Chapter 5: Health

Health care is at once the biggest item in the Ontario government’s budget, the issue of most concern to Ontarians, the source of the most intense and emotional public policy debate, and the centre of the most complex delivery system of any set of programs financed by the provincial government.1

For at least two decades now, Ontarians — along with other Canadians — have worried about the quality and accessibility of their health care. As health has consumed a rising share of the provincial budget, the debate has increasingly focused on the sustainability of the health care system in a form that gives Ontarians what they want. The system is sustainable if we can answer “yes” to one of three questions. Are we willing to pay ever-increasing taxes to support it? If not, are we willing to squeeze out spending on all other public services — including education at all levels, social services, justice, infrastructure and economic development — to make room for rising health care costs? If not, are we willing to shift a significant portion of health care spending to individuals, regardless of their ability to pay?

Public opinion surveys indicate that the answers to the first two questions are probably “no” (significant minorities offer a tepid “yes”) and to the third a resounding “no.” Politically, however, the answers are “no” to all three. Ontarians are unlikely to want either higher new taxes on individuals or cuts to non-health programs to accommodate the relentless increase in health care spending; none will even tolerate discussions that so much as hint at moving away from the public payer nature of financing hospital care and physicians’ services. Indeed, the Commission’s own mandate forbids us from recommending higher taxes or privatization, though, as we have already noted, we believe that allows us to recommend more private- sector involvement in the delivery of health care as long as the public payer model remains intact.

Some Ontarians may grasp at the hope that economic growth or productivity gains will generate the additional wealth needed to pay the bills for health care. As we will argue below in more detail, this is highly unlikely and, in any event, no basis on which to make policy decisions affecting the health care system years into the future. We cannot count on the magic bullets of faster economic growth or rapid productivity gains to finance our health care needs and wants. Nor, apparently, can we accept higher taxes, a reduction in other government services or greater privatization to square the health care fiscal accounts.

So if we cannot — in short — look to “easy” answers to the problem, we are left with hard answers and difficult solutions. We are left with the challenge of reforming the health care system to make it operate more efficiently and give us greater value for money. This is not easy, especially not when every proposal for fundamental change is greeted in some quarters by cries that medicare will be destroyed if Proposal X or Recommendation Y or Scenario Z is adopted. The public debate in Canada has been poisoned in recent decades by a widespread failure to comprehend the issues or trade-offs that must be made; by knee-jerk reactions to worthy but complex ideas for change; by politicians (and media outlets) who have been too willing to pander to fear-mongering; by stakeholders in the health care system who, wishing to cling to the status quo, resist change; and generally by a lack of open-minded acceptance of the reality that change is needed now and that money alone will solve nothing.

What we need is a broad revamping of the system that makes the parts work better together, so that the whole is greater than — or at the very least equal to — the sum of the parts. Such change is already underway in bits and pieces that address specific pressing needs. It is being carried forward by health care providers in every corner of the system who recognize far better than the politicians or the public what needs to be done and — perhaps more importantly — what no longer needs to be done. Already, they are moving the system incrementally towards the greater integration that is utterly necessary. What they need now and in the years ahead is more encouragement from government and financial incentives that will induce people and organizations to behave in ways that will produce a health care system that better serves us all.

The vital first step is a long-term view of how the health system should change to meet the needs of the future. The government must set out a 20-year plan with a vision that all Ontarians can understand and accept as not only necessary but also desirable; a plan that will, though it involves tough decisions in the short term, deliver a superior health care system down the road.

The purpose of reform is not simply to save money, though that is a welcome consequence. The purpose is to improve the quality of the system for the benefit of all Ontarians by shifting from a system that was built mainly for acute care — and remains largely in that mode — to a system built mainly for chronic care, which is where the aging of the population is driving Ontario’s health care needs. We cannot emphasize strongly enough that quality of care and efficiency are essential to any reform. Better care delivered smoothly and briskly across a range of needs will benefit patients and providers alike; it will also save money in the long run.

Indeed, quality and efficiency go hand in hand. Too often, treatment delayed is treatment diminished. The stroke victim who cannot gain immediate access to necessary physiotherapy may suffer permanent damage, with long-term costs to the patient, the family and the health care system alike. An efficient system would not let this happen. The elderly person who is stuck in an acute care hospital bed is not getting the best care, which would be possible if he or she should instead be transferred to a long-term care facility or sent home with appropriate support. An efficient system would not let this happen either.

We will recommend a number of ways in which this can be done. Before we get to those proposals, however, we will sketch out what we regard as the most salient facts about health care and the perspectives that we bring to the issue.


Health care is the Ontario government’s single biggest spending program. In 2010–11, the province spent $44.77 billion on health, 40.3 per cent of its total spending on programs. Based on current trends, this share is likely to expand to more than 44 per cent by 2017–18. The cost of health care is driven by inflation, population growth, aging, new technology and the increasing use of procedures like hip and knee replacements. Rising costs — and questions as to its sustainability — have been a subject of intense public attention and discussion for at least two decades now. Public opinion surveys consistently show that health care is one of the biggest issues of concern for Ontarians and other Canadians. Every provincial government will soon take action to rein in rising health care costs as part of their efforts to return to balanced budgets. The federal government is also a key player; a 10-year agreement under which it finances a portion of provincial government health care costs is due to expire in 2014. The Canadian government has recently committed to grow the Canada Health Transfer (CHT) by six per cent from now until 2016–17, after which it will grow in line with a three-year moving average of GDP, with a three per cent floor. Shifting to the GDP-tied rate, the CHT is estimated to grow by about four per cent per year in 2017–18 and beyond.

The focus on rising health care costs is easy to understand. Over the past decade, while the Ontario government’s total revenue increased by only 4.0 per cent annually, its spending on health care has risen by an average of 6.9 per cent per year.2 To a degree, these rapid cost increases reflect some reinvestment following the restraint of the 1990s. Spending growth has slowed in recent years. In 2010–11, the latest fiscal year, health spending expanded by only 3.7 per cent, its lowest annual rate of growth in a decade. In the latest three years, the growth rate was 5.5 per cent per year, down from 6.6 per cent in the previous three years.

But recent studies suggest that the trajectory of ever-more-costly health care will moderate only modestly if left to operate as it does now, not only in Ontario but in other provinces as well. A 2010 report by TD Economics projected that Ontario’s public health care costs, in the absence of significant reform, would grow by 6.5 per cent annually over the next two decades.3 Using a similar methodology, Dodge and Dion estimated 6.4 per cent cost increases across Canada.4 Such increases will greatly exceed the growth of nominal GDP in Ontario and Canada. In Ontario, as we explained in Chapter 1, The Need for Strong Fiscal Action, nominal GDP may be on a trend growth rate of only 3.9 per cent per year, but revenues are likely to grow more slowly. Ontario has made some progress in recent years; between 2007 and 2011, according to comparisons made available by the Canadian Institute for Health Information (CIHI), total Ontario government spending on health grew by an average of 5.1 per cent annually, the second-lowest pace in Canada, and provincial spending per capita increased by only 3.9 per cent, the second slowest in the country.5 Even so, in a “status quo” environment, health care costs would absorb an increasing share of tax dollars.

The Cost: Now and Ahead

We have outlined briefly (in Chapter 1, The Need for Strong Fiscal Action) some of the costs of the health care system financed by the provincial government and the factors that drive those costs higher. To recap, Ontario’s health care budget in 2010–11 was $44.77 billion, or 40.3 per cent of everything the provincial government spends on programs.

In 2010–11, the big components of Ontario’s health care spending were:

Major components of Ontario Health Care Spending, 2010-11

What, then, is the prognosis for the years ahead? It is relatively simple to extrapolate future costs by examining the factors that drive health care spending. More people need more health care and any increases in compensation for the people who work in the health care system are cost drivers that affect all corners of the health care system. Ontario’s population can be expected to rise by about 1.2 per cent annually in the years to 2017–18, while inflation (mostly in the form of compensation) is likely to add another two per cent per year to the cost of health care. New drugs and related technology will add another 1.5 per cent to the cost of the drug programs. Yet another three per cent in annual cost increases will come from the more intense use of health care, as new treatments become available.

Aging in general will add about one per cent per year to the cost of running hospitals and community care, which, as we have seen, accounts for about two-fifths of health spending. Because the government’s drug programs are aimed at the population aged 65 and over, growth in that age cohort will add about 3.5 per cent annually to those programs. Similarly, growth in the population aged 75 and over will add about 2.5 per cent per year to the cost of supporting long-term care homes, which could mean that more long-term care beds would need to be built — that is, unless we can more efficiently and effectively use home care. In Denmark, where one-fifth of the population is over age 60, the government stopped creating new long-term care beds in the late 1980s and instead focused on building a wide variety of dwellings that are adapted for older people. Now, approximately 80 per cent of the elderly live independently in the community, receiving home care, community social supports and practical help around the house.6 Combined, drugs and long-term care account for just over 15 per cent of all costs in Ontario.

Aging is a significant cost driver, though its importance has been overblown in popular discourse. Members of the large baby boom generation now range in age from about 45 to 65; by 2018 — the limit of our horizon for this report — they will be 52 to 72. Even by then, most boomers will not yet have reached an age when medical costs begin to rise sharply. It is important to remember that the population ages gradually and health care costs also rise gradually with patients’ age. Population aging is not the killer disease here.

In our Status Quo Scenario, the one that relies heavily on existing drivers to project the overall cost of government programs, Ontario’s health care budget rises from $44.77 billion in 2010–11 to $62.46 billion by 2017–18, for an average annual increase of 4.9 per cent. This is below the 5.5 per cent average of the most recent three years, but not by much. Moreover, its share of total program spending — which would increase by 3.5 per cent annually — would rise to 44.2 per cent from 40.3 per cent in 2010–11. In this scenario, the cost of OHIP would rise by an average of 6.4 per cent per year, long-term care homes by 4.7 per cent, community care by 4.4 per cent, drugs by 4.3 per cent and the operation of hospitals by 4.1 per cent.

In our Preferred Scenario, we have set out a much more modest path for health care spending, one in which expenditures grow not by 4.9 per cent annually between now and 2017–18, but by 2.5 per cent. Since we are holding all program spending to an increase of only 0.8 per cent per year, this means — ironically — that by 2017–18, health would account for 45.4 per cent of all program spending. In recent years, such ratios have provoked concerns that the health care system is unsustainable in its present form.

Is the Health Care System Sustainable?

Sustainability is a slippery concept that can be viewed from several perspectives. One is public opinion. How do Ontarians see the issue? Do they think the status quo is acceptable? What do they want from the health care system? What — and how much — are they willing to pay? And how do they want to pay for what they want — from their own pockets or through their tax dollars?

There are no straightforward answers to these questions, which depend on both public attitudes and politicians’ reactions. To an economist, there is nothing particularly surprising or alarming about health care rising as a percentage of public and private budgets. It is a classic “luxury” good; as individuals and societies get richer, they wish to allocate a larger share of their rising income to health care. Nobel prize-winning U.S. economist Robert W. Fogel estimates that, in the long run, for every one per cent increase in income in the United States, people will consume 1.6 per cent more health services. Fogel accordingly projects that health care will roughly double its weight in U.S. GDP over the next three decades.7 So the issue is not the direction of health care as a share of budgets, but rather by how much that share will increase.

Polls offer some insight into public attitudes towards health care issues, but must be treated cautiously. In an Ontario poll done in late 2010 by the Gandalf Group for the Healthcare of Ontario Pension Plan, most people responded that they were prepared to pay more taxes and see other public spending crowded out to preserve the health care system. However, there are reasons to be skeptical of this result, which may apply more in theory than in practice. Most people substantially underestimated both the public cost of health care and the rate at which it is increasing. At the time the poll was conducted, health care accounted for just over 40 per cent of Ontario’s program spending. Yet nine per cent of respondents thought health care was less than 20 per cent of the total, another 25 per cent said the figure was between 20 and 30 per cent, and a further 29 per cent said between 30 and 40 per cent.8 In short, almost two-thirds of Ontarians underestimated — many of them wildly — health care’s share of what their provincial government spends. How much weight should we attach to the public’s view? Would their views change if confronted with the reality of what the current health system costs?

A contrary finding comes from a polling summary prepared by the Canadian Health Services Research Foundation (CHSRF), which revealed that only one-third of Canadians were prepared to accept higher taxes, and less than one-quarter said they would accept a continued squeezing out of other public services.9 Support for these remedies fell well short of a majority, but even these minority views must be qualified: people did not say how big a tax increase they would accept nor by how much other spending could be cut. Beyond higher taxes or cuts to non-health spending, however, Canadians have given some thought to another way to pay for health care. The CHSRF polling summary indicated that two-thirds of respondents were prepared to accept a contributions-based savings plan to amass money for future health costs such as long-term care and pharmaceuticals.

Even though Ontarians seriously underestimated the true cost to government of health care, there is evidence that Canadians in general are increasingly worried about the sustainability of health care spending. The CHSRF polling summary cited two questions that were asked in surveys a decade apart. Respondents were first offered this statement: “Health costs will rise gradually, but the increase will be manageable due to growth in the economy.” In 2000, 19 per cent of respondents agreed, but in 2010, only seven per cent did. The second statement was: “The demand for health care will increase, but we will be able to contain costs by operating the health care system more efficiently.” In 2000, 29 per cent of respondents agreed; in 2010, only 14 per cent. In short, there had been a decline in public confidence that a growing economy or greater efficiency gains can rescue the system.

Polling also reveals large gaps between how we run health care in Canada and what Canadians say they want. A good example is the low public coverage of health care costs other than physicians and hospitals. In 1997, according to the CHSRF polling survey, 94 per cent of Canadians said that if a physician prescribes a medication or vaccine, it should be covered by a prescription drug plan. In 2006, 91 per cent of respondents said that publicly insured services should be extended to home care, long-term care, mental health care and drug benefits. Such moves have been recommended in many health care reports, including the 2002 Romanow Commission and 2004 Kirby Senate Committee Report. It appears there is an appetite, reinforced by expert opinion, for an expanded version of medicare.

