Legislative Overview & AnalysisBill 36, Local Health System

Integration Act, 2005

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Status/Expected Timelines

• Introduced for First Reading November 24th

• Second Reading debates held November 29th to December 7th and referred to Standing Committee on Social Policy

• Will likely pass Second Reading prior to House rising on December 15th

• Dates for public hearings have not been yet set, but Ministry has indicated they will take place “early in the New Year”

• Bill may be put to Third Reading during special sitting of Legislature scheduled for February 13 to March 2nd

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Key Issues

1. Governance/Accountability of LHINs

2. Role/Mandate of LHINs

3. Funding/Accountability Agreements

4. Integration Powers

5. Labour Relations implications

6. LGC/Ministerial powers

7. Implications for Providers

8. Consequential amendments

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1. Governance/Accountability

Governance• Corporations without share capital• Board members appointed by Lieutenant Governor in Council (LGC) and

receive remuneration/expenses as set by LGC• LGC designates Chair and Vice-Chair• CEO compensation set by Board within ranges set by Minister• Required to have open board/committee meetings (unless regulations

specify otherwise)• May pass by-laws, resolutions and establish committees

– Minister may require proposed by-law be submitted for approval – Minister can specify by regulation committees the board is required to establish

Accountability• Accountability agreements with Minister

– Performance goals/objectives, reporting, etc.– If no agreement reached, can be imposed by Minister and Minister can set

terms• Audited annually by Auditor General• Minister has power to direct an audit• Must provide Ontario Health Quality Council with any information it

requests

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Governance/Accountability (cont’d)

Summary Analysis• LHIN governance subject to significant control by the

LGC and Minister • No Board selection criteria or process for appointment

set out in legislation; no mechanism to ensure Board members selected from the community

• Requirement of open meetings ensure some transparency, but may be overridden by regulation

• Accountability agreements may be imposed by Minister

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2. Role/Mandate of LHINs

Corporate objects – plan, fund, integrate – s. 5

a) Promote integration to provide appropriate, co-ordinated, effective and efficient health services

b) Identify and plan for health service needs in accordance with provincial plans and priorities and make recommendations respecting capital needs

c) Engage community in planning and priority settingd) Ensure appropriate process to respond to concerns of communitye) Evaluate, monitor, report on and be accountable to the Minister for

performance of local health care system, including access to services, utilization, co-ordination, integration and cost-effectiveness of services

f) Participate in provincial strategic plan and in development and implementation of provincial health care priorities, programs and services

g) Develop strategies and cooperate with providers, LHINs and providers of provincial services to improve integration

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Role/mandate (cont’d)

Objects (cont’d)

• Undertake joint strategies with other LHINs to improve access and enhance continuity of care across province

• Disseminate information on best practices and promote knowledge transfer

• Bring economic efficiencies to delivery of health care and make system more sustainable

• Allocate and provide funding to providers in accordance with provincial priorities

• Enter into agreement to establish performance standards• Ensure effective and efficient management of the human, material

and financial resources of LHIN and to account to Minister for use of resources

• Any other objects Minister specifies by regulation

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Role/Mandate (cont’d)

• Planning – ss. 15/16– Must develop an Integrated Health Service Plan (IHSP) within time and

form specified by Minister– IHSP must be consistent with provincial plan by Ministry– Must engage community on an on-going basis about the IHSP– Must establish a “health professions advisory committee” consisting of

members determined by LHIN or prescribed by regulation

• Funding – s. 19– May fund providers for services provided “in or for the LHIN geographic

area” on terms and conditions LHIN considers appropriate– Funding must be allocated in manner consistent with accountability

agreement and other regulatory requirements

• Integrating – ss. 24-27– LHINs and providers must separately and collaboratively identify

opportunities to integrate services– May issue “integration decisions”

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Role/Mandate (cont’d)

Summary Analysis• Nature and extent of community engagement in

development of IHSP will be determined by regulation; no statutory requirement to consult with providers; requirement only for regulated health professions advisory committee

• LHINs have authority to make decisions to fulfill their mandate, but are accountable to the Minister for the performance of the local health system

• Role LHINs will play with respect to funding of providers not yet clear

• No clear articulation of LHIN interface with provincial programs/services, nor role with respect to academic health science centres

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3. Funding/Accountability Agreements

• Funding – s. 17– Minister may fund LHINs on terms and conditions the Minister

considers appropriate– Can adjust funding to take into account and savings from

efficiencies generated by the LHIN in the previous year• Funding of Health Service Providers – s. 19

– May fund for services “in or for the LHIN geographic area” on terms and conditions the LHIN considers appropriate

– Must be allocated in a manner consistent with the funding the LHIN receives from the Minister, the accountability agreement between the LHIN and Minister, and other regulatory requirements.

