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Report to the Ontario Council of Hospital Unions Convention April 2008

Report from Doug Allan, CUPE Research Representative, to the OntarioCouncil of Hospital Unions / CUPE Convention, April 2008 in Toronto.

Liberal government moving back to corporate health care

Prior to the provincial election this past fall our strategy was to work with community partners to place maximum pressure on the provincial government to extract concessions before the election. 

The theory was that in the pre-election period the Liberals should be more sensitive to the concerns of working people and less on that tiny minority of people that make up the corporate world. 

This strategy achieved significant concessions from the Liberals:  [1] the Liberals narrowed the range of CUPE hospital jobs that they would require to be privatized through public private partnerships (P3s); [2] in the heat of the election, the Liberals promised to introduce minimum care standards for long term care residents; [3] the Liberals campaigned against the Conservative party’s proposal to turn surgeries over to for-private-profit clinics.  

But after the election of a Liberal majority, the government has become markedly less open to the concerns of working people and much more open to corporate power.  Health Minister Smitherman, for example, openly attacked public sector unions and the health coalition, claiming that we “want to use the misfortune around patient care incidents to muddle the issue around the nature of the building” (i.e. the Osler P3 hospital).

To maintain the modest momentum we achieved in the pre-election period will require a significant increase in pressure to keep the corporations at bay and stop hospital cuts. 

LHINs, the Competitive Market, and Health Care Restructuring

We have flagged two major sorts of concerns: [A] restructuring (mergers, closures, transfer of services, and cuts in hospital services) and [B] the introduction of the competitive market model.

[A]    Restructuring

As suspected, almost immediately after the election, the pace of restructuring increased.  Two sorts of changes are marked: [1] The creation of region-wide public corporations to take over parts of the hospital industry; [2] Changes in the scope and location of hospital services driven by the hospital budget process.

[1]     The Ontario Ministry of Finance is driving change in the supply chain in the Ontario broader public sector through OntarioBuys.   They are starting with the creation of region wide public corporations to deliver hospital supply chain services.  The first example was Plexxus (formerly called HBS) that would take over supply chain services for 14 hospitals in the Greater Toronto Area.  Initially, the plan was to transfer hospital staff to the new organization.  After concerted union opposition this plan was changed and the staff working in the hospitals would remain hospital staff.  Staff at the headquarters and the warehouse are Plexxus employees and remain unorganized.

Regional supply chain organizations are rolling out in other parts of the province, as part of the government’s overall policy.  Indeed, the government says it is “considering legislation that would require BPS organizations to report on their progress in implementing supply chain leading practices, starting with health care service providers.

The trend towards regionally based public corporations taking over sub-industries within the hospital sector has the potential to have a major impact on employment, bargaining units and our relations with other, affected, unions.

An important victory for CUPE with Plexxus was to get the supply chain organization to agree that affected union employees will remain hospital employees rather than transfer to the supply chain organization (at least for the medium term).  We will have to follow these closely to see if they all follow the Plexxus staffing model or take wayward steps.

  • Once established look for these organizations to move into other areas – e.g. payroll, financials, HR, and into services for other health care organizations.  
  • Look for provincial government support for regional supply chain organizations in other parts of the broader public sector – hospitals are merely the first sector. 
  • Look for increased privatization in such regional organizations.  Regionally centralized organizations are of much greater interest to the corporations than operations dispersed over the country-side.   Indeed, corporations may well be in on the ground floor planning or advising on the re-organization.  One rationale for privatization will likely be to defer (temporarily) the infrastructure or new technology costs to the for-profit corporations
  • Organizing opportunities also exist in these new regionally based organizations (specifically in head offices and warehouses – staffed by employees of the supply chain organization).   Organizing these groups should give us a hand up in future restructuring – which is almost inevitable – and any associated representation votes. 
  • Look for other regional sub-industry organizations to be established that will both fragment and regionally centralize hospital work (we are currently dealing with such a case in the Champlain LHIN — hospital labs – see immediately below).

