Posted tagged ‘Ontario Ministry of Health’

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.


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.

Privatising Preventive Care – the For-Profit Flu Fight

November 9, 2012

Flu season is upon us, and it seems that the for-profit-health-care bug is infecting primary and preventative care.  The yearly campaign to increase the number people vaccinated against the flu is coordinated by the public sector though the Ministry of Health and Public Health Units.  After that it gets a bit murky.

Large multinational pharmaceutical companies produce the vaccine.  GlaxoSmithKilne Inc. is Canada’s largest supplier.  Putting the vaccine in the people’s arms has been primarily done by small family practice professionals or public health nurses.  To meet the challenge of increasing immunization rates – over 40% of Ontarians are not receiving the vaccine – the wide network of family practices and community health centers could be given more resources to, as one possibility, hire part-time nurses and nursing students to go into malls, set up tables and administered flu shots. Instead the focus seems to be shifting to for-profit providers.

The for-profit pharmacy chains recently got the nod to administer vaccines.  Also, in malls we have an expanding network of private urgent care clinics and for-profit fee-for-service primary care chains like, MCI: The Doctors Office, which are happy to administer flu shots.  A percent of each shot payment, $4.50 for the vaccination plus an administrative fee-per-visit premium of $5.10, go into the coffers of this for-profit health care management corporation.

The circle is now complete with private multinational corporations producing the vaccine and corporate chains injecting patients.  The yearly repeating cycle provides the opportunity for more and more for-profit involvement.

As a society we make decisions about how we want to organize our affairs.  The policies we adopt develop their own power. There is a political theory, called path dependency, which is based on this phenomenon.  But we really do not need a theory to recognize the strength of existing processes.  The NIMBY syndrome, or the common argument ‘we have always done it this way’ are daily experiences. More profoundly, we have a society based on using fossil fuels and moving to more sustainable energy sources is a major problem.  This does not mean that change cannot happen, it obviously does, but it is much harder when certain structures exist.

The same goes for how we deliver health care. As we allow more private provision the more we are inclined to use it, or for-profit corporations impose themselves on public policy in a way which expands their presence and makes us more reliant on their services. It can be a powerful self-reinforcing spiral.

The muddying of the health care waters with private-profit providers also has implications for reasoned discussion on the benefits of vaccinations. I believe that mass immunization programs have been very important to improving public health, but involving the profit motive in this valuable public policy opens up the programs to legitimate criticism that the need and claims of efficacy come from the drive to make profit and not improve health.  These arguments are at least partially correct and undermine public decision-making. The following post is one of many that make illustrate this muddying of the water:

Increasing for-profit corporate provision of primary care is a matter of significant concern as we move more services into the community and place more emphasis on prevention programs. Unfortunately we do not even know the extent of these changes, their public cost or their effect on quality or access: and the government, to the extent that it is tracking these developments, is not talking. If nothing else, placing larger swaths of primary care under corporate control removes valuable information from public discourse – business confidentiality – and limits both community control and physician control of primary care.

Health Facility License Auction Health Cost Driver

October 19, 2012

It seems so obvious in hindsight:  if you want to know what is going on in business-side of community medicine look where doctors look – the classified section of The Medical Post.

After reading all of the articles, during a slow day at work, a big flashy classified ad for MCI: the Doctors Office caught my attention.  It is one of the expanding chains of family practice centers that are the face for-profit primary care in Canada.  The ad provided no further insights into the operations of the chain.

Below this ad was a more interesting offering: the sale of an Independent Health Facility (IHF) license.

Auction of IHF in GTA

A rare multi-modality IHF in Pickering, Ontario is to be auctioned

 The IHF license has the following modalities: Nuclear Medicine; In Vivo – General and SPECT; Diagnostic Ultrasound; General Ultrasound; Vascular Ultrasound; diagnostic radiology; fluoroscopy; Bone Mineral Density; mammography; and, Radiography

No other assets or liabilities to be sold with this.  This is strictly a license only sale.  Non-conditional sealed bids must be received by end of business hours on Thursday Nov. 1, 2012. Closing of the above transaction will take place no later than December 31, 2012.  A minimum reserve bid is in place.

Only serious principals send inquiry to

The ad is interesting because it puts no caveats on the sale except that it is a final transaction and that there is a minimum reserve bid:  standard practices in any estate auction. Unfortunately this is a sale of an essential health service.

The bid is to be non-conditional but this seems at odds with the Independent Health Facilities Act. The Minister of Health has the power to refuse the transfer of a license.  She ‘may’ allow the transfer if she is satisfied that the new owner will provide a quality service and “operate competently and with honesty and integrity”.  Now it seems to me it should take the Ministry longer than a few weeks over Christmas to assess whether a new owner meets these criteria.