In Ontario, a few simple messages emerge from the polling results that do seem robust: Ontarians regard health care as the single most important public policy issue; they are wedded to the single, public payer model; and they will not tolerate anything that causes deterioration in access and quality of care. Also, there now seems to be less concern that all services be delivered under public administration, as long as the bill can be covered by an OHIP card.

Clearly, Ontarians want their health care system not only sustained, but also improved. Can fears of unsustainability — that the system will not remain affordable — be eased by proposing some of the more obvious — or at least most often cited — solutions? Again, unfortunately, there is no straightforward response. Sustainability involves many moving parts; any number of changes to the equation can render health care more sustainable or less so. Three of the moving parts come to mind:

  • First, stronger productivity growth, by generating more economic growth, would make it easier to afford more health care spending. But even if productivity growth doubled from its low levels of the past decade, trend growth in nominal GDP would still fall far short of the projected increases in health care spending. In any case, such an aggressive assumption about productivity growth is mere wishful thinking since we have no ready answers on how to revive it. Wishful thinking, needless to say, cannot be the foundation of a policy response to the sustainability issue.
  • Second, we could afford more health care if we raised taxes, but tax rates would have to rise persistently to keep the new revenue received above income growth. This might generate voter tax fatigue and would inevitably result in broader economic losses as the economic distortions induced by rising taxes magnified.
  • Third, we could restrain all other government spending severely to leave more room for health care. But as TD Economics pointed out, status quo trends suggest that by 2030, health care would account for 80 per cent of Ontario’s program spending. The remaining 20 per cent would not even cover the current education system, let alone any other public services.

It goes almost without saying that these are not solutions; the status quo growth path of health care spending needs to be curbed. At the same time, much of the Ontario health care system not only can be improved, but calls out for improvement. It is easy to be smug when we compare ourselves with the United States, which spends far more than Canada relative to both its population and its GDP, yet in 2010 left almost 50 million people — over 16 per cent of its population — uncovered by health insurance.10 If we compare ourselves to countries other than the United States, however, we often come up short. We need to do more and we need to do better — and we need to do both on a tight budget.

Hard Truths, Measures and Comparisons

It is easy — too easy — to restrict our focus to how much the Ontario government spends on health and where the cash goes. Health care is about so much more than money that such a blinkered approach is not helpful. Still, a few observations about spending on health care and the resources devoted to it will establish some context before we broaden our approach to non-financial issues.

The health care system is not really a system

Throughout this chapter, we have been referring to Ontario’s collection of health care providers as a “system.” In reality, the province has a series of disjointed services working in many different silos. The Ministry of Health and Long-Term Care (MOHLTC) must work with its health care providers, administrators and stakeholders to co-ordinate roles, simplify the pathways of care and improve the overall patient experience.

Consider the following scenarios presented to the Commission:

Case Study #1:

A 50-year-old woman has a mammogram. The results go to her family physician, whose office calls and asks her to come in for the next available appointment, which is a week later. At the appointment, the family physician says the results are positive for cancer and that she will arrange for a needle aspiration. The family physician has trouble finding a radiologist to do the needle aspiration and it takes three weeks to have it performed. The radiologist then has difficulty finding the mammogram as it was done somewhere other than in his clinic, creating further delay. The aspiration shows suspicious cells and the family physician’s office calls the patient back and asks her to make another appointment to discuss the results. The family physician now wishes to do an MRI, and again there is difficulty getting it done in a timely fashion. Meanwhile, the patient is becoming frantic and taking a lot of time off work. When the MRI is done, the patient is again called back to the family physician’s office where the doctor tries to find a breast cancer surgeon to perform a biopsy as her preferred surgeon is on holiday. Three weeks later, the breast cancer surgeon performs the biopsy, which is found to be negative (i.e., cancer-free).

Case Study #1, What could happen:

After a positive mammogram, the patient is referred electronically as a “Category 1” to a breast assessment centre. The patient goes online to her own record and links to the centre, where she can find and book an appointment at a time that suits her that is also within the Category 1 window for diagnosis and treatment. Through this online portal, the patient is also told how to prepare and what to expect at her appointment. When the patient arrives at the breast assessment centre within the proper time-frame set out by best practice guidelines, she sees a nurse practitioner expert and has her blood work done, a needle aspiration and an examination by doctor, all in one appointment. The patient then books her own followup appointment for four days later, which happens to be an early evening appointment so she can go after work. At the followup appointment, her results are discussed and are also available to the patient online, with email and text access to a registered nurse. That followup appointment avoids the unnecessary MRI and the patient is booked for biopsy. Again, the patient can see the results and discuss them immediately by email and phone.

What is most surprising is that both cases could happen in Ontario as it has the resources in some areas of the province, but lacks the co-ordination. In Case Study #1, the “system” breaks down, while losing sight of the patient experience as scheduling delays layer on top of one another. In the alternate outcome scenario, the patient has control of the scheduling and is at the centre of a standardized process.

We need to see the system proposed in the “what could happen” scenario become the standard operating procedure for breast cancer diagnosis across the province. Comparable systems could be developed for a host of conditions, including diabetes, chronic obstructive pulmonary disease and kidney disease.

Ontario needs to integrate silos and reduce administrative red tape that impedes efficient and effective service. That said, for the sake of simplicity, we will continue to use the term “system” for the remainder of this chapter.

The health care system is costly

Canada has one of the costliest health care systems in the world, which may surprise people who are too accustomed to comparing our record only to that of the United States. Canada spent almost $193 billion on health care in 2010, or 11.9 per cent of GDP.11 In Ontario, where total health spending was $75.5 billion, the share of GDP was 12.3 per cent, slightly higher than the national average, but only the fifth highest of any province. This seems like a bargain compared to the 17.4 per cent (in 2009) for the United States, but Canadians often fail to recognize that the United States has by far the most expensive system in the world, making it the major outlier in this and many other health care measures. It is not a useful comparator for Canada.

Of the 34 countries covered in the latest health data from the Organization for Economic Co-operation and Development (OECD),12 Canada had the sixth most expensive system in 2009, when it was tied with Switzerland. The second-ranked country (after the United States) was the Netherlands, whose spending relative to GDP was only 0.6 percentage point over that of Canada. This puts Canada in the group of developed countries with the costliest health care systems. Worse, many of the other countries have older populations than Canada so, other things being equal, our system should be less expensive because health spending rises sharply with the age of the population. Adjusted for age, Canada definitely has one of the most expensive systems.

The system is not as public as most people think

Ontarians, like most Canadians, focus almost exclusively on the public component of health care, around which a robust mythology has grown. Our system is not as public as most Canadians seem to believe. If a highly public system is a virtue, Canada looks good only relative to the United States. The latest OECD data show that the public sector accounted for 70.6 per cent of all health care spending in Canada in 2009, much higher than the mere 47.7 per cent in the United States. But the other five G7 countries all have a higher public share than Canada’s. Of the 27 OECD countries that reported such data for 2009, Canada ranked 19th.13 Looked at from the other perspective, Canadians spent an average of $636 (U.S.) in out-of-pocket health payments for health, the fifth highest of 27 countries measured.

Canada’s health care system is at its most public when it comes to physician and hospital services; 91 per cent of the former and 99 per cent of the latter are paid for by governments. But according to the CIHI, the public sector covers only 46 per cent of prescription drug expenditures; private insurance pays for 36 per cent and out-of-pocket expenses make up the remaining 18 per cent. Public coverage of the cost of other professionals’ services is meagre — a mere seven per cent. Essentially, the medicare system of which Canadians are so proud covers medically necessary hospital and physician services, and little else. The list of services not covered by medicare is long: out-of-hospital drugs, nursing, psychology and other counselling, community mental health services, nutrition advice, ambulance services, addiction treatment, long-term care, eye care and dental care.

The health care system is only part of the picture

We also need to get past our myopic focus on health care to a broader view of health more generally. Health is much more than patching up people once something has gone wrong. The Senate Subcommittee on Population Health14 estimated that only 25 per cent of the population’s health outcomes can be attributed to the health care system on which we lavish such attention. Half can be explained by socio-economic factors such as education and income; another 15 per cent relates to biology and genetics, while the physical environment accounts for the remaining 10 per cent. To bring about meaningful reform, we must bring all these environmental factors into the equation. For example, strategic education interventions may be more effective in reducing future health care costs than investments in hospitals today. Yet amazingly, three-quarters of the influences that account for health outcomes barely register in the health care debate.

The system does not produce superior results

Canadians consistently tell pollsters that they do not particularly care much about the cost of health care — they simply want access and quality of care. The high cost of our health care system could perhaps be forgiven if the spending produced superior results. It does not.

Canada does not appear in a favourable light on a value-for-money basis relative to other countries. A 2010 report by the Commonwealth Fund15 ranked the quality of the health care systems in Australia, Canada, Germany, the Netherlands, New Zealand, Britain and the United States. Predictably, the United States came last. But Canada was second to last in the overall ranking, second to last on efficiency and dead last on the timeliness of care.

We have fewer physicians than other jurisdictions

Numerous studies suggest that we do not have enough medical doctors. The CIHI concluded that fewer physicians per capita in Canada “may lend insight into why Canadians continue to report difficulties in accessing health care when compared to other countries.”16 According to the World Health Organization, among the countries in the Commonwealth Fund report, only Australia has fewer physicians per capita. At 19 physicians per 10,000 people, Canada compares unfavourably to the United States at 27 and especially to the continental European G7 countries where most are well into the 30s. On the basis of raw data, Canada is in the middle of the OECD pack on physicians per capita. Yet in a 2008 report,17 the Fraser Institute calculated that adjusting for population age, Canada tied for 23rd out of 28 comparable OECD countries on physicians per capita. And Canada seems to be falling behind: 24 OECD countries increased their physician-to-patient ratio by at least 10 per cent from 1990 to 2008 whereas the ratio only improved five per cent in Canada.18 Further, 22 per cent of Canadian physicians are over age 60 so there is a pending wave of retirement.19 The effectiveness of physicians is also constrained in Canada because of their low use of electronic records. The Commonwealth Fund report found that only 37 per cent of Canadian physicians used electronic records to serve their patients, the lowest rate among the 11 countries studied.

The trends in Canada since 1990 are still heavily influenced by cutbacks of the 1990s. During the past decade, however, the number of most health practitioners has grown. According to CIHI, the number of physicians graduating from Canadian medical schools climbed by almost 50 per cent between 1999 and 2009. Between 2001 and 2008, there was an increase of 16 per cent in registered physicians and 15 per cent in registered nurses; between 2004 and 2008, the number of nurse practitioners grew by 90 per cent.20

These statistics appear to make a definitive case that we have not only fewer doctors than elsewhere, but too few doctors in absolute terms. This may not be the case. It may simply be that we do not make efficient use of their time. Suppose that nurses relieved doctors of the task of giving most vaccinations. Suppose that a full set of electronic records enabled an elderly person to stop making multiple visits to different doctors, explaining his or her ailments again and again. Suppose that pharmacists played a greater role in issuing prescriptions. These and other changes could free up enough physicians’ time, perhaps by enough to reduce, if not eliminate, any “shortage” of doctors.

Canada falls short on many measures

The 2008 Fraser Institute report, while acknowledging the difficulty of comparing health outcomes across countries with universal access, publicly funded, health care systems, found that “Canada, while spending more on health care than any other industrialized country in the OECD save Iceland and Switzerland, ranks seventeenth in the percentage of total life expectancy that will be lived in full health, ranks twenty-fourth in infant mortality and seventeenth in prenatal mortality, ranks sixth in mortality amenable to health care, ranks tenth in potential years of life lost to disease, ranks tenth in the incidence of breast cancer mortality, and ranks second in the incidence of mortality from colon cancer.”21

But Ontario’s is the best system in Canada

Internationally comparable data are usually based on Canadian averages. But there is some evidence that on important matters Ontario has one of the best or even the best system within Canada. For example, the Frontier Centre ranks Ontario as having the best system according to its overall Consumer Index of Health,22 although British Columbia and New Brunswick are very close. The relative strength of Ontario is in primary care and problem prevention. In particular, the Frontier Centre notes that “a large number of Ontarians have regular access to a family doctor.”23 However, the Centre hastens to add that “all 10 provinces have significant work to do to achieve the much shorter health care wait times that exist in top European countries such as Germany, France and the Netherlands.”24

Drug costs are growing faster than other health spending

Pharmaceuticals have been the fastest-growing component of health care costs in recent decades. Stabile and Greenblatt note that from 1975 to 2006, inflation-adjusted spending per capita on hospitals rose 51 per cent, the cost of physician services rose 98 per cent and pharmaceutical costs went up 338 per cent.25 The same report documents that the cost of prescription drugs exceeded overall growth for health care spending in every year from 1986 to 2007.26 Busby and Robson found that the Ontario Drug Plan (ODP) now constitutes 10 per cent of Ontario’s health spending — $4.5 billion in 2010 — and has grown by 9.4 per cent per year over the past 20 years.27 About three-quarters of the cost relates to drugs for seniors, who make very low co-payments; singles with income over $16,018 and couples with income over $24,175 pay an annual deductible of $100 and a $6.11 dispensing fee per prescription, while lower-income seniors pay no deductible and $2.00 per prescription.

Both sets of researchers wrestled with the issue of how fast drug costs will grow in future. On the positive side, many prescription drugs will soon be coming off patent protection so some argue that cost increases will moderate. Indeed, at less than five per cent, drug costs had one of the lowest rates of increase in 2010 in many decades. However, drug use is heavily concentrated in the elderly, and new drug discoveries could push the cost curve back up. Stabile and Greenblatt looked at scenarios with drug costs rising four, six and eight per cent annually. At eight per cent growth, still less than in the recent past, drugs would go from 0.62 to 8.6 per cent of GDP in 50 years. Busby and Robson project ODP costs to rise 8.4 per cent per annum over the next 20 years, just slightly less than the 9.4 per cent pace of the past 20 years.

