Reforming health care governance: The case of Nova Scotia

James Bickerton

The immediate cause of the recent travails of the welfare state in Canada was a fiscal crisis brought on by the compounding effects of budget deficits and a spiralling public debt load. A longer term and more insidious structural malaise plagues the welfare state, however, particularly in the social policy sector where expensive social programmes administered by rigid and unwieldy bureaucracies are now the focus of sustained criticism. Critics point out the waste and inefficiency associated with multiple layers of administration, red tape, overregulation, high taxation and the general “deadening” effect of big bureaucracy on individual initiative, responsibility and entrepreneurship. The solution proposed (and to some extent enacted) by the political Right has been to reduce the size of public bureaucracies and the extent of public regulation, through cutbacks, privatization, contracting-out and the introduction of various kinds of market incentives (marketization) into the administrative process.

It is not only the Right, however, that has been unhappy with the performance of the welfare state. While parties, unions, social movements and individuals on the political Left often have felt it necessary to defend the welfare state in the face of a sustained offensive on the scope and intensity of social programmes, they are also uneasy with the design and administration of these same programmes. This has less to do with the overall size of government and the level of taxation required to sustain it than with the failure of social programmes over the past quarter-century, to advance significantly, the egalitarian and democratic goals that originally inspired social reformers. Analysts from the Left criticize the limitations and contradictions of the welfare state, particularly its tendency to pacify, disempower and alienate citizens by systematically excluding them from the design and implementation of programmes that are of vital importance to people’s lives.

Fiscal and political conditions in the early 1990s created an opening for further programme cutbacks and various marketization schemes (aimed at replacing the welfare state with a “competitive state”). At the same time, other approaches to renovating the administration of social programmes also presented an opportunity to initiate significant reforms. One alternative to the competitive model is a “developmental model” that would transform the welfare state by extending the democratic principles of social participation and popular control within government. This transformation would be accomplished through a process of democratization that gradually develops the self-management capacities of public sector workers, citizens and their communities. This alternative has been put forward and given serious consideration, particularly in the health care sector, where privatization and marketization solutions to the woes of the Canadian health care system (e.g., extra-billing, user fees or private hospitals) are widely resisted by the general population.

This article will examine the place of “decentralization and democratization” as an element in the health care reform plans of one province, Nova Scotia. It begins with a brief review of the arguments for a different kind of state, one based on the principles of democratic administration, before considering the issues that these arguments raise for health care governance in particular. Nova Scotia’s health care system will be situated within the broader Canadian context, noting the particular challenges, difficulties and opportunities for reform within this provincial setting. This will be followed by an overview of Nova Scotia’s reform process, which pays close attention to the various fiscal, political and administrative factors at work. The article concludes with an assessment of the Nova Scotia model that duly notes both its accomplishments and failures, and the lessons, problems and prospects it may suggest for reforming health care governance elsewhere in Canada.

The Developmental State and Participatory Democracy

During the post-war era of state expansion, the political debate between the Left and Right was framed primarily by disagreement over whether there should be more or less state spending and intervention in civil society. For the first three decades following the Second World War – the golden age of the welfare state negotiations about the future of the public sector, and social programmes in particular, were always cast in quantitative terms: “what should be the size of increase in social benefits; where should new social programmes be extended?” During the years of state retrenchment that followed (post-1975), the emphasis was quite different. Debate increasingly revolved around “how much public sector wages should be rolled back; how extensively should benefits be cut; and what traditional programmes should be axed next?”‘ In the context of slumping growth, the internationalization of capital and rising state deficits, promoters of the competitive state model launched a sweeping critique of the welfare state, arguing for its complete demolition and a return to unfettered market forces. The success of this agenda shifted political discourse so thoroughly that its views regarding the need for public sector restructuring went virtually uncontested. Even social democratic parties, both in and out of power, were unable to reverse the trend. For the Left, simply opposing cutbacks was no longer sufficient. If the social policy realm was to be revived, then a different kind of state – less hierarchical and rigid, more democratic, responsive and participatory – needed to be advanced as an alternative to both the traditional welfare state and to the competitive state envisaged by proponents of privatization and marketization.

There is now perhaps a greater popular will to democratize than ever before, as people fatigued by programme cutbacks and service reductions are more receptive to a fundamental rethinking of the way traditional programmes are designed and delivered. The welfare state, organized along rigidly hierarchical lines and infused with the values of technocratic management, traditionally denies citizens any significant role in governance other than through periodic elections to choose a new set of political masters for the professional bureaucrats that staff government departments and agencies. Reduced to a passive collective of isolated individuals, citizens suffer from a sense of powerlessness and frustration as government succeeds government with no discernible enhancement of citizen control over the direction or content of government policies or over their own lives. Overcoming this alienating state of affairs first requires the creation and facilitation of communities of identity and interest within the population. As argued by Leo Panitch, “This is the sole way in which people … can develop collective power – which the process of participation can then harness in democratic decision-making.” For Panitch the key to this process is to extend the elective principle beyond the narrow confines of representative parliamentary institutions; he cites as an example elected local and regional boards that would have the kind of decision-making and regulatory powers traditionally associated with government ministers and career civil servants. The ultimate goal is a dynamic democracy, “one that encourages the development of human capacities – above all, our collective capacities for creating a social order governed by justice. It is a process of collective development and education through participation.”‘

The public sector crisis of the 1990s created possibilities for fundamental change because of the growing demand on the part of the increasingly underserviced public for change. Severe fiscal pressures on the state to cut staff and funding levels, and to seek out ways to increase effectiveness, also contributed to a readiness on the part of state managers to explore alternative modes of service provision and delivery. One possibility was to renovate social programmes radically in order to expand the deliberative and self-management capacities of democratic citizenship.

Within the competitive state model, however, which underlies reforms aimed at the marketization of public sector services and activities, private sector competition is seen to be the key to innovation and efficiency. Even modest forms of participatory administration are discouraged on principle, as an inefficient mode of decision-making that interferes with the essential market mechanism. The reality, however, is that bureaucratic controls remain and consumers are expected to bear increased costs. In effect, marketization limits citizenship to the power one can command in the market. Citizen participation does not fare much better in reforms that do little more than renew or rejig the types and roles of professional experts within the bureaucracy. Within this traditional “control from above” model, citizen participation is limited to consultation exercises with client groups that leave decision-making with the professionals, who continue to be insulated from the pressure of those they ostensibly serve and to whom they should be most accountable. As Greg Albo notes, “Ethical training … is a poor substitute for direct accountability to users… rule by experts is no substitute for development of the self-management capacities of citizen movements that are essential to democratic accountability ‘from below.””

