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LHINs Fall Short: Privatization and Cuts



Below is the recent submission of OCHU to the Standing Committee on Social Policy of the Ontario Legislature:

The Ontario Council of Hospital Workers (OCHU/CUPE) represents 30,000 hospital and long-term care workers in 65 hospitals across Ontario. We represent food service workers, maintenance workers, housekeepers, Registered Practical Nurses, Personal Support Workers, administrative and office workers, and many more classifications.

When Local Health Integration Networks (LHINs) were established, we feared that they would provide cover for the government as they proceeded to regionalize, centralize, privatize, and cut health care services. Unfortunately, this has proven accurate.

A number of problems have arisen with the LHINs, but two stand out. First, they have been charged with centralizing, privatizing, and cutting local hospital services and, second, they have distanced elected government officials from decisions to reduce, privatize or centralize local health care services. In other words, they have allowed governments to avoid full responsibility for one of the most basic political issues, access to health care, an issue that should be fully subject to the democratic political process. In this way the LHINs are like the Health Services Restructuring Commission (HSRC) established by the previous Progressive Conservative government. The HSRC took the flack for unpopular decisions to cut and centralize hospital services. That process was very weak on public input, underestimated need, centralized services and resulted in bad outcomes, but did attempt to assess capacity and create some clear public plans.

With the LHINs, the planning process, to the extent it exists, is less clear and consistent. There appears to be no consistent public attempt to assess capacity and need, nor a plan to meet identified needs with adequate capacity.

While capacity planning is weak, the changes we observe do tend to follow in certain specific directions: centralization, the narrowing of hospital services, cutbacks, privatization, and the closure of hospitals in smaller communities. Indeed, hospital services in smaller communities are especially under threat.

The restructuring process used by this government (and implemented by the LHINs) is both more subtle and, in some ways, less transparent than under the HSRC. The LHINs have significant powers to restructure health care. But, unlike the HSRC, these powers are rarely used. Unfortunately, the “lesson” learned from the HSRC experience appears to be to keep the process out of public debate as much as possible. Instead, funding is the main tool of choice to drive restructuring for the current government.

On the face of it, LHINs make major funding decisions for hospitals, long-term care, home care and other providers. However, the reality is different. Their room to manoeuvre is modest.

The 2013 provincial Budget Estimates indicate that funding for LHINs increased $5.6 million in 2013-14 compared with 2012-13. That is an increase of 0.02% (two one hundreds of one percent). Compared with the actual funding for 2011-12, LHIN funding has actually decreased by $310 million dollars. That is a 1.3% decrease over two years.

LHINs – the “Dr. No” of Ontario health care: This is the major way that the government has driven the sorts of changes we feared. Rather than go through the process of public hearings, a public commission, and public directions, the government has simply established regional “arms-length” bodies which present health care providers with untenable budgets.

The health care providers are then forced to regionalize, centralise, abandon, and cut health care services. Apparently, it is more expedient to force the providers to do this – and let them take the blame. And even when the troubles do travel up beyond the health care providers, they can often be deflected on to the LHINs, rather than the actual (political) decision makers.

Now we have major restructuring of hospitals and other providers with little public discussion or input.

With the budget cuts, the pace of restructuring is quickening – it is not just about centralizing services anymore. It is about large scale mergers of hospitals, the abandonment of hospitals in sizable towns and cities.

  • The removal of acute care services from small hospitals like Fort Erie and Port Colborne;
  • The proposed or completed shutdown of smaller hospitals in the Niagara peninsula, Shelburne, and Burk’s Falls;
  • Large cuts in smaller hospitals like Perth-Smiths Falls, Arnprior, Renfrew, and Wallaceburg (Sydenham hospital);
  • The merger of West Lincoln and Hamilton Health Sciences;
  • The merger of Rouge Valley Health Centre and Scarborough Hospital;
  • The merger of Credit Valley and Trillium hospitals.


What have been the consequences of this funding policy for health care and hospitals?


