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Legislative Overview & Analysis Bill 36, Local Health System Integration Act, 2005. Status/Expected Timelines. Introduced for First Reading November 24 th Second Reading debates held November 29th to December 7 th and referred to Standing Committee on Social Policy

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Legislative overview analysis bill 36 local health system integration act 2005

Legislative Overview & AnalysisBill 36, Local Health System Integration Act, 2005

Status expected timelines
Status/Expected Timelines

  • Introduced for First Reading November 24th

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

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

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

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

Key issues
Key Issues

  • Governance/Accountability of LHINs

  • Role/Mandate of LHINs

  • Funding/Accountability Agreements

  • Integration Powers

  • Labour Relations implications

  • LGC/Ministerial powers

  • Implications for Providers

  • Consequential amendments

1 governance accountability
1. Governance/Accountability


  • Corporations without share capital

  • Board members appointed by Lieutenant Governor in Council (LGC) and receive remuneration/expenses as set by LGC

  • LGC designates Chair and Vice-Chair

  • CEO compensation set by Board within ranges set by Minister

  • Required to have open board/committee meetings (unless regulations specify otherwise)

  • May pass by-laws, resolutions and establish committees

    • Minister may require proposed by-law be submitted for approval

    • Minister can specify by regulation committees the board is required to establish


  • Accountability agreements with Minister

    • Performance goals/objectives, reporting, etc.

    • If no agreement reached, can be imposed by Minister and Minister can set terms

  • Audited annually by Auditor General

  • Minister has power to direct an audit

  • Must provide Ontario Health Quality Council with any information it requests

Governance accountability cont d

Summary Analysis

  • LHIN governance subject to significant control by the LGC and Minister

  • No Board selection criteria or process for appointment set out in legislation; no mechanism to ensure Board members selected from the community

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

  • Accountability agreements may be imposed by Minister

2 role mandate of lhins
2. Role/Mandate of LHINs

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

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

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

  • Engage community in planning and priority setting

  • Ensure appropriate process to respond to concerns of community

  • Evaluate, monitor, report on and be accountable to the Minister for performance of local health care system, including access to services, utilization, co-ordination, integration and cost-effectiveness of services

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

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

Role mandate cont d

Objects (cont’d)

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

  • Disseminate information on best practices and promote knowledge transfer

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

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

  • Enter into agreement to establish performance standards

  • Ensure effective and efficient management of the human, material and financial resources of LHIN and to account to Minister for use of resources

  • Any other objects Minister specifies by regulation

Role mandate cont d1

  • Planning – ss. 15/16

    • Must develop an Integrated Health Service Plan (IHSP) within time and form specified by Minister

    • IHSP must be consistent with provincial plan by Ministry

    • Must engage community on an on-going basis about the IHSP

    • Must establish a “health professions advisory committee” consisting of members determined by LHIN or prescribed by regulation

  • Funding– s. 19

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

    • Funding must be allocated in manner consistent with accountability agreement and other regulatory requirements

  • Integrating – ss. 24-27

    • LHINs and providers must separately and collaboratively identify opportunities to integrate services

    • May issue “integration decisions”

Role mandate cont d2

Summary Analysis

  • Nature and extent of community engagement in development of IHSP will be determined by regulation; no statutory requirement to consult with providers; requirement only for regulated health professions advisory committee

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

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

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

3 funding accountability agreements
3. Funding/Accountability Agreements

  • Funding – s. 17

    • Minister may fund LHINs on terms and conditions the Minister considers appropriate

    • Can adjust funding to take into account and savings from efficiencies generated by the LHIN in the previous year

  • Funding of Health Service Providers – s. 19

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

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

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

Funding cont d

  • LHIN Accountability Agreements – s. 18

    • LHINs must enter into multi-year accountability agreements with Minister

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

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

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

Funding cont d1

  • Service Accountability Agreements – s. 20

    • LHINs and providers must enter into “service accountability agreements” under Part III of the Commitment to the Future of Medicare Act.

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

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

  • LHIN audit – s. 21 and 22

    • LHINs may at any time require a provider that receives funding from the LHIN to engage or permit an audit it’s accounts and financial transactions

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

Funding cont d2

Summary Analysis

  • Legislation provides only a broad enabling provision that grants LHINs funding authority, specifics to be set out via regulation

  • Funding to providers must be consistent with the LHINs accountability agreement with the Minister (which may be imposed) and other regulatory requirements

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

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

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

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

4 integration powers
4. Integration Powers

  • Both LHINs and Minister have integration powers

  • LHINs may integrate by: (s. 25)

    • Providing or changing funding to provider

    • Facilitating and negotiating integration between providers or between provider and non-provider (which may result in wind-up of operations)

    • Issuing a decision that requires a provider to proceed with integration

    • Issuing a decision that orders a provider not to proceed with integration*

  • LHIN may issue integration decisions that: (s. 26(1))

