Bill 36: Local Health System Integration Act, 2006

By Anne C. Corbett and John M. Risk

The creation of Local Health Integration Networks ("LHINs") is a major part of the government’s transformation agenda for the health care system. On March 28, 2006, the government passed into law the Local Health System Integration Act, 2006 (the "Act" or "Bill", or "Bill 36"). Bill 36 gives LHINs the power to integrate health services at the local level; their mandate will be to plan, fund, and integrate health care services within their boundaries.

The purpose of the Act is stated as follows:

• to provide for an integrated health system to improve the health of Ontarians through better access to high quality health services, coordinated health care in local health systems and across the province and effective and efficient management of the health system at the local level by local health integration networks.

Bill 36 is a complex statute that provides for the integration of the health care system.

The principal focus of the legislation is in the following areas:

• LHIN governance structure.

• The funding and accountability relationship between LHINs and government.

• LHIN jurisdiction over health service providers.

• Processes and mechanisms to integrate the health system.

The purpose of this note is to provide staff and boards of hospitals and other health care providers with an overview of Bill 36.

• In June 2005, the Ontario government announced its plan to transform Ontario.s health care system and began the process of creating the 14 not-for-profit corporations that will act as the first LHINs under Bill 36. The 14 corporations each represent a distinct geographic area in the province.

• Bill 36 is the next phase in the government’s plan. Bill 36 became law on March 28, 2006. Some provisions will only take effect on proclamation (a decision of Cabinet).

• A committee of the Legislative Assembly will begin a review of the Act and its accompanying regulations between 2009 and 2010. Within one year of beginning its review, the committee will make recommendations to the Assembly concerning amendments to the Act and its regulations.

• LHINs are continued as non-share capital, not-for-profit corporations designated as Crown agencies.

• Generally, LHIN objects are to plan, fund, and integrate the local health system to achieve the purposes of the Act. In addition to the general statement of objects, there are a number of specific objects assigned to the LHINs to achieve the purposes of the Act that focus on system planning and integration at the local level. The Minister may specify other objects by regulation.

• LHINs cannot directly provide health care without the approval of the Lieutenant Governor in Council ("LGIC").

• There are a number of provisions in the Act to ensure that LHIN operations are exempt from statutes that apply to charities, such as the Charitable Gifts Act and the Charities Accounting Act. There are also provisions to specify that the property of a LHIN is not charitable property.

• LHINs may not borrow money without the approval of the LGIC nor may they receive money (other than from the Crown) or participate in fundraising without the consent of the Minister of Health and Long-Term Care ("Minister") and the Minister of Finance. The effect of these provisions is that LHINs will not be able to incur deficits.

• Certain powers of the LHINs can only be exercised with approval of the Minister, or in some cases, the Minister and the Minister of Finance. In addition, LHIN powers, such as the power to borrow or lend money, invest its money, or, as noted above, provide health services directly, can only be undertaken with the approval of the LGIC.

• LHINs will have up to nine (9) directors appointed by the LGIC.

• Directors can be appointed for up to one three (3) year term, with renewal for an additional three (3) year term.

• The Chair and Vice-Chair of a LHIN will be appointed by the LGIC.

• The members of a LHIN will consist of its Board of Directors.

• While a LHIN has the capacity to pass by-laws, the Minister may require that the Minister approve by-laws before they are passed or that any by-law passed by a LHIN be suspended pending approval by the Minister.

• A LHIN may establish committees but will be required to establish the committees that are specified by regulation and appoint to those committees the persons who meet the qualifications that the Minister specifies in the regulations. These committees will be required to operate in accordance with the requirements that may be specified by the Minister by regulation.

• Directors of a LHIN will receive compensation as determined by the LGIC.

• Meetings of the board of directors or a committee will be open to the public and a LHIN is required to give reasonable notice to the public of Board and committee meetings. A LHIN may exclude the public from any part of a meeting that deals with certain matters specified in the Act.

• LHINs are required to appoint and employ a Chief Executive Officer. The Minister may fix ranges for the compensation of the Chief Executive Officer.

• The Minister may provide funding to a LHIN on terms and conditions that the Minister considers appropriate.