If neither the competitive state model nor minor reforms to the “control from above” model embedded in the traditional welfare state are capable of resolving or improving the inefficiencies and anti-democratic features of the welfare state, then democratization of administration should be considered as the best alternative to the status quo. In order to pursue this option certain basic requirements must be met. First, communities must have the power and ability to plan and control the delivery of services. To accomplish this, the democratic principle of electing directly, and thus making accountable, representatives from the appropriate constituencies, must be observed. Other mechanisms to this end include appointing representatives of user groups to committees, creating small area-based committees with budgets and decision-making powers, and administrative decentralization of services to shared local offices to encourage teamwork and easier local access.’

At the same time, there are clearly pitfalls and dangers that can prevent real power from being devolved to the citizenry. In particular, without an independent capacity to do policy research, representatives of local communities and user groups can be easily co-opted into agendas set by the bureaucracy, and decentralization may allow the politically articulate to capture decentralized programmes to the disadvantage of the poor. Whether or not decentralization enhances democracy depends both upon the extent to which the opportunities for involvement and pressure are actively taken up from the outside, and also upon who takes them up. Risk and uncertainty, “noise, trouble and opposition,” is an inevitable part of the process; some power must be relinquished to people who were previously outsiders, and funding and support must be extended to groups who might develop ideas and capacities. As argued by Maureen Mackintosh, it is essential to raise expectations in this process in order to create support for change and to induce participation, but almost impossible to satisfy these expectations. Both public sector staff and citizens must learn to live with conflicting pressures and incomplete achievements.5

Democratizing Health Care Governance

The problems of governance within the health care sector raise specific issues and present unique challenges for the democratization of public administration. Shifting the location of power and changing the access to information for different social groups is central to developing the political and self-managing capacities of citizens. With regard to health care reform, however, it is not clear that the decentralization of decision-making to citizen bodies would be a sufficient guarantee of effective citizen involvement in health care governance. In looking at “consumer” involvement in health care planning and decision-making, Michael Sullivan and Yvette Scattalon cite three main factors that can impede effective participation. First, the dampening effects of the implicit power hierarchy made up of prearranged tiers of professionals, administrators and consumers favour professional authority and consumer complacency. Second, the power of consumer representatives may be compromised by the lack of ties with constituency support networks that can be used to bolster the impact of their lobby efforts. Third, the disparities in technical and administrative skills may undermine the success of consumer involvement; consumer access to relevant information about health care systems and issues is essential.’

While Sullivan and Scattalon use the current health language of consumers rather than referring to citizens or users, their concerns about traditional power hierarchies, organizational ties and skill and knowledge levels are widely shared by policy analysts studying the health care sector. Sharmila Mhatre and Raisa Deber cite studies that conclude that reforms requiring local participation merely replace old central hierarchies with new “local hierarchies” dominated by professionals and bureaucrats. The pattern of participation favours “concentrated interests” rather than “diffuse interests,” providers rather than consumers, and special interest groups with immediate needs rather than the general public.’ The real issue becomes how citizens on health boards can hope to influence the practices of the health and administrative professionals they ostensibly govern.

As the first province to integrate community participation into health care and social service governance structures, Quebec was also the first to have its provisions for participation subjected to critical scrutiny. The 1988 Report of the Rochon Commission concluded that these mechanisms of community participation were paralyzed and nearly useless. It recommended that regional authorities have elected boards directly accountable to the population, that these boards be composed of a majority of citizens, and that nobody working for an agency or facility of the system be allowed to run for office on these boards.8 In their own independent analysis, Godbout and Leduc identified four factors that would translate token citizen participation into empowerment: a strong mandate from users or the community, representatives with strong personalities, mechanisms that would allow citizens easy access to their constituencies and adequate information.’

Since Godbout and Leduc’s analysis, progress on a number of these factors has been evident. Almost all provinces have initiated changes that would result in health authorities that are to some degree deconcentrated, decentralized or devolved.” According to Lomas, Woods and Veenstra, creation of these new authorities has been motivated by three common political objectives: service integration, community empowerment and conflict containment as health spending is cut. The first required the creation of a new health system, the second new governors within this system, and the third the reduction of health expenditures in a manner that limits the inevitable conflict that spending cuts would produce, while allowing provincial governments to avoid blame for the negative changes that such cuts would trigger. The natural tension between these separate objectives, which cannot be equally pursued simultaneously, means that one or more has to be sublimated in the interest of making headway on one or more of the others. Lomas argues that it is the objective of community empowerment that gets sacrificed in the health reform process. The trend towards decentralization and citizen boards notwithstanding, real citizen control within the health care sector will not come about unless a) governments discard their ambivalence towards local community representation, b) health care providers agree to be governed by these representatives and c) local authorities are elected on the basis of large and representative voter turnouts. All of these conditions are necessary, Lomas argues, if reform initiatives are to overcome the substantial obstacles to integrating the community in-to-health care governance effectively.”–

Perhaps because of the great difficulty reform initiatives face in achieving Lomas’s minimal prerequisites for effective community participation, he does not address the obstacle highlighted by Godbout and Leduc as one of the most difficult to overcome: the adequacy of information upon which democratically constituted and broadly representative boards can make decisions. In the past sufficient attention has not been given “to the issue of how to provide regional and local bodies with good scientific evidence and the skills required to interpret such information for decision-making…. Also to be confronted is the problem of how to present ‘technical’ information in ways that conscientious citizen board members can understand. “12 For their part, Sullivan and Scattalon suggest that such problems can be addressed by sensitizing board members to the problems inherent in consumer/citizen participation, encouraging frequent communication among consumers on health boards to promote information sharing and finding ways of increasing the knowledge base of consumers/citizens on health boards .13

The obstacles blocking democratization of health care governance structures are considerable. Health policy researchers have noted some recent progress, however, while suggesting a number of fairly stringent requirements regarding the mechanisms and relationships needed to ensure the effectiveness of citizen participation in an institutional setting that is at once highly professional, technical and hierarchical. Securing these requirements would prove to be an especially daunting task for supporters of radical health care reform in Nova Scotia.

