Private clinics ripping off public in Ontario: OHC

Private clinics

Private clinics a ripoff?

Ontario Health Coalition —

In August 2013, a routine mandatory public notice posted on the government’s regulations website revealed that a change in the ownership and control of public hospital services in Ontario was being planned.

The Ontario government was preparing to introduce two new regulations to cut clinical services from local public hospitals and contract them out to private clinics. In January 2014, the regulations were formally passed and the Ministry of Health issued policy guidelines revealing that it intends to complete contracts by this summer. This new policy would cut clinical services provided under the Public Hospitals Act and transfer them to private clinics under the Independent Health Facilities Act (IHFA).

Ontario’s existing private clinics have been controversial due to poor quality of care, patient safety concerns, questionable billing practices and violations of the Canada Health Act. Starting in the 1980s on the urging of Tommy Douglas, known as the father of Public Medicare in Canada, Health Coalitions like the Ontario Health Coalition were set up as non-partisan advocates across the country to uphold the Canada Health Act and prevent its erosion, and to protect patients from extra-billing and user fees.

Given the government’s intention to significantly expand the private clinic (IHF) sector, the Ontario Health Coalition deemed it timely to take a closer look at increasing patient complaints about extra-billing and user fees in these clinics. Student interns and researchers working with the Coalition called all the existing private clinics in Ontario and recorded our findings. We found a proliferation of user charges and extra-billing of patients practiced by these clinics. This evidence is outlined in this report.

The evidence from our research shows that these clinics undermine single-tier health care, increase costs for patients, sell unnecessary procedures to increase profits at the expense of patients and violate patient trust.

Throughout the month of March 2014, six university student researchers working with Ontario Health Coalition staff called all of the existing private clinics which provide services like those that the Ontario government is proposing to cut from local public hospitals and contract out to private clinics. The researchers found that many of these private clinics are charging OHIP and charging user-fees and extra-billing patients on top. In many cases these extra fees charged to patients constitute outright violations of the Canada Health Act.

Private clinics

In addition, clinics are engaging in manipulative practices of co-mingling medically unnecessary procedures with OHIP-covered procedures in an attempt to sidestep the Canada Health Act’s prohibitions on user fees and extra-billing. We found examples of huge mark ups, unnecessary add-ons and exorbitant administrative costs levied on patients for access to care. In many cases, clinic staff promoted unnecessary treatments and procedures as medically superior and even medically necessary without any objective disclosure of the evidence about their actual efficacy. Such manipulative practices violate medical ethics. We had done a similar study in 2008, which we shared with the provincial government. (Source: “Eroding Public Medicare: The Costs and Consequences of For- Profit Health Care Across Canada” Ontario Health Coalition, October 6, 2008)

Our current findings show that since 2008 the situation has not improved, and in fact, the fees and user charges have increased, are more widespread and the information given to patients is more misleading than ever.

Public hospitals do not engage in upselling

Under Canadian and provincial law, extra-billing and user fees are prohibited.

Medically necessary hospital and physician care is covered by OHIP and the Canada Health Act. Patients already pay for these services through their taxes and should not be charged any extra fees for access to them. These provisions are cornerstone to the fairness and equity of Canada’s public health care system; embodying the fundamental ethic that patients, regardless of income, should receive medical care based on need not wealth. Ontario’s Minister of Health is responsible for upholding provincial and national law to protect single-tier Medicare.

In recent history, Ontario’s Liberal Ministers of Health have taken a clear stand on this issue and have promised not to privatize clinical services from hospitals, though actual enforcement action against private clinics has been inconsistent. However, our evidence shows that the current Minister of Health is not only failing to uphold Ontario’s and Canada’s Medicare laws, she is now planning to expand the private clinics (IHFs) sector in which many violations of laws protecting single-tier Public Medicare are occurring.

The widespread practice of extra-billing and levying user fees on patients in private clinics shows that the government’s plan to cut services from Ontario’s local public hospitals and contract them out to private clinics poses a significant risk to single-tier Public Medicare in Ontario. If Public Medicare is to survive this shift of services to private interests, significant new regulations and new oversight, monitoring and enforcement costs are required.