    • Require providers to start or stop providing all or part of a service

    • Provide a certain quantity of a service

    • Transfer all or part of a service from on location or entity to another

    • Take any action necessary to implement the integration (e.g., transfer property)

      *Other ways may be added by way of regulation

Integration powers cont d
Integration Powers (cont’d)

  • LHIN integration decisions cannot: (s. 26(2))

    • Be contrary to IHSP or accountability agreement

    • Require a provider to dissolve, cease operating or wind up operations

    • Change the composition or structure of its membership or board

    • Amalgamate with another provider

    • Require two or more providers to amalgamate, transfer property held for a charitable purpose to a person/entity that is not a charity

    • “Unjustifiably” require a denominational entity to provide a service that is contrary to the religion of that organization

  • LHIN also approve provider integration initiatives (s. 27)

    • Providers must notify LHIN of integration of services (clinical and non-clinical) with another person or entity; cannot proceed for period of 60 days

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

Integration powers cont d1
Integration Powers(cont’d)

  • Minister can issue integration order – s. 28

    • Upon advice of LHIN, if Minister considers it in the public interest to do so to, Minister may order provider to:

      • Cease operating, dissolve or wind up operations

      • Amalgamate with one or more providers

      • Transfer all or substantially all of its operations

      • Take any other action necessary to carry out these activities

  • Process for LHIN integration decisions/Ministerial orders – ss. 26(3)(4)(5), s. 27 and s. 28(3)

    • Affected parties (i.e., provider) receive a copy of the decision and the decision is made publicly available

    • Provider has 30 days to make submissions, requesting reconsideration

    • LHIN/Minister can confirm, amend it or revoke decision

    • No further consideration; decision is final

    • Statutory Powers Procedures Act does not apply (right to hearing, right to knowledge of documents/evidence upon which decision is based)

    • Opportunity for judicial review under Judicial Review Procedures Act

    • Decision/orders can be enforced Superior Court of Justice

Integration powers cont d2
Integration Powers(cont’d)

  • Where transfers of property as a result or decision or order: (ss. 30/31)

    • If involve a charitable purpose, all gifts, trusts, bequests, devises and grants deemed to be those of transferee; if must be used for specific purpose; must do so

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

  • Integration of non-clinical services – s. 33

    • The LGC may make regulations ordering one or more hospitals to cease performing a non-clinical service and integrate the service by transferring it to a prescribed person or entity by a certain date

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

Integration powers cont d3
Integration Powers(cont’d)

Summary Analysis

  • Integration decisions cannot alter change composition or structure of a provider’s membership or board

  • Providers have no statutory right to be consulted

  • Very little in way of procedural safeguards or due process prior to making of decision/order

  • No criteria upon which decisions/orders are based

  • Unclear as to extent of protection for denominational hospitals (interpretation of “unjustifiably”)

  • No clarification as to factors considered in determining “public interest” in legislation (as in PHA and Bill 8)

5 labour relations implications
5. Labour Relations Implications

  • T

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

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

    • Transfers of all or part of a service under an integration decision

    • A Minister’s order to transfer all or substantially all of the operations of a provider

    • The amalgamation of two or more entities under an integration decision or Minister’s order

    • Minister can order a health service provide to do any other action necessary to carry out an amalgamation, dissolution or transfer of its operations

  • PSLRTA not applicable where:

    • Successor employer and unions agree that it should not apply

    • The successor employer or union applies to the Ontario Labour Relations Board (OLRB) and it orders that PSLRTA is not applicable

    • The successor employer was not a health provider or where the primary function of that person or entity is not the provision of services within or to the health services sector

Labour relations cont d
Labour Relations(cont’d)

Summary Analysis

  • Bargaining rights, collective agreements would follow any work being transferred or amalgamated at time of integration

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

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

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

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

6 lgc ministerial powers
6. LGC/Ministerial Powers

  • Lieutenant Governor in Council (i.e., Cabinet) may by regulation:

    • Amalgamate, dissolve or divide a LHIN, change the name of a LHIN (s. 3(4))

    • Determine LHIN Board remuneration and reimbursement for reasonable expenses (ss. 7(5))

    • Designate the Chair and at least one Vice-Chair of the board (ss. 7(6))

    • Order one or more hospitals to cease performing a non-clinical service and to integrate the service by transferring it to a prescribed person or entity by a certain date (ss. 33(1))

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

Lgc ministerial powers cont d
LGC/Ministerial Powers(cont’d)

  • LGC may also make regulations – s. 36

    • Governing anything described in Act as being prescribed (e.g., ways in which a LHIN may “integrate” or determining when LHIN meetings are closed to public)

    • Excluding entities from definition of “health service provider”