– Regulations can require provider to repay LHIN for excess payment of funding, and allow LHIN to recover excess funding by deducting it from subsequent payments to the provider. – (s. 36)

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Funding (cont’d)

• LHIN Accountability Agreements – s. 18– LHINs must enter into multi-year accountability

agreements with Minister– Include performance goals, objectives, standards,

targets and measures for the LHIN and local health system, reporting requirements for performance, a plan for spending of funding, a progressive performance management process, other matters prescribed

– Minister may set terms of agreement for LHIN if no agreement reached, must be made public

– LHINs to provide to the Minister and information the Minister needs to administer the Act

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Funding (cont’d)

• Service Accountability Agreements – s. 20– LHINs and providers must enter into “service accountability

agreements” under Part III of the Commitment to the Future of Medicare Act.

– LHINs cannot enter into any arrangement that restricts or prevents an individual from receiving services based on geographic area of residence

– The Minister has the power to assist all or part of an agreement between the Minister and a provider to a LHIN, including an agreement to which a person or entity that is not a provider is also a party. (s. 19)

• LHIN audit – s. 21 and 22– LHINs may at any time require a provider that receives funding from

the LHIN to engage or permit an audit it’s accounts and financial transactions

– Providers that receive funding, as well as other prescribed entities, may be required to provide plans, reports, financial statements and other information to the LHIN.

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Funding (cont’d)

Summary Analysis• Legislation provides only a broad enabling provision that grants

LHINs funding authority, specifics to be set out via regulation• Funding to providers must be consistent with the LHINs

accountability agreement with the Minister (which may be imposed) and other regulatory requirements

• Amount of funding available for providers within their geographic area is determined solely based on the funding provided to the LHIN by the Minister

• No provisions for the negotiation of LHIN/Minister accountability agreements, unclear as to when the Minister could unilaterally set the terms of the agreement

• Minister’s ability to assign existing agreements to LHINs, will likely devolve responsibility for the Hospital Accountability Agreements to LHINs

• Ambiguity as to whether agreements such as AFAs (Alternative Funding Agreements) will be assigned to LHINs

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4. Integration Powers

• Both LHINs and Minister have integration powers

• LHINs may integrate by: (s. 25)– Providing or changing funding to provider– Facilitating and negotiating integration between providers or between

provider and non-provider (which may result in wind-up of operations)– Issuing a decision that requires a provider to proceed with integration– Issuing a decision that orders a provider not to proceed with

integration*

• LHIN may issue integration decisions that: (s. 26(1))– Require providers to start or stop providing all or part of a service– Provide a certain quantity of a service– Transfer all or part of a service from on location or entity to another– Take any action necessary to implement the integration (e.g., transfer

property)

*Other ways may be added by way of regulation

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Integration Powers (cont’d)

• LHIN integration decisions cannot: (s. 26(2))– Be contrary to IHSP or accountability agreement – Require a provider to dissolve, cease operating or wind up operations– Change the composition or structure of its membership or board– Amalgamate with another provider– Require two or more providers to amalgamate, transfer property held

for a charitable purpose to a person/entity that is not a charity– “Unjustifiably” require a denominational entity to provide a service that

is contrary to the religion of that organization

• LHIN also approve provider integration initiatives (s. 27)– Providers must notify LHIN of integration of services (clinical and non-

clinical) with another person or entity; cannot proceed for period of 60 days

– If LHIN considers it in the public interest to do so, may issue a decision, ordering provider not to proceed

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Integration Powers (cont’d)

• Minister can issue integration order – s. 28- Upon advice of LHIN, if Minister considers it in the public interest to do

so to, Minister may order provider to:o Cease operating, dissolve or wind up operationso Amalgamate with one or more providerso Transfer all or substantially all of its operationso Take any other action necessary to carry out these activities

