Earlier this month, the Ontario Council of Hospital Unions issued a media release for their The Fewer Hands, Less Hospital Care report, that made the following statement: “Based on the latest figures from the Canadian Institute for Health Information (CIHI), Ontario government funding for hospitals is $1,395.73 per capita. The rest of Canada, excluding Ontario, spends $1,749.69 per capita. In other words, provincial and territorial governments outside of Ontario spend $353.96 more per person than Ontario does. That is a whopping 25.3 percent more than Ontario. Overall there would be an additional 45,500 hospital employees, 15,200 of them nurses, in Ontario if funding was on par with the average for the rest of Canada.” The report goes on to say that this would amount to an additional 4.8 billion dollars for Ontario hospitals.
This argument is not entirely without merit. After all, Ontario does spend less per capita on provincial government hospital spending than most provinces and indeed on provincial government health spending in general. Moreover, real per capita provincial government hospital spending in Ontario has been declining since 2010. Provincial-territorial government health spending in Canada in 2015 is forecast by the Canadian Institute for Health Information to be $4,018 with Ontario coming in at $3,752. Of the ten provinces, Ontario ranks ninth – ahead of Quebec at $3,656. Who are the biggest per capita spenders? Newfoundland and Labrador and Alberta are first and second at $5,181 and $4,682 respectively. (See Figure 1). And Ontario has the same 9th place rank when it comes to per capita provincial government hospital spending (See Figure 2).
However, aside from any potential under funding there are a number of reasons as to why Ontario spends less per capita on hospitals. First, every provincial government makes choices about how to structure and deliver their health care services and Ontario has decided to place more emphasis on other aspects of health expenditures. Many of the other provinces have chosen to devote a larger share of their government health budgets to hospital based care. While Ontario spends 35 percent of its $51.8 billion health budget on hospitals, Alberta spends 46 percent of its $20.4 billion health budget.
While Ontario is near the bottom when it comes to hospital spending, it is near the top when it comes to some of the other categories. In 2015, Ontario is forecast to rank first among the provinces when it comes to per capita provincial government drug spending and second when it comes to physicians. It is mid-ranked when it comes to administration, public health and other professionals. Relative to the other provinces, Ontario ranks near the bottom for hospitals, other institutions and all other health spending. (See Figure 3). Of course, one could argue that rather than the outcome of evidence based government choices, this result is also a function of more successful lobbying of government by physicians and pharmaceutical companies.
Second, part of the difference in spending across the provinces is inevitably rooted in economies of scale. Ontario and Quebec have the largest populations and therefore can spread the fixed costs of their health care and hospital systems across a larger and often denser population. Part of the reason per capita health spending in Nunavut or the Yukon is so high is the small geographically dispersed population in these territories which raise the per capita cost of providing even a basic set of services. Per capita provincial territorial health spending ranges from $3,752 (QE) to $5,180 (NL) for the ten provinces and then jumps to $7,553 for the Yukon, $10,017 for the NWT and $11,377 for Nunavut. I would venture that if one began to examine health spending on a per capita basis within Ontario, one would also find per capita hospital spending higher in its northern districts than the GTA for similar reasons.
Injecting more public money into Ontario’s health care system would increase per capita provincial government health spending. However, given what appear to be Ontario's health expenditure priorities, I’m not so sure that additional money would all get into front line health care or hospitals for that matter.