Promoting Healthy Competition – Competition Bureau’s Digital Health Care Market Study

The COVID-19 pandemic has renewed interest in modernizing Canada’s health care system. On the other hand, the Competition Bureau (“The office”) conducted a digital health care market study, examining how competition policies can encourage innovation and bring greater choice and access to digital health care services to Canadians. After consulting with a range of stakeholders, the Bureau published its first report on the competitive role of personal health information in June 2022, followed by a second report in October 2022 on improving health care through competitive procurement policy. A third and final report is expected to follow in the coming months. The Bureau’s papers highlight some key regulatory, technical and procedural aspects of Canada’s current health care system that may hinder competition, and offer several recommendations that, although lofty, have the potential to have a significant impact on the competitive environment.

Part 1 – Unlocking the Power of Health Data

Although Canadian health care systems have a wealth of data, health care providers have struggled to turn this data into information that can be used to innovate and improve patient care. First report, Unlocking the Power of Health Data, suggests steps for Canadian policymakers to improve access and sharing of personal health information with the goal of promoting competition and innovation in the health care industry. Looking specifically at primary electronic medical record (EMR) health records (ie, systems used to collect personal health information in family physician offices, hospitals and other primary health care settings), the report identifies two key competitive barriers:

  1. Different privacy and data management laws across states and territories create structural inefficiencies, leading to market fragmentation and high entry costs for new players. Because of this, only a few primary health care EMR companies currently compete in many states and territories while PEI, Newfoundland and Labrador, the Northwest Territories and Nunavut are limited to one primary health care EMR provider.
  2. Since there are no data storage standards for all primary health care EMRs, information is confined to a specific EMR system chosen by the primary health care provider, making it difficult to switch between EMRs or share patient information with other health care providers using a different EMR. In addition, primary health care EMR companies are acquiring other players in the health care space (virtual care providers, community clinics, etc.) which increases the opportunities for vertical cooperation but can also hinder innovation when these companies limit the ability of other third-party solutions to communicate with the EMR theirs.
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To achieve interoperability between primary health care EMRs and EMR systems in other health care settings (eg, pharmacies), the Bureau recommends:

  1. Harmonized privacy and data management laws across Canada – in peer review, the Bureau recommends the use of legal instruments (e.g.St Century Cures Act in the United States) and digital solutions (eg, “My Health Record”, a similar national electronic record system in Australia) to develop a national health data system. A national health data system will facilitate market entry and expansion for local and international companies, driving greater competition and innovation across the country.
  2. It needs to be accompanied by an antiblocking rules – Anti-interference laws are those that would prevent healthcare EMR companies from interfering with the access, exchange and use of electronic personal health information. Recommended features of the approach in Canada include compliance, establishing a common standard for data storage and transfer and requiring data sharing costs to be reasonable.
  3. Establish standards of engagement – The Bureau recommends that these standards should be established, implemented and implemented by an independent organization, consistent with international standards and allowing flexibility to develop subsequent innovations.
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Part 2 – Improving Health Care Through Competitive Procurement Policy

Since public sector organizations are the largest purchasers of health care products and services in Canada, public procurement rules play an important role in determining who can compete for government contracts and, in turn, drive competition and innovation in Canada’s digital health care sector. The Bureau’s second report focuses on how strategic use of government procurement rules can bring greater competition, innovation and choice for health care providers and patients. In particular, the report emphasizes the role played by small and medium enterprises (“SMEs”) to play in driving innovation and the need for a public procurement process that helps the opportunities of these companies. Through its consultation, the Bureau identified six barriers to competition in the public procurement system:

  1. Health care falls under the jurisdiction of the state and territory, and the federal government, under the Canada Health Act, describes the national principles reflected in state and local health care systems. This creates a fragmented procurement framework for 14 different areas, each with its own priorities, regulations, regulatory authorities and centralized standards.
  2. RFP requirements that are overly strict or poorly worded can eliminate potential bidders, especially SMEs, who can bring forward innovative solutions.
  3. Focusing on price over value, quality or results can hinder innovators and SMEs often cannot match the lower prices offered by larger companies.
  4. Underestimating risk can lead to favoring established or known systems and vendors over new or innovative solutions.
  5. Public procurement cycles can be overtaken by the rate of innovation, meaning that products and services can become obsolete by the time the procurement process is completed. Long procurement processes may delay the return on investment for innovators, impacting further product development.
  6. Policies that are too prescriptive (eg, requiring the use of a specific product or vendor) can push potential innovators out of the market and eliminate competitive effects.
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To address these barriers and encourage competition and innovation in procurement policies, the Bureau recommends:

  1. Establishing a national innovation center to create a Canadian road to innovation.
  2. Social buyers evaluate their actions and remove any barriers to favor competition, such as attention paid to the complete life cycle of a product or service, how changes in technology may affect current and future needs, and any switching needs between vendors.
  3. Supporting innovative procurement processes that include (1) the use of operational rather than technical requirements to allow vendors to compete in ways to achieve desired results, (2) reducing red tape to facilitate the participation of SMEs, and (3) the use of flexible conditions. A reward system that considers both quality and quantity.

Next Steps

To complete the Digital Health Market Study, the third and final report is expected to be published in the coming months. The final report will likely include some of the common themes that emerged from the Bureau’s stakeholder consultations that were not fully addressed in the first two reports, including health care provider compensation, policies that limit the proliferation and delivery of digital health care products. and services, which improve access, accessibility and learning experience regarding digital solutions, and patient protection.

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