• Process for LHIN integration decisions/Ministerial orders – ss. 26(3)(4)(5), s. 27 and s. 28(3)– Affected parties (i.e., provider) receive a copy of the decision and the

decision is made publicly available– Provider has 30 days to make submissions, requesting reconsideration– LHIN/Minister can confirm, amend it or revoke decision– No further consideration; decision is final– Statutory Powers Procedures Act does not apply (right to hearing, right

to knowledge of documents/evidence upon which decision is based)– Opportunity for judicial review under Judicial Review Procedures Act – Decision/orders can be enforced Superior Court of Justice

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Integration Powers (cont’d)

• Where transfers of property as a result or decision or order: (ss. 30/31)– If involve a charitable purpose, all gifts, trusts, bequests, devises

and grants deemed to be those of transferee; if must be used for specific purpose; must do so

– If loss suffered, may only recover value not acquired with government funds

• Integration of non-clinical services – s. 33– The LGC may make regulations ordering one or more hospitals to

cease performing a non-clinical service and integrate the service by transferring it to a prescribed person or entity by a certain date

– “Service” means a service or program that is offered directly to people; a service or program that supports a direct service (e.g., laundry); and a support function (e.g., payroll)

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Integration Powers (cont’d)

Summary Analysis• Integration decisions cannot alter change composition or

structure of a provider’s membership or board• Providers have no statutory right to be consulted• Very little in way of procedural safeguards or due

process prior to making of decision/order• No criteria upon which decisions/orders are based• Unclear as to extent of protection for denominational

hospitals (interpretation of “unjustifiably”)• No clarification as to factors considered in determining

“public interest” in legislation (as in PHA and Bill 8)

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5. Labour Relations Implications

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• The Public Sector Labour Relations Transitions Act,1997 (PSLRTA) extended to apply to: (s. 32)

– Health services integration – defined as where every employer subject to the integration is either a “health service provider” or an employer whose primary function is or, immediately following the integration, will be the provision of services within or to the health services sector

– Transfers of all or part of a service under an integration decision– A Minister’s order to transfer all or substantially all of the operations of a

provider– The amalgamation of two or more entities under an integration decision or

Minister’s order– Minister can order a health service provide to do any other action necessary to

carry out an amalgamation, dissolution or transfer of its operations• PSLRTA not applicable where:

– Successor employer and unions agree that it should not apply– The successor employer or union applies to the Ontario Labour Relations Board

(OLRB) and it orders that PSLRTA is not applicable– The successor employer was not a health provider or where the primary function of

that person or entity is not the provision of services within or to the health services sector

•

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Labour Relations (cont’d)

Summary Analysis• Bargaining rights, collective agreements would follow any

work being transferred or amalgamated at time of integration

• The OLRB would have authority to determine whether PSLRTA applies before integration occurs (and the authority to an order in the interim which an application for integration is pending)

• LGC has regulation-making powers to order public hospitals to cease performing any non-clinical services and transfer services to another designated person/entity

• Labour issues that arise of the transfer of non-clinical services dealt with through PSLRTA

• Non-clinical transfers will likely fall within the scope of partial integration amendments to PSLRTA

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6. LGC/Ministerial Powers

• Lieutenant Governor in Council (i.e., Cabinet) may by regulation:– Amalgamate, dissolve or divide a LHIN, change the name of a

LHIN (s. 3(4))– Determine LHIN Board remuneration and reimbursement for

reasonable expenses (ss. 7(5))– Designate the Chair and at least one Vice-Chair of the board

(ss. 7(6))– Order one or more hospitals to cease performing a non-clinical

service and to integrate the service by transferring it to a prescribed person or entity by a certain date (ss. 33(1))

– Devolve to the LHIN any powers, duties or functions under any other Act for whose administration the Minister is responsible, of the Minister or a person appointed by the Minister or the LGC (ss. 34(1))

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LGC/Ministerial Powers (cont’d)

• LGC may also make regulations – s. 36– Governing anything described in Act as being prescribed (e.g.,

ways in which a LHIN may “integrate” or determining when LHIN meetings are closed to public)

– Excluding entities from definition of “health service provider”– Specifying who may not be members of a LHIN– Determining how community engagement will occur– Respecting the function and membership of the health

professionals advisory committee– Respecting funding that a LHIN provides to a provider– Requiring providers to set up a method of reconciling funding

received– Respecting a matter relating to a transfer of property as a result

of an integration decision or order– Governing compensation arising from transfers of property– Defining anything in the Act

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LGC/Ministerial Powers (cont’d)

• Minister may:– Make regulations to specify additional objects of a LHIN (ss.

