Posted tagged ‘For-Profit Delivery’

Ontario Budget Debate Ignores Taxes and Billions Transferred to For-Profit Corporations

March 2, 2014

Ontario’s budget debate may be high profile, but it misses two essential points.

With the NDP signaling NO TAX INCREASES (on the middle class) a serious discussion about taxes, particularly the need to increase corporate and wealth taxes, will not take place. It is hard to have any serious budget discussion without considering the income side. Many commentators have made this point.

At the same time, the expanding use of for-profit companies, often multinational conglomerates, to deliver and finance public services, is being ignored. The negative impact of private delivery on cost, quality, accessibility and democratic control of public services has been well documented and may be the most destructive government expense.

The exact amount transferred to for-profit corporations is unknown. This secrecy, by itself, is a strong democratic argument against the use of private companies. Yet, a quick look at the public accounts for the Ministry of Health shows well over one quarter of that budget is paid directly to private for-profit companies. The easy pickings for large payments to for-profit providers in health care are:

Pharmaceuticals – 4.6 Billion Dollars

Only about 2% of the Ontario Drug Programs budget is used for administration. The rest is transferred to large drug store chains and then much from there to the pharmaceutical conglomerates. The $4.6 billion figure includes $414.5 million that is paid to hospitals, Cancer Care Ontario and the Trillium drug plan which is also primarily transferred to ‘Big Pharma’.

Long Term Care (LTC) – 2 Billion Dollars

The Canadian Union of Public Employees estimates that in 2010 fifty-three percent of LTC beds were in for-profit facilities. $2 billion is low because some of the non-profit homes contract services like food preparation, cleaning and maintenance to private health care conglomerates.

Capital expenses – 1.3 Billion Dollars

Most of the $1.46 billion in the Health Capital account to build, finance, maintain, operate and/or renovate hospitals will be transferred to consortiums of multinational companies or to large private contractors.

Home care – 1.2 Billion Dollars

The Ontario Association of Community Care Access Centers says that 91.3% of the home care budget is spent on direct patient care of which the Ontario Health Coalition estimates 58% of nursing care and 64% of personal support services are provided by for-profit companies.

Medical laboratories – 680 Million Dollars

Over 93% of the medical laboratory services outside of hospitals in Ontario are provided by three multinational corporations. Ontario based for-profit companies provide the rest.

Independent Health Facilities (IHF) – 396 Million Dollars

97% of IHFs in Ontario are for-profit companies.

Physiotherapy, Assisted Devices and Home O2 – 598 Million Dollars

Community physiotherapy services, the Assisted Devices Program and home oxygen providers are primarily for-profit.

eHealth – 291 Million Dollars

The 2010-11 eHealth Annual Report says that 80% of their budget is transferred to public-private-partnerships, in other words paid to large for-profit companies.

Hospitals, Primary Care and Multimillion Dollar Incidentals

Hospitals and primary care are still nominally non-profit. However, significant portions of both their expenses go to for-profit corporations (usually very large ones). Hospitals often contract out cleaning, security, food services, information technology and maintenance. Temporary agencies supply nurses. Consultants and management services are regularly hired.

For-profit chains increasingly provide urgent care services and physician offices. These chains are paid from a percentage of the physician’s billings to the government. Management companies, IT firms and temporary help agencies also receive money from the primary care budget.

Then there are a variety of isolated payments from the Ministry of Health to private corporations: for example, the $56 million paid to IBM and the $35.6 million paid to Sykes International. The Community and Priority Services Program, with a $638 million budget, uses a number of private corporations. And the list could go on – the Ministry of Health’s budget is large and complicated.

In addition to the $11.1 billion itemized above, hospitals, primary care and incidentals probably account for billions more public health care dollars transferred annually to for-profit companies.

The use of for-profit companies is not a small problem even in this single case of the Ministry of Health. Two provincial budget provisions would increase accountability, limit further damage and require no party to directly confront the existing problem of for-profit provision.

1) Detail and publish all payments to private-for-profit corporations, and,

2) Prohibit new use of for-profit providers.

A serious debate on these suggestions would help bring the current budget bargaining back to the big issues facing Ontario’s finances: taxes and private delivery of essential services.

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Edmonton’s Medical Laboratory Proposal: A Private Insanity

November 4, 2013

I wrote the following post as an op-ed in the Edmonton Journal, October30, 2013. I hope it plays a part in halting the privatization of Edmonton’s medical laboratories.

The Alberta government is proposing to give the private sector a 15-year contract to run medical laboratory services in Edmonton. This policy meets the popular definition of insanity: a condition where you do the same thing again expecting a different result. The government proposal has been tried many times before, twice in Alberta, and it has not worked.

