If you could design a health care system from the bottom up, odds are that you would create one that would focus on the comprehensive health care needs of all citizens, from disease prevention to chronic disease management to palliative care. Innovation would be rewarded.

There would be fewer hospital and long-term care beds and more patient-centred medical homes. Doctors would be employed, and their pay tied to performance; nurses and other health care professionals would have advanced skills and new responsibilities. Team-based care would predominate, and would be tightly coordinated across sites to ensure seamless, safe patient transitions. Engaged patients would have ready access to their electronic health records and be able to interact with them. Quality-of-care would be front-of-mind, and hospitals would report publicly and regularly on standardized measures of both clinical performance and patient satisfaction. Finally, a rich menu of incentives would drive quality, efficiency and innovation while allowing providers to share in system savings.

Is it fanciful to contemplate such a health system? Not entirely. Much confusion remains regarding the manner in which all Americans will be assured of health care insurance coverage by 2014, but this will be sorted out. Meanwhile, the Patient Protection and Affordable Care Act (AKA Obamacare) and other initiatives may well result in an American health care system with many of the features described above.

For example, compare the scope of services that will be funded by Medicare (publicly- funded health care for senior citizens and the largest single health system payer in the U.S.) to those paid for by Canada’s publicly-funded system. Canada’s system pays for services provided by doctors and hospitals. Other services, now exceeding over 30% of all health care costs, are excluded. Benefits provided through Medicare will not be limited to physician and hospital services but will include health needs such as prescription drugs, mental health and substance abuse services, prevention and wellness programs, and elements of chronic disease management. This approach reflects the fact that the health care needs of the population have changed, and can now be served in different ways.

Consider also the concept of an Accountable Care Organization (ACO), an important Obamacare initiative. It started with Medicare, but is spreading rapidly to the private sector. It is now estimated that over 31 million Americans receive their health care through an ACO, and this number is accelerating. ACOs are founded on the principle that front-line health care providers should know best how to deliver high quality care while conserving costs, and are structured to devolve decision-making to these professionals. A related principle is that there should be incentives that reward excellent performance and that substandard performance should have financial consequences.

In an ACO, there is no fee-for-service medicine. A group of providers – which may consist of physicians, nurses, other health care professionals, hospitals and clinics – band together as an organization, and are paid a sum of money by Medicare, a private health insurer or an employer-funded health plan to provide care to a population of patients.  If high quality care is provided at reduced cost, the ACO gets to share in the savings. However, ACO participants may also choose to accept risk; if their outcomes are poor or costs high, their incomes will be adversely affected; if they succeed, their shared savings will be higher. 

ACOs must meet three objectives: provision of highly coordinated, patient-centred care across the whole care continuum, enhanced quality-of-care, and reduced costs. Safeguards exist to ensure these objectives are met. For example, the resources and competencies necessary for an ACO to provide highly coordinated patient-centred care across the care continuum have been identified and ACOs seeking accreditation will need to provide evidence that they possess these and that patient care is benefiting from them.

On the quality front, Medicare has identified thirty-three quality-of-care indicators in four domains (patient/caregiver experience; care coordination/patient safety; preventive health; populations at risk) that ACOs must be track and report upon.

Cost reduction, the third ACO goal, will happen naturally as a consequence of system integration, physician alignment and increased quality, but efficiency efforts will also be driven by incentives such as being able to share in annual savings that are achieved.

There is no Canadian counterpart to ACOs. In Canada, it is rare for front-line workers to be given responsibility for initiating change, and it is equally rare for their compensation to be linked to such efforts. Unsurprisingly, the pace of health care innovation in Canada is slower than ideal. There should be much for Canada to learn from the ACO concept as it continues to expand and evolve.

In Canada’s health care system adroit use of incentives is rare. In fact, many of our systems’ incentives are actually ‘cross-incentives’, that influence system performance in negative ways. In the U.S., it is clear that health care reform will be propelled by incentives. Shared savings related to ACOs have been mentioned. In addition, hospitals receiving payments from Medicare will suffer financial penalties if too many of their patients with heart attacks, heart failure or pneumonia requires readmission within 30 days. The appropriateness of this particular incentive has been the topic of much debate; however hospitals and health systems are responding to this incentive by better managing patient transitions, improving patient follow-up and community-based care and employing enabling technology such as virtual care.

Another Obamacare provision establishes financial incentives for development and use of electronic health records with which patients will be able to interact, and a further one provides financial incentives to hospitals to improve both clinical quality and patient satisfaction; results of standardized assessments in these areas will be publicly reported, a further incentive. 

America is renowned for its ability to problem-solve through innovation; health care reform may be the next great example of this. The process is just beginning, and great challenges remain. But health care delivery reforms currently underway – only some of which have been mentioned and none of which argue for privatization – already appear to be moving the system in the direction of the ideal. 

Of course, health care reform is also underway in Canada. However, the Canadian system is highly politicized and radical change is difficult to achieve, so leaders must content themselves with incremental change achieved by working at the margins.  Ontario’s Excellent Care for All Act is one example. It does signal a commitment to greater system quality, accountability and transparency, but is unlikely to alter the glacial pace of fundamental change.

In Canada, we too often regard the American health care system with disdain. It’s time to wake up. In many important areas, the American health care system is poised to leap ahead of ours.

Dr. Robert Bear is a former Professor of Medicine at the University of Toronto and the author of Sorrow’s Reward, a novel set in a dialysis unit.  He blogs on health care at sorrowsreward.com.  Follow Bob on Twitter @RobertAllanBear.