicate that one person has all the income).

Canada's 2009 Gini index (0.32) means that 32 per cent of Canada's national income would need to be redistributed in order to have a country that was completely equal in terms of income.

The pattern of inequality growth throughout the past three decades has been uneven. Canada made significant progress in reducing inequality in the 1980s, with the Gini index reaching a low of 0.28 in 1989. Income inequality rose in the 1990s, but Canada's Gini index remained around 0.32 in the 2000s.

Canada is not alone among its peers in experiencing an increase in income inequality. Global inequality is rising and most of Canada's peer countries have also experienced rising inequality. But rising inequality among developed countries is not inevitable. For example, Austria (0.265) and Denmark (0.232) have lower income inequality, as measured by the Gini coefficient, with incomes per capita nearly equivalent to that of Canada.

The average income level of the poorest group of people in Canada increased—after taxes and transfers and after adjusting for inflation—but only marginally, from $12,400 in 1976 to $14,500 in 2009. However, the gap between the real average income of the richest group (the top quintile) of Canadians and the poorest group (the lowest quintile) grew from $92,300 in 1976 to $117,500 in 2009.

Between 2000 and 2009, every province with the exception of Ontario reduced its share of the population living in low income. Recent data, however, indicates that income inequality rose during and after the recession. Between 2007 and 2009, seven out of ten provinces experienced a rise in their low-income rates - Prince Edward Island, Saskatchewan, and New Brunswick are the exceptions. The largest jump occurred in Alberta, where the low-income rate rose from 6.6 per cent to 9.9 per cent.

Another worrisome trend is the rise in elderly poverty since the mid-1990s, following 20 years of dramatic reductions. The biggest jump occurred in the group of elderly women. Between 2006 and 2009, nearly 128,000 more seniors were said to be living in low income, of whom 70 per cent were women.

How Canada Performs is a multi-year research program at The Conference Board of Canada to help leaders identify relative strengths and weaknesses in Canada's socio-economic performance. The How Canada Performs website presents data and analysis on Canada's performance compared to 16 peer countries in six performance categories: Economy, Innovation, Environment, Education and Skills, Health, and Society. This year, the Conference Board is assessing Canada's performance on 10 Hot Topics.

...for more information visit the Conference Board here