  • In the most recent year reported, Ontario hospitals provide 53,963 fewer “weighted cases” of complex continuing care and rehabilitation compared to two years earlier.
  • Ontario provides inpatient services to fewer than half the patients than other developed nations. Thousands of beds have been cut. Bed occupancy is now at world record levels. In England, an authoritative study concludes hospitals are “full to bursting” and bed occupancy is reaching such “dangerous” levels that the safety and quality of patients’ care are in question. The English concerns arise because bed occupancy sometimes passes 85%. Bed occupancy in Ontario is closer to 98%. Yet Ontario’s health minister defends more bed cuts.
  • In the rest of Canada, the public sector spends $281 dollars more per capita for hospitals than in Ontario. That is 19% more. Costs per patient are much lower in Ontario: $151 lower than the Canadian average.
  • As a result, in 2007-2008, Ontario provided 3.6 hours less nursing care per patient than the Canadian average. Four years later, Ontario had cut another 2.1 hours of nursing care per patient. With increases in other provinces by 2011-2012, Ontario hospital nursing care per patient fell 6.1 hours short of the Canadian average. So not surprisingly over the last three reported years, nursing sensitive adverse events for surgical and medical patients averaged 5.1% higher in Ontario compared to the Canada-wide average.
  • The move to narrow hospitals down only to the most serious cases will have a major impact on their viability, especially in smaller towns and cities. Hospitals are often stereotyped as providers of acute care services. In fact, acute care accounts for a relatively small portion of total hospital services. Costs per acute care patient (or, more exactly, per “weighted case”) in Ontario were $5,174 in 2010-11 (and $5,184 in 2011-12 – both significantly less than the Canadian average). There was 1,484,046 weighted acute care (and newborn) cases in 2010-11 in Ontario. So the total acute inpatient cost is about $7,678,454,004. In 2010-11, the total hospital sector expense (funded from both government and other sources) was $20.6 billion according to figures in the 2010-11 Budget. As a result, acute care spending amounts to only 37.2% of all hospital spending. In other words, acute care is a significant part of hospital activity – but it is in a decided minority in overall scheme of things going on at hospitals.

Notably, other health care sub-sectors, have received much better funding increases. The real winners have been the doctors, who are not primarily funded through the LHINs.

The 2013-14 Ontario Budget Estimates indicate that the line item primarily covering the doctors (“Ontario Health Insurance”) is going up 2.9 per cent to $13.3 billion. The rest of the health care sector got an increase of 0.3 %, just over one-tenth as much. In dollar terms, the Ontario Health Insurance line item got an increase of $374 million. The total increase for all of health care (capital and operating expenses) is only $486 million, so this will eat up more than 3/4 of the total health care increase. A relatively small part of health care is getting most of the total increase in health care spending – and about 10% of the total $3.6 billion increase in all provincial spending. Every $100 million split between 25,000 Ontario physicians means another $4,000 per physician, on average. This is part of a long-term pattern in Ontario. Ontario spends more per capita than the Canadian average on physicians (6.0% more) and drugs (3.3% more), but it spends less on hospitals: 5.5% less than the Canadian average.

As an immediate step, real cuts to public hospital funding needs to stop. Funding should increase to the Canadian average. Over the longer term the government (in conjunction with regional health authorities) should publicly develop capacity planning by identifying the current and future health care needs of local communities as well as the existing bed and service capacity in hospitals, long term care homes, supportive housing, home care, and primary care. The identified health care needs should form the basis of capacity development for these health care sub-sectors.

