Oil prices threaten Canadian healthcare system
Canada’s healthcare system is facing a serious threat from high oil prices, according to Canadian commodities expert Rory Johnston. In early March, Johnston warned that the country is facing the largest oil shock in history, with oil potentially reaching $200 a barrel if the Strait of Hormuz remains closed until June.
This could have significant consequences for the healthcare system, including increased energy costs to run facilities. If oil reaches $200 a barrel, provinces could face an additional $3-5 billion in costs, which could lead to service cuts and preventable disability and deaths.
Impact on Healthcare Services
The logistics cost of patient transport and medical supply chains could also increase, with the cost of travel for doctors and nurses soaring and Medevac costs potentially doubling. Rural and northern healthcare access could be severely compromised, and some services may require federal subsidies.
The petrochemical inputs used in pharmaceuticals and medical consumables, such as gowns, gloves, IV bags, and tubing, could also be affected. The base chemicals for medications are petroleum derivatives.
Supply Chain Vulnerabilities
Canada has no domestic manufacturing capacity for medications like insulin, which could lead to shortages. Other medications, such as blood pressure medications, cancer drugs, and antibiotics, could also be affected.
The transport infrastructure for the supply chain, which relies on diesel trucks, could also be disrupted, affecting the viability of biologics, vaccines, and blood products. The health consequences of economic crises, such as those created by historic oil shocks, can be self-amplifying, with people becoming more likely to need acute healthcare when they cannot afford healthy food or medication.
Preparing for the Crisis
There are several measures that governments and health systems can take to adapt to the potential crisis. A national medical supply strategic reserve could be established, with a 90-day reserve of essential consumables held at regionally distributed warehouses.
Investing in domestic consumable manufacturing could also reduce import dependency, and a national group-purchasing organisation could be established to pool consumable procurement through a single federal emergency purchasing entity during a declared supply shock.
In terms of cost, the healthcare system could absorb between $1-12 billion in additional annual costs, depending on the oil price scenario. However, a substantial portion of these costs could be preventable through actions taken now, such as establishing a federal fund for heat pump conversion and providing emergency operating subsidies for rural hospitals.
By taking these measures, Canada’s healthcare system can strengthen its resilience and ensure care in a crisis. The alternative is avoidable, if action is taken now. Dougald Lamont, a writer and public policy researcher, notes that the proposed investments will not only prevent avoidable costs but also lay a foundation for greater resilience in the healthcare system.