In its 2010 Survey of Canada, the OECD noted that Canadian generic drug prices are the highest in the OECD, even higher than in the United States and twice as high as in Finland. It is not surprising then that Ontario took decisive action in 2010 to lower generic drug prices to 25 per cent of brand prices. Other provinces are taking similar steps.

There are inefficiencies in the health care system

The Canadian Institute for Health Information’s Health Care in Canada 2010 report discusses a number of examples of inefficiency in the Canadian health care system. For example, despite lack of evidence of benefit, 3,600 therapeutic knee arthroscopies and 1,050 vertebroplasties were performed in Canada in 2008–09.28 At 19 per cent of all deliveries, caesarean sections far exceed clinical guidelines, as does the continuing widespread practice of hysterectomy.29 Compared with other countries, Canada does poorly on avoidable hospital admissions for diabetes. The OECD noted in its 2010 Canada Survey that hospitalizations in Canada for diabetes per 100,000 people are above the OECD average. The CIHI draws the link to the observation that only 32 per cent of diabetics reported receiving all four recommended tests in 2007. 30 This illustrates the shift that is needed from hospital-based treatment to clinic and home-based prevention.

Many hospital beds are occupied by patients who could get better quality care at a lower overall cost elsewhere in the system. The CIHI tracks what is known as alternate level of care (ALC), which refers to patients who occupy hospital beds but no longer need acute care services — “bed-blockers,” in popular parlance. In 2008–09, five per cent of hospitalizations and 13 per cent of all hospital days were ALC.31 It is understandable to a degree that patients would end up classified as ALC near the end of their hospital stay. But nine per cent of ALC patients were admitted to acute care as ALC and they account for 11 per cent of ALC days. The most common reasons for patients being in ALC status is that they seek palliative care (34 per cent), are waiting for admission to another adequate facility (27 per cent) or seek physical therapy (11 per cent). These ALC patients tend to stay that way for a long time — 62 per cent stay more than a week and 24 per cent more than a month. Five per cent stay even longer than 100 days.

Case Study #2:

After the death of his wife, the family of a 76-year-old man decided to move their father closer to their home, which was 250 kilometres away. After noticing some dementia, he was moved into the family home where the dementia worsened to the point where the family brought him to the local hospital emergency department. Home care could not be given for more than two days per week. He was admitted directly to a hospital unit where steps for placement into a long-term care facility were taken. He was in an ALC hospital bed for 115 days awaiting placement because the long-term care homes did not consider him suitable despite the fact that they had empty beds.

The results of this inefficiency include people in hospital beds who could be better cared for elsewhere, crowding of emergency facilities, cancellations of surgeries because beds are not available and a clogging of ambulance services bringing people to and from hospitals. These are classic symptoms of a system built for acute care at a time when the needs have shifted more to chronic care. It must be noted that in Ontario, which has one of the country’s highest levels of ALC (such patients occupy seven per cent of hospital beds, compared with five per cent nationally), the government introduced its Aging at Home Strategy in 2007, designed in part to reduce the number of ALC patients. More recently, Ontario wisely commissioned a study by Dr. David Walker, who made recommendations (we will return to these later) on ALC and steps that should be taken to shift the health care system towards caring for an older population.32

The OECD researchers who took a stab at measuring inefficiency costs in health care systems came to a startling conclusion about this country. They estimated that if Canada became as efficient as the best-performing countries, there would be a saving in public health care costs of 2.5 per cent of GDP in 2017.33 Securing such efficiency gains would not permanently lower the growth of health care costs, but could certainly do so over the transition period.

The OECD suggests that Canada as a whole “wasted” $40.6 billion of the $136.9 billion that the public sector spent on health in 2010; the comparable figure for Ontario, if the 2.5 per cent figure also holds true for the province, would be $13.4 billion in “waste” out of $47.8 billion in total public spending. In other words, efficiency gains would amount to almost 30 per cent of public-sector spending in 2010.34 Of course, measuring inefficiency, especially by comparing differing international systems, is very difficult, so we must be cautious in interpreting the OECD figure. Further, it simply may not be feasible to eliminate or even substantially reduce the figure. That said, it is not a large leap to presume that if we could remove as little as 10 per cent of this inefficiency over the next 10 years, public health care spending could be restrained to a very low growth rate over that period.

A broader perspective can be taken on efficiency of health care by considering the cost savings possible through improving various lifestyle patterns that have health implications. The Conference Board of Canada estimated that improving the levels of key risk factors such as obesity, smoking rates and hypertension would have delivered cumulative cost savings of $76.4 billion over the 2005–10 period.35

Other reports have estimated efficiency gains. For example, a study by the Canadian Centre for Policy Alternatives36 estimated that a national pharmacare plan would save between 10 and 42 per cent of total drug expenditures. Yet, no federal attention has been directed at this question. The issue was hardly raised during the 2011 federal election, nor did it emerge in any of the many provincial elections over the remainder of 2011.

The conclusion from all this research seems inescapable. The Canadian health care system does not deliver great value for money when judged from a broader international perspective. We can and should do better. In brief, despite the public’s relative satisfaction, the system is showing distinct signs of ill health today.

Complex cases drive costs

Any system designed to address the needs of the majority of the population will be overwhelmed and diverted by the special needs of the truly complex and expensive cases. About one per cent of Ontario’s population accounts for 49 per cent of hospital and home care costs, and 10 per cent of the population accounts for 95 per cent of such costs, according to a 2010 study by the Canadian Health Services Research Group (CHSRG).37 The Institute for Clinical Evaluative Sciences (ICES) looked at system-wide health care costs (excluding inpatient mental health and non-fee-for-service physician costs) and found a similar trend: one per cent of the population accounts for 34 per cent of costs and 10 per cent accounts for 79 per cent of system-wide costs.38 As a point of comparison, the Journal of the American Medical Association recently published an article stating that about 10 per cent of the U.S. population consumes about 64 per cent of health care expenditures.39

If the province can find efficiencies that reduce these costs by even just 10 per cent, that could amount to at least $1.5 billion a year in savings,40 a portion of which could be achieved through better co-ordination of services.41 A much deeper analysis undertaken by Bridgepoint Health and Boston Consulting Group in 2011 suggests that the savings achieved through better co-ordination of care in Ontario could be even greater, in the realm of $4 billion to $6 billion per year.42 However, these special cases need to be handled strategically.

Who are the people in this one per cent category? They are people who are frequently in and out of our health care system, constantly being admitted to, discharged from, and then readmitted to hospitals. In the CHSRG’s analysis, these were most likely patients with circulatory and respiratory system issues, cancer, injuries or poisoning (frequently from post-surgical complications resulting from either infections or device failures). Heart failure is the most common reason for people in this one per cent category to be admitted to hospital. These heart failure patients have a readmission rate of 33 per cent and are most likely to be readmitted within 10 days of being released from hospital.43 If a person is seen by a health provider within two days of being released from hospital, studies have shown that their probability of being readmitted drops by at least one-third. What matters is not merely the intervention itself, but the timeliness with which it is carried out.

There is also proof that home-based care can reduce readmissions for heart failure.44,45 British studies suggest that “telemonitoring of vital signs and symptoms facilitate early detection of deterioration and reduce re-admission rates and length of hospital stay in patients with heart failure.”46 These interventions are simple and already available to Ontarians.

However, this is only part of the answer to the one per cent question. Analysis of a Local Health Integration Network’s (LHIN) 2006–07 billing data done on behalf of MOHTLC revealed that one subset of hospital inpatients accounted for 40 per cent of all hospital bed days.47 These patients were identified as “complex inpatients,” meaning they did not have just one health condition but many at once, often including mental health or addiction issues. Strikingly similar results are found in British Columbia. “Remarkably, over 80 per cent of frequent users of BC’s health care system had at least six different types of illness, and almost one third actually had ten or more illnesses, compared with only a small minority of other users.”48 In Ontario, 80 per cent of all ALC bed days were used by these complex patients, spending an average of 72.9 days in hospital in 2006–07. As a comparison, the average stay for a non-complex patient was 6.3 days over the same period. Over half of these patients also tend to be over age 75 and one-third are discharged from the hospital to another facility (most likely a long-term care home). Another third are discharged to the community without support services.49 Similar interventions to those mentioned above could have a great impact when caring for these patients. Adding to this issue are other social determinants of health such as poverty, social isolation and illiteracy, which can further increase the need for intervention.

Interestingly, when you look at the patients that used emergency rooms (ERs) most often in the LHIN analyzed by MOHLTC the profile changes significantly. More than half were under age 45. These “at-risk” patients accounted for 20 per cent of all ER visits and made over four visits a year, some over 20 in one year. Even more intriguing is the level of severity of their medical issues (also known as “acuity” in ERs). Though one might expect that the reason for frequent visits to the ER was the need for surgery or some other complicated intervention, these patients were no more likely to be an urgent case than an average, everyday visitor to the ER. Instead, a strong underlying contributor to frequent visits to the ER appears to be mental health and addiction issues.50

Case Study #3:

An 80-year-old woman lives alone, has diabetes, arthritis, a colostomy from a previous bout with bowel cancer and is a little forgetful.
She has trouble getting an appointment with her family physician as the phone system is tiered and confusing (“press 1 for this, 3 for that”). Her daughter who lives far away gets her an appointment when she visits. The mother trips on a rug one evening and falls, breaking her wrist. She cannot get up and is found the next day by a neighbour and is taken to the ER. She gets a cast on her wrist, but feels unable to go home alone. As a result, she is admitted after spending 36 hours on a gurney in the ER. Due to a mixture of pain medications, sleeplessness and unfamiliarity, the patient gets confused and is prescribed anti-psychotics. She then gets C. difficile and is placed in isolation. The daughter is advised that her mother needs a nursing home (LTC) bed. The daughter’s wish for her first choice of an LTC home and the C. difficile, now complicated by the patient calling out in the middle of the night, result in the patient being on a waiting list for weeks. Eventually the patient gets to the LTC home, where the cancer returns. The patient is sent back to the hospital, where she dies.

Case Study #3, What could happen:

The patient is identified by the family physician’s office five years before as being at risk for complications due to her multiple ailments. She is visited by the nurse practitioner from the Community Care Access Centre (CCAC) and Family Health Team (FHT), and receives a full assessment of her capabilities, which are all done in her home. An occupational therapist visits and arranges for a variety of changes to the apartment to reduce risk and increase safety. The patient is seen, with her daughter, by a multidisciplinary assessment team that advises on best practices in management of her various conditions, including her early Alzheimer’s disease. The CCAC and community social service agencies, in co-ordination with the FHT, provide a variety of services to assist with bathing, meals and social interaction and provide an alarm system in case of trouble. The patient now has an identified case manager who texts the daughter regularly.
A registered nurse from the FHT visits once every two weeks to oversee her medications and follow progress. The patient also has a regular appointment with the FHT to see the registered nurse and the family physician, where she also sees a behavioural expert registered nurse. The patient does not fall. When the cancer returns, it is identified at a regular visit to the FHT and home-based palliative care is arranged. The patient dies at home.

In the alternate outcome of the above case study, the family physician undertakes a cross-disciplinary core assessment and risk identification process, including a mental health check. Based on what we know about patients needing complex care, the physician would be quickly overwhelmed if he were left to be the lone individual responsible for co-ordinating care. Interprofessional team-based care, with care managers for the most complex patients, is essential to ensure that appropriate transition and supports are in place to mitigate the risk of readmission. Taking this step further, complex patients need to be engaged through their care providers to develop strategies to cope with loss of ability, set goals for recovery, and prepare them to rebuild their lives. Helping complex patients to live with the fewest restrictions and least risk is central to maintaining their dignity and connections with their community.

Mental health and addiction issues are also cost drivers

As with complex cases, the effects of mental health and addiction on our health care system should not be underestimated, nor should the ripple effects felt in the justice, educational and social services sectors. In 2000, the economic costs of mental health and addiction issues were estimated to be $33.9 billion. Eighty-five per cent of these costs ($28.7 billion) came from a loss of productivity, while the remaining $5.2 billion were due to costs of hospitalizations, community mental health and substance abuse programs, law enforcement, supportive housing, fire losses and capital costs, to name a few.51 More recent estimates of the economic costs of mental health and addiction are pegged at $39 billion annually, with productivity losses accounting for 74 per cent of the costs.52 Again, even a 10 per cent reduction in health care costs gained by developing a more efficient system could present at least $3 billion per year in savings to the Ontario economy and deliver better care for these patients.

“At-risk” ER patients are more than four times more likely to have mental health and addiction issues (the mix of the two is called a “co-morbidity”) than other patients visiting the ER. Complex inpatients are three times more likely.53 As a step towards relieving the pressure felt by ERs from patients with mental health and addiction issues, more walk-in clinics and FHTs should be equipped with counselling clinics.54

Mental health and addiction issues, including co-morbidities, have been the subject of many recent consultations and reports,55 including that of the Ontario legislature’s Select Committee on Mental Health and Addictions, which reported in August 2010.56 The committee noted that “mental health and addictions services are funded or provided by at least 10 different ministries. Community care is delivered by 440 children’s mental health agencies, 330 community mental health agencies, 150 substance abuse treatment agencies, and approximately 50 problem gambling centres.” Like the Commission, the Select Committee was surprised to discover “that no one person or organization is responsible for connecting these various parts, or “breaking down the silos” as we so often heard. There is also no single organization responsible of ensuring that mental health and addictions services and supports are delivered consistently and comprehensively across Ontario.”57

Further, there is a need to link the health system and social service planning, including youth protection services, more effectively to serve mental health and addiction patients better. In June 2011, MOHLTC released “Open Minds, Healthy Minds, Ontario’s Comprehensive Mental Health and Addictions Strategy” in response to the Select Committee’s observations. The strategy includes a plan to focus on quality improvement, early intervention and improved service integration for mental health and addiction patients. In addition, it addresses other significant underlying causes of poor health outcomes in Ontarians: the social determinants of health such as poverty and access to care.58

Health care: how it works now and how it should work in future

Canada’s health system, and that of Ontario, developed to deal with acute care and largely remain in that mode. First, the focus is on patching up people after a health problem has struck rather than taking a broader approach that might prevent problems or at least mitigate the effects. Further, the system is designed to bring the patient to the practitioner, often in a hospital setting. Medicare pays the bills for physicians and hospitals, but little else.

