Legislative Assembly of Ontario

ANNUAL REPORT, PROVINCIAL AUDITOR, 1991
MINISTRY OF HEALTH

CONTENTS

Tuesday 18 February 1992

Annual Report, Provincial Auditor, 1991

Ministry of Health

Michael Decter, Deputy Minister of Health

Ron Sapsford, executive director

STANDING COMMITTEE ON PUBLIC ACCOUNTS

Chair / Président(e): Callahan, Robert V. (Brampton South/-Sud L)

Acting Chair / Président(e) suppléant(e): Morin, Gilles E. (Carleton East/-Est L)

Vice-Chair / Vice-Président(e): Cordiano, Joseph (Lawrence L)

Conway, Sean G. (Renfrew North/-Nord L)

Haeck, Christel (St. Catharines-Brock ND)

Hayes, Pat (Essex-Kent ND)

Johnson, Paul R. (Prince Edward-Lennox-South Hastings/Prince Edward-Lennox-Hastings-Sud ND)

MacKinnon, Ellen (Lambton ND)

O'Connor, Larry (Durham-York ND)

Offer, Steven (Mississauga North/-Nord L)

Tilson, David (Dufferin-Peel PC)

Villeneuve, Noble (S-D-G & East Grenville/S-D-G & Grenville-Est PC)

White, Drummond (Durham Centre ND)

Substitution(s) / Membre(s) remplaçant(s):

Drainville, Dennis (Victoria Haliburton ND) for Ms Haeck

Frankford, Robert (Scarborough East/-Est ND) for Mr Johnson

Morin, Gilles E. (Carleton East/-Est L) for Mr Conway

O'Neill, Yvonne (Ottawa-Rideau L) for Mr Offer

Ward, Brad (Brantford ND) for Mr O'Connor

Clerk pro tem / Greffier ou greffière par intérim: Carrozza, Franco

Staff / Personnel: McLellan, Ray, Research Officer, Legislative Research Service

The committee met at 1411 in room 228.

ANNUAL REPORT, PROVINCIAL AUDITOR, 1991
MINISTRY OF HEALTH

The Chair: My sheet says that we have before us Michael Decter, Deputy Minister of Health, and Ron Sapsford, executive director, institutional health division. Welcome, gentlemen. Perhaps you have an opening statement.

Mr Decter: Yes. Thank you very much. I was a little nervous coming here as a relatively new deputy. My anxiety went up when I entered the room and heard someone say it was a shoot-out, but I was relieved to find that was the hockey game, not the meeting.

Let me take you through what we have as an opening. As we get into the questions I will rely on Ron Sapsford, who has a longer history than I do with some of these matters. The essence of what we are here to discuss is the audit that was conducted by the Provincial Auditor at our community hospitals branch and teaching and specialty hospitals branch during the spring and summer of 1991. The report focused on the transfer payments, which then amounted to some $6.4 billion of operating grants to our 221 public hospitals. The transfer payment represents the vast majority of the activities of those branches.

The objectives of the audit were to determine the status of the Ministry of Health's accountability framework for hospitals to account for their management of operating funds and to assess the adequacy of the branch's monitoring of hospital operations.

The basic conclusion of the report, as I understand it, was that continued implementation of the accountability framework could not be implemented without changes to the Public Hospitals Act, which is currently being reviewed.

The further conclusion was that the branches themselves were operating in a less than satisfactory manner. There were specific comments by the Provincial Auditor concerning branch monitoring activities in the areas of bed closures, financial monitoring of hospitals in surplus and the use of accreditation reports and patient complaints.

In September of last year we provided specific comments to the Provincial Auditor. We believe these have been shared with members of the committee. We appreciate the opportunity to be here to further address the concerns raised. The issues raised go very much to the heart of current ministry policy regarding accountability, retention of surpluses by hospitals and the role and relationship of hospital foundations. There are other concerns related to the internal branch practice and operations.

I think the most important thing for me to say is that there has been substantial change in both of these areas since the audit. The first, and I mentioned it already, is that we are in the process of development of a new Public Hospitals Act. We have had a steering committee conduct rather extensive consultations over the past couple of years. We are anticipating the report of the steering committee within the next 30 to 60 days. We are simultaneously moving forward, in parallel, on the drafting of legislation. It is my minister's intention to move forward as rapidly as she can to bring forward that legislation to the assembly. I do not want to put a precise date on it, because we have a considerable number of issues to get through. We will not await a full round of consultation on the steering committee report but move forward in parallel on the legislation.

A number of issues were also addressed in a program review of hospital expenditures conducted in the fall. This followed the completion of the Provincial Auditor's work and led to the announcement of a hospital reform strategy which will be implemented with the support and participation of the variety of stakeholders. We have copies, I believe, of the summary of the program review which we could make available to you. I will not take you through it in detail.

One of the additional things we have done is establish a joint ministry-Ontario Hospital Association committee, the joint planning and policy committee, and a subcommittee structure under it. We felt we needed a regular forum. This group, which is cochaired by my minister and Dr Wilma Dare, the chair of the OHA, meets monthly and has regularized, between the OHA and the ministry, a great number of activities that took place before on a more ad hoc basis.

The issues being tackled under this structure are the development and refinement of funding formulas and methodologies, the movement towards transitional funding, finance and accounting policies and practices, operations and service guidelines, as well as overall management practices. We will be involving other stakeholders -- consumers, the health care unions, hospitals themselves and district health councils -- through this structure, but I think it is important to note that there is now a regular, ongoing and somewhat more structured process for us to jointly tackle these issues.

In October the Minister of Health communicated to hospitals and district health councils a new collaborative process, in which the district health councils were asked to bring together hospitals in respect of the so-called deficit recovery plans and the service aspects that required interhospital or hospital-community cooperation to bring hospitals back to zero deficits by the end of this fiscal year. The DHCs were to undertake the coordination of regional reviews to ensure that service realignments to balance budgets would result in no adverse impacts on communities.

I think it is important to note here that we no longer view bed counts as the only indicator of adequate service delivery. It is fair to say that our hospitals are undergoing a transformation. Historically they have been managers of beds. They are more and more managers of services. Some of those services involve a bed or a hospital stay, but many more services than in the past are performed on an outpatient or an ambulatory care basis. While the debate sometimes centres on beds, we think the debate and the analysis have to focus more clearly on service delivery.

We are continuing to strengthen monitoring as we go into 1992-93. All hospitals will be required to submit not only a budget, but a service and human resources plan. All plans will be reviewed by both the district health councils and our own hospital branches to ensure that necessary regional services remain intact through a period of tight fiscal resources.

We have also made a planning framework available to the hospital sector. Again, district health councils will take the lead in some strategic planning around health services delivery. We have copies of that health services planning framework. I think it is significant to note that it moves the ministry from having a view of bed numbers to having a view of patient days; that is, instead of measuring capacity as a planning target of this system, we are indicating to the hospital sector that we think a better approach is to look at the consumption of bed days on a county basis. We are trying to get them to measure and plan around the service provided rather than the capacity of the system.

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In January of this year all hospitals were asked, and this was on a voluntary basis, to provide the ministry with a copy of their most recent accreditation report. We are incorporating those accreditation reports as a regular feature of branch monitoring activities. We have adopted some new internal procedures for the handling, tracking and monitoring of patient complaints. We are developing an operational procedural manual to bring together the two hospital branches along regional lines and ensure consistency in the handling of patient complaints.

I will conclude these introductory remarks by saying that we are in a challenging time. The period we are facing is even more challenging for the hospitals sector. We feel we have a great deal of cooperative work to do with the hospitals sector and we think we are taking some important steps to equip ourselves to move forward in a constructive way.

I would say -- these are observations based on my six months in the job -- that the work of the Provincial Auditor was extraordinarily helpful to the ministry in focusing on some of the specific challenges we had to tackle. I will finish my remarks there.

Mr Cordiano: You have alluded to a number of undertakings the ministry is proceeding with, with respect to reform of the entire system and the way in which you are approaching health care services. It is obviously to be expected that you are moving in that direction. The focus of our reports and concerns really stems from the fact that from our point of view, we have a lack of monitoring taking place with respect to value-for-money considerations. We would like the auditor to be granted legislative power to do value-for-money audits some time down the road with respect to our hospitals and post-secondary institutions and the like.

We would also like to see, in my opinion, the ministry undertake that kind of monitoring of budgetary considerations within the hospitals on a more value-for-money approach than we have seen in the past. What kinds of steps are you taking to undertake that approach?

