Health Committee on Feb. 7th, 2013

[Dany Morin, NDP, Chicoutimi—Le Fjord, QC]

I'm amazed. We can look at the private sector. For example, a company in my riding will invest in new technology because it will be more efficient, more productive, and more cost-efficient, but when we look at the health care systems in the provinces, they don't apply these same principles.

I'm not advocating for our health care in Canada to go to a private model, of course not. But is there a way, from your point of view, to take the best elements of the private sector and apply them to our public, universal, and free health care system in Canada?

[John Soloninka]

Absolutely. Value-based health care financing is a model that's been showing great benefits in pockets all around the world. This has nothing to do with public versus private health care. This has everything to do with a way of funding that provides incentives so that people, patients and providers across the silos, do the right thing.

Yes, it's totally doable, but it takes a lot of political will and understanding on the part of the public and on the part of the interested parties within the whole scope of the health care system.

[Dany Morin, NDP, Chicoutimi—Le Fjord, QC]

Thank you.

Mr. Soloninka, you mentioned earlier that when money is invested in the health care system, it is for acute care rather than chronic care, or something similar to that.

I feel the same way. When you treat acute problems, you can show good statistics, that you cured whatever number of diseases, or you can check boxes. Prevention and chronic disease management are investments that we need to make, but they produce results only down the road.

[John Soloninka]

With proper investment, you'd be surprised at how many benefits you get in the very short term. But you're right, the biggest benefits are long term.

There are great books by Jeffrey Simpson and others that talk about how this other model with other emphasis will play out. We don't have time for it here, but there are lots of good references on that describing how the health care system could work.

[Dany Morin, NDP, Chicoutimi—Le Fjord, QC]

Thank you.

[The Chair, Conservative, Joy Smith]

Thank you very much. Those were very good questions.

Mr. Lizon.

[Wladyslaw Lizon, Conservative, Mississauga East—Cooksville, ON]

I would like to join my colleagues in thanking all of you for appearing before the committee.

I will start with a comment made by Dr. Ilse Treurnicht.

Doctor, you would be amazed what people can make in a garage. Maybe they don't apply to complicated medical devices, but great things were invented in a garage.

On a more general topic, Mr. Soloninka, what you described in your presentation is a problem that inventors have been faced with over the centuries. They invent something, and then how do they sell it? How do they implement it? There are stories, anecdotes, about how Fulton convinced someone to use the steam engine on a ship, and there are thousands of others.

In answering the questions, you always mention that the financial part is very important, but it's not only the financial part. It's also how knowledgeable they are in buying new things, and whether they can afford it. Some things have to last for x number of years. You may show up with a great invention, but you may be told, “I just bought devices, and I won't have money for the next 10 years.” With the way technology is going now, things are changing very fast and becoming obsolete. How do you envision this? What is your advice to the companies, to the inventors, and to the innovators?

[John Soloninka]

There's been a sea change over the last three or four years in the medical technology world. In the old days, five to 15 years ago, particularly the U.S. health care system had almost a licence to print money, because you could take a product, improve it just a little bit, sell it into the U.S. health care system, and they would pass the added cost on to the insurance companies and on to the other payers, and patients, and others. In our system, we aren't really able to do that.

That beautiful model for generating cash has gone away, fortunately. Now everywhere in the world technologies that are coming out have to be better clinically. They also have to reduce the overall life-cycle costs for the customer. That is a change now. Now we're getting better technologies at lower prices.

However, you are also right that new technologies replace old technologies. They've already made their investment in the old technology, so there has to be a basis for them to swap out the old technology for the new. Then there's the huge aspect of practice. Physicians are trained and they use their tools; they can't just change in mid-course.

I don't think there's an easy answer to this. The challenge specifically Canadian hospitals face is that they don't have the budget to do what this other gentleman said. They are not given a budget to look forward several years and to invest today for benefit down the road. They are told to manage their budgets on this year's budget alone, and that makes it very difficult.

I'm not asking you to change that. I'm saying that someone else with a broader view of health system value should assist in identifying technologies that are very beneficial, testing them out, proving them, and then enabling the health care system to adopt them and do the necessary change management. That's really what I'm talking about.

[Wladyslaw Lizon, Conservative, Mississauga East—Cooksville, ON]

Do I have any time left?

[The Chair, Conservative, Joy Smith]

You have about 35 seconds.

[Wladyslaw Lizon, Conservative, Mississauga East—Cooksville, ON]

I have a quick question. Are companies involved in medical research and innovation cooperating with companies in other fields? Some devices come from other sectors. How do you cooperate?

[John Soloninka]

We do much more so now, and especially as mobile technology is becoming more than.... We do much more now than we did, say, five or 10 years ago. Ten to 15 years ago there was almost none. Now people are looking more broadly to aerospace, to consumer electronics, to other places as to how they can use them.

[Brian Lewis]

If you look at the large imaging companies, they tend to be in clusters with other areas of expertise. Even the companies GE and Philips are broadly into electronics in a big way.

[The Chair, Conservative, Joy Smith]

Thank you very much.

Mr. Kellway.

[Matthew Kellway, NDP, Beaches—East York, ON]

Thanks to you folks for coming today.

It's been a very interesting discussion. We've had people at this committee as witnesses for this study who have talked about, in your terms, Mr. Soloninka, the invention part of this process, with the frustrated researchers and inventors. It's been very interesting to focus on the next step, the innovation part of it, which I take is synonymous with a commercialization process.

[John Soloninka]

It is mostly, except there could be surgical techniques or things that are not products which also need to be innovated and moved into practice, but they may not be generating revenue or anything. That still is an innovation.

[Matthew Kellway, NDP, Beaches—East York, ON]

Is that something your organization—

[John Soloninka]

We don't. Hospitals would do that themselves. Physicians would do that.

[Matthew Kellway, NDP, Beaches—East York, ON]

All right.

I wanted to unpack what happens in this innovation process before it gets to the customer. I get the issue that you've identified, the second big problem of the customer and cost minimization versus value.

There's a funding issue that goes along with this, because these are risky ventures. When we've talked about government involvement in this process, we've talked about it as a kind of catalyst.

Dr. Treurnicht, I think you mentioned that the government's role is primarily catalytic. It's also funding, I take it, to a large extent.

Can you tell me to what extent this kind of commercialization process depends on government funding?

[John Soloninka]

Do you mean to get a sense of how much?

[Matthew Kellway, NDP, Beaches—East York, ON]

Yes. As you go through this process, how much of it is being funded from that? I guess it's really a part of this tunnel that it has to go through as a proof of concept issue—

[John Soloninka]

Right.

[Matthew Kellway, NDP, Beaches—East York, ON]

—so how much of the proof of concept process for most technology that comes through this is actually funded by government money?

[John Soloninka]

Right.

I won't name the company, but I'll give you an example of a company. It's unlike drugs, where you're talking about $1 billion or more to get to market. Med-tech products typically are in the range of $10 million, $20 million, or $30 million to get to market. They're not at the same level.

A company I'm working with right now would have had probably about $500,000 to $1 million in research grants. They would have had about $1 million in government grants. They've levered that up with, currently, $3 million to $4 million in private sector funding, and they're doing another round of another $5 million after that. When they get to market, when a surgeon has actually bought the first product, they will have had about $15 million to $20 million of funding, of which probably $3 million would have been from government-related sources.

Those are very round numbers. Don't quote me on that, but it's—

[Matthew Kellway, NDP, Beaches—East York, ON]

Sure. I'm just trying to get the magnitude.

Dr. Treurnicht, is that your sense, too, that there are those kinds of proportions?