Legislative Assembly of Ontario

1996 ANNUAL REPORT PROVINCIAL AUDITOR

ONTARIO HOME RESPIRATORY SERVICES ASSOCIATION

MINISTRY OF HEALTH

CONTENTS

Thursday 21 August 1997

1996 annual report, Provincial Auditor: section 3.12, assistive device services activity

Ontario Home Respiratory Services Association

Mr Al Sperry

Mr Mitchell Baran

Ministry of Health

Ms Mary Catherine Lindberg

Mr Gordon Kumagai

Ms Monica Reilly

STANDING COMMITTEE ON PUBLIC ACCOUNTS

Chair / Président

Mr Bernard Grandmaître (Ottawa East /-Est L)

Vice-Chair / Vice-Président

Mr Richard Patten (Ottawa Centre /-Centre L)

Mr Gary Fox (Prince Edward-Lennox-South Hastings / Prince Edward-Lennox-Hastings-Sud PC)

Mr Bernard Grandmaître (Ottawa East /-Est L)

Mr Bill Grimmett (Muskoka-Georgian Bay / Muskoka-Baie-Georgienne PC)

Mrs Helen Johns (Huron PC)

Mr Jean-Marc Lalonde (Prescott and Russell / Prescott et Russell L)

Ms Shelley Martel (Sudbury East / -Est ND)

Mr Bill Murdoch (Grey-Owen Sound PC)

Mr Richard Patten (Ottawa Centre / -Centre L)

Mr Gilles Pouliot (Lake Nipigon / Lac-Nipigon ND)

Mr Peter L. Preston (Brant-Haldimand PC)

Mrs Sandra Pupatello (Windsor-Sandwich L)

Mr Derwyn Shea (High Park-Swansea PC)

Mr Toni Skarica (Wentworth North / -Nord PC)

Mr Joseph N. Tascona (Simcoe Centre / -Centre PC)

Substitutions / Membres remplaçants

Mr John R. Baird (Nepean PC)

Mr Tim Hudak (Niagara South / -Sud PC)

Also taking part / Autres participants et participantes

Mr Gerard Kennedy (York South / -Sud L)

Mr Erik Peters, Provincial Auditor

Clerk / Greffière

Ms Donna Bryce

Staff / Personnel

Ms Elaine Campbell, research officer, Legislative Research Service

The committee met at 1007 in room 228.

1996 ANNUAL REPORT PROVINCIAL AUDITOR

Consideration of section 3.12, assistive devices services activity.

The Chair (Mr Grandmaître): Good morning, everybody. I hope you had a great summer -- a short summer, but I'm glad to see that you're back and raring to go.

This morning, members, we're still dealing with section 3.12, "Assistive Devices Services Activity," and that's part of the 1996 Provincial Auditor's report.

ONTARIO HOME RESPIRATORY SERVICES ASSOCIATION

The Chair: This morning we have two groups of people. The first group is from the Ontario Home Respiratory Services Association: Mr Al Sperry, chair; and Mitchell Baran, member. You have 15 to 20 minutes to make your presentation and also provide us with an opportunity to ask questions. Please join us.

Mr Al Sperry: Thank you. Mr Chairman, members of the committee, thank you for the opportunity of speaking with you this morning.

My name is Al Sperry. I am part owner and director of operations for VitalAire in central and eastern Canada. I am also chairman of the Ontario Home Respiratory Services Association, or OHRSA, as we refer to it on a daily basis.

OHRSA represents the majority of home oxygen providers in Ontario. With me as well is Mitch Baran, who is owner and president of London-based Trudell Medical and a former OHRSA board member.

The OHRSA membership has been watching closely as the members of the committee have debated the Ministry of Health budget allocation for the provision of home oxygen to Ontario's citizens. I hope that by being here today, I can help clear up some lingering questions you may have and provide a better understanding of our organization and the services its members provide to the people of this province.

The central question of debate seems to be, is the province getting the best deal possible with its current agreement with OHRSA, which sets a reimbursement rate for oxygen modalities at $425 per client per month?

As an organization that has gone through tremendous change in the last few years to keep pace with changing economic and political realities, OHRSA was quite surprised to learn that our efforts may not meet the approval of this government or specifically this committee.

Several years ago, the members of OHRSA, which represent about 85% of the clients receiving home oxygen in the province, realized that the status quo simply was not an option. Like most service providers, we realized that the days of ever-increasing health budgets were over and that we had to deal with this reality. I believe that the members of this committee are well aware of the significant reductions to the home oxygen budget that the ministry has achieved over the last four years. This has only been achievable with the full cooperation and strong support of OHRSA and its members.

For the industry, this has meant a loss of two thirds of the previously existing companies. The Ontario market now features 46 approved vendors compared to 146 in 1990. While this has caused tremendous upheaval and job losses, about 1,200 in our industry alone during that period of six years, OHRSA and its members have been willing participants in this necessary change.

In 1996, discussions were initiated about two basic issues: (1) the government's desire to streamline and find efficiencies in their approval system -- they had some reductions that were required in terms of economic allocation and staffing levels to their departments at which they needed to streamline their approval process and their efficiencies -- and (2) OHRSA had some issues, particularly the sense of stability for our clients and our companies and their employees. At that time we were involved in discussions about renegotiating our agreement. We knew the result would be a further decrease to our compensation, but our membership recognized the situation facing the government and chose to play our part in reform, while at the same time trying to ensure that our clients, even those located in the most remote and costly areas of this province to serve, were not forgotten.

In the spring of 1996, the Auditor raised some questions concerning the home oxygen program with the officials at the Ministry of Health. To help the ministry address these concerns, our membership has once again chosen to do everything it can to help.

We have fully supported the implementation of independent assessment pilots. We are also hopeful that the study will be done, in conducting the pilot site tests, that will provide valuable scientific data that will be useful when planning for the home oxygen program in the future and that will benefit our clients and the people in need of oxygen in Ontario.

We have provided the ministry with cost breakdowns for a typical home oxygen provider and have accepted the single reimbursement rate for treatment modalities. Why? Because though it means less revenue for us, it is the right thing to do for the system.

While many groups and individuals have talked the talk, OHRSA and its members have actively pursued every reform which we believe has been truly aimed at putting the patient/taxpayer first, and we will continue to do this.

It is OHRSA's belief that ripping up the current agreement signed by the Honourable Dave Johnson and tendering for the provision of home oxygen services will not result in improved conditions for those in need of oxygen in their homes or prolong life or quality of life for those people. Much the opposite would occur.

While certainly saving some money in the short term, tendering will result in a handful of monopolies in the province which will jeopardize the industry's outstanding level of service, which has been a by-product of the competition we have seen, resulting in further job losses for communities throughout Ontario; erode the small business base within the province; and eventually lead to the increase in direct home oxygen costs and to indirect increases in costs to other parts of the health care system, particularly the long-term system.

It is our understanding that the Deputy Minister of Management Board has indicated that the Ministry of Health should be tendering for home oxygen, as the Management Board procurement guidelines "apply to all programs involving direct acquisition by the province." While we believe the guidelines make perfect sense, OHRSA supports the Ministry of Health's contention that Management Board may not realize that this is reimbursement for a service provided to Ontarians, not the purchasing of some equipment used by the ministry. In the same manner that the Ontario Medical Association, the Ontario Pharmacists' Association, the Ontario Nursing Home Association, the Ontario Association of Medical Laboratories and many others negotiate a rate of reimbursement for their membership with the Ontario Ministry of Health, so too does the Ontario Home Respiratory Services Association. We simply want to be treated in the same manner as anyone else in the health care sector.

As responsible members of the health care community, OHRSA members accept and embrace the need to achieve more efficiency in an effort to drive dollars to front-line patient services. As we find individuals being discharged from hospital earlier and earlier and as the general population is living longer in their homes, it is more crucial than ever that Ontarians have access to the comprehensive services in the home. This is not just rhetoric; it is necessary to protect the interests of those in need of our services.

I wish to reiterate that we as an industry have earned a reputation, by swallowing some very harsh medicine, as proactive participants in necessary reform. This is a record we are proud of and vow to continue. While the many small businesses that make up OHRSA appreciate the concerns and questions of the members of the standing committee on public accounts, we hope and trust that the efforts made by the industry and the ministry to maximize the efficiency of government spending without putting taxpayers' health at peril will be recognized and supported.

OHRSA further urges the committee to recognize the tremendous upheaval and long-term negative impacts to both the health of Ontario citizens and government finances that a tendering process will produce. On behalf of all Ontario home service providers, I thank you for your time and consideration of this most important matter of the wellbeing of Ontario citizens.

Mr Baran also has some comments that he would like to make.

