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

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The COVID-19 pandemic has reinvigorated interest in modernizing Canada’s health care system. For its part, the Competition Bureau (“Bureau”) has undertaken a digital health care market study, examining how pro‑competitive policies can foster innovation and bring about greater choice and access to digital health care services for Canadians. After consultations 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 pro-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 the present Canadian health care system that may hinder competition, and provide several recommendations that, while lofty, have the potential to significantly impact the competitive landscape.

Part 1 – Unlocking the Power of Health Data

While Canadian health care systems are data rich, health care providers have struggled to convert 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 aim of promoting 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 doctor offices, hospitals and other primary health care settings), the report identifies two key barriers to competition:

  1. Disparate privacy and data governance rules across the 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 health 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 health care EMR provider.
  2. With no standards for data storage across primary health care EMRs, information is locked into the specific EMR system chosen by a primary health care provider, making it difficult to switch between EMRs or to share patient information with other health care providers using a different EMR. Furthermore, primary health care EMR companies are acquiring other players in the health care space (virtual care providers, community clinics, etc.) which expands opportunities for vertical interoperability but can also stifle innovation where these companies limit the ability of other third party solutions to interface with their EMR.

To achieve interoperability between primary health care EMRs and with EMR systems in other healthcare settings (e.g., pharmacies), the Bureau recommends:

  1. Harmonized privacy and data governance rules across Canada – looking to peer jurisdictions, the Bureau recommends the use of legislative tools (e.g., the 21st Century Cures Act in the United States) and digital solutions (e.g., “My Health Record”, a uniform national electronic record 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, driving greater competition and innovation across the country.
  2. Requiring compliance with anti–blocking rules – anti-blocking rules are those that would prevent health care EMR companies from interfering with access, exchange 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 Bureau recommends these standards should be established, enforced and operationalized by an independent organization, aligned with international standards and allow for flexibility to develop follow-on innovations.

Part 2 – Improving Health Care Through Pro-Competitive Procurement Policy

Since public entities are the main buyers of health care products and services in Canada, public procurement rules play a key part in deciding who can compete for government contracts and, in turn, drive competition and demand-side innovation in Canada’s digital health care sector. The Bureau’s second report focuses on how strategic use of government purchasing rules can bring about greater competition, innovation and choice for health care providers and patients. In particular, the report emphasizes the role that small and medium enterprises (“SMEs”) play in driving innovation and the need for a public procurement process that facilitates opportunities for these companies. Through 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 the Canada Health Act, defines the national principles reflected in provincial and territorial health care plans. 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 improperly scoped RFP requirements can eliminate potential bidders, particularly SMEs, that can bring forward innovative solutions.
  3. Focus on price over value, quality or outcomes can hinder innovators and SMEs that often cannot match the lower prices offered by larger companies.
  4. Risk aversion can result in favouring established or known systems and sellers over new or innovative solutions.
  5. Public procurement cycles can be outpaced by the rate of innovation, meaning that products and services can be outdated by the time a procurement process is complete. Lengthy procurement processes can also delay the return on investment to innovators, impacting further product development.
  6. Overly prescriptive policies (e.g., requiring use of a specific product or vendor) can push potential innovators out of the market and eliminate pro-competitive effects.

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

  1. Establishing a national innovation procurement centre for expertise to create a Canadian roadmap for the implementation of innovative procurement.
  2. Public procurers self-assessing their practices and removing any barriers in order to favour competition, such as attention paid to the full life cycle of a product or service, how changes in technology could affect current and future needs, and any switching requirements between vendors.
  3. Supporting innovation-friendly procurement processes including (1) the use of functional rather than technical requirements to allow vendors to compete on ways to achieve desired outcomes, (2) reducing red tape to effectively facilitate SME participation, and (3) the use of flexible award criteria that consider both quality and price.

Next Steps

To complete the Digital Health Care Market Study, a third and final report is expected to be published 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 have not been fully addressed in the first two reports, including compensation of health care providers, policies that limit the expansion and delivery of digital health care products and services, enhancing access, affordability and literacy regarding digital solutions, and patient protection.

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