In 1996, premier Ralph Klein sought a private-sector provider to deliver all laboratory services in Calgary. The trouble was that none of the companies wanted the work. In the end Klein cajoled MDS and Kasper Labs into partnering with the regional health authority to form Calgary Laboratory Services. The public sector put up more than 50 per cent of the funding, provided the administrative back up and all of the work. Even so, by 2006 all of the private-sector partners had left and Calgary Laboratory Services continues as an integrated fully public non-profit medical laboratory provider.

In Edmonton, Klein forced three local private-sector labs to join forces with the giants, Gamma-Dynacare and MDS, to form Dynacare-Kasper Medical Laboratories (DKML). DKML was given the contract for most of Edmonton’s laboratory services. All hospital laboratories, except at the University of Alberta, were turned into rapid response laboratories and managed by DKML.
It did not work. By 2005, all of Edmonton’s in-patient laboratory services were back under hospital management. DKML transformed into DynaLIFE, a partnership wholly owned by LifeLabs, the fourth largest laboratory company in the world, and Gamma Dynacare, a subsidiary of LabCorp, the second largest laboratory company in the United States. DynaLIFE continues to provide community laboratory services and run the laboratory in the Fort McMurray Hospital.

In the mid-1990s, MDS (now LifeLabs) and the Toronto General Hospital (now part of the University Hospitals Network), also tried a similar public-private partnership to serve both community patients and in-patients in downtown Toronto. The for-profit company gained access to public investment and the hospitals provided all the space, the staff and the administrative backup.The partnership was dissolved in 2009. The hospitals took over all laboratory work and the stand-alone community laboratory closed. Serious attempts to integrate hospital and community laboratories under a private-sector provider have also failed at Toronto’s Sunnybrook Hospital and in eastern Ontario.

These failed projects illustrate that commercial companies are hesitant about taking on the risks inherent in hospital care. Hospitals, by their nature, have fluctuating volume requirements and more individualized testing while private providers prefer a more predictable routine. Large hospitals need large, comprehensive in-house laboratory services to reduce turnaround times. This fact limits what can be effectively moved off site.

To compensate for these higher risks, private companies demand excessive payments to assure a reasonable profit return – an arrangement that has proved unsustainable for regional health authorities and provincial governments. Laboratory medicine is also evolving rapidly making long-term contracts difficult, if not impossible, to negotiate.

On the one hand, too many tests are currently ordered and, hopefully, with better protocols and changing health-care delivery organizations the number of tests will drop, in some cases dramatically. To ensure their profit, private companies would need to build capacity for the current volume and would, in a contract, rightly expect payments to reflect that volume for the life of the contract. This means if we meet the desirable goal of cutting unnecessary tests, we would end up paying for tests that are not done.

On the other hand, as our medical understanding grows, high quality care we will mean new tests and procedures. These tests cannot be anticipated and we will end up negotiating their adoption with a sole-source private provider for the length of a 15-year contract – a very serious problem for a system wishing to provide the best care at the best price.

Few governments could be more effective at bullying the private sector into an agreement than Klein’s and ultimately his solution did not work. Why repeat those mistakes? Alberta needs cost-effective, integrated, quality laboratory services. The sane choice would be to build on the public non-profit approaches that have been proven to work.

Private Hospitals in Specialty Clinic Clothing

September 6, 2013

The provincial government’s mid-summer announcement that regulations under the Independent Health Facilities (IHF) Act will be drafted to permit “specialty clinics” raises some serious concerns. Changes in the LHINS enabling legislation will also be required. While the details are sparse the government’s stated goal is to permit the LHINs, Ontario’s regional health authorities, and Cancer Care Ontario to establish and fund clinics to provide services currently delivered in public hospitals. The government is committing that these new clinics will not harm a hospital’s ability to deliver services.

The official proposals are this general. Some best-guess inferences are: the IHF administration will be responsible for licensing and quality of the new clinics, and they will be paid under some form of global budget-facility-fee-fee-for-service hybrid probably determined through a competitive request for proposals (RFP) process. This is how democracy works these days: in lieu of accountability and transparency, the public has to read the tea leaves.

The proposal for specialty clinics continues trends that move services out of hospitals and shift planning to the regional organizations. These developments have been slow and erratic but seem destined to cut health care expenses, especially for publicly protected services, expand the power of the Ministry at the expense of both doctors – good – and the community – bad, and increase for-profit delivery and market competition in Ontario’s health care system.

