legislative overview analysis bill 36 local health system integration act 2005
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Legislative Overview & Analysis Bill 36, Local Health System Integration Act, 2005

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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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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.)