Mr Decter: I think this goes generally to the point that we have historically measured the whole health care system, but particularly the hospital system, on the basis on inputs. We have tended to take the view that if we put in $6.4 billion or there existed however many thousands of hospital beds, that was a measure of system performance. I think it is very true that the 1990s are going to see a very profound shift in measuring outcomes right across the health system, including the hospitals. The question is far more, what are we getting in terms of health status or what are getting in terms of benefit to the population from these expenditures? That is very consistent with the value-for-money approach.

There is a lively debate as to what degree that is an activity that should be going on as part of quality management and quality assurance within individual hospitals, and to what extent the role of the ministry is to set the context for that. We certainly, in the revisions to the Public Hospitals Act, look to structuring in a more forceful way the requirements that exist at the level of individual hospitals.

If I can read your second question, it is, what will we, the ministry, be doing to tackle these value-for-money questions across the spectrum? I will defer in a minute to Ron Sapsford on the specific issue of the auditor's access because that is one I am not as familiar with, although I believe the Management Board secretariat is dealing with it, since it cuts across a number of ministries.

I think we as a ministry have to change our role. Historically our role has been to fund and to some degree to regulate. We have not been as aggressive in asking the outcome questions. We have recently undergone a reorganization in the ministry that was set in motion by my predecessor but which was put in place as of January 20. In that reorganization we have tried to redirect some of our resources towards the outcome questions, but I would say we have some substantial work to do.

There is not the database in place immediately either, although the Hospital Medical Records Institute is working on it, or good consensus on what the right outcome measures may be, although again there is a good deal of work that is done. I think our work in the transitional funding area attempts very much to have money begin to follow activity rather than simply move on the basis of historic allocations. That I think is helpful in moving in the directions that would allow greater insight into value-for-money questions.

I would like Ron to speak to that specific question.

Mr Sapsford: The issue of access of the Provincial Auditor, value for money, has been raised in the context of the Public Hospitals Act review. One of the subcommittees of the main committee spent some time speaking with staff of the Provincial Auditor's office. The discussion essentially focused on what models one might use in the public hospitals system. I believe from the Provincial Auditor's view, a model where there is a process of integrity that is measuring appropriate indicators of value for money, that is operated by the hospital using its own resources, but which has the ability to be monitored by both the ministry and the Provincial Auditor, would be an acceptable model.

In the context of the review committee's report, the ideas of comprehensive audit are very clearly included and will form part of the recommendations of that committee. It has been very much on the agenda of the steering committee and I am quite confident it will come forward for consideration.

Mr White: Following that very question, the auditor had some real problems in gaining access to information and accounts that clearly were either expenses of public moneys or would impinge directly upon expenses of public moneys. To the best of my recollection there was, from the auditor's report, a pretty inadequate description of why they were denied that access other than that it was not within their purview. Is the relationship between the ministry and the hospitals similarly restricted? The other issue I have is in regard to the transfers of moneys between hospital foundations and the hospitals operating budgets. Are there any regulations, or does the ministry have any purview over those transfers which seem to be extensive and ongoing?

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Mr Decter: My understanding, which is limited on the access question, is that what was bumped up against were confidentiality considerations around individual patient records. I am not certain if that was the major problem encountered in that.

With regard to the hospital foundations in relationship to hospital operating budgets, we have significant access both to information and to remedies in terms of the hospital side of the equation. The foundations exist as distinct legal entities which we do not at the moment have good access to either in an information sense or in a control sense. They are quite independent of the ministry. I think the specifics the auditor noted raise some very good questions about relationships between the foundations and the hospitals and agreements and transfers between them. Maybe Ron wants to add more to that one.

Mr Sapsford: The access to information issue touched on interpretation of what forms a medical record in a hospital's view. There were certain records the auditor wanted access to where the hospital took the position it would contravene regulatory provisions regarding confidentiality.

To answer the second part, in the Public Hospitals Act, under the investigator provisions the ministry has total access to all hospital records. The Provincial Auditor's office was in a different position from ministry staff in the sense that the same access was not provided for in the Public Hospitals Act for the Provincial Auditor. That is an open question. We have had some discussions about whether the public hospitals regulation should be amended to permit the Provincial Auditor access in the same fashion. The ministry does have access beyond the authorities of the Audit Act.

The Chair: Could I just get clarification. I thought Mr Decter said you did not with the foundation funds.

Mr Sapsford: I am talking about the Provincial Auditor's concern about access to hospital records.

The Chair: But I thought you said the ministry has access to the foundation funds. I thought Mr Decter said that one of the shortcomings is that you do not.

Mr Sapsford: The ministry has access to hospital records. My comments only relate to access to hospital records, not foundation records.

The Chair: I thought you were responding in the same vein as Mr Decter where he was talking about funds in response to Mr White.

Mr Sapsford: There were two questions. One was access to the hospital's records. That is really what I have been talking about.

The Chair: Okay.

Mr White: I am following the responses. Thank you.

Mr Sapsford: The issue about transfers is an issue that is on our table for policy work. The policy of the ministry since 1982 has been that hospital surpluses are kept by hospitals for the purposes of operating or capital purchase. In some cases, surplus hospital operating funds had been transferred to foundations for capital purposes. This is the nature of the confusion.

I should add that in analyses we have done, by far the largest transfers, over time, are from hospital foundations to hospitals, admittedly for capital purposes. The principal function of the foundation is to raise money for the benefit of the hospital. In looking at the transfers of funds between these organizations in total, the hospital system has benefited from the transfers. We are going to be looking at the policies surrounding the way hospital operating fund surpluses are handled and the rules that will govern transfers from the hospital to the foundation.

At this point, the statute does not give us the authority to deal with the foundations, but again this is an issue that has been brought forward for review in the Public Hospitals Act review process.

Mr Tilson: Mr Decter, dealing with the subject of the accountability framework that you have prepared with respect to the operation of the various branches, the auditor has had some concerns on this subject and has listed a number of areas that you are aware of. "Interrelated activities of many hospitals and their foundations were not monitored." Bed closures at hospitals were not approved or adequately monitored by the ministry." And so on: You are aware of the others. I also understand that in the restructuring of the Ministry of Health it is now in four separate divisions, one of which is the strategies --

Mr Decter: Health strategies group. It is four broad groups, down from five previously.

Mr Tilson: You are personally looking after that, I guess, because you do not have an assistant deputy minister on that subject.

Mr Decter: We are recruiting nationally for an assistant deputy minister. I am wearing that hat in my spare time until we get someone, so I am eager for us to get someone.

Mr Tilson: I am sure you are. I am sure you have other things to do. I do not know whether this falls under the subject of strategies. I attended your press conference and listened to your comments on restructuring of the ministry. I am interested in the whole subject of strategies, what some of the strategies are that you are in the process of developing, dealing specifically with this accountability framework. Can you give the committee more details on that subject?

Mr Decter: Let my try, although many of them are live issues in terms of the Public Hospitals Act, in terms of the reform, if you like, or development of strategies around how we finance hospitals, how we flow operating funds, on what basis and how they are accountable to the communities in which they exist, accountable to the ministry for the funds they receive and accountable through their governance for the services they deliver.

I think there are a couple of pieces to where we are going. The program review of hospital expenditures was a very major piece. I think it confirmed that there was a broad consensus among the hospital community at large that we should be moving more money along service lines, if I can distinguish, rather than moving somewhat away from global funding in the past.

The second piece of this is really to get the appropriate legislative structure. I think one need look no further than the investigators' report into St Michael's Hospital to understand, in a worst case, how we do not have the protections we need in an accountability sense. I guess it has been one of my less than pleasant duties since arriving to work through what I think is a reasonable plan for the restoration of the financial health of St Michael's Hospital. But it seems abundantly clear, and the investigators in that case did make recommendations pertaining to the Public Hospitals Act, because they felt there were not the accountability frameworks in place.

Mr Tilson: Mr Decter, what I am trying to get at specifically is that as to Management Board of Cabinet's directive on transfer payment accountability, which is the whole subject we are talking about, the auditor has said that hospitals are not even aware of this. If individual hospitals are not even aware of what the directive is, do we not have problems?

Mr Decter: I think what I am saying, in the larger context, is that until we get a Public Hospitals Act in place that lets us put some teeth into the accountability framework as it pertains to hospitals, yes, we do have a problem. I will let Ron address the question of what we are doing on an interim basis to try to move forward. We are not here to say we are awaiting a piece of legislation. We are doing a significant number of things to make improvements in the interim.