    • Specifying who may not be members of a LHIN

    • Determining how community engagement will occur

    • Respecting the function and membership of the health professionals advisory committee

    • Respecting funding that a LHIN provides to a provider

    • Requiring providers to set up a method of reconciling funding received

    • Respecting a matter relating to a transfer of property as a result of an integration decision or order

    • Governing compensation arising from transfers of property

    • Defining anything in the Act

Lgc ministerial powers cont d1
LGC/Ministerial Powers(cont’d)

  • Minister may:

    • Make regulations to specify additional objects of a LHIN (ss. 5(n)) and concerning which LHIN committees which must be established (ss. 8(5))

    • Require approval of LHIN bylaws (ss. 8(2))

    • Set the salary/benefit ranges of LHIN CEOs (ss. 10(4))

    • Direct an audit at any time (ss. 12(2))

    • Fund LHINs on terms and conditions the Minister considers appropriate (ss.17(1))

    • Impose an accountability agreement on the LHIN if no agreement is reached and set the terms of the agreement for the LHIN (ss. 18(3))

    • Issue integration orders (s. 28)

    • Impact CEO compensation under Bill 8 (ss. 42(36))

    • Dispense with statutory requirement of consultation in development of regulations (ss. 36(7))

Lgc ministerial powers cont d2
LGC/Ministerial Powers(cont’d)

New LGC/Ministerial powers under Bill 36

  • Minister may order provider to cease operations, amalgamate, or transfer operations (in public interest)

  • Through regulation, the LGC can integrate non-clinical services

  • LHINs and Minister can enforce orders and decisions through application for court order

    Minister’s existing powers under PHA

  • An amalgamation requires Minister’s approval

  • Minister can direct a hospital subject to HSRC direction or notice (before April 30, 1999) to cease operations, amalgamate, cease or adjust services, or any other direction that Minister considers in public interest

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

Lgc ministerial powers cont d3
LGC/Ministerial Powers(cont’d)

Summary Analysis

  • New” powers of Minister under Bill 36

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

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

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

    • Court orders provide tool for ensuring compliance

  • While a significant number of LHIN powers are delineated in the legislation, the regulation-making authority of both the LGC and the Minister provide the ability to greatly extend these powers

  • But regulations subject to a 60-day consultation period, but this may be dispensed with where:

    • In Minister’s opinion, “urgency of the situation” requires it

    • Regulation clarifies intent of Act

    • Regulation is of minor or technical nature

7 implications for providers
7. Implications for Providers

  • Funding/Agreements –ss. 19/20

    • If receive funding from LHIN, must enter into “service accountability agreements” under Part III, Commitment to the Future of Medicare Act, 2004, whichmay be based on a service plan developed with LHINs

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

  • Integration of clinical services – ss. 24-28

    • Duty to separately and collaboratively (with LHINs) identify integration opportunities (ss. 24)

    • Will be subject to integration decisions of LHINs/Ministerial orders

  • Integration of non-clinical services – s. 33

    • The LGC may make regulations ordering one or more hospitals to cease performing a non-clinical service and integrate the service by transferring it to a prescribed person or entity by a certain date

    • Regulation will set out hospital and specific functions to be integrated

  • Need LHIN approval to integrate services (clinical and non-clinical) – s. 27

8 consequential amendments
8. Consequential Amendments

  • Commitment to Future of Medicare Act – s. 42

    • LHINs now responsible for Part III of Act dealing with accountability agreements (“service accountability agreements”)

    • Minister retains provisions respecting CEO compensation re: performance agreements

    • Provision now only applies to hospital CEOs

  • Public Hospitals Act –s .50

    • HSRC provision (s. 6) replaced with transitional provisions

      • Upon proclamation, Minister will use Bill 36 powers

      • Existing HSRC orders remain valid, but in event of a conflict, integration decisions/orders will prevail over s. 6 directions

    • Amends definitions of “hospital” and “patient

    • Hospitals may alter/revoke physician privileges as a result of an integration decision or order with no appeal

    • Minister may, by regulation, require hospital subsidiaries and foundations to provide financial reports and returns to the Minister and to a LHIN

Summary of key issues
Summary of Key Issues

Issues requiring further clarification

  • Extent, manner and timing of funding responsibilities

  • Assignment of HAAs to LHINs

  • Impact on hospital-physician relationship

  • Potential impact on foundations

  • Application of HLDAA to private sector

  • Implications for facilities with provincial programs

  • Impact on academic health sciences centres

    Areas of potential concern

  • Due process re: integration decisions/orders

  • Criteria for making decisions/orders

  • Requirement of LHIN approval to integrate services

  • Adequacy of safeguards for denominational hospitals

  • Labour relations implications

  • What’s not in legislation (affirmation of role of academic/speciality hospitals, physicians, provincial programs, etc.)

Questions and discussion

Questions and Discussion