Privatization: the government plans to further undermine hospital services by moving surgeries and diagnostic work to private clinics. As we originally feared they might, LHINs are supposed to play a key role in this process. This development raises many problems:
  • The threat to community hospitals: Already the Ontario government is effectively closing down community hospitals. By moving core work over to private specialty hospitals, this threat is deepened. Such facilities will only seek to provide services where they can make money. Instead of being able to provide a range of services, community hospitals will see more and more services creamed off, leaving them with the most difficult and least ‘profitable’. From 2003 through 2005 the U.S. congress banned the construction of specialty hospitals over concern that they were draining profit away from the full-service hospitals.
  • Quality: Detailed Canadian research indicates that private for-profit hospitals have higher death rates than not-for-profit hospitals. Moreover, regarding private clinics, operations can and do go wrong. In contrast with public hospitals, private specialty clinics will be unable to handle many emergencies and will simply call EMS. Will ambulances be able to move patients to hospitals when things go wrong? Indeed, private surgical clinics first came to public attention in Ontario when a patient died and the paramedics arrived to find the patient with no vital signs. Is it appropriate to establish a system that inherently requires extra time to effectively treat patients who fall into emergency situations? Will the Ontario government establish a requirement that doctors be on site at all times? Will they require that specialty hospitals have emergency capacities (beyond calling 911)? Will they require the private clinics to disclose to patients the limitations of their emergency abilities?
  • Oversight: The government has simply passed the buck for oversight of private clinics to the College of Surgeons and Physicians. Eventually, the College of Physicians and Surgeons released a report on the private clinics that mentions that some 29% of the private clinics fall short in some way – but the College wouldn't say which ones – or how they fell short. In the ensuing uproar, the Health Minister promised to improve public reporting. But the College of Physician public reports remain vague at best, providing a one word description for most: “pass”. As in the U.S.A., doctors were a key force behind the lobby for private specialty hospitals. So it is inadequate and incongruous that the main form of oversight for the IHFs will be the College of Physicians and Surgeons of Ontario.
  • User fees: The Ontario Health Coalition has revealed widespread extra-billing by existing private clinics. There is little doubt that this will intensify with more private clinic delivery. But Ontario already has the highest share of private payment for health care in the country. Private expenditures in Ontario run to 32.3% of total health expenditures, higher than any other province (Saskatchewan is at only 24% private expenditures). In dollars, private payments for health care are 5.3% higher in Ontario than Canada as a whole, almost $100 more per person per year. Notably, increased private payment does not mean a reduction in public spending: governments in the U.S.A. spend far more money on health care than Canadian governments, both in absolute dollars per capita and as a percentage of the economy. This despite the fact that most Americans have no public insurance and private payment for health care in the U.S.A. far exceeds any other country.
  • Questionable billings: The experience in the past in Ontario is that private clinics aggressively try to find extra forms of funding, often from private citizens. The government has, just this past summer, gone through a nasty public battle with private physiotherapy clinics, ultimately revealing that the majority of documents submitted by the clinics did not support their billings. Moreover, the private clinics repeatedly went over their budget. So it is odd that right after this experience, the government determined it needed to expand private health care clinics. Billing problems are also evident in Quebec. In early 2013, the province decided not to renew the contract with Rockland MD, which has provided about 9,000 publicly funded surgeries since 2008 in Quebec. The public health insurer found that Rockland MD was charging people illegal facility fees. The former British Secretary of Health reports that such clinics in Britain were 11% more expensive than a hospital providing similar services.
  • Doctors’ incomes: Doctors have lobbied for this new delivery form and it will create a new form of payment for doctors. But the introduction of alternate forms of payment for doctors under the Liberal government has gone hand-in-hand with huge payment increases to doctors, not savings. Since the Liberals were elected in 2003, new (or “alternate”) forms of payment to doctors have increased 430% through to 2011/12. With this increase, doctors have driven up their total clinical payments an astonishing 94%. Now, as noted, Ontario spends 6.0% more per capita on doctors than Canadians as a whole. In contrast Ontario spends 5.5% less per capita on hospitals than Canadians.
OCHU, with the Ontario Health Coalition and others, will be going door to door to stop this transfer of service from public hospitals to private clinics.

We need to stop the transfer of hospital surgical and diagnostic work from public hospitals to private clinics. LHINs should be forbidden from transferring work from public hospitals to private providers.

Thank you for considering our submission.

Photo: :Peel Memorial Hospital's Last Stand" by Sean Marshall

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