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Mr Tilson: Mr Chair, I do not know what the rules are on asking a series of questions, but if I could follow through on that, the government obviously puts forward certain public moneys to hospitals. When there is a directive, I can imagine Management Board of Cabinet establishing certain areas of accountability. The auditor comes along and says, "Not only are those not being followed, but the hospitals do not even know about them." That has nothing to do with the establishment of amendments to the legislation. Could you comment on that?

Mr Decter: I think I will let Ron comment on that.

Mr Sapsford: On the framework itself, I think you have to understand what some of the content of it was. The accountability framework was designed to ensure that the basis on which money was transferred to transfer payment agencies was that there was a reasonable understanding of what the money would be used for in terms of service return.

Very clearly, the ministry took the position that there was a statute governing the creation and operation of hospitals as well as an extensive regulatory framework. The specific and detailed requirements of the Management Board directive where there was a group of agencies that had no statutory framework or regulatory framework would be quite different. In the requirements of the accountability framework, there were many requirements about reporting of statistics and filing of budgets. One that was included in it was monitoring of accreditation reports, which was criticized in this report, but you have to understand that the ministry does receive, on a routine basis, large amounts of routine reporting that are part of the accountability framework.

While it was not adopted and sent out as, "This is the new accountability framework," there are large portions of it that are current practice and have been current practice for quite a long time. The kinds of accountabilities that we felt were new ones or that we wanted to clarify in terms of the transfer payment agencies were the specific accountabilities of the board.

Mr Tilson: This is a 1988 directive I am referring to.

Mr Sapsford: Yes, I understand.

The Chair: Mr Tilson, do you mind if I ask something along with that? I notice that the first report for all ministries was supposed to be March 31, 1991. Can you speak for the Ministry of Health? Was that done?

Mr Sapsford: I am sorry?

The Chair: It says here the secretariat requested ministries to report annually whether the directive on transfer payment accountability had been audited. The first annual reports were due on June 30, 1991 and were to be used on compliance audits of accountability frameworks completed during the period up to March 31, 1991. I am assuming that the period the auditor did --

Mr Morin: You may perhaps indicate --

The Chair: Oh, I am sorry. You do not have a copy of that. Maybe we can provide you with a copy of that. I will get the clerk to give you one. I think that is what Mr Tilson is referring to. It is the cabinet directive. They do not use the word "may"; they use "directive." What I want to find out is whether or not the Ministry of Health did that.

Mr Tilson: I assume it has not, because the auditor is saying the hospitals do not even know about it.

The Chair: That is right; that is precisely my point. Also, the auditor says they did not, or at least he is saying -- is that not right? -- that this was not done. So it seems as though the directive is not a directive; it is a missile that missed the point, I guess.

Mr Tilson: Maybe they forgot to send it.

The Chair: That could be. They could have sent it via Canada Post too. Maybe it did not get there.

Mr Tilson: Perhaps I could just ask that question. Mr Decter, are you aware of this directive? As numbered, it is Management Board of Cabinet's directive 1-11-1, 1988, and it is entitled Transfer Payment Accountability.

Mr Decter: We are certainly aware of the directive and I think what we have been trying to give you was an answer. I think the accurate answer for us to give is that a number of elements of that accountability framework are already in place and have been in place for some considerable period of time between the ministry and the hospitals.

Mr Tilson: I guess that gets back to my very first question, because that is not what the auditor is saying. The auditor is saying the hospitals do not even know about it, so I am asking you to elaborate on what you have just said, that it is already in place.

Mr Decter: I think our distinction here may be semantic. A number of elements of it are in place and have been in place for some considerable period of time.

Mr Tilson: What are they?

Mr Decter: I think Mr Sapsford already reviewed that, but the hospitals submit regular financial reports. They submit regular reports to the ministry on activities, bed counts, days of care and so on. What we have been endeavouring to say is that to put the full accountability framework in place requires legislative amendment, and that point, I believe, was supported by the Provincial Auditor in his report. So it is not that hospitals are not aware of accountability requirements; it is that we do not have the ability to impose on them a directive of the Management Board secretariat in all of its provisions.

Mr Tilson: I gather then that the contract that has been suggested with the hospitals on the whole accountability --

The Chair: Mr Tilson, would you just move forward a little bit?

Mr Tilson: Oh, I am sorry. There has not been a great deal of progress with respect to the contract that has been referred to in the past, the agreement between the hospitals, the accounting system and the reporting framework. Is that a fair statement?

Mr Sapsford: The routine reporting of hospital, financial and operational information has continued unabated. What we are proposing in terms of the future is that there be an operational planning process that would provide more specific information on changes, year to year, in hospital services levels so that there would be an ongoing monitoring of that. I think the new changes we have made in monitoring hospital output and controlling for clinical diagnoses are also developments the Provincial Auditor acknowledged were important ways of monitoring service and value for money, and we are continuing with that as well.

Mr Tilson: Let's get more specific. I get back to the auditor's comment that hospitals have said they do not know anything about this. I therefore ask the question whether or not they do. That does not appear to be denied, so I gather that is the case, that some, if not many, hospitals do not know of it. I am talking about the cabinet directive. On the subject of the ministry developing a manual for hospitals for a consistent accountability system, has that been discussed by the ministry? I am getting back to my very first question to Mr Decter as to, essentially, what are the strategies for improving the whole accountability process? Can you give us details? How will a hospital know what to do?

Mr Sapsford: The accountability framework you are referring to was a document that listed the output of hospitals in terms of days, beds, the types of programs and services and how the ministry would monitor that. The accountability framework as a document, as a stand-alone piece, was not communicated to the hospitals. That is quite correct and the auditor's observation is correct.

The content of the directive and the accountability framework in terms of the specific pieces of information the ministry would monitor are submitted by hospitals on a routine basis. While the framework itself, as you have said, was not communicated to hospitals, the ministry's ongoing monitoring provided a mechanism for the ministry to satisfy the basic outlines of the framework, save and except some exceptions that the Provincial Auditor pointed out, one being the accreditation reporting.

The strategies for future accountability, I think, are relatively clear: the reconstruction of the Public Hospitals Act, making the accountabilities of the board much more specific in the statute itself, clarifying the responsibilities of the board to the minister as well as to the community, improving the operational expectations of hospitals in terms of specifying operating plans that we intend to implement during the course of this next fiscal year and improving the monitoring mechanisms inside the ministry in terms of statistical analysis, and also, as the deputy said, focusing on the outcomes far more than simply the resources in.

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Mr Tilson: I understand you are saying that you have the problem of waiting for the legislation to be implemented, but at the same time we have the auditor saying there is a problem with respect to accountability. It is not a question that the auditor's office is saying that. Prior to any legislation being put forward, can you not put forward some sort of manual that would establish a consistent accountability process for all hospitals to follow, as opposed to saying you will wait until the legislation is passed?

Mr Sapsford: There are many things we do now with our hospitals along this way. The budget process itself is consistent. The reporting of information, the new process on recovery planning and planning for the recovering of deficit positions is consistent. There is an established process for that, working with district health councils.

Mr Tilson: But there is no accountability manual.

Mr Sapsford: There is not a specific manual called "accountability," no. As we develop the processes, though, the policy positions go out and the hospitals receive instructions from the ministry on their behaviour and what the process is.

Mr Tilson: What is your scheduling for developing a manual?

Mr Sapsford: Our reference to a manual was internal, operational to the ministry. As far as an accountability manual is concerned, that has not been contemplated at this point.

Mr Tilson: You have not contemplated that at all.

Mrs Y. O'Neill: I would like to ask a couple of questions about your relationships with the hospitals. Although all of us at Queen's Park know -- we have been listening for at least two, or maybe three years -- that beds are not any real indication of service, many people in the community still think they are, and when we get headlines in local newspapers that 50 or 100 beds are closing, that sends out a message that those of us who serve here are often asked to explain. I wonder if you can tell me, as the first part of my question, what kind of communication goes on between the ministry and a hospital when a decision to close beds is made? If there is any communication, what decisions do you have input into, or are these strictly local decisions?

Mr Sapsford: It varies, of course. Sometimes the ministry is involved in those decisions after the fact, sometimes long before the fact. What we are endeavouring to do is to ensure that those decisions are not made without information passing, certainly to the ministry, but now we are also encouraging hospitals, before they implement those decisions, to have much broader discussion inside the hospital as well as with its own community and with the district health council in the area. So the general approach we are following is that before those kinds of service changes are made, there should be discussion in the broader communities so that the impact of those decisions can be assessed before they are implemented. In the past, many of those decisions have been viewed as local decisions, within the hospital itself, and communicated to the ministry.

