Introduction
There is an important distinction between accounting costs and economic costs. While accounting costs focus on explicit or direct monetary expenses, economic costs also consider the implicit or indirect costs associated with alternative allocations of resources. These implicit costs, known as opportunity costs, represent the forgone benefits of using resources in one way rather than another.
This blog examines why recognizing the distinction between these two cost perspectives in the context of medical transportation is essential for achieving a more equitable and efficient healthcare delivery system for Indigenous peoples in Canada. The discussion highlights the need for a more comprehensive assessment of costs, incorporating opportunity costs, to improve medical transportation services for First Nations and Inuit in Canada and, ultimately, the timely access to healthcare services.
Medical Transportation Services for First Nations and Inuit in Canada
Indigenous Services Canada (ISC), through the Non-Insured Health Benefits (NIHB) program, provides medical transportation services to First Nations and Inuit communities in Canada. The NIHB medical transportation program is intended “to assist eligible clients to access medically necessary health services that are not available on reserve or in their community of residence.” Medical transportation benefits through the NIHB medical transportation program include:
- Ground travel,
- Air travel,
- Water travel,
- Living expenses, and
- Transportation costs for health professionals to provide services to isolated communities.
The importance of medical transportation for First Nations to access healthcare services cannot be overstated. An effective medical transportation mechanism is necessary because many First Nations citizens reside in remote areas without access to healthcare facilities.
Additionally, First Nations face higher morbidity and mortality rates than non-First Nations citizens in Canada, a higher relative frequency of injuries and health emergencies is expected and, consequently, a more frequent use of medical transportation to access healthcare services. Therefore, timely access to health services depends on an efficient system of Medical Transportation.
The essential role of medical transportation in improving access to health services has been highlighted. In the case of Ontario, for example, the Rural Ontario Municipal Association (ROMA) found that:
“Nearly two-thirds (60.8%) of ROMA member survey respondents agreed strongly with this statement: Success in improving access to health services in Rural Ontario requires additional investment in other supports for our citizens (ex. transportation). Another 32% agreed with this statement somewhat. Taken together, these results suggest that virtually all municipal leaders in Rural Ontario see the need for a multi-pronged access-to-service strategy, of which transportation is part.”
In the case of British Columbia, for example, medical transportation was identified as a social determinant of health for older adults residing in small rural communities. The complexity of medical transportation, including, among others, long distances, inclement weather, and coordination between the availability of healthcare services and medical transportation, exacerbates economic costs, difficult access to healthcare services, and increased health inequalities for rural-dwelling residents, particularly older adults.
Accounting Costs of Medical Transportation
According to Indigenous Services Canada, between the fiscal years 2013-2014 and 2022-2023, medical transportation expenditures under the NIHB program increased by 102%, from $352 million to $710 million. Furthermore, medical transportation became the most expensive NIHB program, surpassing pharmacy. Medical transportation expenses accounted for 38% of the total NIHB expenditures, while pharmacy expenses comprised 33%. Just between the 2021-2022 and 2022-2023 fiscal years, medical transportation expenditures increased by 18%.
In the Northern region, characterized by small, scattered, and remote communities, medical transportation expenditures increased by 132% between the 2013-2014 and 2022-2023 fiscal years, rising from $44,703,000 to $103,926,000. In terms of program participation, medical transportation accounted for 49% of total NIHB in 2013-2014 and 57% in 2022-2023 in the Northern region, making it, by far, the most expensive program.
Thus, medical transportation is the most expensive program within NIHB, and medical transportation accounting costs increase annually at a higher rate, in general.
Economic Costs of Medical Transportation
Formal systematic measures of the economic costs of medical transportation for First Nations are missing. However, research evidence shows the high economic costs of medical transportation for First Nations. These “opportunity costs” for a First Nation patient traveling from their residence to a local clinic or regional hospital to receive medical treatment include, among others, lost income due to time away from work, increasing childcare issues, rising levels of stress and anxiety, and cultural disconnection, i.e., the lack of respect for cultural practices experienced by patients and their kinship circles during medical travel.
The high economic costs of medical transportation for First Nations can deter individuals from seeking necessary medical care, leading to unmet health needs and increasing health inequalities, exacerbating health conditions, worsening health outcomes, and increasing hospitalization rates and overall healthcare costs.
Thus, acknowledging the relevance of accounting costs, a more comprehensive assessment of medical transportation needs to incorporate the economic opportunity costs into any analysis.
Policy Recommendations
The significant economic opportunity costs associated with medical transportation for First Nations, as presented above, highlight the necessity for policies that address both the financial and broader socio-economic costs, with the aim of reducing inequities in access to healthcare services for First Nations. Several policy recommendations based on this premise are listed below.
Community-based Emergency and Transportation Models
This strategy is based on utilizing local capacity, where local citizens are trained to recognize illness and injury, provide essential treatment, and focus on disease prevention and health promotion. It has been proposed for First Nations in Northern Ontario as a more appropriate strategy for delivering emergency services than the more conventional approach of deploying standard ambulance transportation services.
Community-based programs can enhance local capacity, support existing untrained volunteers in delivering care, and supplement the limited nursing station staff to improve emergency care in remote Canadian communities. “A community-based emergency care strategy could reduce unnecessary costs and unnecessary deaths.”
Total Health Centres
The proposal to increase the range of health services available in small cities and rural towns, either physically or remotely, through “total health centres,” aims to enhance healthcare access and reduce transportation costs for older adults living in rural areas of British Columbia.These older adults often need to minimize visits to urban centres for healthcare services. As health tends to deteriorate with aging, they face greater opportunity costs for medical transportation, coupled with decreased mobility and increased dependency on others for medical travel. Consequently, investing in local healthcare infrastructure to lessen the need for frequent and financially burdensome travel should be prioritized in policy decision-making.
Cost-Effectiveness Analysis
Ultimately, for a more comprehensive assessment of medical transportation, measuring economic opportunity costs and incorporating them into the policy-making process is crucial. Analyzing potential solutions to medical transportation issues—such as requests for new radiotherapy or imaging units and the previously mentioned total health centres in northern Canada—would benefit from applying cost-effectiveness rather than focusing solely on accounting costs analysis. Cost-effectiveness analysis is a methodology in healthcare economics that measures and incorporates opportunity costs to capture the broader socio-economic burden of policies.
As emphasized in health economics, neglecting to consider indirect opportunity costs results in inefficient resource allocation. In the case of vital (and costly) medical transportation, this reality must be considered to engender more efficient, timely, and equitable healthcare access.