None of this work has been done. But even if it were, the evidence shows that clinics have both the motive and opportunity to find ever new ways to co-mingle new user fees with OHIP-covered services and undermine attempts to protect patients. In comparison, Ontario’s public hospitals do not, except in very rare instances, engage in the same extra-billing, upselling of unnecessary treatments and add-ons, and manipulative sales tactics that we found in private clinics.

Public governance under the Public Hospitals Act is the best way to protect the public interest, control costs and shield patients from extra charges associated with needed medical care.

Methods

The Ontario Ministry of Health and Long-Term Care listing of Independent Health Facilities includes 960 private clinics (Independent Health Facilities) offering various health care services.

We condensed this to a list of 133 private clinics that provide the types of services the government will be cutting from local hospitals and contracting out to Independent Health Facilities, including: diagnostic clinics offering MRIs and CTs; eye-surgery clinics offering medically-necessary cataract surgery; endoscopy and colonoscopy clinics; ‘boutique” physician clinics that offer an array of diagnostic services and other procedures; and clinics that offer surgeries. (We included the transcript of an interview that Ontario Health Coalition executive director had with Kensington Eye Institute in December 2013 when she called them to ask the same list of questions that the researchers asked the other IHFs in March.)

We also included two private hospitals that are governed under the Private Hospitals Act because they provide a similar type of high-volume specialist procedures that the Ontario government wants to contract out to private clinics.

Six researchers called the list of 135 private clinics/hospitals and asked how to get a referral to the service; whether an Ontario health Insurance Plan (OHIP) card was needed; and whether extra fees would be charged. Follow up questions to elicit this information were asked depending on what the employees at the clinics said. The researchers transcribed the interviews as they were being conducted. Ontario Health Coalition staff reviewed the transcripts and excluded all clinics that do not provide the types of services that the government is planning to contract out.

Short summaries of the transcribed results are in the section titled “Evidence” starting on page 11.

In addition, the Ontario Health Coalition asked our members to send us patient stories about user fees and extra billing. In most instances, patients were reticent to speak to media about private health care procedures such as colonoscopies and patients who had been charged extra charges by eye surgery clinics did not want to anger their physicians by complaining publicly. In all cases, we checked to see if our findings from calling the clinics matched with the patients’ stories about extra fees. In all cases, they did. Some of these patients agreed that we could include their stories in this report. They are included under the next section titled “Key Findings”.

Key Findings

  • User Fees & Extra Billing
  • Cataract Surgery Clinics
  • Colonoscopy Clinics
  • Private Hospitals
  • Boutique Physician Clinics
  • Self-referral
  • Patient Experiences
Six researchers working with the Ontario Health Coalition phoned 135 private clinics and hospitals to find out whether they charge patients user fees and extra-bill for services. The researchers found that the majority of the private clinics they talked to charge patients user fees ranging from $50 – $3,500 or more.

We found that a significant number of the clinics are violating the Canada Health Act and Ontario legislation’s prohibition on user fees, extra-billing and the sale of queue-jumping. These fees and charges varied depending on the type of clinic. We found administrative fees of $50 levied on patients for nonsensical and unnecessary things such as “a snack” in a colonoscopy clinic and for items that are clearly covered under the Canada Health Act such as keeping patient records.

In eye surgery clinics we found all kinds of fees ranging from a $50 administrative fee to buy a medically unnecessary lens recommended by physicians at the Kensington Eye Institute to thousands of dollars for surgery.

We found huge mark ups on tests and procedures, for example $745 for a colonoscopy, $1,500 for a cataract surgery and up to $900 for medically unnecessary lenses. We found that information given to patients is biased towards upselling medically unnecessary tests and procedures, and in many cases is very manipulative.

In addition, our researchers found examples of self-referral by physicians for tests and procedures in their own private clinics where they have financial interests and charge extra user fees to patients.

Almost all of the private clinics that do cataract surgeries outside of hospitals are charging patients an increasing array of out-of-pocket fees.

In many of the clinics, staff and physicians recommend medically-unnecessary tests and lenses that they co-mingle with medically necessary (OHIP covered) cataract surgery in order to extra-bill patients. In virtually all cases, the information given to our researchers was not evidence-based and was biased towards making the add-ons and medically unnecessary tests and treatments sound like they are medically significant.