Then there is also the concern about location.  The license is tied to a location and clearly there is nothing but the license being sold.  Is there a lease on the building?  Is it up?  And there appears to be no equipment or staff.  So the purchaser will be setting up a new business with a non-conditional bid and a closing date of less than two months. If the Minister rejects the transfer than we potentially lose needed services, and certainly the purchaser loses money: pretty high stakes for a non-conditional bid.

The transfer cannot really be non-conditional unless the transfer is relatively free from ministerial interference: somewhat like what happened with the establishment of Specimen Collection Centers (SSC) under the laboratory licensing provisions.  The Ministry simply stopped fulfilling its obligation to protect the public interest in the location of SSCs. The indication is that now the transfer of IHF licenses and location of facilities also operates without any significant Ministry control and outside the LHINs, which were supposed to be integrating health care in Ontario.  This would be a good topic for the auditor when the office next examines IHFs.

The ad also shows that these licenses have a market value independent of quality, quantity or accessibility of care. A market price tied to a license only drives up the cost of care.  The private market in the sale of licensees would also facilitate the corporate consolidation of Independent Health Facilities in Ontario: creating a stronger force for more for-profit health care.

Those who doubt the primary business interests in family medicine should take a good look at The Medical Post’s classifieds and follow the money.

The Independent Health Facilities Act can be found at:  The ihfacution-ad was in the October 9, 2012, print edition of The Medical Post.


Are OHIP Fees to High? – Part 1

June 27, 2012

Ontario’s recent decisions to cut fees for doctors’ services and move more services from hospitals to community facilities, called independent health facilities (IHF), raise numerous questions about doctors incomes, fee-for-service payment and for-profit clinics.

The Ontario government is arguing that they need to cut many fees because technology has changed making it less costly for doctors to perform certain services.  The government wants “better value for money”.  These arguments leave the impression that there is some measurable process to determine the value of medical services.

Predictably doctors are crying foul.  They argue that the technologies are expensive, staff costs are ongoing and services will need to be cut if fees are cut: once again reinforcing the idea that there is some objective logic to fee setting.  A position supported by doctor’s organizations which for a century have had committees of doctors that determine the value of a service.

The problem for both parties is that the relationship between fees and the actual cost of providing that service is tenuous.  There is a ‘ballpark’ relationship: a visit to a doctor for a sore throat is paid less that a cardiac catheterization.  But below this level of generality the precision falls away dramatically.

This is not a new observation. From my own research, when lab fees in the 1970’s were set by committees of doctors, pathologists earned millions of dollars from their connections to the expanding for-profit laboratory industry. When this became public the resulting political storm – a million dollar income from the public purse was even more outrageous back then – alleged conflict of interest, inflated fees and, if not fraud, highly questionable billing practices.

The Ontario Medical Association (OMA) responded by establishing a new and improved fee structure for laboratory services.  Within two years of the new fees being introduced the Ministry of Health found that there was no reliable data to determine what a fair fee for a laboratory test was. A finding identified again, this time by Ontario’s Auditor General, in 2005.

In 1996 and 2004 Ontario’s Auditor General also found that it was not possible to adequately assess whether the fees paid to independent health facilities reflected their costs.  In 2007 the Ministry of Health said that they were still working with the OMA on solving the problem.

Marketplace, an American TV show, found similar problems in the United States. Marketplaces’ analysis of the Relative Value Update Committee (RUC), the committee of the American Medical Association that recommends fees for medical procedures, detailed how physicians, specifically specialists, can increase the values of certain procedures in their favour.  One commentator said “that if you want to know what is wrong with health care, Google the RUC…a process that for all intensive (sic) purposes isn’t a public process, and doesn’t appear to be accountable to much of anybody.”

I can safely say that these three examples are just the tip of the iceberg of problems with fees paid to medical professionals.  In all instances procedures and technologies change so quickly that, even if fees start out being relatively appropriate to the service, they quickly become obsolete.  There is also the overwhelming problem of conflict of interest with doctors setting their own fees than solely determining what required care is.

So are physician’s fees exorbitant?  Who knows from a technical point of view?  The bottom line is that what we pay doctors is a social decision that reflects technical considerations, training, cultural norms, economic factors and political power. Historically doctors have demanded, and been given the right to set their fees and bill what they want.  Ironically, over the last forty years, as the world has lurched towards greater corporate control, doctors, as private practitioners, have come under greater government control.