These specialty clinics require new regulations because, unlike other IHFs which also take work from hospitals, they will be established and funded by organizations other than the Ministry of Health. The LHINs and Cancer Care Ontario will then be in a position to decide if they should use their money to fund hospital based services or community clinics, some of which will look like private hospitals.

There is reason to be skeptical of the claim that these clinics will only be set up if they do not harm a public hospital’s ability to deliver a service. Currently, in Ontario, there are over 900 IHFs all of which perform work that could be done in hospitals. Not all of it should be done in hospital’s but there are many instances, especially in smaller communities, where centralizing laboratory work and diagnostic services in hospital facilities would increase the hospital’s ability to provide care for its in-patients, increase access for community patients and cut overall costs. The government has opposed all proposals that would help achieve these goals.

The intent of the government to dogmatically limit the scope of all hospitals is reinforced by the 2006 changes to the definition of a hospital in the Public Hospitals Act. Formerly hospitals were institutions to improve the health of the community, under the new definition hospitals are only to provide services to acute care in-patients. This change in definition has already been used in many smaller communities to cut back or close hospital laboratory and radiology services often limiting access to community patients where is limited or no community alternatives. Almost all this previous hospitals work, to the extent that it is still done, has gone to private corporations. Unless the government’s one-size-fits-all limited approach to hospitals, symbolized by the new legal definition, is changed any commitments to safe guard hospital care need to be taken with a grain of salt.

The most reasonable interpretation of how the new speciality clinics will work is that the LHINs and Cancer Care Ontario will decide which ambulatory hospitals services will be moved to IHFs which are primarily for-profit. The decision on who should provide services will be primarily determined through a competitive RFP process, which is the method enshrined in the IHF Act: public hospitals will end up bidding against private speciality clinics/hospitals to deliver services. This outcome is a logical extension of the competitive approach the government has been using between hospitals for some services. The LHINs and Cancer Care Ontario will pay for these new services primarily by taking money from hospital budgets further increasing the threat to hospitals and public health care.

There are some potential positive benefits from the Specialty Clinics proposal. Following the recent physiotherapy changes it seems likely that these new clinics will be paid on something other than simple fee-for – service, which is helpful. Similarly moving some work in some communities to stand-alone community clinics and shifting more services to the regional planning process could make for a more sustainable and accessible health care system. To achieve these desired goals, these new clinics would need to be public non-profit and preferably run under existing hospital or Community Health Centers administrative structures. This formal linking will allow for better use of staff, greater integration and permit the government to achieve its formal goal of expanding non-profit public health care. The capital expenses required would come from the public purse making them part of the overall public planning process and reducing cost.

These new specialty clinics can only benefit our public health care as non-profit entities within a non-profit system. For these regulations to gain public support they need these guarantees as part of the proposals. Unfortunately the government’s pig-headed commitment to increasing for-profit delivery and market competition will only increase cost, and undermine integration, accessibility and quality.

Fragmentation, Private Profit and Home Phlebotomy

December 20, 2012

Every day there are stories of how the fragmentation of health care hurts patients.  A few, when a patient dies, make the media.  Most often fragmentation causes small inconveniences, but there are many and they affect patients in very real ways.

December 19th’s story is about a patient with a serious chronic illness.  She lives at home and manages her illness fairly well.  Monitoring her condition requires weekly blood work which is taken by a home care nurse through a PIC line, a semi-permanent intravenous access port. She then walks the blood a fairly short distance to a health center where LifeLabs picks it up at the end of day.

On December 19, as usual, the nurse took her blood then, as usual, left: the nurse is not allowed to transport the sample. Unusually, the blood sample stayed in his house because the patient was not able to walk to the clinic due to an exacerbation of her illness.

At this point in the story, it helps to go back 15 years. When I started as a home care nurse, we drew blood and transported it to the lab, often in a hospital.  Around the same time, Ontario formed the Community Care Access Centers to coordinate home care and put all home care services out to tender.  One of the services contracted was blood taking.  In our area, MDS, the precursor to LifeLabs, won the contract.  The new arrangements were that the nurse, now with a contracted agency, would visit for nursing duties, and, when blood was needed, a MDS phlebotomist would take the blood and bring to back to their lab.  Privatized home care coincided with the move away from using hospital labs and worked synergistically to give more work to the for-profit labs. Since MDS drew the blood all the samples went into their laboratory processing system. Most samples were shipped to Belleville, or more likely, Toronto before results were reported back to Kingston.