Health Care Reform Initiatives: Situating Nova Scotia

When Nova Scotia introduced hospital insurance in 1959, with cost sharing under the federal Hospital Insurance and Diagnostic Services Act, there was already a network of public, voluntary and religious hospitals in the province. The following two decades were marked by new construction, remodelling and expansion of these hospital services and the provision of X-ray and laboratory services through public institutions. In 1969, health care coverage was further extended in Nova Scotia with the introduction of a universal publicly financed medicare program, under the province’s Medical Services Insurance (MSI) Act, with federal cost-sharing under Canada’s Medical Care Act. This extended comprehensive, first-dollar-coverage medical care to virtually all Nova Scotians. Previously, only about 40 per cent of Nova Scotians had comparable private medical care insurance.”

This extension of health care coverage and concomitant expansion of the health care system undoubtedly had a profound effect on the quantity, quality and accessibility of health care services available to Nova Scotians. It also introduced greater efficiencies into the health care system by putting it on a single payer basis. It did not, however, alter the existing delivery system, whereby physicians acting as independent private practitioners on a fee-for-service basis continued to provide almost all medical services, either in private offices or in public hospitals. Nor for the most part did it challenge the existing governance and management structures in the health care sector. Independent hospital boards and private physicians continued to run the system, primarily on the basis of a collegiality model. As early as 1972, a provincial government task force had delivered a stinging critique of this health care system citing inappropriate use of hospital beds, too much decisionmaking centralized in Halifax, the absence of a comprehensive home care programme and health professionals (especially nurses) who were not used to their full potential. It warned that if changes were not made, the system would eventually go broke.”

By 1979-80, health care spending accounted for 21.5 per cent of the provincial budget in Nova Scotia. This proportion rose throughout the 1980s and early 1990s, to 23.8 per cent in 1983-84 and 27.8 per cent by 1995-96.11 A number of factors were relevant to this growth in government spending on health: an increase in the number of physicians and hospital beds; an increase in the per capita utilization of physicians and hospital services; a rise in the physician/population ratio; and an escalation in the prescribing and price of drugs. Yet Nova Scotia’s spending on health during this period was not out of line with the experience of other provinces. 17

Prior to initiating its reform process, Nova Scotia was one of the most traditional of provinces in its approach to the health care system. The province and its physicians relations had an unbroken record of harmonious negotiations over fee schedules. For example, after the federal government introduced the Canada Health Act in 1984, punishing provinces that allowed physicians to supplement their incomes with user fees and extra-billing, the provincial government and the Nova Scotia Medical Society accepted binding arbitration on fees as a solution to the unhappiness of physicians with these new federally imposed restrictions.” There was not any predilection on the part of the province to question or challenge the physician-dominated, hierarchical model of health care. According to Joan Boase, the medical society/government relationship was so close as to be symbiotic. As remarked to her by one provincial official, “It is difficult to imagine legislation contrary to the wishes of the medical profession being passed in Nova Scotia.”” Nurses, on the other hand, had a relationship with the government that verged on adversarial. Though well-organized and militant, they won nursing legislation from the province only after the proposals were altered to meet the concerns of doctors.’ Moreover, whereas other provinces had begun to shift more resources to home care programmes and continuing care facilities, Nova Scotia was slow to move in this direction. It continued to allocate a high, stable portion of its health care budget to hospitals, while per capita expenditures on public health in the province (that generally used alternative health care providers and delivery mechanisms) were only one-half the Canadian average.”

This governmental inertia and “hands off” orientation towards health care was not sustainable for one overriding reason. Federal contributions as a share of Nova Scotian health expenditures fell from 50 per cent to 40 per cent between 1979 and 1989, with the prospect of further cuts in the offing. With rising deficits and the continued growth of health-related spending, the province was forced to consider more systematic intervention in the name of restraint. With the market solution of price rationing of health care services removed as an option by the Canada Health Act in 1984, the need to engage in strategic, long-term planning was unavoidable. In 1987, John Buchanan’s Conservative government (in power since 1978) appointed the Royal Commission on Health Care (the Gallant Commission), with a mandate to seek out the reasons for the high rate of increase in costs and to recommend ways to reduce and control these costs. The government’s concerns appear to have been narrowly fiscal, and the Order-in-Council wording did not contemplate a broad review of the structure and principles of the whole health system. Yet this is precisely what the commissioners themselves decided was necessary.”

Budget deficits and rapidly rising health care expenditures through the 1980s were a common reference point for all provinces, not just Nova Scotia.’ This led to a spate of reforms aimed at restructuring and rationalizing provincial health care systems .21 One 1993 survey of these reform initiatives reviewed the efforts of six provinces where restructuring of the planning and management of the health care system had been undertaken. Manitoba’s reforms were characterized as “a centralized, technocratic approach to management in the tradition of rational planning models driven by bureaucratic use of information and expert advice.”21 In New Brunswick, the focus was limited to the hospital sector, where a regional management structure for hospitals was to be located within a centralized system of provincial planning.” In Quebec (as previously mentioned), long-established regional bodies that delivered health and social services were being given wider responsibilities, including the power to allocate budgets to institutions from a provincially determined regional funding envelope (though the ministry retained extensive regulatory power over these regional bodies, ensuring that they would function within “closely circumscribed parameters”).” A more radical break with past practices and institutions was contemplated through reform initiatives in British Columbia, Saskatchewan and Nova Scotia, where the devolution of authority and resources to new regional and local bodies was aimed both at creating new governance structures and eventually bringing about a profound shift in the way health care was delivered to provincial residents.

Nova Scotia’s reform design most closely resembled the BC model.21 Both provinces patterned their reforms on the reports of provincial royal commissions that made similar recommendations, which were also generally in accord with the views of earlier independent commissions.” These commissions were concerned with controlling the rising cost of health care, but also with the effectiveness of the prevailing model of medical care, the overall efficiency of the health care system, and the need to respond to demands for greater patient and citizen involvement in decision-making. The federal Hospital Insurance and Diagnostic Services Act (1957) and Medical Services Act (1968) encouraged a health care system in Canada controlled by local hospital boards and private physicians paid on a fee-for-service basis. Fundamental reform of this system involved a core choice between a more centralized, hierarchical system and a decentralized, participatory system. British Columbia, Nova Scotia and Saskatchewan (and subsequently PEI, Manitoba and Alberta30) opted for the latter. Their health reform initiatives proposed the creation of decentralized and devolved systems based on regional and community bodies with at least some elected public representatives, and significant downsizing of their respective provincial health bureaucracies. All envisaged a transition to a more community-based, preventative and integrated approach to health that would increase the focus on primary health care and utilize a different mix of health care providers.