• The Minister and each LHIN are required to enter into an accountability agreement (note the term "accountability agreement" has previously been used in The Commitment to the Future of Medicare Act, 2004 ("Bill 8") to refer to an agreement between a health service provider and the Minister. Bill 8 will now be amended to provide that the agreements are with a LHIN and are called service accountability agreements).

• The accountability agreements between the Minister and a LHIN shall be for more than one fiscal year and shall include:

• Performance goals and objectives, performance standards, targets and measures for both the LHIN and the local health system;

• requirements for reporting on performance; and,

• a plan for spending the funding that the LHIN receives and such other matters as may be prescribed (the plan for spending LHIN funds must be in accordance with the appropriations from which the Minister has provided funding to the LHIN).

• If the Minister and a LHIN are unable to conclude an accountability agreement, the Minister may set the terms of the accountability agreement (there are no provisions for any appeal or review of such "set agreement" and it appears the agreement can be unilaterally imposed on a LHIN by the Minister).

• A LHIN is required, within the time and in the form the Minister specifies, to provide such plans, information, reports, financial statements, including audited financial statements that the Minister requires for the purposes of administering the Act.

• The Auditor General may audit the accounts and financial transactions of the LHINs. In addition, the Minister may direct a special audit of a LHIN.

• Each LHIN is required to submit an annual report to the Minister in a form that the Minister specifies. The annual report must include audited financial statements and data relating to aboriginal health issues. Each LHIN is also required to provide the Ontario Health Quality Council with information about the LHIN that the Council requests. (The Ontario Health Quality Council was established under Bill 8, the Commitment to the Future of Medicare Act, 2004.)

• The Minister and each LHIN must establish and maintain a website. The Minister and each LHIN must publish on their websites the documents that the Act requires them to make public.

• The term health resource provider was introduced in Bill 8. The definition of health resource provider as set out in Bill 8 will be amended to conform to the new definition of health service provider as set out in Bill 36. Health service providers include a number of institutions and facilities that provide health care, including public hospitals, private hospitals, certain psychiatric facilities, approved charitable homes for the aged under the Charitable Institutions Act, licensees under the Nursing Homes Act, municipalities or boards of management maintaining a home for the aged under the Homes for the Aged and Rest Home Act, community care access centres, a provider of community services approved under the Long-Term Care Act, 1994, community health centres, and community mental health and addiction services. Additional health service providers may be added by regulation. Physicians continue to fall outside the definition of health service providers, as do independent health facilities for the purposes of Bill 36.

• LHINs may provide funding to a health service provider in respect of the services the health service provider provides in and for the geographic area of the network. Such funding shall be on terms and conditions determined by the LHIN, but must be consistent with any terms and conditions imposed by the Minister on LHIN funding, a LHIN.s accountability agreement with the Minister, and any requirements prescribed by regulation.

• The Minister may assign to a LHIN the Minister's rights and obligations under all or any part of an existing agreement between the Minister and a health service provider, including an agreement to which there are other parties, but excluding specific types of agreements relating to remuneration of certain health professionals on a basis other than fee for service (this exclusion would include certain agreements involving hospitals and physicians, for example those relating to Alternative Funding Arrangements.)

• Bill 8 will be amended to give the LHIN the powers that the Minister had under Bill 8 to cause a health service provider to enter into an accountability agreement (now to be called a service accountability agreement) and to ensure performance of the agreement.

• Pursuant to the proposed amendments to Bill 8, a LHIN will be able to issue a compliance directive or an order to a health service provider in circumstances where the Minister could previously have issued the order or compliance directive.

• A LHIN may direct a health service provider that it funds to undergo an audit.

• A LHIN may require a health service provider that it funds, or that it proposes to fund, to provide plans, reports, financial statements or other information that the LHIN requires for the purpose of exercising its powers or duties under the legislation.

• The Minister is required to develop a provincial strategic plan for the health system that includes a vision, priorities, and strategic directions for the health system. In developing the provincial strategic plan, the Minister must seek the advice of province-wide health planning organizations. Copies of the provincial strategic plan are to be made available to the public.