Today, however, the key health issues are increasingly shifting to chronic care questions, in good part because the population is aging, but also because some lifestyle problems such as obesity are creating particular health conditions such as adult-onset Type 2 diabetes. In most chronic care cases, home care is more efficient and of better quality. Yet there has been no national intergovernmental approach to home care since the federal-provincial discussions around the Health Accord in 2004. Neither has there been a national approach to long-term facility-based care for the elderly — a related issue — even though this is where the current and future pressures lie. There have been some provincial initiatives, however. Ontario’s Aging at Home Strategy, launched in 2007, provides services for seniors and caregivers to enable them to remain in their homes. The OECD projects that the total public and private costs of long-term care will more than double from an estimated 1.4 per cent of GDP in 2006 to 3.3 per cent by 2050.59

What Is the Opportunity?

The ideal health system would put more emphasis on preventing poor health. It would be patient-centric and would feature co-ordination along the complete continuum of care that a patient might need. Primary care would be the main point of contact with patients, with much of the co-ordination across caregiving done through the administration of regional health authorities. There would be much less emphasis on treating patients in hospitals, which are costly and expose people to contagious diseases while yielding poor patient satisfaction. To a much greater degree, care would be provided by primary care facilities, through better information and, in the case of chronic health issues, in the home or long-term care facilities. The system would allow all professionals to exercise the full scope of their skills in their work; nurses, for example, would do what they could competently do, like administer vaccines, and nurse practitioners could provide high-quality management of chronic illnesses like diabetes and high blood pressure.

In this ideal system, payment schemes and information gathering would be aligned to support the patient-centric notion. Compensation for hospitals and physicians would be more closely tied to outcomes of health rather than to the inputs or services. Data would be gathered on the actual total cost of looking after a patient rather than the present system of collecting data for separate portions of the system; even then, current data are actually based on government reimbursement rates rather than true costs.60

The current system and an ideal reformed system are laid out in the following charts.

General Approach

Current System Reformed System
  • Intervention after a problem occurs
  • Acute care
  • Hospital-centric
  • Silos
  • Resource-intensive minority of patients in regular system
  • Accept socio-economic weaknesses
  • Extraordinary interventions at end of life
  • Health promotion
  • Chronic care
  • Patient-centric
  • Co-ordination across a continuum of care
  • Dedicated channels for the resource-intensive minority
  • Address socio-economic weaknesses
  • Pre-agreements on end-of-life care


  • Draw patients to hospitals
  • Historical cost plus inflation financing
  • Managed through central government
  • Homogeneous, all trying to offer all services
  • Keep patients out of hospitals
  • Blend of base funding and pay-by-activity
  • Regional management
  • Differentiation and specialization along with specialized clinics

Long-Term Care, Community Care and Home Care

  • Not integrated, underfunded and weight on
    long-term care
  • Integrated with weight on home care

Physicians and Other Professionals

  • Not integrated with hospitals and other sectors
  • Work alone or in groups
  • Mostly fee-for-service funding
  • Few standards for medical approaches/conduct of practice
  • Unclear objectives and weak accountability
  • Inefficient allocation of responsibilities
  • Integrated with primary care being the hub for most patients
  • Work in clinics
  • Blend of salary/capitation and fee-for-outcomes
  • Evidence-based guidelines (through quality councils)
  • Objectives from regional health authorities and accountability buttressed by electronic records
  • Allocation in accordance with respective skills and costs; and where feasible shifting services to lower-cost care-providers


  • Little cost discipline from governments
  • Cost of plans to private employers driven in good part by employees
  • Cost discipline through purchasing power, guidelines for conduct of practice
  • Greater control exercised by employers

Service Delivery

Current System Reformed System
  • Mostly public sector
  • Blend of public and private sector (within public payer model)

Information Technology

  • Little used by physicians and especially across the system
  • Information conveyed in doctors’ offices
  • Extensive use that is key to co-ordination across system and accountability
  • Information more easily available and conveyed through multiple sources (phone, Internet, etc.)

Medical Schools

  • No attention to system (cost) issues
  • Little attention to labour supply issues
  • Course(s) on system issues
  • Role in directing physicians to areas of demand (by area of medicine and geographically)

Coverage of Public Payer Model

  • Hybrid with almost 100 per cent primary, less than   half of drugs and limited mental health
  • Broader coverage widely recommended but not at all clear this will be acted upon

The ideal system begins with a general approach to health care and moves through the major elements of the system — hospitals, long-term care and home care, physicians and other professionals, pharmaceuticals, services delivery (public or private), information technology, medical schools and coverage of the public payer model. Before we get to a more detailed set of recommendations, here is a summary of the kind of changes we seek.

We have already sketched out the general approach — a shift towards health promotion rather than after-the-problem treatment; a system centred on patients rather than hospitals; more attention to chronic care rather than a primary focus on acute care; co-ordination across a broad continuum of care rather than independent silos that allow too many people to fall between the cracks; and new ways of dealing with the small minority of patients who require intensive care.

Rather than draw patients into hospitals for care, we should strive to direct patients to the most appropriate care setting for their problem — whether it is a doctor’s office, family care centre or clinic, rehabilitation centre, long-term care centre or back home. Hospital financing, traditionally based on historical costs and inflation, should move to a blend of base funding and pay-by-activity, which would recognize the work of hospitals that take on the toughest and most expensive cases. This would accompany a shift from hospitals that try to offer all services to greater differentiation and specialization to reduce overlap and concentrate expertise. A further transfer of management from the government to regional authorities should accompany this.

Physicians and other professionals tend to work alone or in small groups where they are not integrated with other sectors of the health care system; better that they become the primary care hub for most patients by working in clinics that offer a variety of services and are well connected with other parts of the care system. And rather than be paid primarily on a fee-for-service basis, doctors should get a blend of salary, capitation (an annual fee for care of a particular patient) and fee-for-outcomes. (Already across Canada, alternative payment methods that include salary and capitation rather than pure fee-for-service account for 27 per cent of total clinical payments to physicians.) A recent report prepared by John Manley, William Anderson and Peter Barnes for the Ontario Hospital Association recommends that the compensation of hospital CEOs and senior executives should be tied to performance on strategic hospital priorities. Further, performance pay should be linked to achieving strategic health outcomes for each region across all types of health service providers in CCACs, LTC facilities, FHTs, Community Health Centres and public health units. The Manley report’s recommendation about transparency of CEO and senior executive compensation should also be extended beyond hospitals and include LHINs, CCACs and LTC facilities. Evidence-based guidelines for the care of specific maladies or conditions developed by quality councils and used by physicians are needed to even out the wide variety of treatments — some more effective than others — that are now used for the same problems. To its credit, the Ontario government has established FHTs that go some way to meeting this goal, but they tend to be too small, with too few physicians and cover too narrow a range of services. Currently, it is unclear what objectives professionals are expected to meet and accountability is weak; the former should be set by regional health authorities and the latter strengthened by electronic record-keeping. In addition, where feasible, services should be shifted to lower-cost care-providers.

Medical schools pay little attention in their teaching to issues involving the entire health care system, particularly costs; they should add at least one course (perhaps more) introducing their students to the broader system in which they will spend their careers, and where physicians fit. The government should also take a bigger role in directing physicians to areas of need — defined either in terms of geography or medical specialty.

The government should exercise greater cost control over pharmaceuticals through its own purchasing power and through the setting of guidelines for pharmaceutical use. The recent move to reduce the cost of generic drugs was a fine first step in this direction. Private-sector employers who run drug plans for their employees should exercise greater control over the cost of these plans.

Long-term care, community care and home care are currently underfunded, with too much emphasis on long-term care facilities and too little integration of services. There should be more integration, with more weight given to home 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.

Information technology (IT) is not used enough by physicians and other health care professionals across the system in a way that allows different disciplines and services to integrate their activities. Extensive use of IT is key to pushing the health care system to operate in a co-ordinated fashion. History has shown that huge IT projects are unwieldy. Most gains will come from local and regional records, so electronic record-keeping should begin with FHTs and hospitals; these could then be connected and expanded from this base. It is imperative, of course, that everyone use compatible systems that can communicate with each other.

The public payer model now covers almost all of primary care — physicians and hospitals — but less than half of drugs and relatively few mental health services; psychological services, for example, are not covered. Extending medicare to a broader range of services would be difficult and controversial. But an open dialogue on this question is worthwhile and at some point will become necessary. The government should at least launch such a dialogue; Ontarians should be prepared to engage in this debate, especially stakeholders who know the system best.   

We must stress two things. First, the health care landscape is not nearly as black and white as the chart and this short discussion imply. Many segments of the old system are already moving towards the kind of reformed system we would like to see and are somewhere along the continuum between old and reformed. Second, none of what we have said will surprise anyone who manages part of the health care system today. These proposals are common among health care professionals, who are full of good ideas about how the system can be reformed; many of them are already pushing the system towards needed reforms with some success.

Neither are these ideas in any way radical. But too many of them have been stifled in a public debate by politicians, interest groups and stakeholders who regard even the most sensible reform proposals as threats to medicare rather than solutions to medicare’s problems.

Among those we talked to, none who manage parts of the system argued that more money alone is the solution to the problems of the health care system, including the ones they face. Indeed, some argued that the system is now well funded and that too much money would simply impede needed reforms. Certainly, the evidence of the recent past is that more money — political rhetoric notwithstanding — did not buy change, only more of the same, at higher cost.

Governments have typically recognized that greater co-ordination is required along the continuum of care and that the co-ordination should be on a regional basis. Ontario created 14 LHINs to do this. Despite the title, the LHINs do not integrate key parts of the system. Among the activities excluded are primary care and physicians in general, public health and, in some cases, community care. Some LHINs have struck arrangements with the CCACs and public health units in their regions, but this pattern is fragile and does not apply everywhere. It is hit and (mostly) miss. In theory, LHINs have the authority to allocate budgets across the various components of care; in practice, they do not.

There is much to be proud of in Ontario’s health care system, but there are also many problems, as anyone who works in the system — and many who deal with it as patients — will tell you. Fortunately, there is an abundance of opportunities for reform that will create a system that can deliver better quality care more efficiently. The challenge is to realize those opportunities.

Recommendations to Turn Problems into Realized Opportunities

Overall System Planning

Ontario’s health system already possesses many qualities that align with promising health delivery practices seen in other jurisdictions. In principle, and even in name, the LHINs were given responsibilities and roles that are essential to a co-ordinated regional health system: they allocate budgets, set objectives, evaluate performance, and generally have the authority and independence to make transformative changes within their regions. However, it is now apparent that LHINs were not given the proper authority or resources to execute the vision for Ontario’s renewed health system. In some cases they have not yet exercised the full scope of the authority they were granted. Through these recommendations, it is the Commission’s intent to further strengthen the existing system, moving forward with the original intent of integrated regional health delivery.

Recommendation 5-1: Develop and publish a comprehensive plan to address health care challenges over the next 20 years. The plan should set objectives and drive solutions that are built around the following principles:

  • The system should be centred on the patient, not on the institutions and practitioners in the health care system;
  • The plan should focus on the co-ordination of services for patients in a fully integrated, system-wide approach;
  • Reforms should recognize changes and challenges in both demographics and lifestyles by putting more emphasis on chronic than acute care;
  • At the provincial level, the system must be able to carry out health care capacity planning; it must look at the health needs of the population and project future needs for facilities, services, funding and human resources;
  • Policies should be based on evidence that provides guidance on what services, procedures, devices and drugs are effective, efficient and eligible for public funding;
  • There should be a heightened focus on preventing health problems, including the role of public health in meeting this goal;
  • It should ensure that health data are collected efficiently and shared;
  • Funding to providers should be based primarily on meeting the needs of patients as they move through the health care continuum; and
  • The quality of care can and should be enhanced despite the need to restrain increased spending; the objectives of quality care and cost restraint must go hand in hand.

Recommendation 5-2: Evaluate all proposals for change that include efficiencies and cost savings within the vision and plan developed above.

Recommendation 5-3: Divert all patients not requiring acute care from hospitals and into a more appropriate form of care that will be less expensive, improve the patient experience and reduce the patient’s exposure to new health risks.

Such services could be provided by private, for-profit entities, but operated within the public payer system. Government would continue to determine what services are offered and set the fees paid by OHIP. The patient experience would, however, remain the same: upon presentation of a health card, the government will pay for the services rendered.

Recommendation 5-4: Increase the use of home-based care where appropriate to reduce costs without compromising excellent care. For example, home-based care should be used more extensively for recovery from procedures such as hip and knee surgery.

Recommendation 5-5: To improve the co-ordination of patient care, all health services in a region must be integrated.

This includes primary care physicians, acute care hospitals, long-term care, CCACs, home care, public health, walk-in clinics, FHTs (which for the purposes of this chapter includes Family Health Organizations [FHOs], groups and networks), community health centres and Nurse Practitioner-Led Clinics (NPLCs).

Cancer Care Ontario, which has recently begun to apply the expertise it built in addressing cancer to renal disease, is a good model for better co-ordinating chronic care services along a continuum of providers.

Exceptions to the regional system are specialized health facilities that have provincewide responsibilities for service co-ordination and system building. Facilities such as the Hospital for Sick Children, Princess Margaret Hospital and Centre for Addiction and Mental Health have quite unique roles and relationships with the provincial government as well as their local health authorities.

Fiscal Issues

Recommendation 5-6: Cap the government’s health budget at 2.5 per cent or less annual growth through 2017–18. After 2017–18, annual health cost increases must be restrained to no more than five per cent, a level necessary to keep the provincial budget balanced without relying on tax increases or an unacceptable squeezing-out of other public services.

Recommendation 5-7: Support a gradual shift to mechanisms that ensure a continuum of care and care that is community-based. Funding for community-based care may need to grow at a higher rate in the short to medium term in order to build capacity to take pressure off acute care facilities; on the other hand, with a shift away from a hospital focus, hospital budgets could grow less rapidly than the average.

