Promoting Healthy Competition – Competition Bureau Digital Health Care Market Study

The COVID-19 pandemic has reignited interest in modernizing Canada’s health care system. For its part, the Competition Bureau (“desk”) undertook a digital health care market study, examining how pro-competitive policies can foster innovation and provide greater choice and access to digital health care services for Canadians. After consulting with a range of stakeholders, the Bureau released 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 pro-competitive procurement policy. A third and final report should follow in the coming months. The Bureau’s papers highlight some key regulatory, technical and procedural aspects of the current Canadian health care system that can impede competition, and make several recommendations that, while noble, can have a significant impact on the competitive landscape.

Part 1 – Unleash the power of health data

While Canadian healthcare systems are data-rich, healthcare providers struggle to convert that data into information that can be used to innovate and improve patient care. The first report Unleash the power of health data, proposes measures for Canadian policy makers to improve access to and sharing of personal health information in order to promote competition and innovation in the health care industry. Looking specifically at primary health care electronic medical record (EMR) systems (i.e. systems used to collect personal health information in family physicians’ offices, hospitals, and other healthcare facilities), the report identifies two key barriers to competition:

1. Disparate data privacy and governance rules across provinces and territories create structural inefficiencies, leading to market fragmentation and high entry costs for new players. As a result, only a handful of primary healthcare EMR companies currently compete in most provinces and territories, while Prince Edward Island, Newfoundland and Labrador, the Territories Northwest and Nunavut are limited to one primary care EMR provider.
2. In the absence of data storage standards in PHC EMRs, information is locked into the specific EMR system chosen by a PHC provider, making it difficult to move from an EMR to each other or sharing patient information with other healthcare providers using a different EMR. Additionally, primary healthcare EMR companies are acquiring other healthcare players (virtual care providers, community clinics, etc.), which expands opportunities for vertical interoperability, but can also stifle innovation when these companies limit the ability of other third-party solutions to interface with their EMR.

To ensure interoperability between primary care EMRs and EMR systems in other health care settings (eg, pharmacies), the Bureau recommends:

1. Harmonized privacy and data governance rules across Canada – with regard to counterpart jurisdictions, the Bureau recommends the use of legislative tools (for example, the 21^st Century Cures Act in the United States) and digital solutions (e.g. “My Health Record”, a uniform national electronic records system in Australia) to develop a national health data plan. A national health data plan would simplify market entry and expansion for domestic and international companies, spurring competition and innovation across the country.
2. Demand respect for anti–blocking rules – anti-blocking rules are those that would prevent healthcare EMR companies from interfering with the access, sharing and use of electronic personal health information. Recommended features for an approach in Canada include incentivizing compliance, establishing a common standard for data storage and transfer, and requiring that the cost of data sharing be reasonable.
3. Establish interoperability standards – the Office recommends that these standards be established, enforced and operationalized by an independent organization, aligned with international standards and allowing flexibility to develop follow-up innovations.

Part 2 – Improving healthcare through a pro-competitive procurement policy

Since public entities are the primary purchasers of health care products and services in Canada, public procurement rules play a key role in deciding who can compete for government contracts and, in turn, drive competition. and demand-side innovation in Canada’s digital healthcare sector. The Bureau’s second report focuses on how the strategic use of government purchasing rules can increase competition, innovation and choice for health care providers and patients. In particular, the report highlights the role that small and medium-sized enterprises (“SME”) play in stimulating innovation and the need for a public procurement process that facilitates opportunities for these companies. During its consultations, the Bureau identified six barriers to competition in the public procurement process:

1. Health care falls under provincial and territorial jurisdiction, while the federal government, under Canada Health Act, sets out national principles reflected in provincial and territorial health care systems. This creates a fragmented procurement structure of 14 different jurisdictions, each with different priorities, statutes, regulatory authorities and levels of centralization.
2. Overly strict or ill-defined bidding requirements can weed out potential bidders, especially SMEs, who can offer innovative solutions.
3. The focus on price rather than value, quality or results can frustrate innovators and SMEs who often cannot match the lower prices offered by larger companies.
4. Risk aversion can lead to favoring established or known systems and vendors over new or innovative solutions.
5. Procurement cycles can be overtaken by the pace of innovation, which means that products and services can be outdated by the time a procurement process is complete. Lengthy procurement processes can also delay innovators’ return on investment, impacting subsequent product development.
6. Overly prescriptive policies (eg, requiring the use of a specific product or vendor) can drive potential innovators out of the market and eliminate pro-competitive effects.

To remove these barriers and foster competition and innovation through procurement policies, the Bureau recommends:

1. Establish a national innovation procurement hub of expertise to create a Canadian roadmap for implementing innovative procurement.
2. Public buyers self-evaluate their practices and remove all barriers to foster competition, such as attention to the full life cycle of a product or service, how changes in technology might affect needs current and future, and any change requirements between suppliers.
3. Support innovation-friendly procurement processes, including (1) using functional rather than technical requirements to allow vendors to compete on ways to achieve desired results, (2) reducing bureaucracy to effectively facilitate SME participation and (3) the use of flexible requirements. award criteria taking into account both quality and price.

Next steps

To complete the digital healthcare market study, a third and final report is expected to be released in the coming months. The final report will likely cover some of the common themes that emerged from the Bureau’s consultation with stakeholders that were not fully addressed in the first two reports, including compensation for health care providers, policies that limit the expansion and delivery of digital healthcare products and services, improving access, affordability and literacy regarding digital solutions, and patient protection.