The Nova Scotia Reform Process, 1989-1993

Nova Scotia’s Gallant Royal Commission on Health Care Reform (1987-1989) received submissions from 322 groups and individuals, addressing a wide range of issues.” In their report, the commissioners laid down five principles to guide reform: health policies oriented to healthy outcomes, participation of citizens, decentralization and regionalization, accountability and matching resources to health needs. They proposed a dramatic shift towards preventative medicine and community involvement in planning for health needs, as well as more stringent controls on the number of doctors and a move toward salaries rather than fee-forservice remuneration. To achieve decentralization and regionalization they proposed four Regional Health Authorities (RHAs) to plan and manage health care services in their region. This would facilitate a rationalization and integration of services; it would also increase citizen participation by bringing the decision-making process closer to the consumer and putting it in the hands of a volunteer board drawn from local health care providers, consumers and volunteer agencies through an appropriate nomination and selection process. Each regional authority would be relatively autonomous, with funds transferred to it from the province on a weighted capitation basis, but major decisions such as closing a hospital would have to be approved by the Department of Health.”

These proposals would have resulted in a more decentralized system of health care governance. Still, the significance of granting budgetary autonomy and broad responsibilities to the proposed regional health authorities would have been diluted somewhat by the proposed retention of a departmental/ministerial veto over reforms that were especially sensitive (such as institutional closures). More tellingly, the far-reaching changes necessary to ensure more public participation and administrative responsiveness to local concerns and problems do not appear to have been carefully thought through by the commission. For instance, by merely tinkering with the traditional practice of ministerial appointment of subordinate authorities, the new regional structures and their personnel remained vulnerable to partisan political manipulation or to other forms of direct governmental control. While accountability to the health minister and the government of the day would have been secured, there would have been no mechanism for direct accountability to the regional public to be served by the proposed Regional Health Authority. Nor, under these circumstances, would the responsiveness of RHAs to local publics have been assured. As well, left to the discretion of regional authorities with a mandate to manage the health care system for large portions of the province, real opportunities for citizen participation in health care planning and decision-making would have been few and far between.

Even so, it appears that even these recommendations on regionalization and greater public involvement were too much for the government of the day. The eventual response of a revamped Conservative government under Premier Donald Cameron (1991-93) was to propose the creation of six purely advisory regional health agencies appointed by the minister of health, a change that effectively forestalled the decentralized and participatory thrust of the commission recommendations. The other recommendations of the commission were accepted in principle, though direct action was for the most part deferred (for example, by setting up special task forces to study the issues further). Ironically (and contrary to the overall thrust of the Gallant Report), the effect of the government’s counter-proposals was to consolidate centralized control further over the whole health system within the Department of Health. There was no decentralization of administration or planning (though the Department of Health would lessen its own internal planning and administration) and public involvement was strictly limited to the traditional (and politically safe) ministerial appointment process.” Health bureaucrats and their political masters “dug in their heels” on the question of devolving any of the government’s powers and responsibilities to citizen boards they might not directly control.

The Cameron government did establish a Provincial Health Council (PHQ in 1991 to consult with Nova Scotians and advise the minister on appropriate health goals and a comprehensive health strategy.” The council soon became a vocal critic of the pace and content of health reform. It chastised the Conservative government for being slow to respond to the recommendations of the royal commission. It characterized Nova Scotia’s home care programme as “the most archaic in the country” and lobbied strenuously for changes that would move Nova Scotia towards its preferred model (and that recommended by the royal commission): a health care system that was community-based, with a larger share of health spending allocated to prevention, home care and alternative service delivery (i.e., away from the curative care model with its focus on hospitals and doctors).35 In December 1992, the PHC attempted to “kick-start” serious health care reform by releasing its own “Blueprint for Health,” challenging the provincial government to act on its key recommendations: a long-term strategy for the health department, the creation of community health centres and regional health plans, adequate financial support for regional health councils to carry out planning, a larger role for communities and consumers in planning health services, the development of alternatives to the fee-for-service method of remunerating doctors, the establishment of “hospital in the home” programmes, provision of more funding for health research and more and better information for health consumers.’

The response of the Cameron government to this call for comprehensive reform was delayed by a provincial election campaign in the spring of 1993, in which health reform figured prominently. Initially, opposition leader John Savage, himself a practising physician, appeared to stumble by focussing discussion on Oregon-style health rationing as the answer to the ever-growing problem of financing the health care system.” An immediate and sharply negative reaction (from the public, the media and from within his own Liberal Party) quickly turned Savage’s focus away from rationing, which sank like a stone from official political discourse on health system reform. Instead, Savage and his Liberal cohorts took up the Health Council’s call for “community-based care” as the basis of a reformed health system in Nova Scotia. In reaction Premier Cameron – tipping his hand on his government’s likely response to the Health Council’s proposals should it be re-elected – ridiculed the idea as likely to cost “hundreds of millions of dollars,” well beyond the ability of Nova Scotians to pay.”

The Reform Process, 1993-19%

After 15 years of Conservative government, Nova Scotians returned only six Tories to the provincial legislature in 1993. John Savage, the new Liberal premier, named fellow physician Ron Stewart as his health minister. Dr Stewart was far removed in personality and experience from both his predecessors and his cabinet colleagues. He was a political neophyte acclaimed for setting up an emergency medical system in Los Angeles, and for serving a stint as the city of Pittsburgh’s “Doctor Emergency@” A vocal advocate of health reform, Stewart candidly admitted serious weaknesses in the health department’s ability to collect data (for example, its inability to pin down the costs of certain health services) and boldly asserted that fee-for-service as the sole payment option for doctors was “no longer viable.” He also admitted that in a time of budgetary restraint additional transitional funds would have to be allocated to health to cushion the dramatic changes that would be associated with health reform.39

Soon after his installment, Stewart moved to set up a Minister’s Action Committee to launch the reform process. This so-called “Blueprint Committee” would be specifically directed to design a reformed health system that was both regionalized (resources organized and shared among communities in an area) and decentralized (planning and spending decisions made locally rather than centrally).40 From January to April 1994, the committee re-examined all the major studies and reports of the previous several years and received a further 200 written submissions from groups and individuals, many of which “highlighted the need for communities and consumers to have access to, and control over, health care services.” 41 Not surprisingly, its recommendations to the minister closely resembled those of the royal commission and the Health Council, urging the government to facilitate and support the creation of new structures of governance in the health care sector.