Recommendation 5-8: Achieve spending restraint by moving the health care system towards a more efficient overall design and finding efficiency gains within its constituent parts.

Recommendation 5-9: Do not apply the same degree of fiscal restraint to all parts of health care. Some areas — including community care and mental health — will need to grow more rapidly than the average.

Ontario’s Mental Health and Addictions Strategy commits the province to the goal of providing “more children, youth, adults and their families the services they need, more quickly, and more effectively....”61 Addressing this historic gap in funding and service is highly laudable, particularly when mental health-related disability costs are mounting.

As a related point, child and youth mental health services should be reconfigured to improve co-ordination of the children’s services sector and the health, education and youth justice sectors. We will return to this point in Chapter 8, Social Programs.

Integrating the Silos into a Health Care System

Recommendation 5-10: Set the overall principles for provincewide health care, but continue to organize the delivery of health care on a regional basis.

Recommendation 5-11: A regional health authority should be clearly identified as the key point for integrating services and institutions across the full continuum of care for a geographic area.

Several key principles must be established for any such co-ordinating entity to succeed: The co-ordinator must have the authority, accountabilities and resources necessary to oversee health within the region; it must have the power to allocate budgets, hold stakeholders accountable and set incentive systems.

The Commission considered the following possible co-ordinators:

  • Reverting back to regional offices of the MOHLTC is not the preferred model. The co-ordinator should have more independence from the ministry, be able to tap into a broader array of expertise, and be more firmly rooted in the communities served.
  • The CCACs currently have resources in collective purchasing and IT capacity that the LHINs lack. However, their reach does not include all health care sectors and a substantial change to the system would be needed to give it to them. We do not believe they are the preferred model either.

This leaves the large, mostly academic, hospitals and reconstituted LHINs. Each has pros and cons.

  • The advantage of the large hospitals is that this is where the managerial and organizational expertise now resides. However, the managerial expertise of the hospitals is often, but not always, only in hospital and acute care issues rather than a broader sector perspective. Among the disadvantages are the likelihood that we would end up with at least 25 organizational entities, which would reduce economies of scale, and the risk that the chosen hospitals would tilt care in the direction of their own facilities even though the thrust of any reforms is to keep people out of hospitals. There is also a history of trepidation among other stakeholders towards large hospitals and their capacity to dominate the system.
  • The LHINs could do the co-ordination, but only if they were substantially reconstituted and given the human resources and IT and collective purchasing capacity they currently lack. They would need a clear mandate to integrate almost all parts of health care and be given the resources adequate to carry out their new role. They would need to be able to pay their chief executive officers salaries that are competitive with other parts of the system (two LHINs have recently lost their CEOs to hospitals) and with other sectors. Their numbers could be reduced from the existing 14, but this is very much a secondary matter relative to the other changes listed above. On average, each LHIN serves almost one million people, and, in the case of northern Ontario, covers vast territories. Attention could be paid to the confusion caused by the five LHINs in the Greater Toronto Area; the boundaries of some cut across those of the municipalities they must deal with, especially on matters of public health. New resources would not all need to be incremental since many would involve a transfer of resources, including staff, from the ministry. The advantages of this option are that the reconstituted LHIN would be independent of the existing sectors and an appropriate number (and their boundaries) could be chosen to balance the needs of regional representation with opportunities for economies of scale. The disadvantage is that the process of expanding their role would require considerable disruptive change to align them with the original intent of their function. The change might also involve transferring people from the management of hospitals and perhaps the CCACs.

The Commission heard arguments in favour both of the large hospitals and of reconstituted LHINs. On balance, we favour the LHIN option; however, either could be made to work. And, as indicated above, neither would work if the basic principles were not adhered to.

LHINs 2.0

As the regional health authority, LHINs need to integrate care across the system by executing three key roles: planning and integrating the system, funding and case management.

Planning and Integrating the System

Streamlining relationships between LHINs and health agencies, sharing information, optimizing the use of human resource capacity and containing further system expansion are necessary elements for developing a cohesive plan to substantively integrate the current health care system.

Streamlining Relationships

Recommendation 5-12: Reduce the number of organizations with which the Local Heath Integration Networks must deal on a day-to-day basis.

There are more than 2,500 funded health organizations in Ontario, many with their own leadership teams and boards of directors. In the health care system’s current state, it will be very difficult for the LHINs to do the job the Commission has set out for them because, in order to have a truly integrated system, the LHINs will need to broker relationships with every agency. In addition, the LHINs will have to deal with all the individual FHTs, FHOs, etc. Similar health care groups, for example, the 155 hospitals, 14 CCACs, 200 FHTs or over 600 long-term care homes in the province, must further consolidate either organizationally by forming merged leadership and boards, or physically by forming merged agencies.

This network of streamlined relationships should have the following features:

  • A regional physician network that has:
    • Joint accountability for primary and acute care that leverages the talent, infrastructure and capacity of hospitals while leveraging the comparative advantages the CCACs have built in the areas of collective purchasing and IT infrastructure;
    • Co-ordinated leadership through a body like the Ontario Medical Association (OMA) to act as the interface with the LHINs, contribute to quality assurance policy development with bodies such as Health Quality Ontario (HQO) and ICES, and keep their fellow doctors and other primary caregivers abreast of new developments;
  • Further amalgamation of hospitals and reduction in the number of boards; and
  • The creation of an entity that represents the network of long-term care homes.

Recommendation 5-13: Consolidation of health service agencies and/or their boards should occur where appropriate, while establishing any new consolidated agencies as separate legal entities to limit major labour harmonization and adjustment costs.

Recommendation 5-14: Establish an advisory panel in each Local Health Integration Network with appropriate representation of the regional health care stakeholders, including community hospitals, physicians, community care and long-term care homes.

The LHINs need to have leaders who are savvy to political and community issues at play in the regions. Do not appoint them through Orders-in-Council, but rather hire them using executive search best practices to ensure independence and that an appropriate combination of skills and expertise is brought to the table.

Information Sharing and Use

Recommendation 5-15: The Local Health Integration Networks must integrate care across the system by sharing information on patients among health care providers, co-ordinating decisions and allocating funds to best reflect regional needs.

Their mandate should include the range of services described in Recommendation 5-5: primary care physicians, acute care hospitals, long-term care, community care, home care, public health, etc. The pan-provincial institutions listed in Recommendation 5-5 should have their own authority, which would be accountable directly to MOHLTC, and the government should explore opportunities to concentrate very specialized intensive care into a few centres to take advantage of their existing talent and infrastructure strengths.

Recommendation 5-16: Use data and information sharing to better understand and address the fiscal impacts of chronic and complex conditions and at-risk patients with mental health and addiction issues (see Recommendations 5-37 to 5-41 for more on managing their care).

Analysis of potential solutions, including more efficient use of the full range of health services and other agencies, should be done in tandem with an assessment of the potential for greater involvement of the private sector in providing advice on complex case management. Integration and co-operation between the health, mental health, addiction, social service, justice and youth protection service sectors are crucial.

Recommendation 5-17: Use information from funding models such as the Health-Based Allocation Model (HBAM)62 to examine where services may not be provided equally across health regions and conduct ongoing evaluations of each Local Health Integration Network’s progress in managing high-use populations. (See Recommendations 5-50 and 5-73 for more details on HBAM.)

Optimize the HBAM data set to identify each LHIN’s high-use population on an annual basis, including their specific demographic, socio-economic, diagnostic and procedural characteristics. Use this information to better understand and learn from the differences in treatment practice in each LHIN and apply best practices across the province. Further, use HBAM data to build specific strategies for co-ordinating health care for each high-use clinical group; for example, end-of-life care, avoidable complications, and care for those with mental health and addictions issues.

Optimize Human Resources Capacity

Recommendation 5-18: Where feasible, services should be shifted to lower-cost caregivers. Across the spectrum of caregivers, full scope of practice needs to be exercised.

There should be a net shift in responsibilities from physicians to nurses and others in health teams, including physician assistants. This should be supported by changes to fee schedules; for example, by not paying physicians for interventions like vaccinations that could be done by nurses.

There is a significant number of cases where there are minimal risks of complications and nurses or physician assistants can play a more independent role; however, there is an equally significant number of cases where there is a somewhat higher but not extreme risk of complications where nurses or physician assistants would require a doctor to be nearby to deal with any potential issues. Family Health Teams have optimized a model that could be transferable to other settings as nurses are often in close proximity to doctors.

Recommendation 5-19: A broader perspective should be applied to decisions that are made on the scope of practice of health professionals. Government should play a more active role in working with the professional colleges to apply a system-wide approach rather than dealing with individual professions in isolation.

Doctors and nurses may discuss among themselves what activities they should retain or give up, but there is no mechanism to put these internal dialogues together and get some action on changes that both agree would be beneficial.

Recommendation 5-20: Maximize opportunities to use nurse practitioners with the aim of efficiency, while maintaining excellent care.

Seven of the controlled acts authorized to physicians are also authorized to nurse practitioners, for example: periodic health examinations (“full physicals” for children, women and men); assessment and clinical management of acute episodic illness, for example, respiratory tract infections; and monitoring stable chronic health conditions, such as hypertension and diabetes, etc.

Recommendation 5-21: Recognize the increased demand for nurses in the capacity of nursing programs at colleges and universities and their ability to train more nurses.

There are already severe labour shortages for nurses and various technicians, with some reports of a 20 to 30 per cent attrition of nurses within the first year after nursing school. There is a desperate need to increase supply and improve retention. If this is not addressed quickly, demand-supply imbalance will blow up labour costs and compromise overall restraint.

Recommendation 5-22: Increase the use of personal support workers and integrate them into teams with nurse practitioners, registered nurses and other staff members where appropriate to optimize patient care.

Increasing the use of personal support workers to apply their full range of skills will allow other health professionals to focus on what they are trained to do best and deliver excellent, cost-efficient care.

Recommendation 5-23: Local Health Integration Networks need to use funding as a lever to encourage hospitals and other health care providers to use the full scope of practice of their staff.

Funding dictated by expensive and sub-optimal use of practitioners must cease. If health care organizations are not implementing the full scope of practice standards set by the ministry, the LHINs need to use funding reductions as an incentive for compliance.

Recommendation 5-24: Make changes to the Pharmacy Act to enable an expanded scope of pharmacy practice. This would involve developing supporting regulations to permit pharmacists to administer routine injections and inhalations, including immunization.

Contain Further Capital Investment

Recommendation 5-25: Hospital capital plans that extend out-of-hospital services such as those for outpatients should not be entertained by Local Health Integration Networks. Hospitals should conduct affairs largely within hospitals, and others, such as Community Care Access Centres (CCACs) and private health care operators, should be responsible for providing out-of-hospital services. The CCACs and private health care operators have demonstrated that they are capable of doing this work for less than hospitals.

Recommendation 5-26: Resist the natural temptation to build many more long-term care facilities for an aging population until the government can assess what can be done by emphasizing to a greater extent the use of home-based care that is supported by community services. Home-based care is less expensive and should generate greater population satisfaction.


Recommendation 5-27: Grant Local Health Integration Networks the authority, accountabilities and resources necessary to oversee health within the region, including allocating budgets, holding stakeholders accountable and setting incentive systems.

The LHINs should have clear powers to deal with all aspects of the health system’s performance in their area, including primary care (physicians), acute care (hospitals), community care and long-term care. This would include setting budgets and/or compensation for all players.

Recommendation 5-28: Tie compensation for CEOs and senior executives in all parts of the health care system to strategically targeted health outcomes, not the number of interventions performed, through a performance pay framework. Mirror this performance pay approach throughout each hospital, Community Care Access Centre, long-term care facility, etc., at the physician and health care worker levels.

Recommendation 5-29: Support transparency in senior executive and CEO salaries throughout the health care system by publicly posting comprehensive compensation information in a timely fashion.

Recommendation 5-30: Allocate funding based on meeting the needs of patients as they move through the continuum of care.

Case Management

An apparent weakness in the current health care system is the lack of smooth and consistent patient case management.

Recommendation 5-31: Some regions have developed roles for “clerical system navigators” that co-ordinate appointments and assist patients with required forms and paperwork. Local Health Integration Networks should ensure that a sufficient number of people in this role are put in place across the entire health care system.

Recommendation 5-32: Empower primary caregivers and physicians in the Family Health Teams (FHTs) or specialized clinics to play the role of “quarterback,” tracking patients as they move through the integrated health system. All FHTs should work in tandem with clerical system navigators and hospitalist63 physicians to track their patients who are in hospitals, from admission to discharge (see Recommendation 5-55 on hospitalists for more details).

Recommendation 5-33: Tightly integrate Community Care Access Centres (CCACs) with Local Health Integration Networks (LHINs) to improve patient case management. There are options that should be explored about the nature of this integration. It could be either through co-operation of two entities or a more formal and complete merger of CCACs into this one key aspect of the work of LHINs.

Recommendation 5-34: Require hospitals to make discharge summaries available electronically to other care providers (e.g., general practitioners, home care) immediately.

Recommendation 5-35: Switch to electronic delivery of laboratory test results to improve timeliness and efficiency, as well as support patient privacy.

Recommendation 5-36: Reduce absenteeism for Ontarians and office visits, while improving patient satisfaction, through secure messaging between patients and providers, online appointment scheduling, access to test results for patients, and online requests for prescription refills and renewal.

Management of Complex and Chronic Conditions

Recommendation 5-37: Complex care patients should be managed through interprofessional, team-based approaches to maximize co-ordination with Family Health Teams and other community care providers.

Recommendation 5-38: Chronic issues should be handled by community and home-based care to the fullest extent possible.

Recommendation 5-39: Reach out to patients who need preventive care, particularly chronic disease and medication management, rather than waiting for them to come to get services. Leverage electronic medical records, decision support and secure messaging with Ontarians to achieve these goals.