Mrs Y. O'Neill: You have told me a very general answer. You have said that you have been involved. How would you be involved? Would this then have something to do with the determination of the hospital's resources? What kind of involvement would you have? I understand what you are saying and I certainly agree with you that there should be much more community knowledge built up over a long period of time and much more rationalization, but I would like to know just how you feel the ministry could be involved or has been involved in this. In many cases, these are very major decisions, a 20% change in services in some cases.

Mr Sapsford: The process itself starts with the transfer payment announcement in the year prior to a new fiscal year. In this current year it took place on January 21. That is the basic information from the province that hospitals use in preparation of their next year's budget. It is between that point and the point when budgets are required to be submitted, usually in April or May of the year, that hospitals are working on those plans. The ministry can be informed at any point along that process as the hospital prepares its budget. The hospital would contact the ministry directly to talk about plans of service changes that would be necessitated by the hospital's allocation. So it is the allocation in the first instance that will establish the position the hospital feels it must take to enter into a balanced position, and it is at that point the communication begins between the hospital and the area teams in the division.

Mrs Y. O'Neill: And for the most part you would agree with the decision of the hospital, or the hospital board; whoever has been involved in that decision.

Mr Sapsford: The ministry's position in terms of the internal decisions about how services should be arranged has been yes, the ministry has relied on the advice of the board and the position the boards take. There are exceptions to that. The ministry in the past two or three budget years has designated certain programs as being protected. In other words, the hospital may not make service changes to a certain range of programs without prior approval, and those programs have been specified in the instructions to hospitals.

Mrs Y. O'Neill: Could you give some examples of those, just for the record, please?

Mr Sapsford: Cardiovascular surgery, neonatal intensive care programs, dialysis programming, schedule 1 mental health facilities, those kinds of specialized programs. If a hospital wishes to make a change in those kinds of programs, then there is specific discussion that is undertaken between ministry staff and the hospital, but in the general service areas, the board decision is the decision that is taken.

Mrs Y. O'Neill: All that having been done and all those budgets and allocations having been lived with or approved, sometimes there have been decisions made to allocate additional funds, usually in the position of deficits. I wonder what criteria or facts and data you use to assess the actual need for that additional funding. In other words, how are you assessing the real total resources of that hospital? Do you include such things as the foundation? Could you tell us a little bit about that?

Mr Sapsford: Surely. The last time the ministry was involved in payments against deficits was, I believe, in 1988. At that time, the basis or the criteria you have asked that were used as the basis were, I believe, 65 reviews of hospital operations and money was allocated on that basis. From that point in time, we have established a new process to allocate money to hospital budgets based on the output, based on the case mix and the kind of clinical service they are providing.

Those funds that have been allocated, and there is a formula that is quite extensive that is used to allocate those funds to hospitals based on this assessment, are usually paid at the end of the year and have been interpreted as moneys paid to balance the hospital's budget. That is not in fact the case. What we have been trying to do is to reallocate money from those hospitals that have on average higher costs to provide the same kind of care, to those hospitals that have a lower cost or a lower base that provide a similar range of care. This reallocation technique is a much stronger control on the way the funds are allocated among the public hospitals, but there is in some quarters the mistaken perception that this is money used to bail out a hospital's deficit position. It is, rather, based on a thought-out formula as to how money should be applied fairly to hospitals across the province.

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Mrs Y. O'Neill: In a case like this, when you have to make some assessment, do you talk to the foundation's stability or the foundation pot, or whatever you want to call that, even though we know some of the operating funds have gone in?

Mr Sapsford: No, that has not been the practice.

Mrs Y. O'Neill: You have not looked at that?

Mr Sapsford: No.

Mrs Y. O'Neill: My final question is this: Part of our review dealt with hospital complaints. I wondered if you could give us five or four or three of the most common kinds of complaints you are aware of regarding community hospitals.

Mr Sapsford: Complaints about care, "I didn't receive the proper kind of care." We then spend time finding out what is the precise complaint. In most cases, it has to do with the communication between the staff of the hospital, mostly physicians, in terms of the patient understanding what his particular problem is or the treatment prescribed or the care provided to support the diagnosis. Our follow-up is generally directly with the hospital, after discussion with the complainant. In some cases where it is clear that the patient's complaint relates to the medical treatment or diagnosis, then we recommend referral to the College of Physicians and Surgeons if it specifically related to the medical component of it. Those are the basic kinds of complaints. Someone is not happy with either the way information has been presented or the human interaction.

Mr Hayes: My first question is more a complement to Ms O'Neill's. What is the role of the district health council, for example, in ensuring that the necessary health services are maintained within the communities when hospitals anticipate bed closures and staff cuts?

Mr Decter: Let me speak to that. I touched on it in my opening remarks. This is a relatively new role for the district health councils. Previously the discussion of bed closures or service realignments was a bilateral, if you like, between the ministry and its area teams and the hospital. But as we have entered a period where we think there is going to be a more rapid realignment of services, we recognized the need last fall for an interhospital discussion; that is, if you have three hospitals in a community and they all decide in terms of their deficit recovery plan to reduce paediatrics beds, for example, you are going to have a very profound effect on paediatric service, whereas if one reduced in paediatrics and another in some other service, you might have a much more limited or no effect.

In October the process the minister put in place was to have the district health councils look at those aspects of the recovery plans that pertained to services. As you can imagine, a hospital with a deficit might propose to do some things that do not have anything to do with service. They might propose to reduce their consumption of energy or bargain harder with their suppliers, and those sorts of things were not referred to the district health councils, but things that touched on changes in service were referred and the district health councils made recommendations in their role as advisory to the ministry on whether they supported or did not support what the hospitals were proposing.

We found that the district health councils played a very important and constructive role. They have historically played more of a role in terms of community health services and therefore they generally have some expertise accumulated on what exists outside the institutional sector. That expertise was valuable to them in looking at the realignment of services. I think we would anticipate the district health councils playing a stronger planning role around service realignment. The planning framework I made reference to really has evolved out of the health planning branch, which supports the district health councils and looks at moving more towards planning that is needs-based, from the community up.

Mr Hayes: I think you have pretty well indicated that the review of the Public Hospitals Act is near completion. Can you elaborate on any of the recommendations that may come forward from the steering committee in relation to strengthening the lines of accountability and reporting requirements between the hospitals and the ministry?

Mr Decter: I would say in general that what I am aware of from the review, because we will officially receive it in March, is that it sets out a number of ways accountability could be strengthened. Ron has had involvement in that review and a leadership position. I do not know if we are letting cats out of bags here.

Mr Sapsford: I cannot report at this point on the details of the recommendations, but I think it is many of the issues that have been identified here today: the role of the board, the role of the management of the hospital, mechanisms for accountability of the hospital both to the community as well as to the minister and the Legislature, the whole issue surrounding quality of care and what mechanisms are necessary, the issue of comprehensive audit. It will have something to say about foundations and the relationship of foundations to hospitals. It will cover a very wide range of issues affecting the operation and structure of hospitals in the province.

As I said, particularly on the audit issue, we did have meetings -- one meeting, I guess -- with the Provincial Auditor to discuss the audit issue in relation to hospital operation.

Mr Villeneuve: Gentlemen, you are certainly two of the very important cogs in the largest ministry expenditurewise in the province. Example: We know that St Mike's hospital is in pretty serious financial difficulty. When do you, as people at the head of the Ministry of Health, find out that something is wrong and what do you do about it?

Mr Sapsford: It varies.

Mr Decter: When we should find out is immediately there is movement away from a balanced budget position and the quarterly reporting we require from hospitals is designed to get us that information. St Michael's Hospital's investigators' report indicates very clearly that the information flow from the hospital's management to its own board to its owners, and the process of audit from the hospital's auditors, was not sufficient to identify accurately the financial position of the hospital, so in the St Michael's case, an annual operating deficit that was probably within the range of ordinary management rolled up into a rather large accumulated deficit of some $63 million.

In our view, I think that is a worst case. Our monitoring is designed to catch hospital deficits in the year in which they are occurring. Our directives require hospitals to plan to recover from those deficits in the year in which they are occurring, to come to a zero deficit position by year-end.

I think it is fair to say that in the case of St Michael's, all the normal checks and balances failed to function. The investigators' report sets out a number of reasons for that, including the unincorporated nature of the entity itself. There was some considerable lack of clarity about what the entity being audited was. The vast majority of our hospitals are incorporated and therefore their accounts are more readily identifiable. I think it is fair to say that the Ministry of Health does not escape unscathed in the investigators' report. There are criticisms directed to us: not reacting to things we were aware of, but not officially aware, such as certain decisions the hospital had taken that we knew of but were not officially informed of.