Mr Mitchell Baran: I'm Mitchell Baran, president of the Professional Respiratory Home Care Service Corp, an Ontario-owned company which services the needs of oxygen patients in Ontario. To begin with, along with my colleague, I'd like to thank you for the opportunity to share our thoughts with you this morning and, to the best of our ability, to answer any questions you may have with truth and candour.

I'll tell you a little story about my background, about getting into this business, which has to do with the quality of the service we provide today. I've been in the medical business for quite a few years. Approximately 15 or 16 years ago I was asked by the respiratory department at one of our local hospitals in London to get into the home oxygen business because the service they were getting was badly done. One thing in particular that struck this particular respiratory department was the evidence of an oxygen cannula that had been left with a patient for Lord knows how long, and it showed a growth within the cannula which was actually green -- you could just see it sitting in the cannula -- and that poor patient was being infected every day, day in, day out, because somebody simply dumped the equipment with the patient and allowed this to happen. That is how I got into the business, because at that time there was a significant problem with quality.

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In addition I'd like to tell you that in my youth I suffered severely from asthma. There was just no such thing as oxygen being provided at that time. I've got a passion for this business, and the passion relates to the question of quality of care to the patients we serve and look after.

My colleague has stolen a lot of thunder from me because we're sort of uncoordinated -- he was in the hospital recently with a pretty severe procedure -- so I'm going to skip around a little bit and hope you'll forgive me if it sounds disjointed. Nevertheless, I'd like to make a few comments based on (1) what our company does, (2) our relationship with the Ministry of Health, (3) competition; and (4) the future.

Oxygen may not be well-known, but it is considered to be a drug. It's not a commodity, and as a drug it is administered to the patient and it needs a health care professional. I served a number of years as chairman of the chronic hospital in the city of London. An oxygen patient at home is really an extension of that person being in the hospital. The relationship of health care professionals and how they look after patients during their visits and how they relate to them in their phone conversations is terribly important. Changing that person around causes a great deal of anxiety and exacerbates a patient's condition.

To illustrate how we deal with this, our staff has been with us for over 10 to 15 years. We provide good, solid jobs for these people to ensure continuity for our patients. These aren't part-timers; these are people who have good jobs with benefits, and they were very concerned and have been over the last four or five years with the onslaught the ministry has put on us to reduce costs and with a 30% reduction in our funding.

If the ministry ceases doing business with us, our staff is out of a job. They have nowhere to go. That obviously is happening everywhere in our economy, but nevertheless there needs to be a recognition that if we cease doing business with the ministry, then we are faced with significant severance benefits for this staff, which in fact we cannot pay.

I wanted to make the point of, number one, how important the relationship of our staff with the patient is. It is very much relative to what happens in a chronic hospital.

The second point I'd make, and it may not be very well understood, is the 24-hour service that our company and other companies in OHRSA provide. That means our people, our health care professionals, are on 24-hour call day in, day out, seven days a week. When a patient calls, they don't get anybody but a health care professional. I would ask any one of you try this on your doctor or even in a hospital. We provide absolutely top-quality service to these patients every time, even during the night, where our staff gets called at 2, 3 and 4 o'clock in the morning. That patient, if our people weren't there to offer that service, would be winding up in the emergency room, increasing the cost of the system.

Again we're coming back to this issue of quality and how important it is in terms of providing care to these patients, and there's a significant cost saving overall to the system because the home oxygen patient is getting the care he or she would get in a hospital at a very low price.

The other thing, for example -- we're not dictated to do this -- is that our company, and probably others, provides a video. Our health care professional sets up the patient, giving instructions, and to reinforce that leaves behind a video. In this province, as you know, we've got a multilingual population, and that video is available in English, French, German, Mandarin, Italian, Portuguese and so on. We've taken the initiative to really care for our patients and to make sure we're delivering the best-quality care. You can be proud of the money that's being spent with your home oxygen industry.

The other point I will make regards accreditation. It's not a prerequisite, for example, for the industry to be accredited. We are accredited. Most of the companies that are providing a service in the industry are accredited by the Canadian Hospital Association, and every two or three years the assessors come in and assess the quality of our service. So we're maintaining a quality, which keeps the patients in their homes rather than being sent to the hospitals.

Getting to the relationship with the Ministry of Health, I would only comment that after your customer beats you up and reduces your pricing 30% over the last few years, that relationship isn't all that great. We think you've been pretty tough on us and we've tried to work within an environment. I'm not here to stick up for them, but I think they've done a pretty good job with the taxpayers' money. I'm a taxpayer as well.

Next I'd refer to the competitive situation. Very simply, the companies compete ferociously in a marketplace, and we're the meat in a sandwich. On top of us is the ministry saying, "Reduce your cost" -- they've reduced our reimbursement -- and at the bottom of the sandwich is the physician or the referral source, and they are asking for better service. We compete on the basis of service and quality of care, so the competition in our industry, in the marketplace, is pretty severe. It goes on every day; it's very intense. I think that anybody who would suggest we're not competing out there is welcome to come into our company and see what we have to do.

Briefly, the future as we see it: We'd like some stability. Over the last three or four years our staff have been constantly asking whether they've got jobs. We've had to make staff reductions and so on and so forth. We want to maintain our quality of care. We can do it with your help. The agreement we got recently with the ministry was on the basis of getting some stability for our people, for our industry, and we've made some sacrifices to achieve that. We thought it was the best way to go in the long term and in the interests of everybody.

In concluding, I along with the staff from my company, and I'm sure companies within OHRSA, are going to strive to continuously improve the delivery of our service to the Ontario home oxygen patients and at a competitive price. Thank you very much.

The Chair: Thank you, Mr Baran and Mr Sperry, for your presentation. Now I'll ask the third party to start questioning our guests. Every caucus will have 10 minutes.

Mr Gilles Pouliot (Lake Nipigon): Gentlemen and members of the ministry, I thank you most kindly for sharing your expertise and professed good deeds by way of the essential service you provide. I, for one, am a little surprised, for it is a departure from form, from process that we would have -- and I don't wish to be so bold, and if I make a mistake, please correct me. You both have that ability, and English is not my mother tongue, so I rely on your good offices to get me back on track. So if I say things like "fronting for the ministry," and if you feel it's not quite so, you indeed will correct me.

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Mr Sperry: That certainly wouldn't be so, if that's what you were trying to say.

Mr Pouliot: Yes, but it's a departure that we have. I mean, you're elevating your office, that of lobbying, and I'm surprised to say that tendering -- and I don't wish to impute by taking you out of context. I occupied four ministries with the previous administration. Don't say we were short on talent, sir. That was then. I thought, by way of the Ministry of Transportation, that tendering would bring out the best in people by way of that essence of the marketplace in our system, that of competition. It establishes balance. Your search for equilibrium is responded to, is established, pronto, by way of process etc.

It's the ministry that I wish to question, because we have an element of process. We have the Provincial Auditor questioning not the ethics but process, and asking in terms of value for money. That's the role of the Provincial Auditor, forever vigilant, diligent, to say, "How do we ensure that the taxpayers in Ontario, all of us, get the best value for money?" So it's the third time. This is getting prolonged. People are aging in front of your very eyes. We're on a first-name basis now. We visit: "How are you? How are the children?" etc. Pretty soon we'll be into tattoos and distinguishing birthmarks. So I don't want to see those people any more in this kind of exercise. They don't want to see me; they never did.

Let me focus here. We have the head of the program, the person responsible for the people of Ontario, saying the following.

Mr Sperry: Before you get into that, sir, could I address --

Mr Pouliot: Excuse me. It's my time, sir.

Mr Sperry: Okay.

The Chair: I know it's your time, but I want to remind you --

Mr Pouliot: I have 10 minutes.

The Chair: -- that your colleague Ms Martel would like to ask questions as well.

Mr Pouliot: I know if we tendered, we'd get a lower price. The contracts are with the suppliers, not with the association. You supply 80% of the oxygen of the users. You represent 17 out of 36 suppliers. We could break those contracts and tender tomorrow and then, quick, quick, quick, if one was to impute motives, you find your way into the maze and you go to Johnson -- that's among us people -- and you go to the Minister of Health, and the recommendations from the Provincial Auditor, from the committee, well, they get bypassed because then you sign long-term and you lock yourself in.

Mr Sperry: Could I answer that?

Mr Pouliot: Yes, please.

Mr Sperry: Unfortunately, the information you have I don't believe is accurate. The agreement with Mr Johnson was made before those comments were made in your committee, was made before that situation took place, and was done in the early part of January.

