1. The Fiscal Sustainability
of Ontario’s Health Care
HLTH 405 / Canadian Health Policy
Winter 2012
School of Kinesiology and Health Studies
Course Instructor:
Alex Mayer, MPA

2. Announcement
• Volunteer note-taker needed
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3. Announcement
• RE: Last week’s quiz
o Moodle grades have been changed as follows
• If an answer was not received for any particular
question, I left it out and pro-rated your score.
o In the future:
• You are solely responsible for ensuring that your
answer is properly transmitted (there is a light on
your iClicker that should turn green).

4. In the News
• ‚High cost of prescription drugs is leading some
patients to skip doses‛ – Jan 17th, 2012 (CBC)
• ‚While McGuinty Stalls, Drummond’s Legend
Grows‛ – Jan 24th, 2012 (Globe and Mail)
• ‚Delisting just the start of big change‛
– Jan 27th, 2012 (TheSpec.com)

5. Test Question…
If a provincial election were held tomorrow, who
would you vote for?
A) Hudak’s Conservative Party
B) McGuinty’s Liberal Party
C) Horwath’s New Democratic Party
D) I don’t vote for parties… I vote for ideas
(independent).
E) Voting is like so boring.

6. Week 3 & Week 4 Quiz

7. Topics for today’s lecture:
Fiscal Sustainability
• How much does Ontario spend on health care?
• Components of health spending
• Key drivers of spending growth
• What action has been taken so far…
And where work remains to be done.
• Don Drummond’s recommendations

8. Topics for today’s lecture:
Interprofessional Collaboration
• What it means
• What problems does team-based care aim to
solve?
• Potential Benefits / Challenges
• What action has been taken so far…
And where work remains to be done.

9. The Fiscal Sustainability
of Ontario’s Health Care

10. The Fiscal Sustainability
of Ontario’s Health Care
• Drastic cuts in the Ontario health budget in the early 90s
o Quality of care was negatively impacted
o Professional shortages (particularly MDs and nurses) were
exacerbated
• Opportunists and proponents of for-profit health care
took advantage
o Cast doubt on the public system’s ability to provide quality
care
o Brought into question the fiscal sustainability of public
health care
o Fuelled a debate over the future of health care in Canada

11. The Fiscal Sustainability
of Ontario’s Health Care
• Around the year 2000, Prime Minister Jean Chrétien
taps Roy Romanow to head up a commission to
survey the values and wishes of Canadians with
regards to the future of the health care system.
• In 2002, the Romanow Report concludes that
Canadians deeply cherish their publicly-financed
health care system and, furthermore, that the health
care system is ‚as sustainable as we want it to be‛.

12. The Fiscal Sustainability
of Ontario’s Health Care
• Reassured Canadians anxious about the
encroachment of for-profit health providers
• Sent a strong message in support of public financing
and provision of care on basis of medical need and
not one’s ability to pay
• Failed to adequately define the fiscal sustainability
problem
• Did not educate Canadians about the seriousness of
the long-term cost containment challenge

13. So what is the ‘Fiscal
Sustainability Problem’?
Every year, Ontarians pay taxes on income
earned…

14. What is the Fiscal
Sustainability Problem?
… on goods and services purchased (13% HST)…

15. What is the Fiscal
Sustainability Problem?
on properties we own, businesses we operate, etc.

16. What is the Fiscal
Sustainability Problem?
• All other things being equal, this government
tax revenue rises or falls in tandem with the
province’s economic activity (GDP).
Year Real GDP Tax Revenue
growth
2011 $71.3B
2010 +2.95% $64.9B
2009 -3.26% $68.9B
2008 -0.64%

17. What is the Fiscal
Sustainability Problem?
So the ‘fiscal sustainability problem’ is simply this:
Y/Y% growth HC spending > Y/Y% growth revenue
Or similarly…
Y/Y% growth HC spending > Y/Y% growth GDP

21. Share of Ontario’s
Total Program Spending
2010
Health, 46%
Education &
Other, 54%

22. Share of Ontario’s
Total Program Spending
2020
Education &
Other, 40%
Health, 60%

23. Share of Ontario’s
Total Program Spending
Education &
2030
Other, 20%
Health, 80%

24. So how does one bend the
cost curve?

25. Let’s follow the money

27. Follow the money
Big revelation #1:
• About 1/3 of the health care budget goes to
hospitals.
o Until recently, these were sent by the MoH to
hospitals as global funding envelopes ($$$)
o In 2011, ‘Excellent Care for All’ kicks in