Other New Regionally-Based Corporations Likely

EORLA was created in the mid-1990s to integrate hospital laboratory services in eastern Ontario.  This led to some consolidation of laboratory services, but the promise was made that hospital laboratory employees would not be transferred.  To date that promise has been kept.

EORLA now wants to go back on that promise.

After the provincial election, the provincial government announced that it was pressing ahead with a reform that would take hospital employees out of area hospitals and transfer them to EORLA, which would become a regionally based corporation, separate from the hospitals.  This, they propose, will affect all employees funded through the hospital laboratory budget: laboratory technologists, technicians, office staff, etc.  

Here are the key points that documents about this reform indicate:

  • EORLA will be a model for other services within the Champlain LHIN
  • The model for delivery of laboratory services in EORLA will be closer to the private laboratory service delivery model.
  • The plan is to reduce staffing costs while also budgeting for more funding for management.  They targeted a 6% savings in staff costs and use an estimate of $1 million annually for recruitment of a CEO, a Medical & Scientific leader, an Operations leader, an HR/Organizational Effectiveness leader, a Projects (PMO) leader a Financial leader, and an IS leader.
  • They foresee only very miniscule savings over ten years (the ‘target’ is a savings of 1/3 of 1% after ten years).  But even this estimate does not deal with some key aspects of laboratory services. 
  • The costing was completed without a human resources plan (so they have to use a ‘placeholder’ estimate of severance costs of $2.2 million). 
  • Notably, plans also estimates that there is a potential for even greater losses, if EORLA is required to borrow rather than receive special grants (presumably from the government).
  • Microbiology is supposed to be centralized to one site.
  • Support functions for financial management and accounting are to be contracted out at the start of full implementation.
  • A 3rd party review calls for membership from hospital representatives on the EORLA board to be reduced while membership from other key stakeholder groups will increase.  Not all hospitals will be represented on this board and a majority of board members will not be from a hospital.
  • The report was developed while much remained unknown.  For example, it was developed without a comprehensive human resources plan, a key part of the proposed reform.  As a result, the report notes:  “This means that the business case (including the employer model) will be approved before assessing the full HR implications.  E.g. costs, turnover, retention issues and strategies, training requirements, morale issues and strategies, relocation requirements, matching current positions and people to the future organization, identifying gaps and duplication and addressing these.“ 
  • EORLA was not able to answer many of our questions at a March meeting.  Some new information was revealed, however.
  • The General Manager of EORLA is currently an employee of Gamma Dynacare and will continue so for an interim period.  A CEO for EORLA will be hired, followed by other management staff.
  • The Champlain LHIN will require hospitals to accept the transfer of laboratory employees in the 2008-2010 Hospital Service Accountability Agreements (a document in which hospitals are supposed to sign).
  • The funding model is changing.  The plan is now for the hospitals to pay for EORLA services.  EORLA states that much remains to be figured out about this funding model, but the LHIN will not directly fund EORLA.
  • EORLA was unable to answer many of our questions:  Will it propose separate bargaining units for lab technologists and office workers, or will office staff be lumped in the laboratory technologist bargaining unit?  Does it see this reform as a contracting out?  Will it rely on the Public Sector Labour Relations Act?

And there are many other unknowns:

  • Will other services eventually be centralized? 
  • What role will Gamma Dynacare assume?
  • Will other EORLA services be contracted out?

We are concerned that this model will open the door for a bigger role for for-profit corporations, either by taking over parts of laboratory services or, eventually by taking over EORLA.

We are concerned that smaller hospitals may lose laboratory services, or laboratory expertise.  These jobs are important for the ongoing vitality of smaller hospitals and the ongoing vitality of smaller communities.  The removal of representation of many smaller hospitals from the EORLA board also raises concerns about their ability to defend community interests.  Indeed, the removal of a hospital majority on the board raises concerns more concerns.

This is not the first instance of the Liberal government’s push to regionalize services.  In the Greater Toronto Area, the Liberal government prodded hospitals to develop a regional supply chain.  At first, the proposal was also to transfer affected employees to this new regional entity.  CUPE and other unions opposed this plan.   Faced with significant opposition, the new corporation changed direction and agreed to keep employees as employees of the hospital. 

