Canada - World Health Organization Regional Office for Europe

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Health systems in transition Canada
in roughly 30% of health spending in Canada – this will be done through the
market as mediated or altered by PHI. In the case of publicly funded health
services, allocative efficiency is more difficult to determine. Indeed, the
economic notion of allocative efficiency may have little meaning as applied
to public spending on health except in terms of whether governments have
reached an appropriate balance in allocating funding among resource inputs
(e.g. capital investment versus workforce inputs versus prescription drugs) and
service sectors (e.g. public health versus primary care versus acute care versus
long-term care).
Provincial and territorial health systems are funded through general tax
revenues, thus offering governments considerable latitude in the allocation
of expenditures among resource inputs and service sectors (see Chapter 3).
Budgeting processes require that provincial government cabinets and their
respective subcommittees – especially treasury board committees of cabinet –
allocate among competing needs across a myriad of economic and social policy
and programme demands. Since provincial governments ramped up health
care spending after the years of restraint in the 1990s, it was argued by some
that cabinet allocations to health care have crowded out other public needs
(Boothe & Carson, 2003; MacKinnon, 2004). However, an empirical test of this
hypothesis concluded that this was not the case (Landon et al., 2006).
Once ministries of health receive their budgets, they allocate among a
number of health services and sectors based on the historic needs and demands
of the sector as well as health policy and reform priorities as communicated
by cabinet. In regionalized jurisdictions, the majority of ministry funding is
distributed to RHAs based on a variety of methodologies, including population
needs-based formulas, activity-based calculations, historically based budgeting
and the government’s immediate policy priorities. However, there have been
few empirical comparisons of these different methodologies and their impact
in terms of allocative efficiency.
7.5.2 Technical efficiency
Technical efficiency indicates the extent to which a health system draws on the
minimum levels of inputs for a given output or, the maximum level of output
based on a given set of inputs. To identify possible technical efficiencies, health
system managers will ask whether it is possible to get more outputs with the
same inputs, or whether it is possible to get the same output with fewer inputs
(Hurley, 2010).