Doug Ford government paying for-profit clinic more than hospitals for OHIP-covered surgeries, documents show

Premier Doug Ford's government gives a for-profit clinic more funding to perform certain OHIP-covered surgeries than it gives Ontario's public hospitals to perform the same operations, CBC News has learned.

Ontario's government has never before made public the rates it pays a private clinic in Toronto to perform thousands of outpatient day surgeries each year.

Through a freedom of information request, CBC News obtained documents that reveal those funding rates for the first time.

Four senior officials who work in different parts of Ontario's hospital system reviewed the documents, and all four say the rates being paid to the privately owned Don Mills Surgical Unit Ltd. are noticeably higher than what the province provides public hospitals for the same procedures.

That discrepancy raises questions about the government's imminent plans to expand the volume and scope of surgeries performed outside of hospitals, including the potentially lucrative field of hip and knee replacements.

Ford and his health minister have pitched this expansion as a cost-efficient way to get more surgeries done and reduce wait times.

However, many health-care professionals are concerned that outsourcing more surgeries to privately run for-profit clinics would merely shift resources from Ontario's hospitals and boost clinic owners' revenues, without actually shortening wait lists.

The documents show provincial agency Ontario Health contracted Don Mills Surgical Unit Ltd. at the following per-surgery funding rates in each of the three fiscal years starting from 2020-21:

• $1,264 for each procedure classed as minor complexity (such as cataract surgery)
• $4,037 for each moderate complexity surgery (such as a laparoscopic gallbladder removal)
• $5,408 for each higher-complexity surgery (such as repairing a large tear of a rotator cuff).

The funding rates do not include how much the surgeon bills OHIP for each operation. The physician's billing for a particular OHIP-covered surgery is identical whether it takes place in a hospital or a private clinic.

'Egregious' overpayment: chief of surgery

In separate interviews, senior public hospital officials who reviewed how those rates applied to the 70 different surgeries on the Don Mills list said the province provides their hospitals less funding per surgery for identical procedures.

The officials spoke on condition of anonymity because they feared talking publicly about the province's funding arrangements could bring financial repercussions to their hospitals.

"The overpayment for these minor things is egregious," said the chief of surgery at a large Ontario hospital. "It doesn't look like great value for money."

The $4,037 of funding allotted to Don Mills Surgical Unit (DMSU) for each moderate complexity surgery is "very generous" compared with how hospitals are funded for comparable operations, the chief of surgery said.

A director of surgery at another hospital says those funding rates would allow significant profit to flow from the public purse to the clinic's owners.

Ministry funding included 'premiums'

"If I were running that centre, I would be a millionaire," said the surgeon. "There's a tonne of money to be made."

A third senior health-care executive, who has led surgical programs at multiple hospitals in Ontario, described the rates as "much higher" than the per-surgery funding that flows to hospitals.

A spokesperson for Health Minister Sylvia Jones says the province contracted DMSU as part of its efforts to catch up on backlogs of publicly funded surgeries stemming from the COVID-19 pandemic.

The Ministry of Health "came to an agreement with DMSU on a pricing structure for day surgeries, grouped on their complexity and included price premiums. These premiums were also given to hospitals to incentivize increased surgeries," said Jones' spokesperson Hannah Jensen in an email.

Earlier this month, Jones defended the government's outsourcing of surgeries and its plans to move more procedures outside of hospitals.

"It's really about people having access and making sure that they're not sitting on wait lists, they're not having to wait at home, they're not off work," Jones said in an interview on Nov. 2.

'Same physicians as hospitals,' says Jones

CBC News asked Jones if she could commit that surgeries performed in private clinics under the government's expansion plans will not cost the province more than in hospitals.

"What I can commit to is that regardless of where you get your surgery, you are being treated and assessed and having access to … licensed regulated healthcare professionals, the same physicians, doctors, anaesthetists who are practicing in our hospital system," she said.

The people who run hospitals are deeply concerned that surgeons, anaesthetists and operating room nurses shifting to private clinics will weaken the ability of hospitals to provide the care expected of them.

That's because surgeons who are attached to a hospital don't just do scheduled surgeries: as part of their deal to have credentials at hospitals, they're expected to put in clinical shifts and take turns being on call for emergency surgeries.

CBC News requested an interview with senior officials from Don Mills Surgical Unit. The company declined the request, but sent a statement by email.

"The surgical services delivered through our state-of-the-art facility have been an integral part of the Ontario healthcare system for decades," said Don Mills Surgical Unit's director of operations, Sara Mooney.

'High patient satisfaction'

"We operate within the funding levels and expected volume budgets assigned by the province to reduce wait times and restore quality of life for Ontarians who've been waiting for essential surgeries," Mooney said. "Our high patient satisfaction rate is testimony to the quality of care provided."

The documents show Don Mills Surgical Unit Ltd. was allocated $3.66 million in what's described as "Private Hospital Surgical Recovery Funding" for 664 minor complexity surgeries, 465 moderate complexity and 175 higher complexity surgeries during each of the 2021-22 and 2022-23 fiscal years.