The Blueprint Committee’s recommendations were clear on the need to establish a radically different set of principles and structures for health care governance.

Local and regional structures will be established to give individuals decisionmaking authority. These structures will be accountable to the communities they serve. Appropriate supports must be put in place to allow Nova Scotians to actively participate in this decentralized, locally-controlled health system that meets provincial -prescribed standards for programs and services.42

The structures recommended to achieve these goals were a network of local Community Health Boards (CHBs), four Regional Health Boards (RHBs) and a Provincial Programs Advisory Committee (PPAC). Interim regional boards appointed by the minister would have two years to establish the community boards in their respective regions. Permanent regional boards would thereafter be comprised of two-thirds community board representatives and one-third appointees of the minister of health. Overall, two-thirds of the regional boards and at least one-half of community boards were to be consumers (as opposed to providers) of health services. The PPAC would be comprised of representatives of each regional board, the Department of Health and others. It was the community boards that would

drive the system … the highest priority of the RHBs should be to determine community boundaries and facilitate the establishment of CHBs in the region … Communities should have the final responsibility for determining the boundaries for their CHB … [though] Community Health Boards representing a population of much less than 10,000 may fragment the province into pieces that are too small to plan and coordinate a comprehensive range of primary health care services.13

The Blueprint Committee also recommended that the community boards be given the maximum degree of responsibility and decision-making power. This meant budgetary authority for all primary health care services, including mental health, home care/continuing care, public health and addiction services.” The regional boards would plan, fund, rationalize, coordinate and evaluate programs and services (rather than facilities) that would serve the whole region and allocate funds for community boards consistent with provincial guidelines. The devolution of decision-making authority would be substantial and uncompromised; there would be no competing or parallel authorities within each health region that might second-guess, overrule or undermine the decisions of the regional and community boards. Hospital boards, for instance, would be phased out as the regional boards assumed formal ownership of and operational responsibility for these institutions (a process known as “designation”). Establishing this new regionalized governance structure, it was asserted, would create efficiencies that would “free up” resources for community-based programmes and services.41

The radical nature of these recommendations, particularly the extent to which they would take health governance away from both the traditional model of “control from above” professional management and the market-based solutions of the competitive state, needs to be recognized. If enacted, the Blueprint’s recommendations would significantly advance the democratization of the state in the realm of health care governance. To all appearances, a tide of radical reformism was about to sweep across the traditional landscape of the Nova Scotia health care system.

Government action in response to the Blueprint Committee’s recommendations took the form of 1994 framework legislation (Bill 95) and a 1995 “bridging document” outlining exactly how implementation would occur. 16 The committee’s recommendations were followed closely on most matters regarding new governance structures in the health care sector, with one telling change. Whereas the Blueprint Committee called for community boards to draw on their own autonomous budgets in order to plan and manage all aspects of primary health care, the government legislation restricted both the independence of the proposed community boards and the eventual scope of their authority. Instead, greater decisionmaking latitude and discretion was bestowed upon the regional boards. The latter, after whatever consultation with communities it deemed appropriate, would determine community boundaries, as well as the method of selection and term of office of community board members, and the number and type of personnel assigned to community boards.41 There would be an allocation of funds designated for each community board within each regional funding envelope, but these boards would have a narrower range of services than originally envisaged by the Blueprint Committee. All “banking and bookkeeping” functions would remain the exclusive preserve of the regional boards. Overall, the proposed role of the regional boards was dramatically enhanced by the government and that of the community boards was sharply circumscribed.”

This deliberate shift of responsibility and power away from the locality to the region was done, it appears, at the determined urging of the (already established) interim regional boards, who argued that forcing the regional boards to share their control over regional health expenditures with community boards would be inviting disaster from a budgeting and cost-control perspective. This evidently proved to be a compelling argument for state managers (both political and bureaucratic) increasingly concerned about the need for budgetary restraint. The shift of power to the regional boards, however, quickly raised alarms in some quarters about the prospect of centralization and bureaucratization at the regional level, a process that would once again give health bureaucrats rather than the people control over health reform.’ Others, however, were more sanguine; not everyone “bought into” the developmental model that underlaid the decentralist and participatory thrust of both the royal commission and Blueprint recommendations. Suspicion and cynicism within the community was (and remains) a major obstacle to the kind of “grassroots mobilization” – the process of engendering the high levels of citizen commitment and participation needed to make community empowerment and democratic administration possible. Communities had to be convinced that their efforts would gain them real power and autonomy, or they were unlikely to devote much energy to participation.10 As noted by one local health association volunteer, “Good people will not volunteer if their task is simply in an advisory capacity, where lip service is paid to their contributions and the hierarchy does what suits it – not us.”51

The decentralist and democratizing elements of the Blueprint recommendations were further undermined by the provincial government’s decision to postpone indefinitely a key control and accountability mechanism in the Blueprint: that two-thirds of the members of the permanent regional boards would be representatives from the community boards. It was this provision that would have given local health boards the potential as a group to control the regional board, making it accountable and responsive to communities. Indeed, it was this aspect of the reform that originally intrigued even the most cynical of community activists who were accustomed to largely meaningless and impotent mechanisms of citizen involvement in the administrative structures of the welfare state.12 Not surprisingly, this potential for the devolution of real power to communities to manage the most important and expensive of social programmes jointly did not sit well with everyone in the Department of Health, which stood to be drastically reduced in size and power at the end of the process. Nor was it a vision embraced by all the interim regional boards, one of which tried to have the province enact regulations that would alter permanently and irrevocably this aspect of the reform and completely separate regional and community personnel.”