Number two, if I could go back to your tendering issue, there is a very good situation in terms of tendering for particular physical pieces of equipment, and I'm sure the Ministry of Transportation does very well with their tendering. What we're talking about here is a very personal service that has to do with individuals, that has to do with taking of health care dollars. If you were going to tender for home oxygen service, why wouldn't you tender for appendectomies? Why wouldn't you tender for who can do the best gall bladder work? Why wouldn't you go to the physicians and say: "Who can do the best job in terms of taking out the most gall bladders for the lowest price? Here you go"? It's exactly that personal service, and it's that personal service that we provide.

Ms Shelley Martel (Sudbury East): Let me give you our position as candidly as I can. Frankly, the auditor made a very significant recommendation, which was that the ministry should do a thorough review of the rates that were being provided to this industry before a new agreement was renegotiated. That did not happen because the ministry made a decision to go in and renegotiate a new deal before the deadline. So that has not made this committee very happy.

Also, we have been told by the ministry two things: (1) that the new rate of $425 is a good deal because it's a package deal; we get equipment and service costs. This committee asked for a breakdown of those costs so that we could make a comparison between service and equipment costs that might be provided in other jurisdictions. We were told by the ministry that the suppliers were not required to provide that detailed cost breakdown between service and equipment under legislation. They don't have to provide it. So we haven't got that information.

Secondly, there is no doubt that at least the two of us here, and I think I speak for others in this committee, have been very concerned about whether or not the cost information that the suppliers give the ministry is accurate, is legitimate. We asked the ministry whether or not we could have some kind of independent analysis of this, and we were told clearly that the suppliers supply cost information to the ministry but have not agreed to an independent cost analysis of it.

Does tendering look good right now to me? Yes, it does, because I have to tell you I feel no confidence in knowing whether or not $425 a month is a good price, a legitimate price, a price that allows you to still operate but that also gives taxpayers a good bang for their dollar.

My questions to you two are the following: Is the industry prepared to provide detailed costing of the elements in the package, both the equipment costs and the costs that you would associate with servicing? Secondly, is the industry prepared to accept an independent cost analysis of the costing information that you provide to the ministry so that as a committee we can feel confident that all of the information is on the table and that indeed what you are providing as information is realistic, legitimate, and we're getting a good bang for our dollar? If you could do that, we'd probably back off on the tendering.

Mr Sperry: Yes, we have been in a situation where we would be open to discussing terms of reference to that type of independent survey. We have already given information in terms of a couple of companies. Mitch has been one. Another has been shared with the former director of the program. We certainly would be amenable and open to discussing terms of reference for that type of situation.

Ms Martel: So on both, the issues of what's in the package and a breakdown of equipment costs versus service costs, what you believe those two sets of items to be; secondly, the overall package with respect to what you need to make some money and what it costs to provide the service and what is good for the taxpayers.

You said you had two companies that were prepared to do that.

Mr Sperry: No, two already have.

Ms Martel: When were those provided to the ministry?

Mr Sperry: I would say some time early this year or late last year.

Ms Martel: Sorry. Can you just give me the companies' names again that provided information?

Mr Sperry: It was a composite of two: Aerocare and Professional Respiratory Care.

Ms Martel: For the other people you represent, the other 17 companies which you represent, who I'm assuming you can speak on behalf of and who provide 80%, you would work to have those 17 participate in that?

Mr Sperry: Certainly. We have nothing to hide. If anybody thinks this is a wonderful business, why hasn't anybody got into this business? Why have we seen our numbers go from 146 to 46? Why have we seen not one single solitary company in the last five years of any significance open or grow in this province? Zero. We have nothing to hide, and if that is what you feel is important to you, we would certainly work with the ministry on trying to ensure the independence of that information, because you can appreciate the sensitivity of that.

Ms Martel: Yes, I do.

Mr Sperry: But we have nothing to hide and we certainly are not in a situation where -- if our industry was making millions of dollars, we would have a lot more competition. We'd have a lot of people coming into this province opening up companies. It's not happening, and the reason it's not happening is because it's not profitable to do it.

Mr Baran: We don't have one US company in here competing with us. The large US companies are not in here. They're just not here, and there's a reason for that. We're not here to cry wolf, but you have to appreciate that, depending on the level of service and quality the company provides, you're going to have your costs vary all over the map, because if you're providing top quality, your costs are going to be higher.

You have to establish some benchmarks as well, which we've worked at. There's no compulsion for us to give credit, for example. It's a big cost, and we are in fact dedicated to providing this quality that we talk about. It is important.

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The Chair: Thank you. Now we will go to the government caucus.

Mr Bill Grimmett (Muskoka-Georgian Bay): Our caucus is anxious to move on and discuss this issue with the ministry. I do appreciate the association coming in today to explain their position. We have no dispute or truck with the association. Our concern as a caucus, and I think really as a committee, is with the ministry's decisions. They're the ones we'd like to get to, so we would like to waive our questions in the interests of moving on quickly.

The Chair: Thank you, Mr Grimmett. Now the official opposition.

Mr Gerard Kennedy (York South): I just wondered if you could talk a little bit about benchmarks. You have made an argument about the kind of service you provide, and I sense in the answer you gave around costing that there is some variability in your industry among your members. I am wondering what the potential is there for some level of benchmarks.

For example, I don't think you can tender just giving out the provision of oxygen. There are services provided with the oxygen supply that are important. The nature of those services: How standardized is it? What are the chances for that being made into benchmarks so we can get a handle on that? Can you comment a little bit about the brief comment I believe one of you made that work had been done around benchmarks and standards in the industry?

Mr Sperry: There have been a lot of situations that have changed over the last number of years. At the moment I think you'd find very standard care throughout the entire province as competition has driven everyone to particular standards. I think benchmarking is something that we certainly could work with the ministry on in terms of specifically indicating to the people who are going out there right now, where we all have respiratory professionals or nurses with special respiratory training who see these patients on a regular basis, who follow up their patient care plans with the physicians and keep them in that area.

The American Association of Respiratory Care has published some standards and has a benchmark grouping you could start with. Also, the CCHSA, which is the new accreditation group that is doing all the accreditation work for the Ontario Home Respiratory Services Association as well as for some hospital-based vendors who are accredited, we are in a situation where their standards in terms of what they asked for -- they asked for 160- or 180-some specific requirements in terms of benchmarks that have to be fulfilled before a home respiratory company could be accredited.

Those are two areas we could start with in terms of ensuring that all patients are being looked after appropriately and that outcomes indeed are there.

Mr Kennedy: I may want to come back there, but can you tell me a little bit about what kind of competition exists today between your member companies in terms of providing levels of service to the people in need of services?

Mr Sperry: If we had a relationship with a particular physician or physician group, and that physician group or that particular hospital said, "I need two-hour service to set up my patients. When I see a patient or I have a discharge from a hospital, I need that patient in the home within two hours," or sometimes within one hour -- we have a couple of places within one hour; I'm just talking specifically now about our company -- we respond to that. So we would provide a minimum requirement that we would be at the hospital, pick up the patient and take that patient home within two hours, and frequently within one hour, in terms of that discharge. Those are the types of time frames and the types of standards we've had to go to to match our competitors, to beat our competitors and to have that quick response for the system and take care of that patient in the system so they are able to be taken care of and to release a hospital bed for someone else.

Mr Kennedy: Does that mean if you can't do that, someone else will come and do it?

Mr Sperry: Exactly. If we can't do it, they'll call Mitch or they'll call someone else.

Mr Kennedy: In the shakeout that's happened in the industry, you've got 46 or 36 providers?

Mr Sperry: Forty-six approved providers, but of that --

Mr Kennedy: How many parts of the province are competitive in the sense that there are multiple providers? Is it across the province or just in larger areas?

Mr Sperry: All parts of the province, with the exception of certain remote northern communities, particularly far northern areas. I understand that there is now another competitor in the province that is opening a branch in that area, so there will be at least two servicing all parts of the province.

Mr Kennedy: In the absence of benchmarks then, I guess it's a little hard to pin down exactly what the standards are except what's acceptable to the provider who decides who is providing the service. Is that right?

Mr Sperry: The physician ultimately has the authority where his patient is going to go. Certainly sometimes they have their nurse, sometimes they have their clerk, sometimes they have a discharge planner at the hospital take care of it, sometimes they have one of their staff members look after it, but it's the physician's call. If you are not providing the responsiveness and the quality of care for that patient -- because obviously these physicians see their patients frequently and their patients are always saying: "I really appreciate the service I got from company X. I appreciate the responsiveness. I appreciate how well they've taken care of me. I appreciate how well I'm doing. I used to go to hospital every month and I've now been at home for a year without one trip to the emergency ward." All of those types of things are the feedback and the reason why physicians and other health care professionals make decisions as to which company to pick.

Mr Baran: Could I just make one fast comment on that? It's my personal opinion that all the companies should be required to be accredited. We think that's a benchmark.