Recommendation 5-40: Reduce mortality, hospitalizations and costs while improving patient satisfaction by connecting Ontarians who have serious chronic health problems (e.g., congestive heart failure) with ongoing monitoring and support through expanded use of telehomecare.

Recommendation 5-41: Centralize leadership of chronic disease management by developing co-ordinating bodies for chronic conditions including mental health, heart and stroke and renal disease, based on the Cancer Care Ontario model.

Governance and Structures

If revamped LHINs are to co-ordinate the system, they would need appropriate representation.

Recommendation 5-42: Resource the Local Health Integration Networks adequately to perform their expanded functions. Additional resources should come in large part from the Ministry of Health and Long-Term Care; this would entail a significant transfer of employees.

Recommendation 5-43: Put in place clear structures to clarify the lines of accountability up to the Local Health Integration Networks (LHINs) and the accountability of LHINs to the Ministry of Health and Long-Term Care.

The LHINs should be able to set accountabilities for primary care provider remuneration as well as regional health system performance, removing the direct influence of MOHLTC. The ministry used to control inputs and paid little attention to outcomes; affording LHINs the ability to focus on outcomes and ease off on inputs and process will help drive positive results. Establishing target outcomes for LHINs in areas such as mental health and diabetes will have a greater impact on health system efficiency than the previous approach of focusing on activities like reducing emergency wait times. In addition, removing the political influence from LHINs’ day-to-day operations will help enable change and innovation. All too often, negative reports in the media have stymied evolution in health care policy and delivery. Government needs to stand by the LHINs’ decisions, even facility closures, if need be.

Recommendation 5-44: Move critical health policy decisions out of the context of negotiations with the Ontario Medical Association and into a forum that includes broad stakeholder consultation.

Currently, decisions regarding medical procedures that are covered under OHIP or excluded from coverage are part of the compensation package negotiated periodically by the government and the OMA. This should stop. As in other jurisdictions, doctors should be consulted on such questions, but no more. Such decisions should be made elsewhere (see next recommendation).

Evidence-based Policy

We must recognize that physicians have a tough job. Medicine is complicated and ever-changing. After many years in school, doctors are thrust into a life of long work hours, which makes it difficult to keep up with the latest research and best practices. They need research-based clinical guidelines to help them stay current with developments in medicine. This is why the government established both the ICES and HQO. Other countries have set up similar quality councils, like Britain’s National Institute for Health and Clinical Excellence. In Ontario, the work of ICES and HQO can be the basis for clinical guidelines that can advise physicians and other health care providers on the most effective and efficient ways of dealing with specific medical problems.

Recommendation 5-45: The Institute for Clinical Evaluative Sciences and Health Quality Ontario must work in tandem, integrating their respective expertise into practical recommendations for health care providers.

They could also help the government decide which procedures might be removed from public coverage, a task now done through the ministry’s negotiations with the OMA.

Recommendation 5-46: As a body of practice is established, expand the mandate of Health Quality Ontario to become a regulatory body to enforce evidence-based directives to guide treatment decisions and OHIP coverage.

Health Quality Ontario is responsible for making recommendations with respect to clinical practice guidelines and the provision of funding for health care services and medical devices based on scientific evidence. Though effectiveness is a central tenet of their research, efficiency should also become an equally large focus.

Care should be taken to ensure that innovation is not stifled by directives that are unreasonably rigid. Such an initiative:

  • Requires effective input from key stakeholders including physicians;
  • Requires effective liaisons with quality/research organizations in other provinces, in the federal government and in other countries; and
  • Requires an international scientific advisory body.

Recommendation 5-47: Make all Health Quality Ontario work public. Use the evidence found to inform directives on practices and what will be covered by OHIP.

Recommendation 5-48: More work must be done on the efficiency front for the Institute for Clinical Evaluative Sciences.

The mandate of ICES is to conduct research that contributes to the effectiveness, quality, equity and efficiency of health care and health services in Ontario. Its work to date has made great strides on the fronts of effectiveness, quality and equity; however, the efficiency component has lagged the others.

Both ICES and HQO could become instrumental in helping increase efficiency of the health system without jeopardizing quality. It is no longer sufficient to simply ask whether a practice or a pharmaceutical offers the prospect of improved health. A much more stringent test is to determine if it is an efficient way to achieve positive health outcomes.

Recommendation 5-49: Explore the potential for a national Organization for Economic Co-operation and Development-type entity that collates and enhances evidence-based policy directions and provides enhanced collaboration on issues across jurisdictions. It could provide a gathering place for dialogue and a secretariat with a capacity for analysis. Such an organization could be housed with the Council of Health Ministers or Deputy Ministers. The federal government should be involved.

Despite variations in how health care is provided across the country, all provinces and territories face the same challenge of controlling health care cost increases without sacrificing excellent care. Much can be learned by discussing and understanding what each jurisdiction is doing and there is an opportunity to conduct cross-jurisdictional studies to determine the best approach. The federal government is unlikely to play the role of facilitating such a dialogue; however, Ontario should convene with the other provinces and territories and invite the federal government to participate.


At present, the payment hospitals receive is based on average costs across the province so there is no incentive to increase efficiency. There is little understanding of the true costs of hospital procedures and, as such, estimations of value for money are difficult to ascertain. Both MOHLTC and LHINs need to take a hard look at the variability in the costs incurred by hospital procedures from region to region and hospital to hospital, and take steps to ensure that Ontario is getting the best value for its money when allocating funds to hospitals.

Recommendation 5-50: Use data from the Health-Based Allocation Model (HBAM) system to set appropriate compensation for procedures and cease the use of average costs to set hospital payments (see Recommendations 5-17 and 5-73 for more details on HBAM).

Recommendation 5-51: Create a blend of activity-based funding (i.e., funding related to interventions or outcomes) and base funding managed through accountability agreements.

Indeed, a shift to activity-based funding should be applied as well to other parts of the health system. Currently, hospital budgets are mostly determined by a percentage increase from the previous year’s budget, regardless of whether a hospital’s activities are increasing or decreasing. Under activity-based funding, a hospital would get a set amount for a specific intervention. For example, a hospital might get $2,000 for each cataract surgery, $400 to set a broken arm and $8,000 for a hip replacement. An activity would shift to the hospitals that can perform it profitably, while hospitals that cannot meet that standard would either become more efficient or reduce their efforts in this area, ideally by focusing on activities that they can do well. The result would be a general reduction in the cost of each procedure.

Recommendation 5-52: Create policies to move people away from inpatient acute care settings by shifting access to the health care system away from emergency rooms and towards community care (i.e., walk-in clinics and Family Health Teams), home care and, in some cases, long-term care.

This alone should reduce the number of people who end up being admitted to hospital beds even though that is not appropriate for the nature of care they need.

Recommendation 5-53: Encourage hospitals to specialize so all are not trying to provide all services regardless of their comparative advantages.

To a degree, proper funding incentives will energize this shift; if a certain reimbursement rate is set for an activity, hospitals that cannot provide the service within that rate will gravitate away from it. More specialty clinics should also be encouraged, because they can cost less and provide better quality. Again, a proper funding model should support this.

Recommendation 5-54: Given the burden of alternate level of care (ALC) patients on hospital capacity, hospitals must become more effective in optimizing this capacity while applying best practices in planning patient discharges. Further, small hospitals with large ALC populations must be assessed with a goal of redefining their role in care for the elderly. Again, funding should be aligned appropriately.

Recommendation 5-55: Use hospitalist physicians to co-ordinate inpatient care from admission to discharge. Hospitalists should work with Family Health Teams to better co-ordinate a patient’s moves through the health care continuum (acute care, rehabilitation, long-term care, community care and home care).


Recommendation 5-56: Make primary care a focal point in a new, integrated health model.

Recommendation 5-57: Regional health authorities must integrate physicians into a rostered health system and adopt the appropriate measures to address compensation issues across disciplines; that is, the proper blend of salary/capitation and fee-for-service.

The primary goal for physician performance should be prevention and keeping people out of hospitals. Collective administrative support would allow physicians to concentrate on providing better care, a value proposition that should appeal to them.

Recommendation 5-58: Reduce the sole proprietorship nature of the offices of many primary care physicians and encourage more interdisciplinary integration through performance incentives and accountability.

Recommendation 5-59: Compensate physicians using a blended model of salary/capitation and fee-for-service; the right balance is probably in the area of 70 per cent salary/capitation and 30 per cent fee-for-service.

Physicians’ compensation, and especially performance pay, should be linked to positive health outcomes that are linked to strategic targets, not to the number of interventions performed.

Recommendation 5-60: Aggressively negotiate with the Ontario Medical Association for the next agreement.

The government must be very strategic in its objectives to ensure the promotion of a high-quality care system that runs efficiently. Since Ontario’s doctors are now the best paid in the country, it is reasonable to set a goal of allowing no increase in total compensation. However, the negotiations must go well beyond compensation. They must also address the integration of physicians into the rest of the health care system and the objective of working towards the best possible health quality regime.

Recommendation 5-61: Adjust fee schedules in a timely manner to reflect technological improvements, with the savings going to the bottom line of less expenditure on health care.

Technological improvements often reduce the time required for procedures. Will Falk has recently pointed to the example of radiology, where government investments, including those made through the Canada Health Infoway program, have resulted in vast productivity improvements. Despite the fact that these improvements have drastically reduced the time it takes to diagnose (and hence greatly increased the volumes of diagnoses that can be made in any given day), the fee schedule has not been adjusted to reflect these effects.64

Recommendation 5-62: Make Family Health Teams (FHTs) the norm for primary care and design the incentive structure of physicians’ compensation to encourage this development. Among the key characteristics of FHTs are the following:

  • The regional health authority should play a key role in determining their relationship with the rest of the health care system and setting ground rules for their operation;
  • Make outcomes the focus of FHTs, not health interventions. Their operation should be tightened through objectives, accountability and a data collection system;
  • Conduct research to determine the optimal size of FHTs, taking into account factors such as geography and patient demography. Balancing economies of scale while maintaining personal connections between health care providers and patients is crucial: FHTs need the scale to support a wide range of care providers and be able to support the administration necessary, including the responsibility of tracking people through the system. It has been suggested to the Commission that the optimal size, for larger communities, may be in the range of 8 to 15 physicians, and include practitioners with a wider range of specialties than is now the case. They now typically have only three to eight physicians; and
  • To provide a range of services at a lower cost, include other health professionals in the FHTs (nurse practitioners, registered nurses, dietitians and midwives, for example). Unlisted practitioners such as physiotherapists and massage therapists would also be part of FHTs; however, their services would be provided on a cost-recovery basis.

Recommendation 5-63: Require Family Health Teams (FHTs) to accept patients who choose them, and the FHTs should work with each patient to connect them with the most appropriate constellation of care providers.

Recommendation 5-64: The regional health authority should establish incentives to discourage Family Health Teams from referring patients to acute care.

Recommendation 5-65: Regional authorities should also be responsible for assigning heavy users of the health care system to the appropriate Family Health Team (FHT). If, for example, there are 300 heavy users within a region and three FHTs, the regional health authority would try to steer 100 to each, so that no FHT is overburdened.

Recommendation 5-66: Because Family Health Teams (FHTs) will be responsible for patient tracking, they will need to build a critical mass of an administrative arm to carry out this task. This administrative arm should be shared among a number of FHTs.

Recommendation 5-67: Better after-hours care must be offered and telephone/Internet services should direct patients to the most appropriate and convenient care provider.

Recommendation 5-68: All Family Health Teams must be encouraged to add more specialists to their teams, which will reduce referrals and ease some of the complexities of patient tracking.

Recommendation 5-69: The Ministry of Health and Long-Term Care should allow the flexibility necessary for Family Health Teams to share specialists by permitting part-time contracts.

Recommendation 5-70: All Family Health Team physicians must begin engaging in discussions with their middle-aged patients about end-of-life health care.

Far too often, patients and their families are thrust into making these types of critical decisions under duress, where a clear understanding of alternatives and consequences is essential and the need to rapidly implement the patient’s wishes is required.

The ministry should seek the assistance of and input from seniors’ advocacy organizations (like CARP65) to engage the public in an open dialogue on the appropriate policies and approaches to address end-of-life care. A module should be developed to assist people in setting out their wishes and advising them on the appropriate processes to ensure that their wishes are carried out. Informing people about the importance of using an advance health care directive (also known as a “living will”) as opposed to the last will and testament as the legal document to express one’s end-of-life care wishes is essential.

Primary care physicians need to open the dialogue about a living will that lays out how individuals wish to be cared for when they are unable to do so, including the need to discuss the living will with family beforehand to mitigate any possible conflicts later.

If patients indicate their preference in approach, then the physician should receive assurances from the patient that there is understanding among all family members. If patients have not indicated a preference, then the physician should gently ensure that the issue is raised.

Having a clear understanding by all parties of patients’ wishes regarding end-of-life care offers the ability to put in place a plan to provide the care necessary to meet the patients’ needs and provide the services in a timely manner when the need arises. This in turn will help to reduce the number of ALC patients who are waiting for places in long-term care facilities and hospices.

Recommendation 5-71: Improve access to care (e.g., in remote communities) and productivity for specialists by triaging appropriate patients for telemedicine services (e.g., teledermatology, teleophthalmology).

Recommendation 5-72: Remove perverse incentives that undermine the quality and efficiency of care. For example, physicians are penalized when one of their patients goes to another walk-in clinic, but not when the patient goes to the emergency department of a hospital. More generally, the fee-for-service compensation model gives an incentive for medical interventions without due consideration to quality and efficiency of care. Such incentive issues must be addressed by focusing the Ontario Medical Association’s negotiations more on quality of care and amending payment systems for physicians and throughout the health care system.

Recommendation 5-73: The model described in the above recommendations must be supported by a robust data collection and sharing system that allows the creation of the necessary records. For example, the model works only if we know how many patients are not visiting emergency departments or how many diabetes patients are not experiencing complications (see Recommendations 5-17 and 5-50 on Health-Based Allocation Model data for more details).

Community Care, Home Care and Long-Term Care

Recommendation 5-74: Increase the focus on home care, supported by required resources, particularly at the community level.