5(n)) and concerning which LHIN committees which must be established (ss. 8(5))

– Require approval of LHIN bylaws (ss. 8(2))– Set the salary/benefit ranges of LHIN CEOs (ss. 10(4))– Direct an audit at any time (ss. 12(2))– Fund LHINs on terms and conditions the Minister considers

appropriate (ss.17(1))– Impose an accountability agreement on the LHIN if no

agreement is reached and set the terms of the agreement for the LHIN (ss. 18(3))

– Issue integration orders (s. 28)– Impact CEO compensation under Bill 8 (ss. 42(36))– Dispense with statutory requirement of consultation in

development of regulations (ss. 36(7))

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LGC/Ministerial Powers (cont’d)

New LGC/Ministerial powers under Bill 36• Minister may order provider to cease operations, amalgamate, or

transfer operations (in public interest) • Through regulation, the LGC can integrate non-clinical services• LHINs and Minister can enforce orders and decisions through

application for court order

Minister’s existing powers under PHA• An amalgamation requires Minister’s approval• Minister can direct a hospital subject to HSRC direction or notice

(before April 30, 1999) to cease operations, amalgamate, cease or adjust services, or any other direction that Minister considers in public interest

• Minister can recommend to the LGC for appointment of a supervisor who can exercise all the powers of the board, corporation, officers and members

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LGC/Ministerial Powers (cont’d)

Summary Analysis• New” powers of Minister under Bill 36

– LHINs’ power to stop voluntary integration is broader than requirement for Minister approval of hospital amalgamations under PHA

– LHIN/Ministry integration orders and decisions apply to all hospitals (and health service providers), not just hospitals subject to HSRC direction or notice

– With Bill 36, Minister need not go through process of appointing supervisor, but can ‘directly’ pursue integration and restructuring activities

– Court orders provide tool for ensuring compliance • While a significant number of LHIN powers are delineated in the

legislation, the regulation-making authority of both the LGC and the Minister provide the ability to greatly extend these powers

• But regulations subject to a 60-day consultation period, but this may be dispensed with where:– In Minister’s opinion, “urgency of the situation” requires it– Regulation clarifies intent of Act– Regulation is of minor or technical nature

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7. Implications for Providers

• Funding/Agreements –ss. 19/20– If receive funding from LHIN, must enter into “service accountability

agreements” under Part III, Commitment to the Future of Medicare Act, 2004, which may be based on a service plan developed with LHINs

– Existing agreements between the Minister and providers may be assigned to the LHIN (e.g., HAAs)

• Integration of clinical services – ss. 24-28– Duty to separately and collaboratively (with LHINs) identify integration

opportunities (ss. 24)– Will be subject to integration decisions of LHINs/Ministerial orders

• Integration of non-clinical services – s. 33– The LGC may make regulations ordering one or more hospitals to

cease performing a non-clinical service and integrate the service by transferring it to a prescribed person or entity by a certain date

– Regulation will set out hospital and specific functions to be integrated• Need LHIN approval to integrate services (clinical and non-

clinical) – s. 27

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8. Consequential Amendments

• Commitment to Future of Medicare Act – s. 42– LHINs now responsible for Part III of Act dealing with

accountability agreements (“service accountability agreements”)– Minister retains provisions respecting CEO compensation re:

performance agreements– Provision now only applies to hospital CEOs

• Public Hospitals Act –s .50– HSRC provision (s. 6) replaced with transitional provisions

• Upon proclamation, Minister will use Bill 36 powers• Existing HSRC orders remain valid, but in event of a conflict,

integration decisions/orders will prevail over s. 6 directions– Amends definitions of “hospital” and “patient– Hospitals may alter/revoke physician privileges as a result of an

integration decision or order with no appeal– Minister may, by regulation, require hospital subsidiaries and

foundations to provide financial reports and returns to the Minister and to a LHIN

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Summary of Key Issues

Issues requiring further clarification• Extent, manner and timing of funding responsibilities• Assignment of HAAs to LHINs• Impact on hospital-physician relationship• Potential impact on foundations• Application of HLDAA to private sector• Implications for facilities with provincial programs • Impact on academic health sciences centres

Areas of potential concern• Due process re: integration decisions/orders• Criteria for making decisions/orders• Requirement of LHIN approval to integrate services• Adequacy of safeguards for denominational hospitals• Labour relations implications • What’s not in legislation (affirmation of role of

academic/speciality hospitals, physicians, provincial programs, etc.)

Questions and Discussion