This system was even more absurd for my specific job.  I worked on the intravenous team servicing rural areas.  I would drive 20 minute s to see a patient and, if they needed urgent blood work I would draw the blood, and, as now required, leave it for an MDS driver who would also drive 20 minutes out to the patient’s house to pick up the blood.  Certainly one solution to this absurdity was to stop the service and make it the patients responsibility.  For the home-bound-cardiac-patients-in–rural-Ontario this was not the best solution. Nonetheless, as a way to reduce expensive duplication this was the one chosen the government.  Most patients are now expected to go to a bleeding station to have their blood taken.  Or, if you wish, you can pay a for-profit lab to come to your house.

Back to December 19, 2012 and our patient at home with a PIC line and her blood samples.  She did call the clinic and ask for help.  Luckily, a staff person was both available to drive to her house and willing to look the other way ignoring various bureaucratic restrictions around the transportation of blood.  The blood was picked up and the patient will get the results she needs.

This is a small story on the impact of fragmentation due to the division of services into components to facilitate the use of for-profit health care companies. Staff flexibility, concern and minor rule-breaking were needed to give this patient the care she needed, though I expect that” best practice” rules would not agree with this approach.  And, it does not address the needs of the hundreds of thousands of patients who daily suffer from a fragmented for-profit home care system.  Rather than rely on serendipity and the good will of staff maybe it is time for an integrated public non-profit home care service.

Quality Program Fee Increases and IHF Corporate Concentration

October 29, 2012

This year Independent Health Facilities (IHFs) in Ontario will start paying an annual administrative fee to cover the costs of their quality control program plus a new fee for the direct costs of each quality assessment. Prior to June 2012 the Ministry of Health had paid the College of Physicians and Surgeons out of Ministry funds to run the quality program.

The administrative fee per license is set at 860 dollars for the first year. The amount per license is not large but it is continuous.  Many IHFs also have more than one license, for instance, they may be licensed for diagnostic imaging and pulmonary function testing, so their yearly increase will be thousands of dollars. The administrative costs, plus the new fees for each assessment, are on top of increasing costs for electronic medical records, more reporting, more in-depth accreditation and quality control measures, newer technology and a host of costs.

Moving the quality control costs off the government books is a bit of a shell game. IHFs are primarily funded by OHIP payments, or in other words, public revenues. Having IHF operators directly pay for quality programs means they are going to request more money from OHIP. Either way it comes from the public purse.

The government is hoping that the IHF operators will simply absorb the costs.  Under current rules the extra charges cannot be passed onto patients because of the ban on extra billing.  Operators could ask for increased fees-for-services but in the short-term this seems unlikely given the recent fee cuts imposed by the government. Larger corporations with reserves and the ability to reduce costs through multi-site efficiencies will ride out the increases and recoup losses in future fee negotiations. Many smaller operators will simply feel the most pain.

An article in the October 2012 edition of Health Affairs pointed out an increased quality cost on the clinical side.  The authors make the argument that under the fee-for-service payment structure for surgeries in the United States improving quality outcomes can lead to decreased revenues.  Fewer complications from better quality control lead to fewer billing opportunities per surgery plus extra costs in prevention.  The logic underlying this research finding could easily be applied to other fee-for-service health environments, including most IHFs in Ontario.

In case I sound like a defender of millionaire IHF operators that is certainly not my intention. Nor do I think that quality assessment programs are not needed. They obviously are: though it would probably be better if the College did not run them with its conflict of interest – doctors run the College and are responsible for quality in the clinics – and the College’s history of questionable quality practices, at least in the laboratory sector where they are also in charge of quality.

The point is that the long-term provision of for-profit health services by small physician run facilities is a non-starter. As the costs increase to ensure quality it is more challenging for smaller operators.  Smaller operators also pay a disproportionately larger share of their expenses on the process of licensing and maintaining a separate administration to oversee the private market.  It is telling that in the fact sheet outlining the increased fees the last point discusses how IHF operators can give up their licenses. Licenses usually don’t disappear; they are taken over by other operators, more often than not IHF chains which are, in turn, often part of a larger health care conglomerates.

Small physician-run laboratories have long since moved into corporate giants, individual doctors’ practices are quickly becoming an historical artifact and IHF s are  amalgamating into fewer and larger corporations.  The dynamics of quality control and regulation among for-profit providers lead to long-term, non-competitive, corporate domination of these sectors.

The Health Affairs article can be found at: http://content.healthaffairs.org/content/early/2012/10/12/hlthaff.2011.0605

Canada Health Act used in Zombie Defence of For-Profit Health Care

October 14, 2012

Andrew Duffy, in an article syndicated by Postmedia, made the logical equivalent of mixing metaphors when he used the Canada Health Act (CHA) to legitimize the use of private clinics. The result, as with mixed metaphors, is a “head-scratching” argument in favour of Centric’s takeover of the Shouldice Clinic.