• The Minister is required to establish an Aboriginal and First Nations health council and a French language health service advisory council, both to act in an advisory capacity.

• Each LHIN is required within the time and the form specified by the Minister to develop an integrated health service plan for the local health system (that part of the health system that provides services in the geographic area of the LHIN). Copies are to be made available to the public.

• The integrated health service plan is to be consistent with the provincial strategic plan, the funding that the LHIN receives from the Minister and any other requirements prescribed by regulation under the Act.

• Each LHIN and each health service provider are to "separately and in conjunction with each other" identify opportunities to integrate services.

• A LHIN is required to "engage the community of diverse persons and entities involved in the local health system" about the system on an ongoing basis and in developing plans and setting priorities for the delivery of health services.

• "Community" includes patients, health service providers, and employees involved in the local health system.

• Each LHIN shall establish a health professions advisory committee consisting of the persons that the LHIN appoints from among members of those regulated health professions that the LHIN determines or that are prescribed. No role is specified for this committee.

• The legislation provides significant mechanisms for restructuring the health system through:

• Integration decisions - issued by the LHIN.

• Integration orders - issued by the Minister.

• Regulations - promulgated by the LGIC (before April 1, 2007).

• In addition to achieving integration by providing or changing funding to a health service provider, a LHIN may integrate the local system through issuing an "integration decision" in the following circumstances:

• Voluntary Integration Agreement

• Required Integration of "Services"

• Provide or cease to provide all or part of a service.

• Provide a service to a certain level, quantity or extent.

• Transfer all or part of a service from one location to another.

• Transfer all or part of a service to or receive all or part of a service from another person or entity.

• Carry out another type of integration of services as prescribed by regulation.

• To do or refrain from doing anything necessary to carry out the above integration of services (including transfer of property).

• Cease operating or carrying on a business.

• Dissolve or wind up its operations.

• Amalgamate or change the composition or structure of its membership or board.

• Stopping Voluntary Integration by Health Service Providers

• An integration decision is required to set out, among other things, the purpose and nature of the integration and the actions that the parties to the decision are required to take, including time periods and the effective date of all transfers.

• At least 30 days prior notice of a proposed decision must be given to a health service provider.

• Proposed integration decisions are to be made available to the public.

• Any person may make written submissions about a proposed decision.

• A LHIN may issue an integration decision after considering the written submissions. The LHIN’s decision may be different from the proposed decision that was the subject of the notice.

• Parties to the decision are required to develop a human resources adjustment plan relating to the integration (this requirement also applies to parties subject to a Minister order or subject to integration of non-clinical services by LGIC regulation. Minister’s orders and integration of non-clinical services are discussed below).

• If the Minister considers it in the public interest, the Minister may order a health service provider that receives funding from a LHIN and that carries on its operations on a for profit or not for profit basis to:

• Cease operating, dissolve, or wind up.

• Amalgamate with one or more health service providers that receive funding from a LHIN (although the Minister cannot order a not for profit health service provider to amalgamate with a for profit health service provider).

• Transfer all or substantially all of its operations.

• Take such other actions as may be necessary to carry out the orders set out above.

• Before issuing an integration order, the Minister must first receive the advice of the LHINs involved.

• As in the case of LHIN integration decisions, the Minister shall not unjustifiably require a religious organization to provide a service that is contrary to the religion of the organization.

• There is a requirement to receive 30 days prior notice of the Minister's proposed decision in the same manner that applies to a LHIN integration decision and the same process relating to written submissions apply.

• A person or entity party to a LHIN integration decision or a Ministerial integration order must comply with the decision or order. After making the decision or order, the LHIN or the Minister may apply to the Superior Court of Justice for an order directing a party to comply with the decision or order.

• Bill 36 generally provides that there is no compensation for any loss or damages resulting from an integration decision or a Minister's order. Where a loss results from a transfer of property, the person suffering the loss is entitled to compensation (as prescribed by legislation) in respect of the portion of the loss that relates to the portion of the value of the property that was not acquired with government money.

• The LGIC may order a public hospital within the meaning of the Public Hospitals Act and the University of Ottawa Heart Institute to cease performing any prescribed non-clinical service and to integrate the service by transferring it to a prescribed person or entity.