Recommendation 5-75: Match seniors to the services that they need from the earliest available care provider, reduce alternate level of care days, and improve co-ordination of care through the use of referral management tools for long-term care, home care and community services.

Recommendation 5-76: Implement the recommendations contained in “Caring for Our Aging Population and Addressing Alternate Level of Care,” a report prepared by Dr. David Walker and released in August 2011.66

More specifically, the government should move quickly to implement his proposals that:

  • Ontario’s health care system needs to undergo a broader transformation to meet the care needs of an aging population;
  • Primary care providers must make care for the elderly a priority, including the early identification of seniors at risk of frailty and proactive management of their multiple challenges;
  • The continuum of community care must be supported through additional and sustained resources to integrate, co-ordinate and enhance traditional sectors and assisted living arrangements while bridging gaps through new models of care that serve populations whose care needs exceed what is currently available;
  • Seniors and younger populations with special needs, particularly behavioural challenges, must be provided with knowledgeable, integrated care across the continuum, wherever they seek treatment, with equitable and timely transition to the right provider for the right service;
  • An “assess and restore” philosophy and function must be central to health care delivery. There should be an enhancement of programs aimed at restoring and reactivating elderly patients’ level of functioning, and creating opportunities for them to be transferred home with appropriate ongoing supports; and
  • Improved communication between institutions, and between primary care and CCACs, through the use of electronic medical records is essential. Furthermore, advances made in the use of telehomecare should be disseminated and adopted broadly for the right ALC populations.

Recommendation 5-77: In addition to recommendations contained in “Caring for Our Aging Population and Addressing Alternate Level of Care,” a report prepared by Dr. David Walker and released in August 2011,67 there is a need for more and varied palliative care — at home and in residential hospices.

Health Promotion and Prevention

Recommendation 5-78: Integrate the public health system into the other parts of the health system (i.e., Local Health Integration Networks).

Much public health work is done outside the primary health care sector, for example, in matters of settlement and housing. The potential impacts of budget integration should be taken into consideration as the funding sources for public health are strongly linked to municipal budgets.

Recommendation 5-79: Review the current funding model that requires a 25 per cent match from municipalities for public health spending.

Many municipalities are now considering reducing their funding, which puts public health units at risk of losing provincial support as a result of the municipal cuts.

Recommendation 5-80: Consider fully uploading public health to the provincial level to ensure better integration with the health care system and avoid existing funding pressures.

Recommendation 5-81: Improve co-ordination across the public health system, not only among public health units, but also among hospitals, community care providers and primary care physicians.

With the advent of LHINs, hospitals refocused on acute care and core services, but as an unintended result, they began pulling back on public health functions such as diabetes counselling.

Recommendation 5-82: Replicate British Columbia’s Act Now initiative, which has been identified by the World Health Organization (WHO) as a best practice for health promotion and chronic disease prevention, in Ontario.

There appears to be some correlation between health outcomes and the amount provinces spend on public health. A 2009 study by Douglas Manuel and others revealed that British Columbia, which spends almost three times as much per capita on public health as Ontario, is the leading province in terms of overall population health and health behaviours (including quitting smoking, engaging in regular physical activity, choosing a healthy diet and maintaining a healthy body weight).68 This apparent correlation between public health spending and health outcomes needs to be further explored through research to determine the benefit-cost ratios.

Recommendation 5-83: Have doctors address diet and exercise issues before reaching for the prescription pad when dealing with health issues such as cardiovascular disease and late-onset Type 2 diabetes.

Patients need to heed their doctor’s advice and make lifestyle changes when requested. For example, the cholesterol-lowering medication Lipitor has been the biggest selling drug for over 10 years, in some years exceeding $1 billion in sales. As Lipitor is the most-often prescribed drug in Canada for those over age 65, this means that the ODB program is covering a substantial cost that could be potentially alleviated, at least in part, by lifestyle changes in Ontarians.

Recommendation 5-84: Do more to promote population health and healthy lifestyles and to reverse the trend of childhood obesity, especially through schools.

In addition, the government should explore regulatory options for the food industry. This would require the integration of health promotion activities with municipalities and school boards, among others. It will be important to take a whole of government approach to population health and include population health in planning considerations.

Recommendation 5-85: Work with the federal government on nutrition information and, where appropriate, regulation.

If we apply the WHO population attributable risk estimates to Canadian mortality statistics, nutrition-related chronic diseases now cause some 48,000 deaths annually in Canada and perhaps some 16,000 deaths in Ontario.69 If the federal government does not act in a timely fashion, Ontario should act alone in areas such as restricting the amount of trans fat and sodium permissible in restaurant and manufactured foods, and establishing a provincial chronic disease prevention strategy, including nutrition, tobacco, alcohol and physical activity measures.

Medical Schools/Training

Recommendation 5-86: Medical schools should educate students on “system issues,” so they better understand how physicians fit into the health care system; for example, how to deal with patient needs efficiently and effectively, but using fewer resources by connecting different parts of the health care system.

Recommendation 5-87: Do a better job of flagging health professions and locations that are currently in short supply or where shortages can be expected in the future.

The school system seems to be the right focal point for carrying out the task of labour supply planning. Medical schools need to do their part to ensure an adequate supply of health care professionals is able to care for the aging population.


Recommendation 5-88: Link the Ontario Drug Benefit program more directly to income.

Almost all of the cost of prescription drugs for seniors is now covered by the provincial government. This is very expensive. Ontario needs to start having an open, honest discussion about public coverage of health care costs, which includes the possibility of broader public coverage of pharmaceutical costs and how it should be financed.

In the meantime, the ODB should be better targeted. Two basic options are on the table, each with differing effects on who would benefit and the level of savings that can be achieved. A minimal step would be to make the portion of pharmaceutical costs paid for by seniors rise more sharply as income increases. The other, preferred, option is to sever the link to age and instead link the benefit to income only. In either case, changes would need to be phased in over time.

Option 1, which the Commission views as de minimus, is to change the program only as it applies to seniors. That change would see the tightening of the relationship to income. In other words, co-payments would increase more sharply, and in a more graduated fashion, as income rises. This option would permit substantial savings. Out of the $2.7 billion now spent within the ODB program on subsidizing pharmaceuticals for seniors, at least $300 million could be saved annually. Tightening the relationship further, it is feasible to save as much as $1 billion per year. In that scenario, the highest-income seniors would see their annual co-payments increase around $1,000 per year.

Option 2, and the preferred route forward for the Commission, is to change the program as it applies to both seniors and lower-income non-seniors. In this option, the links to age and social assistance status would end. Instead, the program would be linked solely to income. So an individual or family would have the same eligibility and extent of assistance with the cost of pharmaceuticals regardless of age or whether they are receiving social assistance. This option would greatly strengthen the equity of the program. It would also remove a large brick in the so-called “welfare wall.”

What is the “welfare wall”? It is a series of barriers that can discourage people from leaving social assistance. In the case of the ODB, after a short interval social assistance recipients through Ontario Works and the Ontario Disability Support Program (ODSP) lose access to pharmaceutical cost support if they take a job. This is a major contributor to what is known as the high marginal tax rate faced by social assistance recipients entering the workplace (more information on barriers in the current social support system can be found in Chapter 8, Social Programs). Put simply, it serves as a disincentive to finding employment. Making the ODB available to all within a low-income range would remove this disincentive.

However, it would be more difficult under this scenario to extract the large savings feasible under Option 1. That is because there would be new recipients who would become eligible — lower-income non-seniors who are not receiving Ontario Works or ODSP — and this would offset much of the savings from no longer subsidizing pharmaceuticals for higher-income seniors.

The Commission regrets it was not able to be informed by any modelling of such an option, which would have helped clarify the net fiscal impact and the incidence. However, we feel that at worst it should be possible to design such a scenario on a cost-neutral basis that would still leave the benefits of enhanced equity and less disincentive for social assistance recipients to enter the workforce. Ontario is not the only province to explore these options. British Columbia offers a model worthy of study: in 2003, it changed its age-dependent program into one that links solely to income.

Recommendation 5-89: Help reduce medication errors through the use of electronic supports to cross-reference multiple prescriptions.

Recommendation 5-90: Reduce fraudulent prescription medication use through the use of drug information systems.

Recommendation 5-91: Pursue — with other provinces — the possibility of establishing a national entity that would set a common price for pharmaceuticals for the entire country (or at least jurisdictions opting in).

This would create economies of scale. In addition, a number of regulatory bodies at both the provincial and federal levels are responsible for overseeing the pharmaceutical industry. The regulations set by one body often do not map to those set by another, and often they are not aligned to those set by comparable bodies in other countries. Overlapping regulations across provinces and across countries add costs and present barriers to new drugs entering the marketplace in an efficient manner.

Recommendation 5-92: Conduct drug-to-drug comparisons to determine which drug is the most efficient at addressing a given ailment.

Drugs are approved by Health Canada for use after studies prove that they are more effective than a sugar pill. Groups such as ICES and HQO need to conduct treatment comparison studies to help inform what kinds of pharmaceuticals (and, if applicable, treatment combinations) should be prescribed to provide the most effective and efficient care. Decisions regarding coverage of new brand-name drugs should be made with an evidence-based approach to ensure that all new drugs are adding value that exceeds their cost.

Recommendation 5-93: Work with the federal government to ensure that Ontario’s interests in expanding use of generic drugs are not undermined by a Canada-European Union Free  Trade Agreement.

Harmonizing patent protection for brand-name drugs to European standards could cost Ontario dearly since generic drugs would be kept off the market for a longer time. Aidan Hollis at the University of Calgary and Paul Grootendorst at the University of Toronto found in their February 2011 report that, if all three of the EU’s pharmaceutical intellectual property (IP) proposals are adopted, it could cost Ontario payers up to $1.2 billion annually ($551 million for Ontario government, $672 million for private sector),70 which would more than wipe out the savings achieved through the government’s recent drug reforms.

Recommendation 5-94: Use pharmacists to their full scope of practice.

  • Permit the practice of therapeutic substitution, which would allow pharmacists to substitute a less expensive alternative to the physician’s prescription. In British Columbia, pharmacists can change the dose and the prescription within the same class of drugs without consulting the prescribing doctor first, though they do have to inform the prescribing doctor after the prescription is filled. Pharmacists can also change prescription formulations based on identified risks or side effects. For example, some formulations of proton pump inhibitor drugs (used to control stomach acid) are better for people with kidney problems. If the doctor has not prescribed the best formulation, the pharmacist can change the prescription.
  • Permit pharmacists to administer injectables and inhalant medications. Pharmacists in Ontario were just recently permitted to administer them for purposes of demonstration and education only. Many other provinces and U.S. states permit pharmacists to perform vaccinations. Ontario has very low vaccination rates. They may be improved through increased access as pharmacies are prevalent and accessible.
  • Allow pharmacists to prescribe for minor ailments. In Saskatchewan, prescribing for minor ailments is being done by pharmacists. They are allowed to prescribe for self-limiting conditions like skin rashes or eye infections, but if they do not get better in a few days, they are referred to a physician. Pharmacists could also write prescriptions for smoking cessation or other non-prescription therapy.

Cost Efficiencies

Recommendation 5-95: Centralize all back-office functions such as information technology, human resources, finance and procurement across the health system.

There is redundancy and duplication in the current system design, with hundreds of independent organizations having some level of administrative/corporate structure and back-office models that result in higher-than-necessary administrative costs. These structures could build on some of the procurement mechanisms in place now (e.g., Plexxus, 3SO, Shared Services West) but need to go further and move forward faster to create stronger single enterprise solutions for all central back-office functions. They should be integrated at a LHIN level (and possibly across all LHINs) to reduce the percentage of overall spending on these services to benchmark levels that have been achieved in other provinces. Assuming a savings benchmark of six to eight per cent of total spending on administration costs, the potential savings in Ontario could be up to $1 billion. In addition, leveraging purchasing power, standardizing procurement practices and managing inventory more effectively would generate savings through lower costs for goods and services purchased.

Recommendation 5-96: Establish a central mechanism to oversee the creation of a “spot market” for goods and discretionary services, such as diagnostics, infusions and specialist consultation services.

A spot market is a system whereby if a hospital or other institution has an overstock of a particular supply, they can instantly locate and quickly transfer goods to other institutions in the province that are running short. If there is a need for a particular service in an institution, the system would be able to quickly identify service providers and provide a portal through which a price can be efficiently negotiated. This would achieve economies of scale across the system.

Recommendation 5-97: Put a wider array of specialist services to tender based on price and quality, while remaining under the single-payer model.

Build on the success of the Kensington Eye Institute in treating cataracts quickly and efficiently. This model could include private for-profit clinics that operate within the public payer system. Government should continue to determine what services are offered and set the fees paid by OHIP.

Recommendation 5-98: Put to tender more service delivery, but with the criteria for selection based on quality-adjusted metrics rather than just price.

Recommendation 5-99: Accelerate the adoption of electronic records, working in a bottom-up fashion.

Begin with doctors, clinics and hospitals and ensure that they use compatible systems. Then build bridges within a region, and then across regions. Currently, 60 per cent of physicians keep e-records. Incentives should be used to encourage physicians to adopt e-systems through the development of usable data and analysis tools. Also, Ontario has a wealth of information contained in the HBAM database that is currently underutilized. All HBAM data should be improved through integration with the e-records system so that LHINs and health care providers can use data to support evidence-based decision-making.

Recommendation 5-100: Adopt the Nova Scotia model in which emergency medical technicians provide home care when not on emergency calls; this requires integrating municipal and provincial funding structures.

Recommendation 5-101: Provide better information to individuals and families to facilitate self-care, for people with conditions such as diabetes.

Scope of Public Sector

Recommendation 5-102: Begin a dialogue with Ontarians on the issue of expanding the coverage of the health system to include, for example, pharmaceuticals, long-term care and aspects of mental health care.

Such an expansion could be funded either within a social insurance model or within the current public payer model that applies to most aspects of primary and physician care.