I think it is accurate to say we are taking a more aggressive approach with the hospitals in the wake of that unhappy experience. Our area teams have very strong direction from the minister, from myself and from the whole senior management team, to identify problems earlier and to err on the side of being more aggressive rather than more passive in dealing with them. Again, the investigators' report identified some legislative changes that are needed and those are being dealt with in the Public Hospitals Act amendments -- the development of a new act, really. I do not know if you want me to add to that.

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Mr Villeneuve: If I hear correctly, you knew about it unofficially but not officially? You were not really asked to react, and I guess it is a reaction situation that we have facing us now, as opposed to trying to correct the problem as it was becoming apparent. Do I hear that right?

Mr Decter: Let me be careful here. There is not a single situation at St Michael's Hospital. A whole series of actions, including the purchase of a building on Queen Street, were undertaken. Ron will correct me if I get this slightly wrong. Hospitals, if they are acquiring property for use, for hospital purposes, require our approval. Approval for 61 Queen Street East was not sought. Hospitals are not required to seek our approval for the acquisition of non-hospital assets. We have some work ahead of us in the review of the business-oriented new development program which was set up originally to give hospitals another source of revenue but which, I think it is fair to say, led to some excesses that had unhappy consequences.

It is not as though we were aware of the full St Michael's situation. In fact, the reason the minister appointed the investigators team was to get a full picture and it was a lengthy and expensive undertaking to assemble. We were aware of some disagreements between the hospital and the ministry as to what we felt their revenues should be around certain programs, and what they felt they should be. Where I say we are not blameless is that we were not perhaps as hard in saying to the hospital board: "You cannot carry these things as accounts receivable because we do not have any intention of paying these amounts to you. We do not think we owed you that." So that drift contributed to the magnitude of the problem. The root causes, I think, are well identified by the investigators' report.

Mr Villeneuve: So we have internal audits, external audits, the Ministry of Health and in certain instances the Provincial Auditor. The Provincial Auditor had some difficulty in obtaining some basic information he felt was very important in finding value for money. Do you have that problem, then, with some hospitals? Let's get away from St Michael's; I mean in general.

Mr Decter: In general, it is fair to say the system has not been viewed on a value-for-money or an outcome basis. We have taken, largely as a matter of faith, that something deemed by the medical profession to be medically necessary is also a good thing and value for money. The emergence of clinical epidemiology as a mainstream specialty is relatively recent. The ministry has funded and will continue to fund a number of activities in that area, but frankly the notion of looking very hard at health expenditures from a value-for-money point of view is gaining tremendous momentum, but it is gaining tremendous momentum relatively recently.

I think there has been a view for a considerable period of time that the system was best judged on the inputs. We are engaged in a rather major shift of emphasis in how we look at health care. I think it is an important and constructive direction. It will be achieved with some amount of anguish because there are a variety of views on the part of providers, physicians and others, as to what is an appropriate role for others in questioning their activities, but hospitals are moving towards quality assurance programs. The requirements being imposed on hospitals in terms of accreditation are getting steadily more stringent in that regard.

To give a constructive example, because there are many good things happening in the hospital community in this regard, I visited Sunnybrook Medical Centre recently and they have an information system in place that lets them look at resource use and the consumption of all resources on a case basis, on a physician basis. For a given procedure, if there are 10 physicians performing that procedure, they are beginning to look at their consumption of resources.

The hospitals are gaining some very significant management tools in this shift. It is relatively recent because for a long time government was the global funder. They did not have to have information at a patient level for billing purposes and did not have it for management purposes either. I think it is fair to say that hospitals have had to invest a lot of money in automated systems to begin to have the information base to manage in a more precise way and to ask the outcome questions. They even asked the case-costing questions. We are still using a methodology that we have borrowed from New York state in terms of how we drive our transitional funding because we do not have a sufficient base yet in Ontario to base it on. That is a change we would like to make. I want to signal that it is an essential direction if we are going to be able to assure the taxpayers of this province that they are getting real value in terms of outcomes for their tax dollars.

This information has to exist at a hospital level and the ministry level. It is going to take a considerable amount of work to get there, to get agreed standards and to get the medical profession on board with this approach. I think their leadership is coming but it is not a completely cooperative process, if I can say that.

Mr Villeneuve: In the riding I represent there are three small, community-based hospitals and we are worried that with the cutbacks and the so-called managing beds out of the system, we may lose one, two or maybe all three of them and that is of concern. Yet I read in the Globe and Mail, November 19, 1991, that Toronto General and Toronto Western have an $80-million patient management computer system that does not work very well. That is a lot of money. This was quite obviously set up to make sure that patients' medical records got well recorded and that somewhere a bell would have triggered. Charts are very common in the hospitals I represent. Who would have had the final say in this $80-million expenditure?

Mr Decter: I believe that expenditure would have been approved by the board of the Toronto Hospital. If I am not mistaken, you will have a chance -- is it tomorrow? -- to address them directly on that question.

Mr Sapsford: That would have been a capital investment and would have been outside the operating vote of the hospitals. They are required to raise their own funds for capital equipment purchase and replacement and it would have been clearly the prerogative of the board to make that decision.

Mr Villeneuve: I see those figures as astronomical in relation to what we have to work with in small, rural areas. It is of great concern to me. The playing field, in my humble opinion, is not very level when I see this.

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Mr White: I have a number of questions. First, the St Michael's Hospital issue you started to go into: I am wondering, within the framework of the issues we have been talking about, if we could discuss, for example, the reform of the Public Hospitals Act. How would that reform have assisted a better knowledge and/or better recovery plan in relationship to that hospital?

Mr Sapsford: I think in the first instance that the various pieces of the hospital organization will be much more clarified in what we are considering, the Public Hospitals Act. To some extent, the St Michael's problem resulted from a lack of clarity in the responsibilities of the board versus the owners versus the management of the hospital. What we are trying to achieve in the review of the act is to clarify the responsibilities of the governance structure of the board of the hospital as being the principal point of responsibility for the overall hospital operation. Part of the answer is that there needs to be more clarity with respect to the responsibilities of the various players inside the hospital.

Mr White: You also mentioned that with hospitals suffering a deficit, part of their recovery plan would be assisted by the district health council. Have there been comments on the St Michael's problems from the district health council here in Toronto?

Mr Decter: Well, no. We were into a dialogue or a discussion with St Michael's around its situation stemming from the investigators' report in advance of the directive, I believe, going to the district health council. It is important to note that there is an agreement between the ministry and St Michael's on an eight-year recovery plan. One of the key elements of that is a role study for St Michael's to look at what services it will deliver in the future. The district health council will be very involved in that.

I think it is fair to say we do not see the district health council, in a sense, second-guessing the board or the management of an individual hospital. We see their role in sorting out among the hospitals what roles various ones will play and what services will be delivered by each, so that as some realignment takes place, I think the real questions for the district health council will be the specialty services St Michael's currently provides. Should they continue to provide them or should there be some realignment of trauma services or cardiovascular services among the various hospitals providing them? We see a very important involvement for the Metropolitan Toronto District Health Council in the role study and strategic planning for St Michael's that is an essential part of its recovery plan.

Mr White: Further, while we are with the DHCs, I have certainly been struck in the last year or so -- and you gentlemen certainly have been knowledgeable of DHCs and health planning for many years more than I -- that in the health services industry, or industries, we have about as much competition as we have in the automotive trade, if not more. Although the common goal is supposedly all the same, the standpoint of the stakeholders is quite aggressive one to the other. Inasmuch as the DHCs tend to represent, as you had indicated, community-based services, would they not tend to be somewhat held in disdain by the hospital, given the wealth of institutional services they represent?

Mr Decter: There is certainly not an overall attitude. There are a variety of district health councils across the province. Some are farther along than others in terms of their broad strategic planning. A number of the ones I have had contact with have a good working relationship with the institutional sector. I think there was a sense on the part of the Ontario Hospital Association that the new rule for DHCs meant change and I think it is fair to say nobody likes the process of change; they might like the results. It did take a little while for them to come round and see that we needed some better way on the ground of having these interhospital issues considered.

We are also finding that some of the competitive behaviour that has been very strong in the past, particularly among the larger teaching hospitals, is giving way to some greater amount of cooperation and joint planning. Although they have some difficulties, and the auditor has paid some attention to some of those difficulties, the Toronto Hospital last fall sent a very strong signal in saying that it no longer saw its role as being all things to all people, that it was going to look at what it was doing from the point of view of, did it need to do it all or could it in a sense narrow its focus and let others pick up some of the roles. That is a very important signal for the largest hospital in the province to give and it has led to some significant opening of doors, but changing behaviour among what have historically been very independent entities and getting them to think in more of a system fashion, to think more of how care can be delivered across facilities, is going to take some time.