28. Global Funding
Hospital is paid based on historical budget trends, with
small year-to-year adjustments based on input costs.
Pros
• Provides budgetary predictability
Cons
• Disincentives for discharging patients to post-acute care
and increasing volume (i.e. exchanging relatively less
expensive patients for relatively more expensive
patients)
• No incentive to improve quality or efficiency

29. Excellent Care for All Act (2011)
• Introduces activity-based hospital funding in Ontario as
of April 2011.
• Reimbursement rate based on types, volumes and
quality of care provided.
• CEO pay is tied to performance (meeting concrete
targets).
• If all goes well, model will become funding model for
CCACs, long-term care homes, CHCs, as well.

30. Activity-Based Funding
Pros
• Rewards volume, quality and efficiency, which will
incentivize greater specialization (i.e. centres of excellence)
and high throughput (i.e. more efficient discharge; no more
stranded ALC patients).
• CEO incentives are aligned with hospital’s performance.
Cons
• Rural hospitals risk may be penalized if performance
standards (e.g. ‘quality premiums’) are set too high or if some
component of basic global funding is not retained to offset
operating costs.

32. Follow the money
Big revelation #2:
• More than ½ of health care dollars are spent
paying people for services (e.g.
medical, admin, clerical).
o Big ticket items: Physicians, nurses, CEOs

33. Physician Remuneration
• Payment models come in many different shapes and
sizes:
o Fee-For-Service
o Blended Models: FHT MDs can choose from Blended
Capitation (FHN or FHO) or Blended Salary
• Average payments to physicians have moved from
$200,000 to $400,000 over 1992 - 2009.

34. Physician Remuneration
• MDs are being gradually weaned off of Fee-for-Service
based models through $$$ inducements from other
payment models (FHGs in 2003, FHOs/FHTs in 2006).

35. Blended Capitation Model
• Base funding of about $125 (avg.) per patient added
to a physician’s roster (accounts for 60% of income)
o teen male = $60; 90-year old female = $440
o $60 extra if patient has diabetes or serious mental illness, $125
extra if patient has experienced heart failure
• Shadow billing provides small FFS component (only
10-15% of normal OHIP fee for the procedure)
• Population health bonuses and incentives:
o E.g. If 50% patients get colorectal cancer screening, $2200 bonus
If 70% patients get colorectal cancer screening, $4400 bonus

36. FHTs and Blended
Capitation Payments
Pros
• Incentivizes cost-effective primary care (i.e. prevention)
• Does NOT incentivize volume (desirable for quality care)
• MDs lose out on bonuses if low acuity patients seek ER care;
this incentivizes 24/7 access to primary care (e.g. extended
hours, THAS)
Cons
• Rewards beneficial activity but not health outcomes!! (yet!)
• FFS MD practices still alive and kicking despite their obvious
drawbacks (BC payment model not imposed across the board)

37. Health Human Resources
• If you were to design the system from the
ground-up, with MDs costing $250k to
$500k, NPs costing $100k, practical nurses
costing $50k, how would you organize different
health professionals to provide accessible, cost-
effective primary care?

39. Follow the money
Big revelation #3:
• Drug expenditures account for 10% of public
health care costs and 33% of privately-borne
health care costs.

40. Pharmaceutical Drugs
• Ontario had some of the highest per capita drug costs of any
jurisdiction in the world until recently.
• Due to:
1. Generous Ontario Drug Benefit program
e.g. No matter if a 68-year old made $45,000/yr. or $45M/
yr., she would still have access to basically ‚free‛
pharmaceutical drugs (small annual deductible of $100).
2. Overutilization of new, expensive brand-name drugs
90-95% of new drugs provide no clinical benefit over generics.
3. Relatively high prices for generic drugs
Highest of any jurisdiction in the world, until recently.

42. Pharmaceutical Drugs
• Defeats cost-effective provision of health care in
a few ways:
o Age criterion does not align provision of benefits with
financial need
o High cost of pharmaceuticals facing non-ODB patient
leads to high rates of clinical non-adherence; patients
show up sicker downstream

43. Pharmaceutical Drugs
• In 2010, new regulations were introduced into the
Ontario Drug Benefit Act.
o Prices for generics bought under the plan would be capped at
25% of the cost of their brand-name equivalent, down from 50%.
o Similar price reductions for drugs purchased out-of-pocket or
through private insurance to be phased in over 3 years.
Result:
• Whereas ODB program cost growth used to go up by
9.4% per year, it only went up by 5% in 2010.