Mr Kennedy: I wonder if I could ask the Provincial Auditor whether or not the new financing or funding arrangements have been assessed relative to their value to the province and so on. Has the new single-pricing system been assessed and, in the presence of the association, what is your opinion of it in terms of what value it brings to taxpayers?

Mr Erik Peters: We have only assessed it in terms of trying to find out whether it will help the ministry in reaching its targets, which were to change the modality from liquid to concentrators, to reduce liquid oxygen expenditures to 35% of the total cost. Our concern, and that's where we have this raising, is that we are not sure how the single-price structure will actually help the ministry change the modality from liquid oxygen to concentrators, because in our audit we found that we are very unusual as a province in terms of the percentage of people we fund who are on liquid oxygen versus concentrators. So our concern was how the single-pricing structure and the absence of tendering -- this was a negotiated price versus a tendered price -- would help the ministry in achieving its cost reduction targets while maintaining the service level in the province. We have not assessed it, but we do question whether the single-pricing structure is constructive in that regard.

Mr Kennedy: Does the association have a comment on that or not?

Mr Sperry: My comment would be that maybe if you took Ontario in terms of Canada and looked provincially at the liquid being more significant -- if you looked at it in the case of the world situation, that's not accurate at all. Certainly in the American model it's not accurate. Certainly in the Italian model it's not accurate. Certainly in the Spanish model it's not accurate. I would simply say that a lot of medical research that is being done today talking about respiratory rehab and talking about medical rehab specifically addresses the area of liquid oxygen, most importantly in Sweden, where there's recently been a study produced that indicates that at least 30% should be on mobility. If you talk to a physician, their answer would be, "Everybody who has a rehab need should be on liquid oxygen." It should not be driven by percentages, it should be driven by patient need.

The Chair: Mr Patten, you have one minute.

Mr Richard Patten (Ottawa Centre): My original question was the same as Ms Martel's and I was pleased with the response that you are amenable, in the sensitive manner that of course is required, because it is sensitive, to providing the cost structures of your services.

I suppose part of the difficulty is that we have the experience that the ministry has really been operating as if you were like a pharmaceutical association or the OMA or the OHA, when in fact that status, as such, was never negotiated or confirmed. That, I think, is part of the difficulty. So my question to you, because I only have 30 seconds or so, is why do you not apply for that kind of status and would you get the support of the full membership of your association? What would that do to the industry?

Mr Sperry: I'm not aware of that situation that we should have applied for, but if there is an area to apply for that type of status, we certainly would be interested in applying. We would have full support, I'm sure, of our membership, and I believe that we would readily be accepted into that category. There is no question that if anyone goes out and takes a full assessment of what we do, we fall into being a service provider, not an equipment provider. It's that particular area of expertise that has made our industry successful, and is why we've been able to keep so many patients and clients in the homes, not in the hospitals.

The Chair: Mr Sperry and Mr Baran, thank you for your presentation this morning.

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MINISTRY OF HEALTH

The Chair: I'd like to call on the Ministry of Health to come to the bar, please. From the ministry this morning we have Ms Lindberg, the assistant deputy minister; Gordon Kumagai, acting director; and also Monica Reilly, who's the senior program coordinator. Welcome to our committee.

Ms Mary Catherine Lindberg: Thank you. We would like just to make a very short statement. I swear, it will be short.

The Chair: It'll give us more time for questions.

Ms Lindberg: The ministry would like to thank you for bringing us back and to say that we feel we have negotiated a fair price. However, we recognize there's always room for improvement.

The ministry feels the best value for health care is more than getting the best and lowest price. Obtaining the lowest price for goods and service is not the only principle the ministry has to follow. We need to ensure that we get the right price or treatment for the right person. We provide this as close to home as possible, and we do this as cost-effectively as possible. As managers, we're committed to reviewing the business of the assistive devices branch and how it does it.

How to improve the services to clients and how to make the best use of public funds? When we sign a contract with a vendor for the provision of home oxygen services, the contract we sign isn't just for a product, the gas. We sign a contract that demands that a vendor provide home delivery, set up the equipment, train the user and family members in the safe use and storage of oxygen and deliver and replenish supplies needed to use the equipment. A vendor must commit to providing trained, professional staff to monitor and assist patients, provide fast backup, emergency coverage 24 hours a day every day, adequate delivery staff, equipment, trucks, and to meet all these requirements.

There are basically three components we require to get the best value for our expenditures on home oxygen. We need to ensure there is access to northern and rural communities. We need timely backup in case of electricity failures or equipment failures. They must be provided, as oxygen is a life-sustaining treatment. The quality of service is making sure that the professional expertise is provided to the users and their families.

We have committed to doing a couple of initiatives, and I think they were talked about here previously, but I think we should just indicate what we are going to do again. We have reached an agreement with medical experts to research whether using independent assessors affects determination of a patient's eligibility for the home oxygen, and we will be working with the Ontario Home Respiratory Services Association in a joint audit of home oxygen costs and prices by using an independent auditing firm. We will work jointly with the Ministry of Health auditors and the provincial auditors to ensure that the issues that need to be addressed will be addressed.

That's our statement.

The Chair: Anyone else from the ministry?

Ms Lindberg: No.

The Chair: Then we'll start with members from the government caucus.

Mr Grimmett: We've had a lot of discussion about this on the committee and certainly in the time that we've spent on this issue there's been some concern that the Ministry of Health may not have been aware of or possibly was not clear on how they were to proceed under the Management Board directives. Have you had the benefit of the chronology that was provided to the committee?

Ms Lindberg: Yes. We've read it.

Mr Grimmett: If you'll note on page 6 of the chronology, May 16, 1997, Michele Noble sent a directive to Margaret Mottershead, and in it she dealt with the directive and whether the directive would apply to this particular program. We've received a lot of information today, a lot of explanation for the contract extension. I think we have to keep in mind the recommendations the auditor has made and my question continues to be, just how is your ministry going to deal with this issue if the contract extension stays in place? How are you going to deal with it next time around? Are you looking at an approach that would also include some aspects of tendering next time around?

Ms Lindberg: In the same letter, Michele Noble also said that we understand the "commitments made to OHRSA preclude any changes to the home oxygen pricing before March 2000." So if in the next two years we plan on reviewing the full determination of how we deliver oxygen and how oxygen is obtained by the person and look at -- the other thing is we will be looking at the directive and the tendering. We're not going to dismiss the directive out of hand. We will be following the directive. However, we would like to have the full two years or most of the year -- it would take us less time than that because we have to make a decision early on before the year 2000 if we're going to change how we currently operate. So we've only really got a year to look at any kind of pricing structure, any kind of new ways of doing things.

There are alternative ways of delivering oxygen, and one is tendering, but one is also maybe looking at a different way of supplying it. We would like to have an opportunity to look at those in the next year.

Mr Grimmett: The auditor said in his report that the focus of the ministry should be on, I take it, trying to reduce the use of the liquid oxygen. I wonder how, under this contractual situation, that's going to occur. What is the ministry going to do to try to reduce the use of liquid oxygen?

Ms Lindberg: You have to forgive us. We're sort of new on this and some of the details, so Gordon, maybe you can --

Mr Gordon Kumagai: I'm not sure that we're going to continue everything that's been discussed in the past. We're looking to the future and, in terms of what we see, we're looking for best value. Part of that is ensuring that clients get the most appropriate form of oxygen, according to medical criteria. So while I recognize that previously the minister has indicated we'd use a target, we've got this research project under way that is looking at two things. One is the appropriateness, if you like, of the testing on who is eligible within fairly narrow confines of medical benefit. There's been a question raised as to quality-of-life benefit for clients on oxygen that hasn't been addressed, and part of the research project will deal with that. What we would like to do is take those results and build them into the process of achieving the best value that delivers the best service that's required by clients according scientifically based medical criteria.

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Mr Derwyn Shea (High Park-Swansea): I confess I'm not quite certain where to begin with my questioning, nor do I think 10 minutes is sufficient.

Let me ask you to go back to some comments made by Mr Sperry, because I think he gave a very definitive response to some of our concerns. Obviously they were driven from his side of the issue, and that's fair enough.

To go back to some of the questions that concern me -- and setting aside the issue of tendering or not. That's something I think this committee is probably of a mind to approach in its own time and way. The concern I have about the appearance that the auditor -- and I don't want to put the auditor personally on the spot, but in terms of the drive of all governments to find economies, the relationship to liquid, the issue of patient needs versus percentage driving the decision, do you have a response in that regard? How do we ensure there is not wastage, on the one side, and that there are the appropriate economies and efficiencies? How do you give a reassurance to the committee that that can be found, without obviously going too far one way or the other?

Mr Kumagai: Good question.

Ms Monica Reilly: Do want me to help you?

Mr Kumagai: Sure.