So it is troubling to see that the new model is for hospitals to divest themselves of staff. 

If this becomes the model in the rest of the province, many more employees could be forced to move from the employment of the hospital to other new regional entities.  Hospital bargaining units and hospital bargaining unit power could be seriously undermined.

Finally, I note that the provincial auditor, Erik Peters, said the body overseeing the last major restructuring of hospitals (in the 1990s) dramatically underestimated restructuring costs: it would actually cost $1.8 billion more than the original estimate of $2.1 billion.  One might well wonder why the Liberals think this round of restructuring will be more successful.

[2]     Hospital Budgets

A key tool for the government to achieve their restructuring plans is the hospital budgeting process.  Many hospitals are facing deficits – deficits that they are not allowed to have.  As a result many still have not signed Hospital Service Accountability Agreements with their LHIN.  Others have only been able to sign it by agreeing to leave the second year open.

Through this budget process we are seeing some significant changes.  Rouge Valley Health system, with sites in Ajax and Scarborough is lead example. 


Following a ‘peer review’ late last year that alleged management shortcomings and inefficiencies, the Rouge Valley Health System signed an agreement with the LHIN to accept the peer review recommendations.

Subsequently the Rouge adopted a plan to deal with the debt and deficit.  They believe that Rouge is inefficient compared to other hospitals and that the Rouge could deliver existing services within its funding.  The plan is to cut costs by $25 million over 3 years, with a cut of 220 jobs (including 195 union jobs).  That’s 7.5% of the workforce. 

The plan cuts 36 beds (including 12 cardiology, 14 CCC and Rehab, and 11 surgery) and cutting $4.5 million through (unspecified) ‘non-clinical benchmarking’.  Full time nurses will be reduced from 80% to 70% of the nursing compliment (as per MOHLTC minimum requirements).  The hospital will focus on ‘core services’ as defined by the LHIN.  There is significant concern about trying to maintain safety during this plan, including concern about infection control. 

Essentially, the plan is to treat the same number of illnesses, but with 220 fewer workers.  This is what we face from the government.  And to date, at least, it appears they have found a CEO who is willing to play along with them. 

The local community was outraged, with a 1,000 person town hall meeting in Ajax and banner newspaper headlines in Toronto.  The Ajax community was particularly outraged about the plan to move 15 mental health beds from Ajax to the Centenary site of the Rouge in Scarborough

In response to the public furor, Health Minister Smitherman began to lay out some of the new funding hospitals will receive this year. 

Much of the new money is targeted money – money that must be spent as the provincial government demands.  In the past, local hospitals were allowed to use new funding to meet community needs.  This sort of global funding is now being reduced.  Of the 6.1% increase in hospital finding this year, so far only 2.4% is for global (or ‘base’) funding.  The rest goes to programs where the provincial government can claim credit.  So, much of the new money goes to reducing ‘wait times’ in selected areas.  And the government never misses an opportunity to brag about what new reductions in wait times they have achieved.

Existing programs, however, are starved.  The 2.4% increase is not enough to cover off inflation in the hospital sector.  The head of the Ontario hospital association Tom Closson responded to Smitherman’s announcement by saying “If a hospital receives less money for inflation than inflation actually is, then they have to look at what cuts they can make….For a good chunk of the hospitals, it’s going to be difficult to balance their budgets.”  And for hospitals, like the Rouge, with serious deficits, the problems are even bigger and the cuts are bigger.  

An OHA advisory on tactics for negotiating with the LHINs warns hospital boards not to sign any agreement unless they can meet their obligations.

The Rouge’s response to Smitherman’s ‘announcement’ of new money was simply to assert that they would continue with their plan to slash jobs.

The monies announced to date do not include another $170 million that will be announced later this year.  That will move the funding increase from 4.9% to 6.1%.  The government says “Emergency Room wait time reductions will be a target of these resources.”  If so, that’s more targeted funding. 