While the health minister charged with managing these controversies and disagreements, Dr Ron Stewart, brought to his portfolio a personal zeal for reform (along with a keen intelligence, forthright honesty and unquestioned sincerity), he also suffered from a shortage of the political skills required to complete a radical and contentious change in the status quo during a period of severe fiscal austerity. In any event, Stewart’s many fine personal and professional qualities were insufficient to ensure either the place of health reform in the government’s priorities or its eventual success as a key policy initiative. During Stewart’s brief tenure as health minister, cuts to his department’s budget overwhelmed the reform initiative. Hospital and bed closures, salary rollbacks, layoffs and pharmacare cuts dominated the news, while little new money was allocated to setting up alternative services or community-based programmes.’ Stewart’s proposal to the province’s doctors that they consider changing over to a fee/salary mix was rejected outright by the provincial Medical Society, while the media was rife with reports of overworked doctors, doctors leaving for the United States and doctor shortages in rural areas.” The Provincial Health Council – which vocally opposed some aspects of the government’s plans for the health care sector – complained bitterly that health department bureaucrats continued to be unco-operative, making things difficult for the council and throwing obstacles in its way. 16 The beleaguered government’s response was to disband the PHC.-II By the end of 1995, with health reform stalled and popular protests mounting in number and intensity, Stewart relented, submitting his resignation as minister and announcing his intention to leave politics. Health reform had claimed its first political victim. The Reform Process, 1996-1998

When the Canada Health and Social Transfer (CHST) came into effect on I April 1996, the fiscal framework was established for potentially profound changes in Canadian social policy. Specifically, the CHST included a 15 per cent cut in the federal government’s share of funding for health, post-secondary education and social assistance through 1998. In return, provincial governments were to be granted greater autonomy in policy-making in these fields. This federal fiscal retreat from social policy, however, was balanced in the case of health care by a proclamation that the federal government would continue to uphold the essentials of medicare as protected in the Canada Health Act and financially penalize provinces that violated its principles. To this end, the changes in federal/provincial fiscal relations occasioned by the CHST also included a guaranteed minimum cash transfer for health care, as a way of ensuring some continuing federal leverage in this area and some degree of provincial convergence. Even so, the sheer fiscal weight of health care spending within provincial budgets made it a prime target for finance ministers seeking to make further reductions in expenditures.

After Stewart’s resignation, political responsibility for health was handed over to the province’s finance minister, Bernie Boudreau, who chose (or was forced) to lay in a bed of his own making. Facing some undeniable and uncomfortable facts – hospitals had been closed, doctors had left the province, home care had been slow to develop, yet another cut in the health budget had been made, and 62 per cent of Nova Scotians felt their health care system had worsened under the Liberal government” Boudreau decided to return some money to the health budget. He also placed an 19month moratorium on the further development of community health boards and announced that all members of the regional boards would continue to be ministerial appointees. Community boards would not be formalized by legislation or regulation and would not be granted privileged status as local planning mechanisms; consolidation of the shift to regionalized health care governance would continue to be the government’s main concern and priority.” All the key elements of effective citizen participation in health care governance had now been expunged from the reform process; with Boudreau, the early indications of serious reforms in the direction of democratic administration had reached a dead end.

The response from some community activists and volunteers involved from the beginning in the reform process was sharply critical, prompting some resignations from regional and community boards. According to these individuals, health reform was being “gutted” with the abandonment of local boards, leaving the health system more centralized (at the regional level) and closed than ever. Both Boudreau and a “control-obsessed” bureaucracy were blamed.60 Criticism from other quarters did not subside or diminish with the announcement that reform would be placed on the backburner. Physicians continued to mobilize against the health cuts, polling patients on their opinions and blaming “unneccessary” patient deaths on the government’s budget cuts. Nurses collected and publicized evidence that reform measures had led to poorer rather than improved health care; growing waiting lists for surgery were highlighted; and health care unions lambasted the government for the negative effects on their members of health care “deform.” Committed supporters of the reform process could only express their frustration about the turn of events and decry the sadly inadequate resources that had been shifted into home care, the core of the community-based system that reform was supposed to create.61

After another provincial budget that returned a further portion of the funds previously stripped from health care, Boudreau stepped down as health minister.62 Despite having pumped millions back into the traditional foci of health spending – hospitals and doctors fees – he continued to be a lightning rod for public outrage over the government’s “bungled” health care reforms.’ The deep-seated anger of Nova Scotia voters for all governing Liberals, which had produced a rout of the federal party in the June 1997 national election, put the brakes on an imminent provincial election.” The political cost borne by the key politicians associated with the health cuts was growing: besides having caused Stewart to resign, it brought down a powerful federal cabinet minister (Dave Dingwall), forced John Savage into giving up the premier’s office, and assured Bernie Boudreau’s defeat in the subsequent leadership convention to replace Savage. Shortly thereafter, two other high-profile government ministers resigned, and three more announced they would not be seeking re-election.61

The decimation of the Liberal front benches had one salutary effect from a partisan viewpoint: it removed the focus of voter anger and allowed new leader Russell MacLellan (a long-time Liberal MP) to put a new face on an unpopular party and government. Coasting for several months on what seemed to be voter willingness to give him the benefit of the doubt, MacLellan called a provincial election for March 1998, and tried to float through the campaign on the promise of a future full of the economic benefits of a balanced provincial budget. The opposition parties, however, quickly made health care the focus of the campaign. Both the NDP and the Tories emphasized the need to give greater control over health planning and decision-making to local communities, and slammed the Liberal decision not to legislate community health boards.” With growing signs that he was in trouble, MacLellan switched strategies and added one spending platform to his campaign: his government would immediately provide $80 million for more doctors, beds and new technology.”

The 1998 election ended in a dead heat between the Liberals and the NDP, with the Conservatives holding the balance of power. This forced the government to make a number of conciliatory gestures in order to survive the spring legislative session. Conservative priorities, in particular, were given special consideration, and the main legislation passed during the session reflected this. Nevertheless, in the policy sector most germane to the gains made by the opposition parties – health care – there was no return to the original Blueprint Committee recommendations regarding governance structures. The opposition parties (both of whom loudly proclaimed their support for the principle of elected and accountable regional and community health boards) could not agree on the particulars of new legislation. As a result, an NDP bill that would have established a legal framework for the operation of elected and accountable regional and community health boards died on the order paper when the assembly rose in June 1998.”