The Chair: The auditor would like --

Mr Shea: Is this clocked as part of my time?

The Chair: I guarantee you, you'll have plenty of time, Mr Shea. The auditor at this time would like to make a clarification.

Mr Shea: I didn't ask the auditor.

Mr Peters: No, you didn't. But I need a clarification of fact. The 35% of expenditure and 20% users on liquid modality was not a target set by my office. That was a target that was in existence in the ministry when we did the audit. That is a ministry target, not one that we had recommended.

Mr Shea: That's a fair rejoinder. That's fair. You escaped again.

The Chair: Ms Reilly, please.

Ms Reilly: To address your question of how we'll know whether or not we're meeting that target, part of what this whole exercise --

Mr Shea: Please let me intervene. It was not just how you're meeting the target. I'm concerned about the target itself. Mr Sperry was at pains pointing out the patient needs versus statistics. That was a reasonable comment that I think the Ministry of Health needs to be conscious of, and probably is.

Ms Reilly: That indeed is something that we have looked at fairly recently and that Mr Kumagai was referring to with the independent assessment pilot project. Because there is debate in the field as to whether or not the target should remain where it is, at the 35% liquid and the remainder being concentrators, part of the independent assessment model will look at trying to determine what best suits a client's individual needs in terms of their supply system. We are at a flat rate price right now and don't really have a good handle at this point on where the shift is occurring, whether more people are moving to liquid or if they're moving to concentrators. We're hoping the independent assessment project will help us determine this, and whether or not it's appropriate to move to that model.

Mr Kumagai: As far as competence is concerned, by the way, the two people we've got doing the research are internationally recognized in their fields of respirology and epidemiology. One of the things we were concerned about is that the results of the study have credibility within the medical community.

Mr Shea: Just passing by the issue of flat rate, I assume that what you did was essentially just simply average out the difference between the $347 and the $526.

Ms Reilly: Yes.

Mr Shea: So there was really no differential to the industry. It was essentially a matter of, where does this line move?

Ms Reilly: It was based on the average reimbursement per client that we were making.

Mr Shea: Clearly. The issue of benchmarking, let me ask you about that, because it troubled me in the response again from the industry. This gets into the issue of tendering, in another direction. Can I take it from the comments from the industry that indeed one of the difficulties you may have is that there may well be quality differentials of what you're tendering on and that creates a problem of how you benchmark? If you're going to a tendering route, you'd have to be incredibly precise in how you define what you're looking for, both in terms of quality and access. Is that true?

Ms Reilly: Yes, it is true.

Mr Shea: Do you find at this point that as you do your search of suppliers across North America, at the very least, there is a wide divergence of benchmark qualities?

Ms Reilly: Yes. We have some minimal standards that we set for vendors to have agreements with us at present, but there is still a lot of room for play in that, follow-up schedules, that kind of thing, that we don't define precisely.

Mr Shea: The concern that is expressed by the industry about the direction that governments have moved in -- and I say the plural, not just to involve this government but others -- in an attempt to try to ensure that costs are contained, or at least can be very clearly rationalized to the taxpayer, may have, in the Canadian instance and in the Ontario instance specifically, created a difficulty with the supply sector. That is, the figure I wrote down was 146 in 1990 and it's down to 46 or thereabouts now. We're creating some difficulties and the evidence that we have before us in some of the documents indicates that, with some of the shift, this may now allow smaller suppliers to begin to re-enter the stream.

Can you comment on that in terms of the competition that it's leaving in Ontario and what the rates are that we're currently experiencing in Ontario compared to -- give me a couple of other Canadian jurisdictions and a couple of other jurisdictions where the population densities would be similar to Ontario. I'm not interested in trying to compare where densities are incredibly rich. I want to find something where there is some sense of northwestern Ontario, as a case in point.

Mr Kumagai: I am sorry, I haven't done that analysis and I'm not familiar with those rates. It's something I've started to do but I can't give you any figures right now on the comparisons. They've looked at comparisons in global terms.

The Chair: Can the auditor be of any help to you, Mr Shea?

Mr Shea: Will you whisper in his ear and ask, Chairman?

Mr Peters: If I may, the ministry has actually provided some information on that point. I'm referring to page 3 of a letter of June 9, written by the ministry to the clerk, in which there is a comparison, for example, with Alberta and Saskatchewan which indicates that liquid oxygen is not covered in Alberta, is not covered in Saskatchewan, and that the concentrator rate is -- Ontario's was $425, as we know. Alberta is indicated as $337 to $468 and Saskatchewan is indicated at $410. I hope I didn't go too fast.

Mr Shea: I didn't have that in front of me. I was trying to recall. I don't have my notes from the last time we discussed this, but I assumed the ministry would have them right at their fingertips and would be able to offer them for me. I need a moment to go at this now, but thank you for the comment. I appreciate the clerk providing this for me. I didn't have it. I'll defer to Mr Grimmett for a moment while I continue going over this one point in particular I'm trying to chew away here.

The Chair: Mr Grimmett, carry on. You still have five minutes.

Mr Grimmett: That's ours.

The Chair: Mr Shea, you'll have a chance to get back to the panel. Now the official opposition will have 15 minutes and then we'll carry on with the third party. Mr Shea will have something to add after our 15 minutes. Go ahead.

Mr Jean-Marc Lalonde (Prescott and Russell): I would just like to know, since we are targeting to reduce the liquid oxygen by 35%, which would be a cost saving of $3 million, what is the best for the patient? Is it liquid or concentrator?

Ms Reilly: I'm sorry, I didn't hear the question.

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Mr Lalonde: What is the best for a patient, liquid oxygen or concentrator oxygen? Because at the present time, 51% of the users use liquid oxygen. That is according to 1995-96 figures that we have. But what is the best? The fact that we are going to have one price of $425 doesn't go along with the recommendation of the auditor to try and reduce the oxygen at the present time. If we are saying that we are going to continue giving the liquid oxygen, we're not following the recommendation of the auditor. According to what the auditor just said about the cost in other provinces, if we are trying to reduce the amount of liquid oxygen, why have we gone to this one price of $425 if we are going to reduce the liquid? What is the best at the present time for the patient?

Ms Reilly: It's a very difficult question, because from the patient's perspective, the patient who has a low oxygen level needs oxygen no matter what. You can deliver it in any one of a number of ways. The cheapest way is to put in an electrically powered concentrator which literally sifts the oxygen out of room air and gives concentrated oxygen to the client. The drawback to that is that you sacrifice mobility, because then the client is confined to the house.

Mr Lalonde: With the liquid?

Ms Reilly: With a concentrator system, not with the liquid. The concentrator system has a drawback in that it's electrically powered. You have to use portable tanks, high-powered, high-pressured cylinders, to give them any kind of mobility away from an electrical outlet.

For a portion of the population, that is just fine if they tend to be more sedentary, more homebound, as a fair number of oxygen clients are. Most of our population are seniors, and of that, a good portion are elderly seniors, so they may not be going out that much. In that case, the portable tank will do them for the once-a-week trip out that they may take to visit family. They may have people helping them with groceries etc.

However, the liquid oxygen, which is more costly, is a standalone system. It's actually oxygen at a very low temperature, which enables one to store oxygen as a liquid and you actually get about 800 times as much. Per liquid litre of oxygen, you get 800 gaseous litres of oxygen, so you can store an awful lot.

To utilize that, you can also have a small stroller unit that you can fill off this standalone reservoir. It's not electrically powered at all; it's standalone. You can fill a portable reservoir and that will last a great deal longer than a tank, so one could go out twice or three times a week, every day if they had to, and refill this tank, this small portable unit, from this larger tank. In terms of the supplier it's more work-intensive because now they have to come in twice a week, sometimes three times a week, to fill this liquid reservoir so the client can fill up their little portable unit or use it at home.

In terms of what is best, it depends entirely on the client. If we have patients who are working people, who may be continuing on a part-time or full-time basis with their job, they obviously want liquid oxygen. They need liquid oxygen to keep them mobile. It's the same with the very mobile seniors who are out and about a lot and want to maintain that level of interaction. That's why we seem to be having so much difficulty with the question of what is the best split. It depends on the population we have at the time. As diagnostic tools improve and knowledge improves and these situations where clients need oxygen are picked up sooner, we may be picking up more people who are more mobile. We don't know.

Mr Patten: Just a short question: Part of the discussion, I suppose, is the fine line of the role of the suppliers. The industry today talked about themselves as providing services to patients and how important that was, that that is different from simply being an equipment deliverer to a home. Could I have your comments on that? How do you see them? What is the mandate other than simply providing a piece of machinery or a tank or whatever? Are there subtle things or other aspects in more human terms that really are important in what they do?