At the same time setting prices for medical services through some sort of bidding process in a market environment or administrative procedure has become more common: mechanisms that work well with the private delivery of health care and for-profit medicine.

The recent conflicts between the OMA and the Ontario government raise other issues that will be discussed over the next weeks in an ongoing evaluation of the changes in the fee schedule and the push for more Independent Health Facilities.

Drummond and For-Profit Health Care

February 22, 2012

Considering the 1,500 dollars a day Don Drummond was paid and the research staff at his disposal you would figure that his analysis would be more subtle and better informed.

It is not news that Don Drummond supports for-profit health care but his rationale is shockingly simplistic. The following is the key paragraph from his report supporting more private health care:

There should not be an a priori or ideological bias towards public- or private-sector service delivery. Both options should be fully tested to see which provides the best service. This should not be defined simply with respect to cost, but be quality-adjusted. As long as government remains the payer for all covered services, it should allow for a role to be played by both the public and private sectors. After all, family physicians are for the most part private-sector operators paid by OHIP for their services. And we seem to have no trouble with the idea that private companies now provide publicly funded laboratory work for health care providers. This should be extended where it is the superior model.

Mike Harris in 1999 also uses the private labs as an example of how well “the private sector has been delivering medical laboratory service for years more efficiently and effectively than hospitals.”

We should certainly be examining for-profit laboratory services, it is the largest and longest standing example of private delivery of an essential medical service, but unfortunately for Drummond and Harris any close examination shows that using private labs is an inferior model.

The residents in Thessalon, Wallaceburg, Perth, Bracebridge, and dozens of other smaller towns in Ontario would tell Drummond they are not happy with the switch to the private labs.

Similarly, many big city patients have been inconvenienced by the loss of access to their local hospital,

Many doctors report longer turnaround times with increased private delivery.

And there is the increased cost.  It is a reasonable estimate that Ontario health care system could save 175 to 200 million dollars per year by integrating community and hospital laboratory services with hospital laboratories at the center of the system.

Drummond’s other example of good for-profit health care is as misleading.  To glibly equate independent family physicians with corporate health care, like the AIM Health Group owned by the venture capital corporation, Imperial Capital Group, or diagnostic multinational CML, shows that Drummond knows more about ideological correctness than health care or economics.  Sorry Don, the overview of health care in your report would not have passed as a fourth year policy paper.

No Legal Requirement to Cut Lab Services

January 12, 2012

Residents around Thessalon and on St. Joseph Island, both east of Sault St. Marie in northern Ontario, have been recently told that their community hospitals will no longer be taking blood samples ordered by their family doctors. This follows a trend across Ontario to force all non-hospital patients to use for-profit laboratories, even if, as it is in the Algoma region, it is much more inconvenient for patients and more expensive.

The communications officer for the Sault Area Hospital, the mother ship of these two local hospitals, gave as the reason for cutting lab services that conditions of their laboratory’s licence and provisions of the Public Hospitals Act prohibited hospitals from servicing community patients.  According to a newspaper column in the Sault Star this information had been given to the hospital by a spokesperson for the Laboratory Licensing Branch of Ontario’s Ministry of Health.  Nothing about this story rings true.

I can find nothing in the laboratory’s licence, found on-line at, that restricts what patient’s provide the samples to be tested and it would be very much out of line for the quality assurance service to make this ruling.  Their job is to ensure that the tests results are accurate, not who can provide the blood.  Also, I can find no prohibitions against performing community patients’ tests in the Public Hospitals Act or its regulations.

I also read the current Hospital Service Accountability Agreement between the Sault Area Hospital and the North East Local Health Integration Network (LHIN) and could find no reference to who can use hospital faculties to have their samples taken or restrictions on what tests can be performed in the hospital’s laboratory.

The story from the Ministry of Health also does not ring true because hospitals in Ontario take requisitions from family doctors for diagnostic imaging on a daily basis.  Hospitals in Ontario have been performing tests on community patients since their inception, many since the middle of the last century, and I can find no recent substantive legislative changes that would restrict these activities.

All of these factors point to the conclusion that the hospital’s spokesperson was given misleading information to justify reducing access to needed laboratory services.  The real question is where did this order come from?

The coordination of these service cuts across Ontario strongly suggests that it is a Ministry of Health directive, but so far no one has come forward and provided the evidence.  Until this happens local hospital executives will continue to take the flack and provide stories to cover someone’s butt, probably the Minister of Health’s. So much for openness, accountability, strengthening the public healthcare system and improving access, all stated goals of the Ministry of Health.