The documents do not show how many surgeries were actually carried out, nor which of the 70 different surgical procedures on the list were performed. The Ministry of Health said it could not provide a breakdown because DMSU does not submit "procedure-level data."

CBC News asked Don Mills for specifics. Mooney said the surgeries provided under the program were orthopaedic, ear, nose and throat, cataract, general, and medically necessary plastic surgeries.

The documents also show Don Mills was funded an additional $1.3 million in 2022-23 to perform another 1,041 minor surgeries at $1,264 each. In December 2022, Ontario Health also gave it another $263,000 in what it described as "one-time funding to support the operation of private hospitals."

Ontario's end-of-year financial statements, the public accounts, show the Ministry of Health's annual payments to Don Mills ran consistently at $1.32 million in the years leading up to the pandemic, and have quadrupled since, hitting $5.27 million in 2022-23. A government official confirmed that the private clinic is continuing to receive funding this year under the surgical recovery program.

Christine Elliott lobbying for the company

Don Mills Surgical Unit is part of Clearpoint Health Network, the largest chain of private surgical clinics in Canada.

Clearpoint is wholly owned by the $1.5 billion private equity firm Kensington Capital Partners Ltd., which launched the chain through a $35 million purchase of clinics in Ontario, Manitoba, Alberta and B.C. in 2019.

Last week, former health minister Christine Elliott registered to lobby the Ford government on behalf of Clearpoint. Her official registration says her lobbying goals are to "engage the government in updating and increasing the base funding amount available to Clearpoint."

Clearpoint says about 90 per cent of the surgeries performed in its clinics across Canada are publicly funded.

The higher per-surgery funding to Clearpoint's clinic debunks the government's claims about the benefits of outsourcing OHIP-covered procedures, says Andrew Longhurst, a health policy researcher at Simon Fraser University.

"Having this [funding] information tells us that the main rationale that the government has used to argue for greater for-profit delivery simply doesn't pass the sniff test," said Longhurst in an interview.

"Taxpayers are having to pay significantly more to have the same procedures done in private, for-profit facilities, so investors can make a return," Longhurst said. "I see that as a very bad deal for the public."

To compare per-surgery funding rates, CBC News reviewed official funding documents called Hospital Service Accountability Agreements posted by a variety of Ontario hospitals.

Cataracts and knee arthroscopy

Two common procedures on the list at Don Mills that the province also funds on a per-procedure basis in hospitals are cataract surgery and arthroscopic knee surgery.

While the contract shows the province provides Don Mills $1,264 for each cataract operation, the funding agreements with hospitals show $508 per procedure.

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"Knee arthroscopy with meniscus repair" is defined as a Level 2 or moderate complexity procedure in the Don Mills agreement, funded at $4,037 per surgery.

The funding to hospitals for "knee arthroscopy (degenerative meniscus and joint)" ranges from $1,273 per surgery at Toronto's University Health Network to $1,692 each at Sunnybrook Health Sciences Centre.

'No justification'

"There's no justification for this that I can possibly think of," said Dr. Dick Zoutman, a former chief of staff at two major hospitals in the province, now a board member of the union-backed Ontario Health Coalition

"The costs to the Ontario taxpayers are substantially more for exactly the same service," said Zoutman in an interview. "Frankly, I think it's nonsense."

The health minister's spokesperson says it's not possible to make an accurate comparison between the funding Ontario gives to an independent facility like DMSU and the funding given to a hospital to provide the same procedure, because hospitals also receive separate global operating budgets.

"Community surgical and diagnostic centres receive one-time funds for procedures only and have to absorb any capital or operating costs, unlike hospitals," said the spokesperson. "These centres may have higher costs for purchasing equipment or, in some cases, having to rent equipment."

However, hospital officials say the global operating budgets fund the many other things hospitals do beyond outpatient surgery. They also question why the province would subsidize a private clinic's costs by paying it more money per procedure.

"I don't really understand the decision-making process [the province] used for setting these particular rates," said a senior hospital executive.

There is "no point" in the government outsourcing surgeries to for-profit clinics if they can't perform surgeries more cost-effectively than hospitals can, the executive said. "You would be wasting taxpayers' dollars."

Ontario doctors have urged the government to create non-profit surgical centres in its move to expand the scope of surgeries performed outside of hospitals.

The government allocated $300 million across Ontario in 2022-23 to tackle the increased backlog of surgeries and diagnostic procedures driven by the pandemic, the bulk of which went to hospitals.

"A single rate setting-approach should be established for both public hospitals and private clinics offering the same clinical services," said Anthony Dale, president of the Ontario Hospital Association, in a statement.

The government's plan to increase the number of surgeries done outside hospitals includes adding hip and knee replacements to the list in 2024. The current per-procedure funding to hospitals is around $8,100 for each knee replacement and $8,900 for each hip replacement.