Ms Reilly: For a supplier, yes. It would be very easy to get a company to just drop off the oxygen equipment and then not follow up. There are all kinds of considerations, particularly in trying to keep these people at optimization: somebody going into the home who has some experience and skill in that area who can encourage them to exercise, mobilize; also perhaps just during a routine visit noticing that their ankles might be a little puffier than usual, perhaps alerting their physician that maybe there's an early sign of an impending problem, or if the patient complains that they're feeling a little chesty lately and their cough is not doing very well.

In addition to looking at the oxygen, if they hear these complaints they may take that time to put a non-invasive testing device on and just have a look and see what's going on. Maybe their clinical situation is changing. It would be rare that you would have somebody who just needs oxygen and no other drug. These people generally have respiratory compromise, so they're not per se the healthiest segment of the population.

Mr Patten: I take it that there is an acknowledgement that it's more than just delivering a piece of equipment. In a sense the industry has been treated almost as if they were a consortium or an association. What are your views on that down the line? I'm assuming a lot. At some point, obviously, we have to talk about standards and what kind of training, and the role of the suppliers, and maybe "supplier" isn't the best term. There was a comparison where the industry said, "We'd like to be considered like the pharmaceutical association," where you negotiate a fee and the rules and regulations are negotiated, and away you go, and you do it on an industry-wide basis. Do you think that's the best way to go down the line?

Ms Reilly: We certainly see some merit in having the supplier recognized as a service industry. However, we are mindful of the auditor's recommendation to separate out the assessment process for qualifying for funding for our program from the continued provision of service. Yes, we do see merit in having the service providers recognized as service providers, not just suppliers, because they do indeed provide comprehensive services. However, we want to separate that from qualifying for our program to begin with.

Mr Kennedy: You talk about credibility. The targets in the first place that begat some of this discussion -- how are they supported? Where is the medical evidence that those are safe targets for us to put in place? Where is the stuff that shows us that we're not deducting services away from people who could be either economically contributing or whatever? Where does that start from? You set a target. What medical evidence was it based on? It's startling to hear about a study being done after the fact to see whether it's a safe or good thing, that there's concern out in the field. Where does this come from and what is it supported by?

Ms Reilly: It was developed by looking at scientific papers that were available in the industry. Some of the studies were based in Europe and the United Kingdom and largely showed what percentage of clients they had on oxygen and what types of oxygen supply systems were required by these clients. These papers are not old. I think they're from the mid-1980s. However, we're now in the late 1990s. When all of this has come up, that's why we have started this project, because we want to readdress some of these problems and see if there hasn't been a shift.

Mr Kennedy: Does this take into account what's happening in terms of hospitals particularly, with more and more people being in long-term-care facilities, where more and more people are being made to stay in the home in the sense of the availability of service and the quicker-and-sicker modalities of getting people out of hospital? Does it take that into account?

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Ms Reilly: Those studies do not. That's why we have this independent research project, to ask some more questions, and it's part of the reason we went to a flat rate, because we began to find it increasingly difficult to have ministry staff adjudicate requirement for liquid versus a concentrator. Part of our frustration was that we were seeing exactly what you're talking about. Things are changing.

Mr Kennedy: The essential thing we have to have a look at in the public interest is, how much of this is saving money purely -- in other words, efficiency -- and how much of this is about effectiveness? What are the goals of this? What are the criteria for someone to get a concentrator? We need to know. If you have criteria and somebody gets liquid oxygen and they can contribute more to society, have a better quality of life, maybe spend less time in acute facilities, that's useful. But if you don't have criteria, we're wandering around here.

Ms Reilly: We do have criteria. We did before the flat rate. Now we don't implement the criteria. But yes, we did have criteria; they were based on medical input from --

Mr Kennedy: Who decides after the flat rate? Who decides now who gets which modality?

Ms Reilly: Now that choice remains between the physician, the service provider and the client.

Mr Kennedy: The last thing is, in the savings you've had so far, how were they achieved? You've had reduction in outlays. In my understanding, some of it at least came from restricting the access to the program. Is that correct? Where would you say the savings came from over the last five years?

Ms Reilly: Largely from reduction in costs. Is that correct, Gordon?

Mr Kennedy: Reductions in what kinds of costs?

Mr Kumagai: A reduction in the rate that was paid, and second, a smaller reduction from the enforcement of the medical criteria, so there were fewer people being made eligible in the first place.

Mr Kennedy: Have the medical criteria been made more stringent or just the enforcement of them?

Mr Kumagai: Just the enforcement was changed.

Mr Kennedy: So the actual blood test and so on remains the same and the readings are the same. Is that correct?

Ms Reilly: Actually, in 1990 we did change the criteria. From 1991 to 1993, it was tightened up.

The Chair: I must move on to the third party.

Mr Pouliot: By way of reciprocity, we are pleased to have you back as well.

I have a letter from Jim Wilson, the minister, and I'll quote the last paragraph: "At this time I have no intention of altering this agreement before its expiry in March 2000," which would freeze the prices.

I also have another document. It says, "A clause allows the ministry to reopen and/or get out of the contract."

I have a quote from Mark Cox, who's no longer in the employ of the government.

Interjection: Where is Mark?

Mr Pouliot: Yes, where is Mark? He says, talking about tendering, that the ministry could tender if it wanted and has thought about it. According to Mark Cox, "That frightens the industry, because it would drive the price down even further and speed up the process of consolidating the industry." That's one quote.

Mark also makes the following comment, again on tendering: "If the government wanted us to tender, we could tender. I know that if we tendered, we'd get a lower price. The contracts are with the suppliers, not with the association. We could break those contracts and tender tomorrow."

The chronology illustrates the sequence of events. From March, we know about the good offices of one Michele Noble. We know when your ticket was drawn: the visit of the Provincial Auditor. All the Provincial Auditor said, simply put, is that he urged the ministry to negotiate better prices. Everything else came after; some of it was in the words etc. That's what the ministry said.

We have to reconcile the words of Mark Cox, who was adamant, very clear, very much to the point in saying that in his professional opinion -- said in front of this committee, sincerely believed, even said with candour -- if we went to tendering we could achieve a better price. He said it not once, but twice, and on the record. The spokesperson for the ministry, the highest authority when it comes to home oxygen supply that the government has, the number one person on the panel, says in response to the Provincial Auditor, response to the committee, "I, Mark Cox, am of the opinion that if we went to an open tendering process, the taxpayer of Ontario would achieve a better price for the same product." This is not in question here. This is a fact backed by the highest expertise and authority in the province. Otherwise etc he would not have been here to answer, to explain the question.

Now that Mark Cox is no longer here, he loses credibility. He becomes the Michael de Guzman of the ministry, anything associated with Bre-X, whether it's Felderhof -- love and affection, Ingrid in Grand Cayman, all in her name -- or David Walsh in Calgary, it's all de Guzman.

Mark Cox should be here to reiterate. But then again, he need not be here, because that's what he said. Who am I to believe? Someone who comes in as a lobbyist and says: "Buy from me. Drink Coca-Cola, because if you drink Dr Pepper or Pepsi-Cola you're going to die. It's the only product"? They preach for their parish, and I can accept that.

Where I have difficulty is with the sequence chronologically, the sequence of events from the time the Provincial Auditor urged the ministry to negotiate better oxygen prices. Add to it the directive of the deputy minister and the board, Michele Noble, the secretariat, and the manoeuvring. Then tendering became the real key.

Then I have the expediency. There are nine days before the directive laid out in this letter. That's what our chronology says here. It's easy to analyze. The ministry did as they were told to do. They are public servants. I'll change the tone: You put your best foot forward and follow the directive. The thing is, you don't know which directive to follow, do you? You've got to satisfy beyond the generic, because when you act for the second time it should make you nervous. The third time, you'll miss that cuddly feeling of your mom. You don't want to be here. You say nice things but you really don't want to be here.

You're going to come back a fourth time, if we have our say. That's our party; we can only speak on behalf of our party, the small lot we are at present. We wish to have an independent -- we'll get the tendering off the hook, to be honest with you. That's not the real thing. We're more concerned about process than we are about whether you tendered or not. We feel that the community, the users are well served.

Suffice it that we want an independent audit, if you wish, or study of the money which flows from the taxpayers of Ontario into your books, to the suppliers. Where is the appropriation? We're not about to start treating you like the OMA or the OHA. The analogy, the parallel of the gall bladder etc to us doesn't mean that much. It's not filled with validity for us.

You are suppliers of oxygen. We're not that concerned because we don't know which of the 10% or 15% it is who are on oxygen and shouldn't be. That's not our role here. Our role is the recommendation of the Provincial Auditor and the taxpayers of Ontario getting value for money. We want an independent someone to go and look at your books in the association, because otherwise you're going to be revisited. We're going to recommend that this go by motion, that this go on and on and on. You don't need that and we don't need that either. There is $57 billion spent in this province each year, so we have other places to look at.