44. Class Exercise
Don Drummond’s 10 Prescriptions
for Sustainable Health Care

45. Recommendation #1
Take bold action to promote healthier lifestyles.
o Government should set bold targets around obesity, diabetes,
smoking, and invest more $ in health promotion initiatives.
o Ontario should diminish health disparities by predominantly
targeting its initiatives towards disadvantaged or low-income
groups.
o Targeting physical activity and junk food in schools.
o Engage larger employers about the benefits of workplace
wellness programs to productivity and insurance costs.

46. Recommendation #2
Expand the use of information technology in the
system.
o Use this as a tool to collect data and reward
performance across the system.
o Mandate the use of a single province-wide IT system
in new Family Health Teams, allowing FHTs to
communicate effectively with other providers and
expand their gate-keeper role for hospital and
community services.

47. Recommendation #3
Establish a Commission on Quality and Value for
Health Care.
o Establish a quasi-independent body to assess the
value-for-money of new health care procedures and
review existing ones (including drug treatments) and
make binding decisions on provincial coverage.
o Would amalgamate the activities of the Ontario
Health Quality Council (OHQC), the Committee to
Evaluate Drugs (CED) and the Institute for Clinical
Evaluative Sciences (ICES).

48. Recommendation #4
Change the way physicians are paid.
o Step up provincial efforts to move the 2/3 of
physicians still receiving fee-for-service payments to
the newer blended capitation payment model.
o Target financial incentives on process rather than
outcomes, to avoid ‚cream-skimming‛.

49. Recommendation #5
Develop a new hospital financing model.
o Move towards a diagnosis-related group-based
payment system (i.e. ‚activity-based funding‛).
o Have a review body assess and set appropriate prices
for different diagnoses.

50. Recommendation #6
Reallocate functions among health care providers.
o Reallocate some functions from physicians to non-
physician health professionals (e.g. Nurse-Practitioners) to
improve access and increase patient satisfaction.
o Expand roles of technologists for specific procedures (e.g.
routine cataract surgery).
o Expand the supply of non-physician health
professionals, by easing restrictions on foreign credential
recognition and increasing support programs for
immigrant professionals.

51. Recommendation #7
Scale back Ontario Drug Benefit for higher-income
seniors.
o Increase the rate of financial contribution (i.e. co-
payments) of high income seniors for drug coverage
on a sliding scale, while maintaining generous
coverage for low-income seniors and seniors with
high drug costs.

52. Recommendation #8
Increase bulk purchases of drugs to lower costs.
o Centralize hospital drug purchasing in Ontario to
drive down the price of generic pharmaceutical
products.
o Approach other Canadian provinces to form a central
buying agency responsible for bulk drug purchasing
on the behalf of the provinces.

53. Recommendation #9
Establish pre-funding of drug coverage.
o Establish a CPP-style contribution system to prefund
one’s lifetime drug costs, in order to fairly distribute
the burden among different generations and to free
up the fastest growing portion of most provincial
health budgets.

54. Recommendation #10
Incorporate a health-care benefit tax into the
income-tax structure.
o Establish a link between cost and usage to discourage
over-utilization of health care goods and services.
o Address ability-to-pay concerns at low administrative
cost, by taxing benefits at 40% the cost of care
received, up to a maximum of 3% of income over
$10,000. People earning below $10,000 would pay
nothing.

55. Recap
• How much does Ontario spend on health care?
• Components of health spending
• Key drivers of spending growth
• What action has been taken so far…
And where work remains to be done.
• Don Drummond’s recommendations
Fill-In-The-Blank…
• What is the %growth in Ontario’s HC spending for 2011?
• What does this say about our odds of having a fiscally
sustainable health care system under McGuinty?

56. An Important Question
• If you were to design the primary care system
from the ground-up, with MDs costing
$300k, NPs and PAs costing $100k, practical
nurses costing $50k, how would you organize
different health professionals to provide
accessible, cost-effective primary care?