Medically-unnecessary lenses for which clinics are charging $200 – $900 or more were described as “upgraded” or “power” lenses, while the OHIP covered service was described as “the old way” and it was claimed or implied that the OHIP-covered services was substandard, less medically safe and more medically risky. New fees that did not exist when we called cataract surgery clinics in 2008 have now been added on.

On average, the clinics are charging $100 – $300 or more for what they call “lens measurement” tests and a variety of other names referring to measuring the eye for the lens implant. Several clinics told our researchers that they would need to pay between $1,000 and $1,450 or more for the cataract surgery.

Our researchers found that private colonoscopy clinics are charging “administrative” fees and “block fees” to patients in addition to billing OHIP for the colonoscopy procedures. At the Durham Endo Surgery Centre our researcher was told that she would have to pay a $50 “administrative” fee for her colonoscopy. When she queried what the fee was for, she was told it covers, “A CD for your doctor, different supplies the physician will need for the procedure, reports to your family physician and a snack.” Such charges are unlawful under the Canada Health Act. Several clinics told us that the physician would talk to the patient about block fees when the patient came into the office. Patients have expressed to us that they find it very awkward and difficult to say no to physicians in these circumstances, and they wonder if they do, will they get worse care? Undoubtedly a direct-ask by the physician to the patient for a block fee would be the most effective way to get the most patients to pay. The Ontario Health Coalition outlined the problem with these clinics charging block fees in a letter to the Health Minister’s policy advisor in early March as follows:

“…there is no reason for a specialty clinic to be charging a block fee at all. Patients do not have an ongoing relationship with these clinics. We have provided evidence – as has the media – that these fees are misused, that patients feel coerced, and that unused portions of block fees are almost never returned to patients even though failure to do so clearly constitutes a violation of the Canada Health Act’s prohibition of extra-billing.”

There are also fully private surgeries being sold for high cost. At the Medcan Clinic in Toronto, our researcher was told that she would get a referral for a colonoscopy from a Medcan physician which requires a $895 membership fees or a $2,595 comprehensive health assessment, then it costs $745 to use the colonoscopy suite. At the Taunton Surgical Centre, our researcher was told that the doctor would discuss with her an optional $60 “block fee”.

Under Ontario’s Private Hospitals Act, the only private hospitals allowed in Ontario are those that were grandfathered in when the public hospital system was being formed. We called the private hospitals we could find that offer similar services to those that the government is likely to contract out to specialty clinics. Our transcripts show that the use of user fees in these private hospitals follows the same trend as the private clinics. At the Shouldice Hospital, our researcher was told that she would have to pay for a semi-private room. There are only semi-private rooms so there is no option and the fee is $250 per night. Since the hospital requires a 3 – 4 night stay, the cost for a hernia surgery at this private hospital is $750 – $1,000. At the Centric/Don Mills Surgical Unit, staff would not disclose costs over the phone, but our researcher was told that the doctor would discuss what type of lens she would need and the associated fees with her.
Another type of clinic that co-mingles medically unnecessary services with medically necessary care in order to extra-bill patients is what has become known as “boutique” physician clinics. Generally these clinics package their products as “comprehensive” or “preventive” health assessments for wealthy executives and their fees range from $2,000 – $3,500 or more. Without question, these clinics are selling enhanced access to physicians. Many advertise medically necessary care such as a physician consult and emergency consult mixed with an array of unnecessary tests.

These clinics feature physicians that over-serve the wealthy and have a low patient case load. It is a model of care that, were it to spread, would reduce access to physicians for many while over-serving the well-heeled. The clinics refuse to see patients who cannot afford the multi-thousand dollar fees. At La Vie Executive Health Centre our researcher was told that if she paid $2,000 for a comprehensive health assessment, she would have access to care but when she asked if she could see a physician without paying extra above OHIP she was told that their “roster is full”. At Medcan and Regal our researcher was told she could not access a doctor without paying thousands of dollars in membership and other fees.

Physician self-referral is a term that describes the practice of physicians sending patients for tests, surgeries or procedures to their own private clinics or clinics in which they have a financial interest. Such practices are widely criticized as a conflict-of-interest because the self-referring physician benefits financially from ordering more tests and procedures and has an incentive to order unnecessary tests and procedures. In the United States, the Stark Law bans self-referral for a number of procedures and tests for publicly-insured patients under U.S. Medicare and Medicaid.