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The Chair: We still have about six and a half minutes.

Ms Martel: Would you mind re-reading the last two lines of the presentation you made for the committee this morning?

Ms Lindberg: About the audit?

Ms Martel: Yes.

Ms Lindberg: "The ministry has raised this matter with the Ontario Home Respiratory Services Association and we will be working jointly with them and the Provincial Auditor and the Ministry of Health auditor to address the concerns and issues that are being asked."

Ms Martel: So we're going to get some kind of independent look at it.

Ms Lindberg: An independent accounting firm is what we were suggesting.

Ms Martel: Let me raise this with you, because I am really distressed by the process that has gone on around this whole issue. It seems to me that would have been the smart thing to do in the first place. The auditor made a recommendation in 1996 that the ministry should initiate a review of rates, and the ministry itself agreed that should be done in preparation for the negotiations that were to replace the existing agreement, which was due to expire in March 1998. Then in September 1996, we find, lo and behold, that the ministry has introduced a new rate without that kind of substantial review being done, which begs the question why, especially after the auditor said that a more thorough review should be done and the ministry agreed with that.

It seems to me that if the ministry had done that in the first place and left the existing agreement in place up to the expiry date at that time, we might not be here right now asking for an independent review or have had to ask you back here three times to get at that issue. My first question is, why did the ministry in September 1996 initiate a new rate contrary to what the auditor had requested and contrary to what the ministry itself had told the auditor they were prepared to do?

Ms Lindberg: In fairness, I'm not sure Gordon or I can answer that question. I understand what you're saying, but we came here today to offer that we will engage an independent accounting firm, asking the Provincial Auditor and our own Ministry of Health auditors to work with us to develop the terms of reference to ensure that we can address the concerns you have raised.

Ms Martel: I'm not blaming you. I'm sure there are other people who should be taking the fall. My colleague is right about de Guzman in terms of who is here to now accept the fallout. But I can tell you that for me, that has been one of the prime sources of concern, frustration and frankly anger. We wouldn't be here for the third time if the ministry had done what it said it would do and what it was supposed to do, and this committee would have had a lot more comfort than I think we're feeling today.

Second, I continue to be concerned about the process that occurred around the tendering issue. When the ministry was here on March 6, questions were raised by committee members about tendering. The ministry staff at the time said they did not think they had to go to Management Board to get an exemption from the directive around tendering. But the ministry staff at that time also gave an undertaking to approach Management Board and get some clarification with respect to that issue.

Before a reply from Management Board was even received by the ministry or by this committee, as we had made that request, a letter went out from Minister Wilson to the association to confirm that the existing agreement that had been arrived at on April 1, 1997, was going to stay in place until the year 2000. The top of his letter to Mr Sperry says, "Thank you for your letter and brief expressing concerns about tendering for home oxygen services," obviously a direct reply to the association about their concerns around tendering. I have some real concerns that nine days before we got a reply from Michele Noble about whether or not the ministry should have implemented tendering, this letter went out.

You can see that the perception left for us to assume as committee members is that we've got some kind of sweetheart deal here that the minister wants to keep in place. I know my friends from the industry will disagree because they will say, "We're not making any money," but the perception that's left for the committee is that before we even get a reply about the issue of tendering, Wilson sends a letter confirming that "The current agreement is going to stay in place, so don't worry."

I am really curious to know on whose directive that letter went out before the ministry or this committee had a response to its concern and question around the issue of tendering.

Ms Lindberg: I can't answer your specific question, but what I can tell you is that because we extended the contract we have -- it is a binding contract on us. Even Michele Noble says that in her letter back which says we should follow directives. If you look at her letter, on the last page it says as well, "We are obligated to maintain the current services to the year 2000," but that we should follow the directive. "We understand that the commitments made to OHRSA preclude any changes in home oxygen prices before March 2000." That's what her letter says to us.

We did have a commitment to the organization because we signed the deal earlier. The minister was just confirming that we had a commitment that we felt we were obligated to meet. We actually had a legal opinion on that so we would be sure we weren't -- I'm not trying to persuade you on perception. I'm just saying we have a legal opinion that said we must and should maintain this contract to March 2000.

The Chair: I must move on. I'm sorry, Ms Martel. We will now alternate questions.

Mr Shea: Thank you, Chairman. I appreciate your coming back to me. I had a chance to go over some of the other documents to refresh my memory. Clearly, what all of us are interested in, and I suspect this includes both ministry officials and the industry, is the best arrangements for Ontario patients; we are interested in the best price for Ontario taxpayers. We are not wishing to put the private sector out of business or create a situation to lose jobs, but there is a process, a protocol we're concerned about, that we have a reasonable need to ask questions about.

Clearly, the issue of tendering is one this committee has wrestled with. It looks as though there seems to have been something that went awry. Whether one approached Management Board or not, and why not, is a question that really ought to be engaged in discussion at some point. But there's another part to the sidebar about tendering and whether tendering is reasonable or not in this instance. When we listened to the industry today, it at least raises some sufficient questions to say, "Are you able to tender effectively or not?" I think that's at least fair for us to wrestle with, either in this committee or elsewhere, because that was a fair rejoinder.

As I talk to my great friend and colleague from the empire of Nipigon, I share his concern: Are there ways, for example, that we can tender regionally? My concern in response to him was, if I do that, do I place northwestern Ontario in jeopardy because it has a different economy of scale than elsewhere?

Those are the kinds of issues we have to approach very carefully, not just driven by raw objectives and statistics. I have a sense that your ministry is trying to do that, but I still need more comfort; my comfort level is still not high yet at that point. And I am concerned to ensure that all Ontarians benefit from the economies of scale.

The issue of accessibility is one that is of real concern to me, to make sure that wherever you are in this province you have access to it. I'm not interested in Metropolitan Toronto or the GTA constantly subsidizing everything and everybody everywhere --

Mr Patten: It's the other way around.

Mr Shea: -- but on the other hand there is a responsibility involved in equalization payments, and I accept that responsibility with generosity. I'm prepared to engage Mr Patten in that debate any time, any place.

Having said that, the costs and benchmarking of quality are also of concern to me: modality choice, who drives that, whether it is the patient, whether it is the physician; or if it's statistics that are internally driven, that concern is worth considering. But here is the concern that really overrides much of my questioning in the first instance. I think what we've got today are the midline players. I don't want to be discourteous to the gentlemen who appeared here today, but these are not the players I want to get my hands on and look at.

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On page 2 of the report I find something that would occupy, Chairman, a great amount of time of this committee somewhere else. It's in the second paragraph and it moves on, and we start taking a look at the first phrases to get my attention, "There are five multinational companies." I flow from that. Isn't that interesting?

Let's take a look at the relationship of those companies to not just the players here today but the others represented. We take a look, for example, at Medigas, which is owned by Praxair. That is an American firm, meaning the United States of America, which has 31% of the market share. VitalAire, 50% owned by the Republic of France, that is Air Liquide's 50%, which has 25% of the market share. Respircare is German through Messer; that's 9%. The Home Care service, again the Germans at 6%. At that point I'm up to 71% and I'm beginning to take a look at where the other 29% comes from. I don't know where they are from.

I want to start taking a look at these interrelationships and how they have impact upon the market share in our community. For example, maybe you could start by answering my question: Is any liquid oxygen or is all liquid oxygen manufactured in Ontario? What percentage is imported, for example?

Ms Reilly: The association would be invited to correct me if I am incorrect, but probably the manufacturing is done in Ontario even though they are multinational companies.

Mr Shea: So we are looking at the large corporate structures and then their own corporate relationships in terms of some of the companies here today and a number of others.

Where would the 29% of the market not identified in the figures you've given us settle out in terms of the economy?

Ms Reilly: There are public hospitals that are also --

Mr Shea: Yes, and how much would that account for? You did indicate them in the report.

Mr Kumagai: It's 2% or 3%, I believe.

Mr Shea: That's 10% of the 29%.

The Chair: One very short question, Mr Shea, please.

Mr Kumagai: And there are a number of small, independent companies.

Mr Shea: Have they been showing signs of declining?

Mr Kumagai: There are fewer of them. That is my understanding.

Mr Shea: Chair, there is not time for me to do it in one minute, so that's fine. I'll be back on this one.

The Chair: Thank you. Now we'll move on to the official opposition.

Mr Lalonde: I have one comment and two questions. You just mentioned that in Michele Noble's letter she said we're tied up until the year 2000. This is a matter of interpretation, because that is not the way it is written: "to ensure that our future actions are in compliance with the directives." That doesn't mean -- in every contract there's an escape clause of 30 days. If we haven't proceeded properly according to the directives that exist, that does not prevent us from going to tendering service.