With the community, we are organizing a rally in Ajax in early May.  This is only the latest clash over hospital services this year: we have also seen spirited fights in Kingston, Midland and Penetang, Uxbridge, and Kenora.

Having a hospital board and a hospital CEO with enough guts to stand up for their community and push back against government austerity is very important.  It is evident, however, that this is not always the case.  Here’s what the boss of the South East LHIN said about the fightback by Kingston General for funding:

Huras said the LHIN went to Smitherman about KGH three or four weeks ago because the Kingston hospital - the main tertiary care centre in southeastern Ontario - made no attempt to reduce its estimated 2008-09 deficit over the past year. “Kingston GeneralHospital is projecting the same deficit as they did 10 months ago,” he said.  When asked if the hospital, under President Joe de Mora, may have purposely engaged in a stalling tactic to force the LHIN to cover the deficit and by enlisting public support for the ploy, Huras admitted it is a possibility. “What you just said is (something) that has crossed my mind,” he said, but added that would be speculation about what may have brought on the showdown between KGH and the LHIN.’

[B]    Introduction of the Market

LHINs and related restructuring opens up several areas for the introduction of a “competitive market model” for health care delivery:

    1. The purchaser/provider split between LHINs and health care provider organizations.  This split distinguishes LHINs from regional health authorities in all other provinces.  Regional authorities in all other provinces directly deliver services.
      1. The introduction of pricing and purchasing of hospital surgeries and procedures.  This “fee for service” system has, initially been introduced through the government’s new “Wait Time Strategy”. The government continues to expand this funding model into new areas while global funding is held back.
        1. The government has also begun to turn surgical and diagnostic work over to independent clinics, rather than hospitals:  The Kensington surgical clinic is the lead case.

        Given these steps, it is only surprising that it took as long as it did for Conservatives like John Tory to call for full-fledged privatization of surgeries.

        John Tory and the Conservative party campaigned in the last election for for-profit surgical clinics.  His claim that the lack of hospital operating rooms is causing delays is ridiculous.  Hospitals, as easily as for profit clinics, can build new operating rooms.  The shortage of doctors and other professional staff is a factor but for-profit clinics will make this worse by stealing staff from public hospitals - especially hurting small and rural communities who won’t have the bucks to retain staff. 

         A cooperative model of health care, where providers work together, share best practices, and create seamless care for patients is the opposite of the competitive market model.  Indeed, cooperation, sharing, and seamless care make the competitive market model impossible.

        As privatization has developed, many unions have become more open to it.  As a way to increase their market share, corporations will sometimes make deals with unions to allow them to represent their workforce, in the hope that their opposition to privatization will decline.  This is becoming an issue in Ontario

        Finally, in another less than promising sign from the Liberals, Shelley Jamieson has been appointed the new Ontario government cabinet secretary, the head of the OPS and perhaps the 2nd most powerful job in government (after McGuinty’s).  Here’s some highlights of her career over the last ten years:

        • Jamieson joined Extendicare (Canada) Inc. in 1998 as Vice- President, Eastern Operations and became Executive Vice-President. In April 2000, she became president of Extendicare (Canada). 
        • She was also the former executive director of the Ontario Nursing Home Association (a predecessor of the Ontario Long Term Care Association that represents for-private-profit nursing homes).
        • Finally she was a Commissioner of the Health Services Restructuring Commission, a body which ordered the closure of numerous hospitals.

        Competitive Bidding

        In 2004, the provincial government was forced to suspend competitive bidding in home health care services.  The Liberals brought back competitive bidding in late 2007 after tweaking the system.  Nevertheless the new model proved just as unsuitable and the government had to suspend the system again.  CUPE (including OCHU) has been campaigning hard to use this opportunity to stop competitive bidding once and for all and bring in a public, not for profit home care system.  So far, the Liberals have resisted any public hearings on this matter and claim they will bring back competitive bidding yet again. 

        This shows how closely related the interests of workers in different health care sub-sectors are.  Stopping competitive bidding in home care will make it very difficult for the government to introduce it in hospitals or homes.  