There are some good examples, though. I was in North Bay recently and in that community two hospitals have a joint board and have done a lot of work to integrate their activities, so there is certainly creativity being shown at the field level.

Mr Drainville: I want to reflect a little bit on one of the comments Mrs O'Neill made, and that was the view that many people in our public equate the number of beds with the level of care they receive. We know that equation is not only wrong but is certainly difficult for our task as we try to rationalize the changes that are going to be taking place across Ontario. I would like to go even further and say that in my own experience as an Anglican priest, I have spent a great deal of time in hospitals across this province. There are many hospitals that are bloated in terms of the number of beds they have and in terms of what they have tried to do within the community. The institutions are too large for the needs of the community.

Unfortunately we are presently in a situation in which we have to significantly cut our budgets across the board. I would like to put a case to you of a particular hospital that over the last number of years has been rationalizing considerably. It has been involved in community-based health care for quite a number of years and has done things like setting up an after-hours clinic. It has the largest capacity for any area in Ontario. That area, of course, is Victoria county. There is only one hospital in that area and it is running presently at 116% to 120% capacity.

They established an after-hours clinic as a means of unclogging the mess in emergency and they have been reasonably successful in that process. They have initiated many kinds of health care classes, going out into the community and trying to be proactive and help people before they have to come to an institution, trying to serve them within the community. They have a reasonably good relationship with the community health council, which is a good thing, and because of the considerable population of aging people in the area, they have helped to spearhead many programs that have attempted to keep people in their homes, thereby not using institutions.

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This all sounds like a wonderful hospital that is moving in the right direction and yet I have some concerns about the transfer payments even in regard to this hospital. Can you give me any indication that when the hospital is so avant-garde in terms of going in the direction the Ministry of Health wants hospitals to go in taking a leadership role, is there any hope that such a hospital, if it finds itself in financial trouble -- It does not have significant deficits like other hospitals. In fact, it has too few beds in some senses. Will that kind of hospital be helped, or is the across-the-board decision by the Ministry of Health going to be inviolate? Is everyone going to get the same amount of money and is that the way it is going to be attended to?

Mr Decter: Let me try and give you part of an answer and maybe Ron can give you the rest. There are several elements to the financial relationship between the ministry and the individual hospitals. Ron spoke to it earlier. Since 1988 there has been a no-deficit policy. That policy applies to every hospital in the province.

There has also been a shift in the logic on which funding flows. There have been two components to funding. One is the annual economic adjustment, which has been a percentage across the board. In the Treasurer's announcement of January 21, that will be for next year 1% to the hospital sector. But there has been in the most recent years funding that has flowed to hospitals on other than a percentage basis, funding that has flowed on equity lines, growth lines, life support lines. We collectively refer to that as transitional assistance. It really is an effort to, if you like, reward good behaviour, reward hospitals that are delivering services in an effective and efficient way.

To address the issue that I think you are coming at, what are the rewards for a hospital that functions with a lower number of beds and achieves efficiencies? We are currently in discussion with the hospital sector around the use of money above the 1%. The Treasurer indicated in his announcement that there was $160 million for all the transfer payment agencies. We are endeavouring, in meetings with the Ontario Hospital Association, the health care unions and others, to determine the basis on which we would ask the treasury board to allocate additional money. It is fair to say that we feel very strongly in the ministry that we have to have more money move over a period of time on the basis of services that are being provided rather than on the basis of bed counts or history. That view was confirmed very strongly to us by the program review in the fall, which had a wide participation.

There is good support from physicians, from the hospital association and from the health care unions for the view that you want to have the dollars follow the patients, if you like, and have the dollars follow the most efficient management of the patient outcome.

Mr Drainville: There was a flurry of activity immediately following the announcement of the government as to the transfer payments that would be allotted, and I might even say hysteria in some circles in response to the decision of the government. What I was very pleased about is that in Ross Memorial Hospital in Victoria county, the first thing they did was to get the staff of the hospital together and talk about what they were going to do as a community to continue the mandate they wanted to do in terms of serving the needs of the community, and at the same time how they could best help people keep their jobs and keep doing the work they had to do. My view is that this is a model that should be emulated across Ontario. The reason I am saying that is because I am proud of Ross Memorial Hospital. I am proud there are people who are willing to take a very conscious and careful approach to the financial crisis we happen to be in in Ontario.

The last concern I have is in terms of the projects that have been allocated. There is a very particular concern about Haliburton county. We have had discussions before in the ministry around that. There is no question that with the downturn in the economy, this model of health care that has been put forward in Haliburton county is going to be jeopardized in any way because of the difficulties in financing. Is that correct?

Mr Sapsford: The proposals for Haliburton of course involve other divisions of the ministry. As far as the institutional division is concerned, we have instituted a brief capital review process, given the projections on operating funds in the next three fiscal years. It was felt prudent to pause and review the capital construction projects to identify those that would have an inordinate operating impact in the future. That process is going on right now. It is not meant as a process to defer capital spending in any way, but rather to focus on those projects where we need to do a little bit more work to ensure that the intention of the project is consistent now with the operating horizons. We are anticipating that the review should be completed before the end of the current fiscal year. I do not anticipate huge delays on projects as a result of this.

Mr Decter: Perhaps I might add that with reference to Ross Memorial, I think it is fair to say the hospital is an extraordinary institution in the community. It brings together a wide array of people. We have enormous amounts of evidence coming to us gradually of various hospitals involving all the people that work in them. The OHA passed a resolution some time ago urging hospitals to freeze the salaries of those in the higher income brackets and we have good evidence that is happening across the province.

These things take a bit of time to work their way through over 220 hospitals, but it is fair to say there were some very dire predictions at the time of the transfer payment announcement, particularly in terms of the number of jobs that might be affected. It is clear there will be some number of jobs affected, but the evidence to date suggests that people are finding a large number of ways of cushioning those impacts, finding ways of protecting services and protecting, not every job but a great number of jobs across the system. It is enormously encouraging to see this.

Both the minister and I will be speaking at an OHA conference next week. Trying to gather together all the evidence of how hospitals are coping is actually an encouraging task, given the creativity that is being shown. It is a difficult period. The boards of many of the hospitals bring to bear their own experiences in the rest of the economy and inject a note of just how many others are having to restructure their activities, be they business or otherwise, which is helpful in this context.

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Mr Tilson: I would like to return to the subject of bed closures raised initially by Mrs O'Neill, specifically the comments with respect to the auditor, who has reminded us of your policy that there would be no bed closures in hospitals that relate directly to patient care without receiving prior ministry approval. The auditor says this is simply not being done. In fact, I will read what the auditor has said:

"We selected 15 hospitals that had closed 770 beds during the 1990 fiscal year and noted that for 12 hospitals there was no evidence of ministry approval prior to beds being closed and no evidence that the branch teams had monitored these bed closures."

It even draws to my mind the situation in the district of Parry Sound where an entire hospital was closed, namely, Burk's Falls Hospital. Of course that is part of the Huntsville system. The minister did appear in Burk's Falls, but that was after the decision was made. I do not even know what the current status of it is. I gather that decision has been finalized and that Burk's Falls Hospital is ended. There is a whole different outlook of course depending on where you are. This is in an area where the nearest hospital could be in Parry Sound, Huntsville or North Bay and could in some cases result in an hour-and-a-half drive.

Further to Mr Villeneuve's comments on the rural hospital, the ministry's response simply was that it indicated to the hospital sector that hospitals must operate within allocated resources, which is a business decision. This gets to the real question. Whether you are talking about closing hospitals such as the Burk's Falls Hospital or the board is simply closing beds, the ministry obviously must look at all kinds of things. The ministry's responsibility is, "You have allocated funds, but you must ensure that community care and standards are maintained."

On the one hand you are saying you must operate within your allocated funds, but on the other hand how are you ensuring that community care and standards are being met when you allow boards to make these decisions without prior monitoring by the ministry?

Mr Decter: Let me take the specific you mention, that of Burk's Falls and Huntsville. I think it is fair to say that in the past, the decision might well have been taken by the Huntsville hospital in conjunction with the ministry. The process that was introduced last fall required a review by the district health council. That review was carried out. The Huntsville hospital recommended the Burk's Falls closure as part of its deficit recovery plan. That recommendation to the minister was supported by the district health council, which was broadly representative of people in that region.

