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

The COVID-19 pandemic has revived interest in modernizing Canada’s healthcare system. The Competition Bureau (“Desk”) conducted a digital healthcare market study exploring how pro-competitive policies can foster innovation and increase choice and access to digital healthcare for 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 healthcare through competitive procurement policies. A third and final report is expected in the coming months. The Bureau’s documents highlight some key regulatory, technical and procedural aspects of Canada’s current health care system that may hinder competition, and make several recommendations that, while lofty, have the potential to significantly impact the competitive landscape.

Part 1 – Unlocking the power of health data

While Canada’s healthcare systems are rich in data, healthcare providers have struggled to turn this data into information that can be used to innovate and improve patient care. The first report, Unlocking the power of health data, proposes steps for Canadian policymakers to improve access to and sharing of personal health information with the goal of fostering competition and innovation in healthcare. Looking specifically at electronic health record (EMR) systems in primary health care (i.e., systems used to collect personal health information in general practices, hospitals and other primary health care settings), the report identifies two main barriers to competition:

  1. Unequal privacy and data governance rules across provinces and territories create structural inefficiencies, resulting in market fragmentation and high entry costs for new players. As a result, only a handful of primary care EMR companies currently compete in most provinces and territories, while PEI, Newfoundland and Labrador, Northwest Territories, and Nunavut are limited to a single primary care EMR provider.
  2. Because there are no standards for data storage in primary care EMRs, information is locked into the specific EMR system chosen by a primary care provider, making it difficult to switch between EMRs or share patient information with other providers using a different EMR to use. In addition, primary care EMR companies are acquiring other healthcare players (virtual caregivers, 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 EPD.
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To achieve interoperability between EMRs in primary care and with EMR systems in other healthcare facilities (e.g. pharmacies), the Agency recommends:

  1. Harmonized privacy and data governance rules across Canada – looking at peer jurisdictions, the Bureau recommends the use of legislative instruments (e.g. the 21st Century Cures Act in the United States) and digital solutions (e.g. “My Health Record”, a unified national electronic record system in Australia) to develop a national health record plan. A national health data plan would simplify market entry and expansion for domestic and international companies, creating more competition and innovation across the country.
  2. Requires compliance with antiblocking rules – anti-blocking rules are rules that would prevent EMR healthcare companies from interfering with the access, exchange and use of electronic personal health information. Recommended features of an approach in Canada include encouraging 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 Bureau recommends that these standards be established, maintained and operationalized by an independent organisation, aligned with international standards and allowing for the flexibility to develop follow-on innovations.

Part 2 – Improving health care through a pro-competitive procurement policy

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

  1. Healthcare is under provincial and territorial jurisdiction, while the federal government is under the Canadian Health Act, defines the national principles that are reflected in provincial and territorial health care plans. This creates a fragmented procurement structure of 14 different jurisdictions, each with different priorities, statutes, regulatory bodies and levels of centralization.
  2. Overly strict or incorrectly drafted RFP requirements can eliminate potential bidders, especially SMEs, that can provide innovative solutions.
  3. Focusing on price over value, quality or results can be a drag for innovators and SMEs that often cannot match the lower prices offered by larger companies.
  4. Risk aversion can lead to favoring established or well-known systems and vendors over new or innovative solutions.
  5. Public procurement cycles can be outpaced by the pace of innovation, meaning that products and services may be obsolete by the time a procurement process is completed. Lengthy procurement processes can also delay the return on investment for innovators, impacting further product development.
  6. Overly prescriptive policies (for example, requiring the use of a specific product or supplier) can push potential innovators out of the market and eliminate pro-competitive effects.
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To address these barriers and promote competition and innovation through procurement policies, the Bureau recommends the following:

  1. Establishment of a National Innovation Procurement Center for Expertise to establish a Canadian roadmap for implementation of innovative procurement.
  2. Government procurers self-assess their practices and remove any barriers to promote competition, such as consideration of the full lifecycle of a product or service, how changes in technology may affect current and future needs, and any switching requirements between suppliers.
  3. Supporting innovation-friendly procurement processes, including (1) using functional rather than technical requirements to enable sellers to compete in ways to achieve desired outcomes, (2) reducing red tape to effectively encourage SME participation and (3) the use of flexible award criteria that take into account both quality and price.

Next steps

Completing the Digital Health Care Market Study, a third and final report is expected to be published in the coming months. The final report is likely to address some of the common themes that emerged from the Agency’s stakeholder consultations that were not fully addressed in the first two reports, including healthcare provider reimbursement, policies limiting the expansion and delivery of digital healthcare products and services, improving access, affordability and literacy in relation to digital solutions, and patient protection.

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