Assessment and Reflections

In their review of health reform initiatives in 1994, Hurley, Lomas and Bhatia concluded that most policy analysts’ concerns about the regionalization and democratization of health reform appeared (at that time) to be addressed in Nova Scotia’s reform plans. The proposed health boards were to be explicitly accountable to both the provincial government and directly to the residents in each health district. This was to be accomplished through open board meetings, annual reports and locally elected or appointed members. By allocating two-thirds of their regional health board seats to representatives of community boards, Nova Scotia would at least have given communities the means to hold regional health authorities accountable. Furthermore, the relatively small size of the districts in Nova Scotia would likely facilitate accountability and access to citizens, “potentially providing the representatives with strong mandates.” Accountability and mandate were seen as strong points in Nova Scotia. The quality of community representatives on these boards remained an open question, but the authors were confident that the potential for a real devolution of power to communities, and the importance with which all citizens tended to view their health care system, would likely be sufficient to induce the participation of strong individuals.”

What happened in the interim to throw these governance aspects of Nova Scotia’s reforms so dramatically off course? The foregoing review of Nova Scotia’s health care reform initiative provides some insight into the more or less permanent obstacles that inevitably confront those who would attempt to reform radically the traditional relationships embedded within the welfare state and the administrative apparatus that supports and enforces these relationships. It further suggests some problems more specific to the Nova Scotia experience, but familiar none the less to the situation in many other provinces.

Perhaps the first general observation that can be made about radical reforms to governance structures is that the longer governments have been in power, the less likely they are to be dissuaded from paying attention almost exclusively to the advice and concerns of their own bureaucrats and the dominant structural interests the policy sector. Generally, bureaucrats and established (insider) interests in the health sector represent strong nodal points of resistance to proposals that would devolve administrative and regulatory functions to other levels or types of governance, and that would expand involvement in health policy-making and administration to participants and interests previously excluded from these governance activities. Thus, the immediate reaction of a Nova Scotia Conservative government in its fourth term of office to the 1989 Report of the Royal Commission on Health Care Reform was to reject its key recommendations on the devolution of health care governance functions, opting instead for the traditional (and politically non-threatening) mechanism of government-appointed advisory agencies; still, four years later (when the Conservatives were finally defeated at the polls) even these tepid changes had yet to be fully implemented. As in British Columbia, it was only after the defeat of a government that had been in power for many years that radical reform of the status quo in the health sector was seriously considered. In contrast, successor governments (in Nova Scotia the Savage Liberals) not only embraced the spirit of the royal commission reports, but also moved quickly to implement fairly radical reforms.

It is also apparent that without the political will to impose serious restrictive measures (which Nova Scotia clearly lacked before 1991), and without substantial and well-documented evidence of waste and financial excesses in the existing health system, meaningful structural reforms in the health sector were unlikely to have occurred. Serious reform of the health care system was literally forced on the Nova Scotia government by the province’s fiscal crisis and the federal cuts and rising health care costs that dramatically worsened it. The growing severity of the fiscal situation made the argument for immediate and substantial expenditure reductions compelling, and such reductions began with a new premier and a revamped Conservative government in 1991, escalating after the Liberals took power provincially in 1993. Accounting for almost one-third of the provincial budget, the health care sector out of necessity absorbed a major portion of these spending cuts. This created an opportunity for radical reform to a weakened and vulnerable status quo, while simultaneously imposing severe limitations and painful choices on policymakers. The fiscal crisis may have created both the political will and popular acceptance (or at least acquiescence) necessary to undertake reform, but it did not produce a consensus either on the pace of change or its precise direction. It may have been difficult for a new government not to follow the clear course for reform laid out by royal commissions and task forces (but previously ignored or rejected by the incumbent government). This predilection was no doubt reinforced by the factors at work in the health care sector that encouraged provinces to share or mimic policy solutions to common problems.___

It is worth noting, however, that the Nova Scotia Liberal Party itself had not worked out a clear strategy on health reform at the time of the 1993 election, as evinced by the waffling and backtracking on health rationing during the campaign, followed by the panicky embrace of the handy model already publicly championed by the Gallant Commission and Provincial Health Council, This suggests political opportunism rather than party ideology as the key factor behind partisan political sponsorship of radical reform in Nova Scotia. Yet without the sustenance and support provided by ideological commitment, a sustained commitment to health reform on the new government’s part was perhaps neither likely nor possible.’ Still, the knowledge, beliefs and orientations of key decision-makers within the Liberal government (both the premier and health minister were medical doctors with a progressive orientation towards the role of their profession) may have been factors of some relevance, at least initially.

Another element of particular relevance to the unfolding of the reform process in Nova Scotia was that province’s special vulnerability to spending cuts in the institutional sector, given the relative underdevelopment of alternative delivery mechanisms such as home care, and the limited role given alternative health care providers such as nurses, nurse practitioners and midwives. This increased the political and administrative difficulty of going from a very hospital-centric system to a community-based system in one intensive cycle of change, and led to justified howls of protest about hospital cuts undertaken before there are adequate alternative services in place.” By contrast, New Brunswick limited itself to regionalizing its hospital boards, while British Columbia had one of the most extensive and effective home care programmes in North America when it began its reform initiative. As noted by BCs deputy minister of health, “If you cut services or programs in hospitals and then try to build something in the community – you’ll be doing it under pressure and probably badly. So do the community side first – get it up and running and appreciated. “72

Realistically, Nova Scotia probably did not have this luxury. The budget pressures driving reform were greater than in British Columbia and demanded immediate savings. Hospitals, the main item of health care expenditure, had to be the first and foremost target of cost reduction. At the same time, other reforms needed to begin simultaneously if there was to be any hope of mobilizing and maintaining a coalition of interests who stood to gain from changes to the health care system; otherwise entrenched interest groups that opposed reform could focus political debate exclusively on cuts, reductions and threats to existing services, galvanizing opposition and creating the climate for a government retreat from its reform agenda.” Strongly negative community and provider reaction to the health care cuts associated with the government’s regionalization and rationalization of the institutional sector (in large part due to the lack of coincident and adequate development of alternative services) gave rise to fears in government that the reform initiative’s community empowerment measures would be used to block or fundamentally alter the other (primary) objectives of health reform (a more costefficient and effective health care system).