During our phone interviews with private clinics, we found several instances of apparent self-referral that raised serious ethical concerns. The financial incentive to self-refer is clear. For an ophthalmologist that works in a hospital, the choice to refer a patient to his or her own private clinic rather than conduct the surgery in the hospital means that they not only charge OHIP approximately $7303 for the surgery but also they charge patients fees that range from $100 – $ 1,400 per eye for unnecessary add-ons in their own private clinics. In another example, Medcan’s own physicians refer patients to Medcan’s colonoscopy suite where they are charged $745 for a colonoscopy which is an OHIP-covered procedure in hospitals.

3 Ontario Ministry of Health and Long-Term Care, “Schedule of Benefits for Physician Services under the Health Insurance Act” October 1, 2013: Y3.

One of our researchers called TLC Laser Eye Center in London Ontario where ophthalmic surgeon Dr. Bruce Nichols works. Dr. Nichols also works in St. Josephs, the local public hospital. When our researcher phoned TLC Laser Eye Center, she was told that for cataract surgery she would need to talk to the physician’s office at St. Joseph’s Hospital in London and would be referred from there either to TLC (the private clinic) or the hospital for the surgery. She called the doctor’s office at the hospital and was told that her surgery would take place at the private clinic. She was not, at that point, given any option. Upon further questioning she found out that the surgery was also available at the hospital without charge but at the clinic it would cost $1,500 or more per eye. She was given information that made the OHIP-covered surgery sound substandard and more dangerous. She was told that the medically-unnecessary tests and add-ons that cost hundreds of dollars each were medically significant, “better” and showed “improved outcomes”. (See transcript of the interview, page 18).

At the Herzig Eye Institute in Toronto, our researcher was initially told that she would need a referral to get her eye surgery. Then she was told that a referral was not really necessary, she could just go to the clinic and have a consultation in order to get surgery for $1,500. She was told that the clinic was faster than getting service at the hospital and that they ran their own tests and provided a special lens.

At the Medcan Clinic in Toronto, our researcher was told that she could get a referral from a Medcan doctor for the Medcan-owned colonoscopy suite where they sell colonoscopies for $745.

In our interviews, patients expressed confusion about what comprise publicly-insured and uninsured services. Most have no familiarity with these notions, leaving them vulnerable to exploitative fees. The power imbalance in the physician-patient relationship was evident when we asked if the patients – who clearly were not happy at the prospect of being charged user fees for health care – to speak publicly. None of the patients we interviewed were willing to speak to the media about their experiences. This was not a problem of inaccurate stories; we checked out all of their claims by calling the clinics in question directly. They were uncomfortable talking publicly about having private tests like colonoscopies and they were worried about the reaction of the physicians and staff at the private clinics. Despite their fears, the patients agreed that we could tell their stories if we withheld identifying information. The patients’ experiences follow here.

A male patient went to a private ophthalmology clinic in Mississauga. He was told his cataract was getting worse and that he should have it operated on. He was told that he should get an extra lens and eye vision correction which would cost $2,120. He was told the government only pays for one visit and the lens that they pay for is substandard. He told us that he got them down to $1,020 but he was told for that price he would still need glasses at the end of it. The clinic wanted him to go in and pay four days before the operation. They never mentioned that OHIP covered any of the procedure. He found out from friends that he could go to the hospital and get his operation. He skipped the appointment at the clinic and went to the hospital where his cataract surgery was covered under OHIP. He asked that we not use his name publicly because he may have to go back to the clinic someday. He expressed that he did not understand exactly what the clinic was charging for and what OHIP covered. He felt that the clinic was charging a lot of money.

A man who lives in northern Ontario travelled to North Bay in November and December 2011 to get cataract surgery on both of his eyes. Each surgery cost $1,100 for a total of $2,200. Travel costs were covered by the Ontario government travel grant. He said that the physician did not tell him that he had to get the special lens but suggested he needed it. The operation took place in the hospital, but the discussion about the fees took place in the physician’s office where he did the consultation. The patient was confused about what was medically necessary and what was not. He expressed concern that OHIP did not cover any of his medical services – but did not realize that OHIP does cover cataract surgery and that the OHIP-covered procedure was all he needed.