57. Interprofessional
Collaboration in Health Care

58. Interprofessional
Collaboration in Health Care
What is the problem?
• Health care is provider-centric rather than patient-
centered
• Poor use of available resources
• Emerging evidence of high rates of medical error
in acute care settings (e.g. hospitals)

59. So how does interprofessional
collaboration address these challenges?
Video Presentation:
‚Teams Work, Patients Win‛
by the Health Council of Canada
http://www.youtube.com/watch?v=YipFWjZp2Jc&feature=related

60. Interprofessional
Collaboration in Health Care
Benefits
• Increases access to primary health care
• Improves outcomes for chronic disease patients
• Less tension/conflict among caregivers
• More cost-effective use of clinical resources
• Better workload and work environment

61. What are some of the
policy challenges of
shifting to IPC?
•
•
•
•
•
•
•
•

62. Interprofessional
Collaboration in Health Care
In Ontario, Family Health Teams may
include any of the following professions:
• Family physician • Physiotherapist
• Registered Nurse • Occupational Therapist
• Psychologist • Chiropractor
• Dietitian • And more!
• Pharmacist

63. Interprofessional
Collaboration in Health Care
• Additionally, two new regulated
professions have appeared in recent years:
o Nurse Practitioners (NPs)
o Physician Assistants (PAs)
• Policy goal:
To let lower-cost health providers do the routine tasks of
MDs, freeing up physicians to engage in more cognitive
work and thereby addressing the ‚doctor shortage‛.

64. Interprofessional
Collaboration in Health Care
• Nurse Practitioner (NP)
o An advanced practice nurse who has completed a nurse
practitioner program (Master’s or PhD degree)
o Typically specialize either in Primary Care, Adult Care
or Pediatric Care
o Has acquired expert knowledge base, critical decision-
making skills, and clinical competencies for expanded
practice

65. Interprofessional
Collaboration in Health Care
• Nurse Practitioners (NPs): Scope of Practice
o Can perform annual physicals and counseling services
o Health promotion (e.g. smoking cessation)
o Can order tests, perform screenings and administer immunizations
o Treat acute illnesses (e.g. injuries, infections)
o Monitor stable chronic illnesses (e.g. diabetes care)
o Can refer patients to health and social services (e.g.
dietitians, psychologists, specialists, addictions programs, housing
supports)
• In July 2012, will be able to admit patients to
hospitals through amendments to the Regulated
Health Professions Statute Law Amendment

66. Interprofessional
Collaboration in Health Care
• Other potential uses for NPs being
discussed:
o Perform on-the-spot lab tests for patients
o Use specific types of energy (e.g. defibrillation)
o Order diagnostic tests, specifically MRI & CT scans
o Offer psychotherapy as a controlled act (i.e. with
appropriate credentials)

67. Interprofessional
Collaboration in Health Care
• Nurse Practitioner-led clinics
o Performing quite well:
• High patient satisfaction
• Oftentimes better patient compliance with clinical
guidelines
• Improved coordination of care
o NP-led clinics are currently the norm in Northern
under-serviced areas, but NPs are increasingly common
in all mainstream care settings
(CCACs, FHTs, CHCs, hospitals, LTC homes, etc.).

68. Interprofessional
Collaboration in Health Care
• Physician Assistant (PA)
o A health care professional with a Master’s level or PhD
degree who is licensed to practice medicine under the
supervision of a physician.
o A PA’s scope of practice can be as expansive as that of
an MD, but is typically negotiated based on several
factors including a clinic’s caseload as well the MD’s
expertise and preferences.

69. Interprofessional
Collaboration in Health Care
• Physician Assistant (PA)
o Currently being deployed in different settings as part of
provincial pilot projects
• Family Health Teams
• Emergency Rooms
• Interprofessional teams in Hospitals (e.g. surgery)
• Interprofessional teams in CHCs
• MD practices, working for MDs on chronic disease
management and in LTC settings
o Provincial review will take place in the next 2 years to assess
the proper role for PAs based on provider feedback.

70. Interprofessional
Collaboration in Health Care
• Between the introduction of Family Health
Teams, blended salary models, IPE
programs, eHealth technologies, NPs and PAs…
Lots of positive changes to the quality of
primary care over the past 5 years!
• Better yet, the stage is set for further
improvements.

71. Interprofessional
Collaboration in Health Care
• The hard work now is to:
o Increase eHealth adoption and use it more strategically in
team-based care settings
o Increase the % of MDs being paid under BC payment
model
o Evaluate the health outcomes of team-based care vs.
traditional medical practices
o Boost supply of non-physician health professionals
o Better use and coordination of health teams in providing
outpatient and home care

73. Have a great week!