Who is to decide which type of oxygen is to be given to the patient? Is it the company, is it the patient or is it the physician?

Ms Lindberg: Oxygen is ordered by a physician. It is like a drug and it has got to be prescribed by a physician. The physician usually, with the patient and the supplier, will make a determination --

Mr Lalonde: And the supplier.

Ms Lindberg: An analogy I can make, because I know more about it, is that as a pharmacist I can talk to the physician and say that instead of using this drug we could use this generic, which would be a cheaper modality. I think that is the role of the supplier.

The supplier does not determine the criteria under which the patient will get oxygen. The physician orders the oxygen. The supplier can work with the two of them to decide what is the best modality based on their activities, their quality of life, where they would be, who is there to help them if they're living by themselves, independently, versus having somebody there who could live there to help them move the oxygen around. Those are the kinds of things they take into consideration when they make that decision about the modality. The decision is made mostly by the doctor and the patient, with some input from the service provider.

Mr Lalonde: It has been known that companies are there to make a buck. Service to the customer is very important, but they are also there to make money. If you go to rural areas, most patients don't know their rights. They will go according to what is recommended by the company. I would say that up north and in eastern Ontario, where people don't have access or cannot read or understand English most of the time, they will accept whatever is recommended by the company at the cheaper rate.

Is it possible for the ministry to supply each member of this committee a copy of the criteria to qualify for the oxygen?

Ms Lindberg: Yes, we can.

Ms Martel: I just want to follow up from where I left off in the last round of questioning. You said that the ministry had obtained a legal opinion that the contracts that had been signed with the suppliers of the association were legal and binding until the year 2000. Can I ask when the ministry got that legal opinion?

Ms Lindberg: From our own legal services.

Ms Martel: When, not where.

Ms Lindberg: I'm not sure. I'll have to go back. I don't have it with me.

Ms Martel: Let me tell you why I'm asking. You are telling us that today. Fine. On March 6, when the ministry was here, Mr Cox, who is no longer in your employ, told the committee, "We could break those contracts and tender tomorrow." He told us one thing on March 6, but you have said there is a legal opinion. We don't know when that is from; perhaps it's after March 6.

Ms Lindberg: The agreement does provide a 30-day right of termination. However, because we have extended the agreement to the year 2000 by a minister's letter that says we have a good-faith binding agreement, like we would with any other association, that doesn't mean we couldn't terminate those contracts. We could terminate them. However, we would be into legal jeopardy and we would be taken to court. The advice is that it would be better to sustain that until the year 2000 and not be taken to court by the organization with which we signed a good-faith binding agreement. The legal opinion does not say there isn't a 30-day termination clause; there is.

Ms Martel: Let me say this, though you're the wrong people for me to direct this to: The other, major problem I have seen throughout this whole process is that consistently the committee has felt that we were either not given the proper information or that information was not forthcoming unless we really dug for it, that every effort was made to give us a hard time in trying to sort this issue out.

You're the wrong person to say that to, but I cannot tell you how frustrating this experience has been in dealing with this issue. I've been a member of public accounts for 10 years and I have never seen us have to fool around in such a way and call the ministry back the way we have on this issue. I hope the ministry is going to get under way with getting the independent audit and getting the information so that when it comes time to do this again, it can be done properly and it can be done in a way that gives the auditor some confidence around the pricing.

I have to say that whoever was responsible for ringleading the effort of coming here and giving us or not giving us information really has a lot to answer for. I think the way the committee has been treated is unacceptable and has certainly led to our going way down the road in recommending tendering, because we felt we couldn't get the right information or that it was being blocked every step of the way. I don't expect you to answer that, because you are not the person who should be blamed for that, but that is certainly how I feel right now about how all this has come about.

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Ms Lindberg: I will certainly take back your concerns so that we don't have a repeat of this.

Mr Pouliot: I could add to the 10 years; I've been on this 13 years. I have an experience, in lifelong learning, something quite like this, but I don't wish to be mélodramatique, to put everything into a catastrophe.

Madame, you are most credible. The people who work with you are the same. As my distinguished colleague Ms Martel has said, it's not individuals; it's how do we get to this? I too am not satisfied, but I won't go as far as to say that lip-service was paid and what about the committee? I don't vex easily. It's not my nature. Nor do I ulcerate; my job is to give other people ulcers, not to get them.

We have now the satisfaction that independents will do some examination and report to the committee, not in the fullness of time but at the appropriate time. We know what the timetable is. I can now say that I am satisfied. This is no big deal here. The thing is, as we started to get some information it took on extraordinary proportions. More questions were raised. Had we been able to focus on the subject matter being addressed, ie, the recommendation from the Provincial Auditor, if we had committed to action directe we not have had encore after encore and this eternal repetition.

We became suspicious. That's not too strong a word. Then we asked some more questions, started to dig and to find out more. Through it we've learned a great deal about the process, but never had we the intention to mobilize a good part of the ministry for -- there are two other players. How many people do you have working there? Now you bring people from the industries. It's the offspring; we used to say the son of a so on. This is getting to be a little long.

I'm satisfied -- but I say this with a degree of reluctance -- thanks to your good office. We would make a motion, some of us would, to please come back again every three months, but this is not nice. Next time the Provincial Auditor comes up, we don't wish to make your life or our life any more miserable than it already is. Thank you for your visit.

Mr Grimmett: Mr Chairman, we have a suggestion, because I think we're getting close to the end of the day. We have some suggestions on how the committee might deal with this issue. I think Helen Johns has a motion.

Mrs Helen Johns (Huron): I just need to ask a question first of you. Can you tell us how long it will take to get the results of the two studies you have indicated you are proceeding with? One is a study that looks at the needs of the patients with respect to the liquid oxygen and the other. The second is the independent audit. Can you tell me how long you think would be a reasonable time for those two to be accomplished?

Ms Lindberg: I know the assessment one is September 1998. There are two phases to it, but it will take them till September 1998. They have to do it as tests first and then move it out, so it'll be September 1998 on the independent assessment.

On the audit I can't really tell you. It shouldn't take us any more than probably six or seven months.

Mrs Johns: Would it be fair if we suggested a motion like this today: that we would like to hear the results of those two studies when they're accomplished, and we could put a date on it of October or November 1998, whatever number we have here, to get these two studies in, or to hear from one study and then the other, whichever way; to get the results of those two studies and then to understand from the Ministry of Health what they are preparing to do with the next contract?

We all feel very strongly that we want to ensure that every stone is looked at prior to the next contract being established. It would be our motion on this side, and we're certainly prepared to negotiate, that the Ministry of Health come back in October 1998 with two studies, and that we get the studies as soon as they are prepared, so if one's done earlier it comes to us earlier; the two studies, with some recommendations about how they would like to proceed with the next negotiations in this area.

The Chair: Did you say October 1998?

Mrs Johns: Yes, because the second study will not be out until September 1998. That's why I suggested October.

The Chair: We can deal with this today or we can deal with this when we meet next Thursday to continue our report writing. It's really up to the members to decide.

Mr Grimmett: While it's fresh in our minds, did you have some suggestions?

Mrs Johns: Do you have some changes you'd like to recommend?

Mr Pouliot: I certainly acquiesce. A second review will not be ready. In a broadly summarized form, Mr Peters, are you satisfied?

Mr Peters: Yes, the only part I'm a little bit at a loss over is what we're going to do with Ms Martel's questions about the cost. Should we in the meantime get the costs? Should this all be stalled until the costs come? That's why I'm a little bit unclear right now. You made a request, I believe, to have the costs of supplying, the service costs versus the equipment costs, analysed.

Mr Shea: I think it's all subsumed in the motion. I think it's all there implicitly. The ministry knows what to do.

Mrs Johns: With all due respect, and maybe I'm incorrect, with the audit portion that's coming through I think we would expect to have those numbers in that.

Mr Shea: They'll all tumble in.

Mrs Johns: That's what I've moved.

The Chair: Any further debate? All in favour? Against? Thank you.

I'd like to thank the ministry and also the Ontario Home Respiratory Services Association people who have joined us this morning.

This completes section 312. Next week we will continue to write our report. Ms Campbell would like to add a few words.

Ms Elaine Campbell: We could send out a memo next week to the members reminding them of what is left to do, but just to briefly summarize, the committee looked at 13 sections of the auditor's report. Nine of those sections have been examined twice. There are four that are left to look at a second time, one being the assistive devices program, the other three being alternate payments, drug benefits and independent health facilities. That's the status of the draft report writing process.

The Chair: Thank you, Ms Campbell. This committee stands adjourned until next Thursday at 10 o'clock.

The committee adjourned at 1158.