A Toronto man went to a private colonoscopy clinic on Brunswick Avenue. He was referred there by a physician at a community health centre. The colonoscopy was covered by OHIP but the physician at the clinic suggested he pay a donation of $50. He was concerned that he might not get good service if he did not pay the “donation”.

An elderly man had hernia surgery in mid-March at the Shouldice hospital. He has been told that he needs to pay $1,000.

A middle-aged man from Whitby was referred to the Durham Endo Surgery Centre in Ajax for a colonoscopy. Previously, he had a colonoscopy at the hospital. At the private clinic he was charged a $50 administration fee. He asked if the fee was covered by OHIP and the employee at the clinic said he had to pay the fee. He did not know that there is no fee for a colonoscopy.

Background

New regulations to cut services from public hospitals and contract them out to private clinics

Ontario’s government has passed two new legal regulations to cut clinical services from local public hospitals and contract them out to private clinics. The regulations enable the government’s regional health authorities- the Local Health Integration Networks (LHINs) – and the public cancer care agency – Cancer Care Ontario (CCO) – to cut clinical services from local public hospitals and contract them out to private clinics, known as Independent Health Facilities (IHFs). According to Ontario’s Auditor General, more than 97% of IHFs are for-profit. The Ministry of Health has issued policy guidelines to Local Health Integration Networks (LHINs) and requests for applications have gone out. The deadlines for applications are in April and the government is planning to issue contracts by mid-summer.

The decision to change the ownership and governance of public hospital services has not been subject to the democratic processes of the Ontario Legislature. The government passed this change as a regulatory change, requiring only cabinet approval. There have been no public hearings, no legislation and no debate in the Ontario Legislature over this transfer of ownership and control of Ontario’s local public hospital services.

Differences between public hospitals and private clinics

There are significant differences between public hospitals and private clinics. Public hospitals are governed by Boards of Directors under the Public Hospitals Act and the Non-Profit Corporations Act. They have a comprehensive regulatory regime, including: Medical Advisory Committees; Nursing Advisory Committees; quality of care committees that review medical errors and accidents; continuous quality improvement monitoring; public disclosure requirements under the Public Hospitals Act, the Quality of Care Act, and the Freedom of Information and Protection of Privacy Act, and; mandatory accreditation. Though the Ontario Health Coalition has advocated for more transparency, better public access to information and improved responsiveness to patients, the quality and governance regimes for hospitals are far more robust than those for private clinics.

In fact, private clinics under the Independent Health Facilities Act have almost none of these requirements. More than 97% are privately owned and operated without public governance. Even the non-profit Kensington Eye Institute has a closed membership that includes less than ten people, most of whom, according to clinic staff, are former Board Members. Members are appointed by the Board of Directors and who then appoint the Board. Kensington does not allow the public to attend their Annual General Meeting. They will not disclose their financial statements. In general, private clinics have much less oversight for quality, safety and care practices. They do not have the medical, nursing and quality committees of hospitals. They are required to have a Medical Advisor, but the regulations allow clinic owners to be their own medical advisors, an obvious conflict-of-interest that renders this regulation meaningless. They have a recently-imposed inspection regime under the College of Physicians and Surgeons, and different clinics have different types of inspections under the Ministry of Health and the Healing Arts Radiation Protection Act. The Ontario Auditor General reviewed the oversight, monitoring and enforcement regimes of these clinics in 2012. He found poor tracking and inspections. He also found that the Ministry of Health had taken no action on evidence of questionable billing practices in a significant proportion of the clinics.

Ontario Auditor General “Annual Report 2012” Chapter 3.

The prohibition of extra-billing and user fees: the Canada Health Act and Ontario law

The Canada Health Act is federal legislation enacted in 1984, which sets out the conditions for Canada’s public health care system. The Act was precipitated in part by Justice Emmett Hall’s report reviewing health services in Canada, in which he found that user charges and extra billing threatened the ability of the system to provide accessible health care to all eligible residents. Under the Act, all Canadians are to receive medically necessary hospital and physician care on equal terms and conditions without extra-billing and user fees.

