The political strategy is as predictable as it is structurally flawed. Fresh off a newly launched bid to lead the Ontario Liberal Party, housing-advocate-turned-politician Eric Lombardi recently floated an idea that immediately set off alarm bells across the province’s policy landscape. He vowed to make Ontario’s public health care system competitive.
By using language long favored by right-of-center think tanks, Lombardi is clearly attempting to bridge the partisan divide, hunting for votes among disillusioned Progressive Conservatives while trying not to alienate his own center-left base. He insists that this does not mean importing American-style private medical care, arguing instead that the public system itself can be incentivized to compete against itself.
It is a comforting rhetorical dance, but it ignores the fundamental realities of how modern medicine actually functions. The concept of introducing internal market competition into a universal, single-payer health care framework is not new, nor is it a magical fix for the crippling access problems plaguing Ontario hospitals. In reality, treating public hospitals and diagnostic clinics like rival corporations competing for business often exacerbates the exact administrative inefficiencies it claims to cure.
Understanding why this approach fails requires looking past the political messaging and analyzing the mechanics of health care delivery, resource allocation, and the phenomenon known as cost disease.
The Core Deficit of Internal Markets
When a politician talks about making a public health system competitive without privatizing it, they are usually referring to an internal market framework. In a standard model of this type, the government remains the sole funder, but public providers like hospitals, independent health facilities, and diagnostic centers are forced to compete for public dollars based on their performance, volume, or speed.
The theory sounds reasonable on paper. If Hospital A operates more efficiently than Hospital B, patients or funding will shift toward Hospital A, forcing Hospital B to improve its operations.
But medical infrastructure does not mirror consumer retail. A retail store can rapidly adjust its supply chains, hire temporary workers, or change its product line to beat a competitor down the street. A public hospital cannot.
Hospitals are capital-intensive, highly regulated institutions tied to fixed geographic communities. If an internal market starves a struggling regional hospital of funding because a larger, urban facility is outcompeting it on throughput metrics, the local community simply loses its primary point of care.
Furthermore, true economic competition requires an oversupply of goods or services. For a consumer to have a meaningful choice between two options, both options must have the spare capacity to take on that consumer’s business. Ontario’s healthcare reality is defined entirely by scarcity. There is no excess capacity.
With hundreds of thousands of residents lacking a family physician and surgical wait times stretching across months, every single diagnostic machine, operating room, and nursing shift is already spoken for. Forcing exhausted, understaffed public entities to compete for resources they are already drowning trying to manage does not create efficiency. It creates administrative gridlock.
Why Healthcare Resists the Laws of Supply and Demand
The push toward market-based solutions in public services often stems from a fundamental misunderstanding of Baumol’s cost disease. This economic principle explains why salaries rise in industries that have experienced no increase in labor productivity, simply because they must compete for workers with industries that have.
In manufacturing, technology can drastically increase output per worker. A car factory that once required a thousand men now needs a dozen technicians monitoring automated machinery. Productivity skyrockets, costs drop, and wages rise.
Health care operates on an entirely different axis. It remains stubbornly, fundamentally labor-intensive. It takes the same amount of time for a nurse to change a surgical dressing, or for a doctor to conduct a complex psychiatric evaluation, as it did fifty years ago. While advanced diagnostic technology has improved accuracy, the actual delivery of patient care cannot be automated without eroding its quality.
Because health care cannot achieve the massive, technology-driven productivity leaps seen in the tech or manufacturing sectors, its costs naturally rise faster than standard inflation. Forcing a public health care system to become competitive does nothing to alter this structural reality.
Instead of lowering costs, market mechanisms within a public framework shift money away from direct patient care and into bureaucratic oversight. To run a competitive internal market, a government must build a massive infrastructure dedicated to measuring, auditing, billing, and tracking performance metrics between competing entities.
Consider a hypothetical example of two public imaging clinics operating under a competitive model. Under a traditional global funding model, the ministry cuts a single check to cover operations based on regional population data. Under a competitive model, each clinic must hire specialized administrative staff to track every single ultrasound, manage complex internal billing codes, contest funding allocations, and market their services to patients and referring physicians.