• Many of the provisions that apply to integration decisions and Minister's orders (compensation and the ability to apply for a court order) will also apply to the regulation made by the LGIC.

• Pursuant to general provisions in the legislation, a regulation that is proposed to be made under the Act must be published for the purpose of providing notice to persons or entities that would be affected by it, unless there is a matter of urgency or other specific exemptions apply.

• These provisions will .sunset. April 1, 2007.

• Bill 36 provides that the Public Sector Labour Relations Transition Act, 1997 applies to transfers of services under an integration decision, transfers of operations under a Minister's order, amalgamation under a Minister's order, or an integration decision issued as a result of a voluntary integration by health service providers.

• The LGIC may by regulation devolve to a LHIN any powers, duties or functions of the Minister (or a person appointed by the Minister or LGIC) under any Act for whose administration the Minister is responsible.

• This provision gives a wide power to the LGIC to put the LHIN in the shoes of the Minister in respect of other health legislation.

• Bill 36 amends section 6 of the PHA. Under section 6, the Minister could direct certain hospitals, which were subject to a Health Services Restructuring Commission direction, draft direction, or notice of intention to issue a direction, to cease operations, amalgamate with another hospital, or cease or provide specific services. The Minister will not have the power to issue new directions to these hospitals. However, the Minister will have the power to amend or revoke a direction given pursuant to section 6 before the Bill 36 amendments. In addition, a LHIN integration decision or an integration order by the Minister will prevail over a direction given pursuant to section 6 before the Bill 36 amendments.

• Powers that were previously in the PHA that allowed hospitals to deal with physician privileges in the event of a direction, or where the hospital ceases to operate or provide a service, are extended to integration decisions and orders.

• As noted above, Bill 36 transfers many of the Minister’s powers under Part III of Bill 8, including the power to issue compliance directives and orders. There are exceptions to the LHINs stepping into the Minister’s shoes in Bill 8. For example, the Bill does not transfer to LHINs the Minister’s powers to recommend to the LGIC to make an order affecting CEO compensation, although a LHIN may make a recommendation to the Minister that such an order be made (note that the CEO compensation provisions in Bill 8 will also be amended to apply to hospital CEO’s only). In addition, the Minister will be able to exercise all powers under Part III of Bill 8 with reference to Independent Health Facilities (but only in regard to Independent Health Facilities).

• Changes to the Community Care Access Corporations Act, 2001 (.CCAC Act.) will return CCACs to nonprofit boards subject in part to the Corporations Act. CCACs will select their members and directors and hire an Executive Director. Bill 36 gives the LGIC authority to amalgamate, dissolve, or divide CCACs.

• As mentioned above, the Public Sector Labour Relations Transition Act, 1997 (PSLRTA) will apply to integration activities in the health care sector, including LHIN integration decisions. Amendments to the PSLRTA will grant the Ontario Labour Relations Board significant discretion to resolve labour relations issues arising from integration activities in the health sector, for example issues relating to combination of bargaining units or the applicability of the PSLRTA to a health services integration.

• Bill 36 amends a number of other Acts to reflect the relationship between the LHINs and health service providers. The Bill also includes amendments to the PHA that do not concern LHINs, for example amendments relating to the definition of patient.

Bill 36 is a complex piece of legislation and will have a major effect on the delivery of health care in Ontario. Some issues to consider while reviewing or discussing the Act are as follows:

• LHINs are subject to significant control by the Minister.

• Bill 36 requires health service providers to identify integration opportunities.

• The Act encourages integration and provides a capacity for the LHIN to initiate voluntary integration.

• LHINs will need to align service accountability agreements with other agreements that they will not fund or administer, for example physician Alternative Funding Plans.

• Physicians are not health service providers under Bill 36, although the Bill will affect physicians, especially those practicing in hospitals, community health centres, and other health service providers. Any major reform effort will need to confront physician issues.

To download a copy of Bill 36, go to http://www.ontla.on.ca/. The legislation will also be available through http://www.e-laws.gov.on.ca/.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.