Duffy uses a confidential government manual found by Jeffery Simpson, author of a recent book on Canada’s health care system, to argue that the CHA was not intended to prohibit the use of for-profit companies to deliver essential medical services.  This expose, complete with grainy pictures, is used to undermine what Duffy sees as a key argument of most who oppose private health care.

Unfortunately for Duffy he is not addressing those who oppose for-profit medicine nor is Jeffery Simpson’s revelation a revelation.  The existence of the manual is an interesting historical footnote but it is only necessary to read the widely distributed Romanow discussion papers to know that the CHA does not prohibit the use of for-profit companies.  As Duffy points out the CHA has been used to penalize provinces for extra billing and user fees, not for using private companies to deliver publicly funded services.

Duffy then mixes his political facts to imply that the opposition to the takeover the Shouldice Clinic by the health care conglomerate, Centric, is based in some misunderstanding of the Canada Health Act.  This is confusing. He has apparently read our letter to Ontario’s Minister of Health objecting to the takeover and it only mentions the CHA in the context that many for-profit companies extra bill, charge user fees, and allow patients to queue jump: all illegal. Duffy seems to think that because the CHA, as all pieces of legislation, is a compromise between different social forces and does not ban private companies, that it condones their use? Andrew, while we are scratching our heads, a quick trip to a logic 101 class might help.

The sale of Shouldice to Centric once again raises the issue of how best to deliver health care. Along with the well researched and documented concerns of increased cost and mortality and decreased quality and access associated with for-profit providers, which have been outlined in this blog and many other more reputable sources, Centric highlights the growing problem of corporate concentration and foreign ties in Canada’s private health care sector.

Centric is nominally a Canadian company but it has strong ties to transnational private equity firms. For-profit primary care chains, such as Appletree, AIM and MCI, are expanding their presence; laboratories and other diagnostic services have for decades been dominated by an oligopoly of multinational corporations; and Saskatchewan’s expansion into publicly paid for-profit surgery uses Surgical Centers Incorporated, a chain with facilities in Alberta and British Columbia.

Do these conglomerate chains increase the problems of for-profit care? Do they open Canada to trade challenges undermining public health care?  Do they place Canadian health care needs below foreign profit concerns?  All good questions which are hard to answer because we do not even have access to simple accountability data like, how much public money is paid to these for-profit companies?

There are problems with the CHA: one is that it does not require public non-profit delivery.

A problem with the health-care-delivery debate is that those who favour the use of for-profit companies tend to rely on fabricated arguments, for example, ‘activists oppose private delivery because they misunderstand the Canada Health Act.’  These fabricated arguments, like all other zombies, are hard to kill because their perpetrators won’t come into the daylight and address the real problems with for-profit delivery.

Duffy’s article can be found at: http://www.canada.com/health/Cabinet+document+shows+Canada+Health+open+private+clinics/7383633/story.html

Monitoring Favours For-Profit Health Care

August 30, 2012

A new study by the Health Care Compliance Association (HCCA) in the United States found that non-profit health care institutions are audited by Medicare more often than their for-profit counterparts: 6 times per year compared to 4 for the for-profit facilities.  47% of non-profits were also audited by more than one government agency compared to only 27% of the for-profits.

No explanation was given for these findings, but the authors found the results “surprising”. They are correct: it makes no sense.  Media headlines in the last year include many reports of fraud by major drug companies, hundreds of millions of dollars in fines paid by private laboratory corporations and for-profit hospital chains that have been penalized for a variety of legal indiscretions.

Also, most peer-reviewed studies comparing quality in the two sectors find that you live longer and have fewer complications in non-profit hospitals and that for-profit nursing homes violate regulations more often.

One of the arguments made in support of more private profit in health care is that monitoring will increase.  The corporations will “row” and the state will “steer”.  In the country that invented this metaphor, that clearly is not the case.  The corporations steer, the state pays and it is not clear to many who need health care that anyone is rowing.

Canada also has a playing field tilted towards private firms. For-profit corporations are sheltered by privacy laws while public institutions often have their quality ratings published on web sites. Private corporations use surpluses, derived from public payments, to lobby the government, speak publicly about the value of private health care and fund more private firms.

The HCCA findings add another dimension to our understanding of the negative impact of mixed economies in the provision of essential services.  The uneven monitoring adds extra cost to the public non-profit sector and decreases pressure on corporations most likely to cause a problem.  The promise of monitoring safeguards becomes more than a cover for expanded private provision; it becomes a lever pushing in that direction.

Follow this link to read the full HCCA report:

http://www.hcca-info.org/Resources/View/ArticleId/817/Auditing-the-Auditors.aspx