The money spent on this administrative machinery is money that could have been directly invested in hiring more ultrasound technicians or purchasing additional diagnostic equipment. The system becomes heavier at the top, while remaining hollowed out at the bedside.
The Fragmented Reality of Private Delivery
In his policy defense, Lombardi correctly pointed out that Ontario already relies heavily on private entities within its public framework. The vast majority of family doctors operate as independent business owners, and many community x-ray and ultrasound clinics are privately run while billing the Ontario Health Insurance Plan directly.
However, using the existing footprint of private delivery to justify expanding competitive market dynamics ignores the systemic fragmentation that this current model already causes.
The independent physician model worked reasonably well when medicine was less complex and centered primarily on episodic, acute care. Modern medicine, however, is increasingly defined by the management of chronic, multi-system diseases in an aging population. This requires deep, seamless integration between primary care, specialized hospital teams, home care services, and long-term care facilities.
Ontario’s current mix of independent private providers and public hospitals creates distinct informational and operational silos.
- Information Silos: Diagnostic clinics frequently use proprietary software systems that do not communicate easily with hospital networks, forcing doctors to rely on outdated fax technology or fragmented digital portals to share crucial patient data.
- Operational Silos: Private clinics naturally prioritize high-volume, low-complexity procedures that offer steady, predictable returns from the public insurance system. This leaves the public hospital network to handle the most complex, expensive, and financially draining cases without the balancing revenue of simpler, faster procedures.
Ambulatory surgical centers and private clinics can easily process dozens of routine cataract surgeries or uncomplicated knee replacements in a single day. But when a patient has multiple underlying medical conditions, such as severe cardiovascular disease or advanced diabetes, private clinics routinely divert them to the public system because the risk and cost of complications are too high.
If the public system is forced to compete on a level playing field with independent clinics while carrying the structural burden of the province's most complex medical failures, it is a race the public hospital is structurally guaranteed to lose.
The Inefficiency of the Corporate Medical Model
The broader claim that introducing corporate-style competitive incentives will spur innovation in a public system is routinely contradicted by international evidence. The most competitive, market-driven health care system in the developed world belongs to the United States, which spends roughly 17 percent of its GDP on healthcare while delivering worse life expectancy and infant mortality outcomes than many peer nations that rely on heavily centralized, non-competitive public systems.
Even within Europe, countries that experimented heavily with internal market reforms in the 1990s and 2000s, such as the United Kingdom’s National Health Service, have spent the last decade systematically dismantling those exact mechanisms. The UK’s "purchaser-provider split," which forced different parts of the public health system to contract and compete with one another, led to an explosion in management consultants and transaction costs without producing measurable improvements in long-term patient outcomes.
The alternative to a competitive model is not a stagnant, bureaucratic monolith. It is an integrated, regionally coordinated system designed around resource optimization rather than internal rivalry.
Instead of forcing hospitals to compete for patients, high-performing universal systems focus on centralized intake models. In a centralized intake framework, all referrals for a specific procedure, such as a hip replacement or an MRI scan, go into a single regional pool. Patients are automatically routed to the next available specialist or machine within that region, eliminating the phenomenon where one hospital has a six-month waitlist while a facility thirty kilometers away has open slots.
This requires deep structural cooperation, standardized digital infrastructure, and global funding models that reward regional health outcomes rather than individual institutional volume. It requires treating health care as a singular, public infrastructure piece, akin to a electrical grid or a water treatment network, rather than a collection of competing retail outlets.
Political candidates seeking to lead Ontario will continue to look for easy, cross-partisan messaging to capture headlines. But suggesting that competition can fix the deep, structural deficits of Ontario’s health care system misdiagnoses the disease. The province does not suffer from a lack of internal commercial pressure. It suffers from a chronic shortage of frontline staff, aging physical infrastructure, and a deeply fragmented delivery model that prioritizes institutional silos over integrated patient care.
Fixing that requires sustained, unglamorous capital investment and serious regulatory modernization, not the introduction of artificial markets designed to make public institutions fight each other for survival.