Under such circumstances the political objectives associated with the creation of devolved authorities in the health care sector could only be partially achieved, if at all. To be more specific, the Liberal government that came to power in 1993, constrained as it was in the health sector, successfully pushed through significant spending cuts to address the immediate fiscal crisis, but in making these cuts clearly failed to avoid exceeding the “squeal threshold” beyond which community complaint becomes significant, widespread, sustained and politically damaging to the government. This made it almost impossible for the government to exploit effectively the potential for acquiring local allies for significant health care restructuring.

Since the community involvement/democratization objectives of the reform process were derailed by 1996, only the cost control measures introduced by the reform can determine whether it was at least a partial success. Indeed, in the longer term, many (if not most) will judge the reform initiative not on the basis of how successful it was at involving citizens in the governance of the health care sector, but on how well it controlled rising costs. The Canadian and international experience has demonstrated that cost control is fostered by centralized control over expenditures and closed-budget methods of funding. With this in mind, Nova Scotia and several other provinces adopted systems of closed regional funding envelopes. Furthermore, Nova Scotia’s early decision in the reform process to centralize budgetary and financial functions with the regional boards appears to have been a conscious cost control consideration. This consideration apparently overrode other concerns: that the reforms were simply duplicating at the regional level the bureaucratized model the reform was initially designed to avoid; or that community boards without their own budgets to manage might become irrelevant and powerless, as the attention of service providers and consumers increasingly focussed on the regional level; or that by doing this the health care system might become less flexible and adaptive to local circumstances and needs than it otherwise would have been.

Ultimately, the question of cost control is unlikely to be dramatically affected by the choice of governance structure relative to other factors. In particular, rising health costs are primarily a function of two large and fast-growing budgetary items: physician services and drug costs. Thus, in Nova Scotia, major cuts in health spending did make a significant contribution to balancing the provincial budget. Deficits continued to be incurred, however, by “autonomous” regional health boards for which the province remains responsible, while “overspending” in the Department of Health continued to bedevil the precarious balancing act of provincial finance ministers. Notably, it was increased billing by doctors and increased drug plan costs that were the major culprits in this unbudgeted health spending, suggesting that as long as these items remain outside the reform initiative, cost control in the health care sector will continue to be a major problem.” This is also the conclusion reached by Rachlis and Kushner, who argue that physicians’ ability to control their own incomes is so central to the problem of rising health care costs in Canada, it is only by changing the method whereby doctors are remunerated (from fee-forservice to capitation or salary), and reducing the number of doctors being graduated from medical school, that costs can be effectively controlled in the long run.” At the same time, the spatial distribution of physician services must be addressed. All provinces have taken some action at different junctures to address this problem. Nova Scotia, for instance, cut and temporarily capped physician fees, placed a freeze on new medicare billing numbers in metropolitan Halifax, and provides (like some other provinces) monetary incentive packages to physicians willing to locate in underserviced rural areas. 76

A second but equally important question for the provincial health reform initiatives is whether they create a more effective health care system that delivers better health outcomes for the majority of the population? Certainly, there seems to be widespread agreement on how to do this: shift resources from curative, acute care medicine to preventative, community-based health care, which utilizes a wider range of health care providers and relies much less on hospitals and doctors. The devolution of authority to regional and local health boards is a key step in making this happen because it facilitates rationalization and integration of health services at the regional level, thereby freeing up resources that can be used to develop more community-based services. But this approach to health, because of its broad definition of health and its ecological understanding of the causes of ill health, also requires a broader governmental commitment to “healthy public policy.” Greater coordination and integration of health and social services is an essential long-term component of health reform, but one that is likely to be difficult to accomplish. The key assumption here – that better efficiencies will create savings that will be plowed back into primary care services – is central to the success of health care reform. If it cannot be sustained, if there is no budgetary stability for the health care sector, if savings get stripped from health care budgets and put towards deficit/debt reduction or towards higher drug costs and physician pay scales, then reform will have been nothing more than an elaborate cover for downloading the burden of budget cuts onto regions and communities.


The long-term impact of Nova Scotia’s stunted reform initiative remains unclear. For the ill-fated community boards, the political hedging and policy reversals that occurred during the process of implementing the Blueprint design may foreshadow a permanent downgrading of their future role, though a change of government in Nova Scotia in the near future could alter this trajectory. The longer-appointed regional boards operate without continuous, systematic and democratically legitimated representation or input from the communities they ostensibly serve, the more resistant they will be towards relinquishing any of their present powers and responsibilities, and the less well-positioned the orphaned community boards will be to assert a major role for themselves in the health planning and administration process.

Real devolution of power to citizens only occurs when citizen capacities for participation are developed, and this in turn requires the mobilization of communities and the provision of necessary supports for effective citizen participation on decisionmaking bodies. This is a slow, messy process that requires enormous amounts of time and resources. But, if the community sector is to be effectively developed and integrated into a new system of health care governance, there is no other way. Therefore much depends on the level of political commitment on the part of authorities at all levels to this way of doing things, or it is likely to fail.77 In Nova Scotia this commitment wavered and evaporated as the demands of crisis management took precedence over the needs and exigencies of effective citizen participation.

The circumstances under which Nova Scotia launched its reform initiative were far from propitious, and this made certain elements of the reform difficult to implement effectively. The political problems associated with the transition convinced the Nova Scotia government to alter its course and to turn the reform initiative into a staged process, whereby the turmoil generated by the consolidation and rationalization of hospital services was dealt with first.” The end result – appointed regional authorities that are accountable only to the minister and indefinite postponement of an effective role for community boards – creates a “democratic deficit” in the system of health care governance that threatens the credibility and legitimacy of health governance authorities, while posing serious problems for the mobilization of the “social capital” needed to continue the reform process.

The abandoned democratization elements of Nova Scotia’s health care reform initiative remain important to its eventual success. Decentralization and democratization are not just about the ideal of citizen empowerment or the quality of democracy. They are also important to the long-term goals of cost containment and resource reallocation, as well as the need to change the public’s perception of the factors important to securing the health and well-being of their communities. While other policies must be pursued to accomplish all of the varied goals of comprehensive health care reform, moving towards a fully democratic and participatory system of health care governance continues to be central to its long-term success.

Copyright Trent University Summer 1999

Provided by ProQuest Information and Learning Company. All rights Reserved.

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