I think that (1) the Huntsville board itself has an obligation to look at the impact on care, and (2) the district health council has well within its mandate that very specific concern about the provision of service. The Minister of Health, having heard from both those entities, visited the area to meet directly with people in Burk's Falls and in Huntsville. We have an operational review of Huntsville under way, but with a somewhat broader mandate to look at the continuing provision of care. You are right that the advice to the minister from the district health council was accepted by the minister following her visit.

Mr Tilson: That is the question I am really getting to.

Mr Decter: There are two issues here. There is the issue of whether the dollars that are being spent are getting value for money in terms of care. I think the second issue is, how is that care best provided? Is it best provided by the Burk's Falls Hospital or by some other service delivery agency? I think our core concern here is service. But the ministry had a look at this. The ministry looked at all the recommended changes that came forward from the individual hospitals as well as having the district health councils look at them. I am not sure if Ron might want to add something on the historical question of the 15 hospitals.

Mr Sapsford: I think the auditor's comments were simply based on an old policy of the Ministry of Health some years ago. In budget instructions in later years, certainly in the last two fiscal years, the policy position had moved away from beds being the benchmark, as has been said. We were much more concerned that hospitals were moving to outpatient and day surgery as new techniques of dealing with service. The issue about beds specifically, in terms of bed closures, was not the same kind of issue it had been in the early 1980s and late 1970s. There have been some changes in hospital operations and in medical techniques. The policy of the ministry with respect to beds was changing in an effort to reflect those changes. We took the Provincial Auditor's comments in the sense that yes, the policy was on the books -- it had not been formally withdrawn -- but that clearly the policy of prior approval of all bed closures was not something we would return to.

Mr Tilson: I am very concerned. I will pick Burk's Falls. It is not even in my riding but it is an example that perhaps can be best used as a setting that is at least different from the larger municipalities. There is a concern that has been expressed throughout the community as to the proper maintenance of community care and standards: Are they being lessened? All right, so there are not as many dollars, and Burk's Falls is a typical example. Obviously there is going to be a major strain on the Huntsville hospital and perhaps even on Victoria-Haliburton, because the populations in areas such as this quadruple in certain seasons of the year. The strain on hospitals must be very serious. Huntsville is an example. I would like you to elaborate again on how the Ministry of Health is going to satisfy communities such as Burk's Falls that with the closing of their hospital their community care and standards will be maintained.

Mr Sapsford: The process the minister has set in motion will to some extent deal with this specific issue of Burk's Falls, to examine just these points, what community services need to be maintained in Burk's Falls so that the kind of erosion you are talking about does not occur. It is still an outstanding question for Burk's Falls. It is back to the question of value for money. If there are other ways of providing services that are more cost-effective, then the ministry's general approach is that hospitals should move in that direction. There are many hospitals in the province where rates of day surgery are 30%, 40% or 45% and there are other areas in the province where they are as high as 60% or 65%. The best practice would argue for hospitals moving to higher rates of outpatient surgery and lower rates of admission as being inappropriate in today's environment and in today's style of medical practice.

To some extent we monitor the behaviour of hospitals on indicators such as rates of day surgery, rates of utilization, their average length of stay, the per cent occupancy of hospitals. There is a range of indicators we look at to judge whether or not this hospital's operation has room for improvement. Often the way hospitals make these improvements is by making marginal reductions in bed capacity to reallocate some services to other forms.

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Mr Tilson: Do you make those decisions before the beds are closed? In other words, if you are doing that then in fact you are disputing the auditor's comments that the ministry really was not involved in the process prior to the decision being made.

Mr Sapsford: The auditor's comment was that there was not a specific and discrete approval by the ministry, but I would not say we are not involved. Certainly the process we have set up for the current year and future years is that the decisions or plans of the board very much have to be communicated to the ministry before they are implemented. It will give the ministry an opportunity to do that kind of review of hospital service plans.

Mr Tilson: Of course the auditor goes even further and says there is no evidence that the branch teams had monitored these bed closures.

Mr Sapsford: There was no documented evidence.

Mr Tilson: I do not know what you mean by that.

Mr Sapsford: To some extent there was no documented evidence in the file that this had been reviewed or that had been reviewed.

Mr Tilson: No.

Mr Sapsford: But that does not mean there had not been discussion or interaction along some of these lines.

Mr Frankford: I would like to ask about accreditation. Can you give some indication of how effective the Canadian Council on Health Facilities Accreditation is for doing this sort of audit work that is needed?

Mr Sapsford: Accreditation, up until this point in time, has dealt with structure and process in hospitals; in other words, what resources there are, whether there are beds in the structure, and then the processes inside the hospital: Are there processes at the board level and management level for review of a whole host of issues? The criticism of the accreditation process is that it does not provide an evaluation of the outcomes of care. It makes no effort to evaluate, from the outcomes side, whether the hospital is achieving its mandate. That has been recognized by the Canadian council. They have been doing some research in the last two years, I believe, to try to establish an evaluation mechanism to measure the outcomes of care and to apply them as part of the accreditation process. If there is a problem with that, it is not focused enough on outcomes.

The other issue of course is that accreditation is a voluntary process. There is no mandatory requirement that a hospital participate in accreditation. There is also the concern on the part of the council that accreditation not be made mandatory, as part of the regulatory framework, by provincial governments. They certainly do value the process as being a participative one as opposed to an imposed one. In Ontario hospitals, over 90% are accredited. It is a very popular program in the province, not just with hospitals but also with long-term care facilities. There is a process for public health units as well.

Mr Frankford: Does the process give an indication of the financial health of the institution?

Mr Sapsford: Not specifically. They will review financial processes in a cursory way: Is there a financial and audit committee of the board? Does it meet and does it review these kinds of issues? But it will not go in and do a detailed analysis of the financial position or comment on the financial position of the hospital.

The Chair: Mr Frankford, I hesitate to interrupt you because you have only been on for a very brief period of time. We are getting close to 4 o'clock and there are two other members, Mr Morin and Mr White, on the list. If I could get unanimous consent that we could sit maybe 10 minutes longer to 4:10, that would allow everybody an opportunity.

Mr White: I am sure that with the hour approaching we would have very brief questions.

Mr Morin: In fairness to Dr Frankford, I have allowed a lot of time to the others, and I think it would be only fair for him to have as much time as the others.

The Chair: That was the nature of my inquiry, because you would have a specific interest in this, I am sure, and probably have far more erudite questions than many of us on the committee. I just wanted to know whether it is agreeable that we could sit for an extra 10 minutes to ensure everybody is accommodated.

We are going to have Toronto General Hospital before us tomorrow, and on the odd possibility that there are questions we might want to ask of you two gentlemen, would it be possible for you to come back on Thursday morning if the clerk indicated that there were questions, so that committee members might be able to get answers from you on Thursday morning? It may not happen, but just on the odd chance it does, is that all right? Is it agreeable to the committee that if some questions arise out of the Toronto General hearings all day tomorrow, we will have them available to answer them? Okay. Dr Frankford, perhaps you would like to continue.

Mr Frankford: I think you said the ministry is going to receive the accreditation reports on a consistent basis now.

Mr Decter: Yes, those reports have been requested from all hospitals.

Mr Frankford: Are you going to have a formal process to identify issues in the reports and to evaluate and follow-up?

Mr Sapsford: The accreditation process is important to the hospital. We will work on the assumption that the hospital, in order to keep its accreditation, will be following up on the major issues itself. Our intention will be to review the reports, to document those areas of concern to the ministry, and to note those for follow-up to ensure the hospital has made some movement in its own review of the accreditation report. There are in some cases large areas of comment that would not interest the ministry directly in terms of internal procedures, but certainly we intend to review them with the teams and follow up on those issues that are of concern to the ministry.

Mr Frankford: If I can briefly go to another favourite topic of mine around information systems, I think you referred to wanting to get better databases and better feedback mechanisms. It has been my thought, in the areas I am familiar with, that the ministry could do a great deal to set common standards. Are you satisfied with what you got or could you say something about what you are developing?

Mr Sapsford: In the area of management information systems, there has been considerable work done over the past 10 years at the national level that all the provinces and hospital associations across the country have participated in. It is called the management information system guideline, and Ontario has just recently set up a committee for its implementation.