In order to qualify for the complete federal transfer of funds for health care, provinces and territories must meet the five criteria regarding publicly-insured health services, two conditions regarding insured and extended health services, and provisions and regulations concerning user charges and extra billing of insured health services. The five principles of public administration, comprehensiveness, universality, portability, and accessibility are enshrined in the Act. The provinces and territories are required to provide estimates at the beginning of every fiscal year of these user fees and extra-billing of publicly-insured residents. Their federal cash transfer is reduced accordingly. The Act states that if user charges or extra billing are found to be present in a province or territory, there must be a mandatory deduction from the federal cash transfer, the amount of which is to be decided by the federal Minister of Health. The mandatory deduction should at least meet the amount extra-billed to insured patients. The federal Minister of Health may base his or her decision of the amount on information received from the province or territory (as stipulated in the Extra-Billing and User Charges Information regulations) or if inadequate information is provided, the Minister may make an estimate of the amount paid by insured Canadians. There are also discretionary penalties based on how serious the non-compliance is perceived to be by the federal Minister, but before penalties may be issued, there must be a consultation process with the province or territory.

In 1995, federal Minister of Health, Diane Marleau expressed to provincial and territorial ministers that private clinics were akin to hospitals in the federal interpretation of the Act, and as such provincial and territorial governments were responsible for paying facility fees to clinics providing insured services (so these fees could not be charged to insured patients).

Extra billing is defined as billing by a medical practitioner or dentist to an insured person for an insured health service that is an addition to what is paid to the provincial or territorial health care insurance plan. A user charge is any charge that is not extra billing for an insured health service. Insured health services refer to physician services, hospital services, and surgical-dental services that are described under the Act (and described in greater detail under each province’s health insurance plan) to be medically necessary. In Ontario, the public understands these services as OHIP-covered services.

Ontario’s Health Insurance Act covers hospital and physician services including but not limited to “laboratory, radiological and other diagnostic procedures together with the necessary interpretations for the purpose of maintaining health, preventing disease and assisting in the diagnosis and treatment of any injury, illness or disability.” Within Ontario, the Commitment to the Future of Medicare Act (CFMA) protects access to insured services by prohibiting extra fees for these services, including any payment that provides preferred access to an insured service. The Ministry of Health and Long Term Care is responsible for investigating potential violations of the CFMA, ensuring the insured patient is repaid if issued a user charge or extra-billed, and communicating with the Minister of Health and Long Term Care, who is responsible for OHIP’s overall operation and administration and serves as the liaison to the federal Minister when it comes to matters of the Canada Health Act.

Conclusion

The Ontario government’s plan to change the ownership, governance and control regimes for clinical services from public hospitals to private clinics has long-term implications for equity and access to care. There are improvements that could be made, but public hospitals operate under public governance regimes that have protected the public interest in key aspects. Quality of care and access to information regimes, though they could be significantly better, are still far superior in public hospitals than in private clinics. Importantly, as this report shows, public hospitals uphold the equity of our single-tier public medicare system and control costs for patients, while private clinics pose a significant threat to these. Beyond the scope of this paper, there are other significant issues such as the negative impact of private clinics as they take scarce human resources and funding out of the hospital system, and the impact on patient travel distances and costs of centralizing high volumes of procedures into specialty centres.

The Minister of Health has the power to more effectively monitor and curtail the extra-billing and user fees that are proliferating in the existing private clinics in Ontario. This will be a continual challenge as clinics adapt to new regulations and oversight and find ways to circumvent the Canada Health Act and Ontario legislation to increase their revenues and their profits. Regardless, the Minister has an obligation to set a much less tolerant tone than she has done to date, and can much more effectively use the resources of her Ministry to take action against the clinics that are violating medical ethics and undermining Public Medicare. Given the evidence, expanding the private clinics sector will worsen the problem of regulating, monitoring and enforcing the prohibition on extra-billing and user fees.

The Ontario government has the ability to set up specialty centres under its existing public hospitals. It has never answered as to why it has chosen instead to transfer ownership and control of clinical services to private clinics. This decision has profound implications for quality of care and equity. Given the lack of proper regulation, oversight, monitoring and enforcement; and given the evidence of extra-billing, user fees, high-costs, misinformation and “upselling” to increase profits at the expense of patients; the government should reconsider its proposal to transfer the ownership of vital health care services to these providers and should instead ensure that health reform happens only under of the Public Hospitals Act. 11

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