Reform Process

Recommendation 5-103: Involve all stakeholders in a mature conversation on the future of health care and the 20-year plan.

History has proven that anything done in the health field can be politically dangerous, especially if cost restraint is involved. There are ways to mitigate the risk that would clear the way to important reforms. It will be critical to explain the objectives carefully to the public and to stress that this is not just another round of cost restraint. The goal is to achieve efficiencies while enhancing quality. Publication of a far-seeing plan — as set out in Recommendation 5-1 — will be critical to the exercise. But this must be accompanied by other communications including pamphlets, speeches, town halls and the use of social media.

The stars are aligning for a discussion on health care because the stakeholders are themselves reaching out with proposals for reform, many of which are consistent with our recommendations here. The government can use intermediaries to convene discussions with stakeholders and the public.

The stakeholders themselves must speak out. Every citizen is a stakeholder, of course, and should pay attention to and preferably take part in any debate. But we must also hear from health care providers of all stripes, from drug companies whose products are one of the fastest-growing components of costs, from employers who bear much of the cost growth through coverage of their employees’ drug and other health costs, and from academics who study these issues.

Recommendation 5-104: Establish a Commission to guide the health reforms.

The scale of reform we propose is vast, dealing with organizational, clinical and business issues. There is a precedent for this approach; the Health Services Restructuring Commission was given power from 1996 to 2000 to expedite hospital restructuring in the province and to advise the Minister of Health on revamping other aspects of Ontario’s health system.71 Given that the scale of reform being proposed in this report extends well beyond hospitals, a new commission should be established to guide the reforms, drawing from a broad range of stakeholder communities, including providers and citizens/patients.

Recommendation 5-105: Do not let concerns about successor rights stop amalgamations that make sense and are critical to successful reform.

Successor rights as currently defined do not necessarily limit the right of the government, for legitimate reasons within its purview of responsibility, to engage in system reorganization. Successor rights simply require that the government respect successor rights in doing so. Inherited agreements do not live forever; provisions can be accepted initially and bargained differently when they come up.


We believe these recommendations can guide the health care system over the period to 2017–18 in a way that meets our target of a 2.5 per cent annual increase in health care funding by the province. In light of our recent past, this is a tough goal; it implies that real inflation-adjusted spending per person on health care would have to fall by a total of 5.7 per cent in the seven years from 2010–11, or 0.8 per cent per year. But there are many opportunities we can seize to reform the system in ways that bring better care to more people at less cost.

The reforms we recommend matter most. Lashing out with major spending cuts solves little. In the 1990s, the health budget was not only restrained, but cut for a few years. Because thorough underlying reforms were not implemented, however, pressures built and spending took off again, beginning in 1999. The experience left the public even more leery of moves to save money or raise efficiency.

Beyond 2017–18, when a higher proportion of the baby boomers have reached the age at which health care costs begin to escalate, spending will probably accelerate. But this is where our recommendation for a 20-year plan and full public debate is crucial.

The tone of such a debate over our health care future matters. The government should describe the challenges ahead that are posed by demographic and lifestyle changes. It should highlight the potential to make the system more efficient in terms of both quality and cost. It should discuss financial issues squarely. It should present the fundamental choices clearly. The clear danger is that if we do not seize the opportunity to begin creating a more efficient system that delivers more value for the money we spend on health care, one or two decades from now, Ontarians will face options far less attractive than the ones we face today. Unless we act now, Ontarians will be confronted with steadily escalating costs that force them to choose either to forgo many other government services that they treasure, pay higher taxes to cover a relentlessly growing health care bill, or privatize parts of the health care system, something that is anathema to most Ontarians.

We can and should avoid such an outcome by making the right decisions today, however tough they appear at the moment. Our decisions will not be perfect, but almost certainly, they will ensure that we bequeath a more equitable, more cost-efficient and higher-quality system to future generations.

1. The analysis in this chapter and many of the passages is drawn directly from “A Prescription for Canada’s Health System,” Don Drummond’s Benefactors Lecture to the C.D. Howe Institute, Nov. 17, 2011, downloaded from

2.  This is the compound annual growth rate from 2000–01 to 2010–11.

3. Don Drummond and Derek Burleton, “Charting a Path to Sustainable Health Care in Ontario, 10 Proposals to Restrain Cost Growth Without Compromising Quality of Care,” TD Economics, May 27, 2010, downloaded from

4. David Dodge and Richard Dion, “Chronic Healthcare Spending Disease: A Macro Diagnosis and Prognosis,” C.D. Howe Institute, April 2011, downloaded from

5.  Canadian Institute for Health Information, “National Health Expenditure Trends, 1975 to 2011,” October 2011, calculations based on data in Tables B.4.1 and B.4.2; downloaded from

6.  Dr. David A. Walker, “Caring for our Aging Population and Addressing Alternate Level of Care: Report Submitted to the Minister of Health and Long-Term Care,” June 30, 2011; downloaded from

7. Robert W. Fogel, “Forecasting the Cost of U.S. Health Care in 2040, National Bureau of Economic Research,” Working Paper 14361, downloaded from

8. Detailed survey responses provided by the Gandalf Group, downloaded from

9. Stuart N. Soroka, “Public Perceptions and Media Coverage of the Canadian Healthcare System: A Synthesis,” Canadian Health Services Research Foundation; released October 2011, downloaded from

10. U.S. Census Bureau, “Income, Poverty, and Health Insurance Coverage in the United States: 2010,” September 2011, downloaded from

11. Canadian Institute for Health Information, “National Health Expenditure Trends, 1975–2011,” November 2011, pp. 118, 144, 146, downloaded from

12. Organization for Economic Co-operation and Development, “OECD Health Data 2011 –– Frequently Requested Data,” November 2011, downloaded from,3746,en_2649_37407_2085200_1_1_1_37407,00.html.

13. In 2008, Canada ranked 23rd of the 32 countries for which there are data.

14. Standing Senate Committee on Social Affairs, Science and Technology, Final Report of Senate Subcommittee on Population Health, “A Healthy, Productive Canada: A Determinant of Health Approach,” June 2009, pp. 7–9, downloaded from

15. Commonwealth Fund, “Mirror, Mirror on the Wall: How the Performance of the U.S. Health Care System Compares Internationally, 2010 Update,” p. 3, downloaded from

16. Canadian Institute for Health Information, “Health Care in Canada, 2010,” p. 85, downloaded from

17. Fraser Institute, “How Good is Canadian Health Care? 2008 Report,” p. 55, downloaded from

18. CIHI, “Health Care in Canada, 2010,” op. cit., p. 85.

19. Ibid., p. 84.

20. Ibid., pp. 82–84.

21. Fraser Institute, op. cit., p. 8.

22. Frontier Centre, “Canada Health Consumer Index 2010,” December 2010, p. 17, downloaded from!B.pdf.

23. Ibid., p. 21.

24. Ibid., p. 29.

25. Mark Stabile and Jacqueline Greenblatt, “Providing Pharmacare for an Aging Population: Is Prefunding the Solution?” IRPP Study, February 2010, p. 9, downloaded from

26. Ibid., p. 7.

27. Colin Busby and William B.P. Robson, “A Social Insurance Model for Pharmacare: Ontario’s Options for a More Sustainable,
Cost-Effective Drug Program,” C.D. Howe Institute, April 2011, downloaded from

28. CIHI, “Health Care in Canada,” 2010, op. cit., pp. 22–24.

29. Ibid., pp. 25–35.

30. Ibid., pp. 43–45.

31. Ibid., pp. 49–54.

32. Walker, op. cit.

33. Organization for Economic Co-operation and Development. “Healthcare Systems: Efficiency and Policy Settings 2010,” downloaded from,3343,en_2649_33733_46491431_1_1_1_1,00.html.

34. Calculations based on CIHI, “National Health Expenditure Trends, 1975–2011,” op. cit., Table 4.

35. Conference Board of Canada, “The Canadian Heart Health Strategy: Risk Factors and Future Cost Implications,” February 2010, p. 17, downloaded from

36. Marc-André Gagnon and Guillaume Hébert, “The Economic Case for Universal Pharmacare: Costs and Benefits of Publicly Funded Drug Coverage for All Canadians,” Canadian Centre for Policy Alternatives, September 2010, downloaded from

37. C. Preyra, “Realizing the Health Based Allocation Model,” PowerPoint deck provided by Mr. Preyra, 2010, p. 37.

38. W. Wodchis, P. Austin, A. Newman and A. Corallo, “High Cost Users of the Ontario Health Care System: Preliminary Analyses,” 2011, PowerPoint deck provided by ICES, p. 3.

39. E.J. Emanuel, “Where Are the Health Care Cost Savings?” JAMA 307 (Jan. 4, 2012), no. 1. pp. 39–40.

40. Ontario spent $44.8 billion last year on health. Using the ICES figures, 34 per cent of $44.8 billion is $15.2 billion, so a 10 per cent reduction in costs would be $1.5 billion.

41. Wodchis et al., op. cit., p. 21.

42. Bridgepoint Health and Boston Consulting Group, “Improving Value in Managing Patients with Complex Chronic Disease,” PowerPoint deck provided by Bridgepoint Health, 2011.

43. Preyra, op. cit., p. 41.

44. S. Stewart, A.J. Vandenbroek, S. Pearson and J.D. Horowitz, “Prolonged Beneficial Effects of a Home-Based Intervention on Unplanned Readmissions and Mortality Among Patients with Congestive Heart Failure,” Arch Intern Med 159 (Feb. 8, 1999), no. 3, pp. 257–61.

45. Preyra, op. cit.

46. A.A. Louis, T. Turner, M. Gretton, A. Baksh and J.G. Cleland, “A Systematic Review of Telemonitoring for the Management of Heart Failure,“ Eur J Heart Fail 5 (2003), no. 5, pp. 583–90.

47. J. Lawson, “High User Analysis,” 2008, PowerPoint deck provided by Mr. Lawson.

48. R.J. Reid, R.G. Evans, M.L. Barer, S. Sheps, K. Kerluke, K. McGrail, C. Hertzman and N. Pagliccia, “Why Do Some People Use So Much Health Care?” 2003, University of British Columbia Research Brief downloaded from

49. It should be noted that in this group it may have been the case that support services were not needed.

50. Lawson, op. cit.

51. W. Gnam, “The Economic Costs of Mental Disorders and Alcohol, Tobacco, and Illicit Drug Abuse in Ontario, 2000,” 2006, Centre for Addiction and Mental Health Fact Sheet, downloaded from

52. Ministry of Health and Long-Term Care, “Every Door is the Right Door: Towards a 10-Year Mental Health Strategy,” 2009, p. 16.

53. Lawson, op. cit.

54. Family Service Ontario, “Walk-In Counselling Clinics: A Powerful Relief Valve for Pressure on Ontario’s Health Care System,” 2011.

55. Some recent reports include “Wired for Success: An Ontario Brain Strategy,” Neurological Health Charities Canada (December 2010); “Respect, Recovery and Resilience,” Minister of Health and Long-Term Care’s Advisory Group (December 2010), downloaded from, and “Every Door is the Right Door: Towards a 10-Year Mental Health Strategy,” MOHLTC (July 2009), all of which are available online.

56. Select Committee on Mental Health and Addictions, “Navigating the Journey to Wellness: The Comprehensive Mental Health and Addictions Action Plan for Ontarians,” downloaded from

57. Ibid., p. 3.

58. Ontario Ministry of Health and Long-Term Care, “Open Minds, Healthy Minds, Ontario’s Comprehensive Mental Health and Addictions Strategy,” June 2011, p. 4, downloaded from>

59. OECD, “Help Wanted? Providing and Paying for Long-Term Care, 2011,” based on data in Table 2.2, p. 80, downloaded from,3746,en_2649_37407_47659479_1_1_1_37407,00.html#data.

60. There is a good discussion of management and data issues in a patient-centric system in Robert S. Kaplan and Michael E. Porter, “The Big Idea: How to Solve the Cost Crisis in Health Care,” Harvard Business Review, September 2011, downloaded from

61. Ontario Ministry of Health and Long-Term Care, “Open Minds, Healthy Minds,” op. cit., p. 4, downloaded from

62. The Health-Based Allocation Model (HBAM) is a tool to allocate funding for health services across communities in the province.  Allocations estimate the demand and costs of these services based on clinical and demographic information such as age, health status, patient flow and rural geography.

63. Hospitalists are physicians who dedicate their time to caring for hospitalized patients, following individual cases through the system, ensuring co-ordinated communication among the hospital’s health care providers and specialists, including surgeons and oncologists. This type of role is crucial when dealing with patients with complex cases where multiple specialists may be involved in their care.

64. W. Falk, M. Mendelsohn, J. Hjartarson and A. Southey, “Fiscal Sustainability and the Transformation of Canada’s Healthcare System: A Shifting Gears Report,” 2011, Mowat Centre, p. 36.

65. CARP was formerly known as the Canadian Association of Retired Persons and is now known as Canada's Association for the Fifty-Plus, but it has retained the CARP acronym. For more information, please see

66. Walker, op. cit.

67. Walker, op. cit.

68. D. Manuel et al., “What Does It Take to Make a Healthy Province?” Institute for Clinical Evaluative Sciences, 2009, p. vi.

69. World Health Organization, “Global Health Risks: Mortality and Burden of Disease Attributable to Selected Major Risks,” 2009, W.H.O. Geneva; see especially p. 17, downloaded from Statistics Canada, “Mortality, Summary List of Causes,” 2008, Ottawa. Catalogue no. 84F0209X, which indicates the total number of deaths in 2008 was 238,617, 20% of which is 47,723; downloaded from

70. P. Grootendorst and A. Hollis, “The Canada-European Union Comprehensive Economic and Trade Agreement: An Economic Impact Assessment of Proposed Pharmaceutical Intellectual Property Provisions,” 2011.

71. Schedule F of The Restructuring and Savings Act, S.O. 1996 Ch. 1 ("Bill 26,"), as quoted in “Looking Back, Looking Forward: The Ontario Health Services Restructuring Commission (1996–2000), A Legacy Report,” p. iii, downloaded from