March 31, 2015

Quebec Healthcare Reform: Update

by Ghislain Gauthier, Director; Marc M. Lafoley,

Following the election in April 2014, one of priorities of the new Quebec government was to reach a balanced budget for the 2015-2016 fiscal year.

On March 26th, 2015, the Finance Minister delivered the budget for the next fiscal year. The good news is that Quebec is confident it will deliver on the challenging task of a balancing the budget. Many observers of the Quebec political scene are not surprised but are voicing some scepticism about the underlying economic assumptions and their validity.

Let’s look at some of the key numbers from this budget.

The forecasted revenues for the next fiscal year are $100.2 billion with an expected growth of 4.2%. On the other hand, spending is expected to reach $98 billion. This figure does not include $1.6 billion going to the Generation fund, which only leaves a safety margin of $600 million. These figures are based on a forecasted economic growth of 2%. - Currently it is only 1.3%. These numbers have been challenged by the opposition.


Let’s move on to Healthcare.

The Healthcare budget is increasing by a mere 1.2% for the next fiscal year, which is significantly lower than the typical 4% growth seen over the last few years. This objective seems far-fetched given that the healthcare system will need some “TLC” in 2015 with all the reforms that are taking place. This government is on a mission to reduce the money going to Healthcare and bring down the weight of public spending on Healthcare (which currently sits at 49.4%). Since last summer, the “A” word (austerity) that no one wants to say, has resulted in the development of many new bills and provisions that impose new ways to manage the finances of Quebec. The Finance Minister and especially the Healthcare Minister have been hyperactive in this sphere.

The main purpose of Bill 28 is to implement certain provisions of the Budget Speech of June 4th, 2014 and return to a balanced budget in 2015-2016. Once adopted, it will authorize the Health Minister to negotiate confidential listing agreements with manufacturers and, join the PCPA, and cap the overall budget allowed for pharmacist dispensing fees for compliance packs used mainly for elderly patients. The exact details on the savings that will result from these two measures has not yet been fully delineated. During the hearing for the Bill 28 commission, several stakeholder groups made submissions on the Bill. Some of the recommendations have already been implemented. A good example is the “no sub” prescription, which will no longer be honoured by pharmacists in the majority of cases. This will allow savings of over $40M in the first year. Bill 28 will certainly be amended before being presented to the National Assembly for final approval; but one can expect new legislative adjustments throughout 2015 that will affect drug pricing and the business of pharmacy.

Bill 10, also known as “An Act to modify the organization and governance of the health and social services network, in particular by abolishing the regional agencies” was adopted on February 9th. This act is about cutting a layer of bureaucracy, namely the ASSS (Agence de Santé et services Sociaux). It will be replaced by a new administrative system (CISSS or Integrated Center of Healthcare and Social Services) that will be leaner and will allow for forecasted yearly saving of $220 millions. It is estimated that 1,300 employees, mostly bureaucrats, will lose their jobs during the implementation phase in 2015.

Bill 20 is also known as “An Act to enact the Act to promote access to family medicine and specialized medicine services and to amend various legislative provisions relating to assisted procreation”. This bill is at its late stage of review and should be adopted within the next month. Let’s take a step back to last summer when the Health Minister renegotiated with the two main Physicians associations (FMOQ and FMSQ) to delay and spread their salary increase over a longer period. This process took considerable time. Shorty after this was agreed to, the Health Minister presented Bill 20 which is focussed on setting patient quotas for both GP’s and Specialists and meeting performance criteria. The objective is to increase MD’s productivity and improve patient access to first- and second line healthcare. The tone, manner and the various provisions of Bill 20 were simply not acceptable to the Medical bodies. This Bill went through hearing and all groups did have the opportunity to voice their opinions and make recommendations. Bill 20 is moving forward but the final details will follow within the next few weeks. In the meantime, the new budget has taken into account the potential increase of medical acts and new patients that physicians will bring in to meet their patient quotas. The healthcare budget is being increased by $535M of which $329M is dedicated to MD’s.

In summary, there will be many moving parts in the Quebec Healthcare system in 2015. The drivers are money and increased productivity. Every stakeholder in the healthcare system will be affected. Some argue that there are too many reforms, which are too important and moving too fast. Over the last few years, Brand pharma has seen most of its Quebec privileges disappear. Contraction measures will continue to hurt Brand pharma.