One widely touted response to the COVID-19 pandemic is to “flatten the curve” — to spread COVID-19 infections over time, so that the medical system can cope with them. Yet a cold hard look at the numbers suggests our hospitals cannot cope with the most flattened of curves. Indeed, they cannot cope with any kind of curve at all.

Canada has 1.95 acute care hospital beds per 1,000 people, fewer than any other OECD country but Mexico. (Italy, which has been overwhelmed by this coronavirus, has 34 percent more beds per capita than we do: 2.62 per 1,000 people.) Nationwide, the occupancy rate for Canada’s hospital beds is over 90 percent. (To put that number into perspective, the occupancy rate for US hospital beds is 64 percent.) Canada’s bed numbers and occupancy rates together imply that the “spare capacity” in our health care system is, at best, around 2 acute care beds per 10,000 people. If even a small fraction of Canadians contract COVID-19, and a non-trivial portion of those require hospitalization, our system will be overwhelmed.

How did Canada end up in this situation, and what can be done about it?

Through the 1970s, ’80s and ’90s, changing medical technology and practice caused the number of acute care beds per capita in every OECD country to fall substantially (figure 1). But the cause of the declines since those years is a failure of funding levels to keep up with population growth. The provinces with fewer beds per capita — Ontario, British Columbia and Alberta — tend to be the ones that have experienced strong population growth, while the ones with higher numbers of beds per capita — the Atlantic provinces — are the ones with low growth rates (figure 2).

Provinces’ failure to provide more beds for more residents is a product, in part, of the fact that beds are lumpy. It is not possible to, say, increase the number of beds in each BC hospital by 1 percent. Many hospitals have little space to put more beds. More beds require more buildings, meaning large capital investments. For governments, committing funds to hospital infrastructure has political risks. For each community that is delighted to see its hospital expanded, there are dozens that feel slighted because their needs were ignored.

Moreover, a new building’s benefits, whether in decreased wait times or in improved care, take time to be felt, and governments seeking re-election are looking for immediate electoral payoffs. Provincial governments also face pressures from a multitude of directions. Some interests compete with health care for spending dollars; others advocate tax reductions. Within the health care envelope, some would like to see the dollars spent in other ways: for example, health care workers may seek better remuneration, and there is lobbying for enhanced pharmacare. Provincial governments’ choices reveal that these other groups have been more effective in making their case than the advocates for more hospital beds.

The shortfall of acute care capacity in our health care system is thus, in part, a consequence of avoidable, and possibly mistaken, political decisions. Yet it also reflects an intrinsic feature of the Canadian health care system. Every health care system has to have some way of rationing care: of stopping, say, profit-hungry orthopedic surgeons from carrying out hip and knee replacements of dubious value, and billing someone else for the cost. In the US, care is rationed by insurance companies that decide what treatments their plans will pay for, and by charges and co-payments that discourage people from seeking care. In Canada, care is rationed through supply constraints: surgeons can barely get enough time in operating theatres to perform essential surgeries, let alone low-value procedures.

Overall, it is not a bad system. Despite Canada’s strained health care resources, we have decent health care outcomes. Canadians born today can expect to live 82.3 years, 3.4 years longer than their American counterparts. According to key indicators of health care quality, such as five-year cancer survival rates or the percentage of patients surviving strokes, Canada ranks in the top half of OECD countries.

Yet COVID-19 is about to reveal just how fragile the system is. A system that constrains costs by limiting the supply of essential services is a system that cannot cope with a pandemic. Perhaps no health care system can cope with the unprecedented surge in demand that this coronavirus can create. Pandemics require spare capacity, and the nature of health care is that someone will always find a use for spare capacity — there is always, for example, someone who would benefit from being in a hospital bed while they wait for a long-term care place. Responding to pandemics is, one might argue, the responsibility of our emergency management system, not our health care system; in this view, the problem is siloed and uncoordinated care, not insufficient health care.

Still, I will venture a prediction: if COVID-19 takes hold in Canada, every failing of our health care system — insufficient infrastructure, long wait times, doctor shortages — will be highlighted. Fixing those failings will require more resources. There are a limited number of places those resources can come from: provincial tax revenues, federal tax revenues, the generosity of private donors or increased private funding. Canadian governments have some hard choices to make. Personally, I believe that publicly funded health care systems are more efficient and equitable than privately funded ones, and that the federal government is in a better position to raise additional revenue than the provinces and territories. Thus, when the economy has recovered, I would like to see the GST/HST increased by two percentage points, and the funds transferred to provincial governments to meet their spending needs. However, I suspect other outcomes are somewhat more likely.

Note to readers: An earlier version of this story contained data in figure 2 that has been revised.

Photo: Shutterstock, by sfam_photo.

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Frances Woolley
Frances Woolley is a professor of economics at Carleton University whose research focuses on Canadian public policy.

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