In the area of doing cost accounting in case costs and standard definitions of hospital information, we already have the template for it and we are now in discussions with the hospital system about ways to implement it. The deputy mentioned that we still use relative cost information from New York state. It is our intention over the next two years to develop about 15 hospitals that would be able to generate this information from Ontario costs. We are very much trying to develop standards of definition and reporting for both financial and operating statistics, as well as to have consistent reporting of clinical information in terms of clinical diagnosis, so that direct comparisons can be made between relative costs of treatment from one hospital to another. The management information systems are very important, and we are moving forward as rapidly as we can to develop them for Ontario.

I should add that there is also great interest across the country in what Ontario is doing in this regard, so it certainly is not just an Ontario issue.

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Mr Decter: I should add briefly that one of the strides forward we have made is the reregistration of the entire population of the province with unique health numbers. We have moved from a situation where we had some 23 million to 25 million health numbers outstanding for a population of 10 million, which led to enormous numbers of data problems right across the system, to something that more closely resembles the 10-million population. We are going to take a number of steps that have been recommended to us in an audit sense to keep the registration clean into the future, because it is a very valuable asset for us in all the systems, hospital and otherwise. I think we are ready to declare victory on the reregistration and put our effort into keeping it up to date.

Mr Frankford: If I can just make an observation that you can respond to, Mr Sapsford mentioned the diagnostic classification. The diagnostic classification provided by the ministry that I had to work with in the office left, I thought, a lot to be desired, and it had not been updated for many years.

Mr Sapsford: There would be a difference between the diagnostic and the billing code versus the one hospitals use for the diagnosis of their patients. The diagnostic coding system in hospitals is based on the international classification of disease, which is an international standard for nosology, or diagnosis. That is the required standard for hospitals in terms of the data they submit. We have just recently completed, in cooperation with the Ontario Hospital Association, an audit of those data to ensure that there is consistency and validity in the way individual hospitals are classifying and coding their patients. While there was some room for improvement, on the whole the results of that audit showed there is relative consistency and comparability in the way hospitals are actually recording their diagnostic information.

Mr Morin: I am referring to the auditor's report on the accountability of hospital boards to the ministry. Have you ever considered appointing a representative of the ministry to the hospital board? After all, we are spending 85% of our money to finance hospitals. If you were in private enterprise you would have -- I would have, certainly -- a representative on the board itself to make sure the money is well spent and to make sure it is a good relationship between me and the board and the company. How would hospitals react to that?

Mr Decter: You are asking three questions there. Have I ever considered appointing a representative to a board? There have certainly been moments since I arrived when that had enormous appeal. I think it is fair to say the minister has that capacity, so it could be done. I think it is also fair to say that there would be enormous resistance from the hospital community to those appointments. The attitude of the hospital community, generally, is that they are entities at considerable distance from government in terms of their governance and their independence, and they place great emphasis on that.

There are some hospitals where the government, by order in council, appoints some number of representatives. Those situations exist, but I think it is fair to say that the practice taken has been to appoint members of the public, not of the ministry, to hospital boards.

I think I would defer to the rather difficult governance debates within the Public Hospitals Act review, but I do not think an answer would be for the ministry itself to become a series of directors on boards. One, the numbers would simply be overwhelming. Two, I think the ability of one ministry representative on a large board to carry the day would be -- we would be there, but probably would be held accountable for decisions we had little influence over. It is not the same as exercising the stewardship that comes with an ownership position in a business. We are the stewards of the taxpayers' dollars in terms of the hospital system. I think all these questions go to how we exercise that stewardship, but I would not be prepared to advise my minister that a good way to go would be to put a single ministry representative on each hospital board in the province. I do not know if Ron would want to comment.

The Chair: Mr Morin, it is a logical question, but unfortunately it is a political question.

Mr Morin: I know it is and that is why I ask it. At the same time, okay, let's say that you would hesitate --

Mr Frankford: Your question was about ministry representatives as opposed to appointments by the minister.

Mr Morin: Ministry appointment, exactly, because it seems to me that when I look at the auditor's report there is a lack of communication, a lack of understanding of the regulations themselves, and why not have somebody on the spot --

The Chair: They would be on the spot too, believe me.

Mr Morin: -- who is there permanently affixed to the hospital, taking care of your interests and making sure the regulations are being followed. You are not there as a policeman but as a help. Therefore you are assured the moneys are well spent. Is that not what we have to look for? We have to make sure the taxes I pay and everybody pays are well spent and the service is also well given.

Mr Decter: I think we share the objective completely. This may well be a better question to put to the minister than to officials.

The Chair: I was going to say I do not think it is fair to ask a bureaucrat, albeit a senior bureaucrat, that kind of question. That really is a policy question. But as an aside to that as Chairman, I have to say that is very logical. Unfortunately business does not operate the same way as government does. There are those sort of overlying political considerations, but I think that is not a fair question to --

Mr Morin: But I seem to detect a tone of --

The Chair: I think he agrees with you, but he is not going to say that, obviously.

Mr White: One of the things you mentioned earlier, Mr Decter, really piqued my interest and had some resonance. You mentioned both the amalgamation of a couple of hospitals at the administrative level in the North Bay area and also how well many local boards and communities were responding with the limited financial situation we are in.

I just want to comment that certainly that has been the case in my community. The two hospitals are merging, at least at the administrative level, and the board members have shown a great deal of creativity in dealing with the structural problems. I think they should be commended in that regard, and through that amalgamation, through that restructuring, they should be able to offer, if not the same level of service as least year, possibly even a larger level of service on a very small level of increment. They were very thankful for the support your ministry has been able to offer them. I think that, dealing in difficult times, your ministry has been able to surmount some of those challenges and assist people in the community in so doing.

Mr Decter: Thank you. Perhaps I could just add that sometimes when one is dealing with difficult situations, it is easy to lose sight of the enormous amount of good governance that goes on throughout the hospital system and to lose sight from time to time of the enormous numbers of hours put in by volunteer directors of hospitals across the province. I think it is fair to say that we value greatly both the creativity and the dedication of those directors. We share very much the view that we have to find ways of strengthening accountability. We also have to balance that against the requirements to keep those volunteer directors feeling there is a balancing of their time and commitment and responsibility with the accountability. I think there is a point to be considered in the nature of the system, which is a system that has a great deal of citizen involvement at various levels historically, and a great deal of money. Although the taxpayer shoulders the majority of the burden in an operating sense, there is still a very major role played by communities and fund-raising, and I think that balance is important to the health of the system.

The Chair: Mrs O'Neill, I understand you have une petite question.

Mrs Y. O'Neill: I want to apologize for having a meeting I could not change, but I did have one short question on the transitional funding. I was approached by an executive director of a health facility last Saturday night and it was stated to me by him, and I think he is a pretty knowledgeable person, that the hospital incentive funds are now being phased out. I was not aware of that. He seemed to be pretty sure of it and was discussing it with a person who is working under a hospital incentive fund in the Ottawa area. I wonder if I could have any update on that kind of information.

Mr Decter: The hospital incentive fund remains in the base budget of the ministry. It provides funding on a project basis, so it is conceivable that someone could be working on a project that had been funded under the hospital incentive fund and that project would have a specific life, but the fund itself continues as an important feature of our base budget.

Mrs Y. O'Neill: It is not under any review at the present time then.

Mr Decter: It has been funding on a project basis for the last three years and there may be some shift in the direction. In other words, the kind of projects that would qualify for funding may change, based on discussion with the hospital system itself, but the fund, in the sense you have described it, is not disappearing.

Mrs Y. O'Neill: Thank you. I had not heard of it myself and I wanted to verify it.

The Chair: I want to thank you very much for coming, and I have a message to send back to the Minister of Health, with love and kisses. This is not a political comment, because I think our government or the Tories should have done it.

I think it is absolutely outrageous that psychologists are not covered under OHIP and that we actually force people who could be dealt with by psychologists very effectively to go to psychiatrists at, what, $106 an hour. It is not to put the psychiatrists down, but that is an issue that should definitely be looked at. You have people out there who have kids who do not have the bucks to pay that shot and their kids are suffering as a result of not being able to get that treatment. My experience in 30 years of practising in the criminal courts is that psychologists very often could do a hell of a lot better job than the drugs that are required by some psychiatrists who consider drug therapy to be the be all and end all. I certainly hope you will take that back to Frances. I have found her to be very communicative and I hope she will look at that. That is my final message of the day, yours sincerely, chairman of the public accounts committee. Thank you very much for coming and we look forward to seeing you on Thursday.

Mr Decter: Thank you very much and I will be delighted to convey that message, although I think without the hugs and kisses. I will leave that to you to convey in a more direct way.

The Chair: All right. We might have a mixed marriage if we did that, you see.

The committee adjourned at 1615.