        Long Term Care

        A concerted campaign by unions and the health coalition led to some movement during the election on staffing standard.  McGuinty was obliged to promise minimum standards of care during the election.

        Since the election Shirley Sharkey has been appointed to review long term care regulation.  It has become apparent that she and the Liberals will resist minimum staffing standards. 

        Nevertheless, this is a first instance where we have been able to move off the defensive and on to the offensive.  The LTC campaign has had a modest first step forward, with the promise in the Ontario budget of 4,500 more nurses and PSWs for the sector over the next 3 years. This is not a staffing standard and is far from solving the problem, but it is a modest step.

        The for-private profit operators remain formidable opponents of a minimum staffing standard.

        It’s notable that the Ontario Provincial Police began investigating a defunct Hamilton-based chain of nursing and retirement homes that went bankrupt five years ago, according to a document obtained by The Spectator (25 February 2008).   

        Royal Crest Lifecare Group, a chain of 17 nursing homes across southern Ontario, went bankrupt in January 2003 with about $180 million in liabilities. Royal Crest owed the MOHLTC $4.4 million when it went bankrupt (and $18 million to the government in total). The Spectator’s investigation at the time showed that Ontario’s health ministry had provided more than $500 million to Royal Crest in slightly more than a decade leading up to the chain’s collapse, but the ministry hadn’t conducted its own audit of the company in the three years prior to the bankruptcy.  Ontario’s health ministry has turned over the results of a long-awaited forensic audit of Royal Crest to the OPP’s Anti-Rackets Health Fraud Investigation Unit for examination.

        Notably, the brothers didn’t provide plausible explanations in court for what had happened to the $4 million they earned in the few years before their ‘bankruptcies’.

        The OHC

        The Ontario Health Coalition continues to be a very valuable ally on public private partnerships, health care privatization, long term care reform, and restructuring.  I want to encourage CUPE locals to continue to work with (and fund) the OHC and its local affiliates.  Their struggle for universal, accessible and public health care is our struggle.

        We are building a major rally with the Ontario Health Coalition for early June to demand an end to competitive bidding, an end to P3 hospitals, minimum staffing standards in long terms care homes, and adequate hospital funding. 

        Hospital Acquired Infections (HAIs)

        HAIs infect over 200,000 patients in Canadian hospitals every year – 8,000 or more die. More are infected in nursing homes.  OCHU and CUPE have campaigned on HAIs (such C. Difficile, MRSA, and VRE) for several years to raise awareness of this issue and to connect it to the need for high quality, publicly delivered health care support services.  Importantly, the media is more often connecting this issue to the need for high quality hospital cleaning.

        More evidence of the importance of high quality environmental services is emerging.  For example, an infectious disease expert reports that 47 per cent of toilets used by patients with C. Difficile in Winnipeg hospitals had toxic bacteria spores on them.   One in 10 toilets had C. Difficile bacteria on them even if the patient using the washroom wasn’t infected with it.  “The reality is if it may look clean but there may be a lot of spores there.”   The researcher, Dr Michelle Alfa, added: “I think it’s time for us to look at the staffing and the compliance with housekeeping…We need to make sure we have adequate guidelines, adequate timelines and adequate staffing to get the cleaning done properly.”

        The Quebec coroner has fingered poor hospital hygiene in the the deaths of patients at Honoré-MercierHospital from C. Difficile (a common Hospital-Acquired Infection or ‘HAI’).   The coroner, Catherine Rudel-Tessier, concluded the principal problem was management’s need to save money - and its decision to skimp on appropriate prevention measures.

         The inquest heard repeated accounts of poor hygiene at the hospital in Saint-Hyacinthe including bed railings and stethoscopes that weren’t properly disinfected before repeated use.  Angry family members told the inquest they encountered stomach-churning conditions when they brought ailing loved ones to the hospital, including balls of dust, dried blood and pools of urine in the emergency room.

        “Things have to change.” Ms. Rudel-Tessier said.  ”We must put more resources into the prevention and control of these infections. One death is too many.”

        The (new) interim director of the hospital insisted Honoré-Mercier has changed its ways: it now produces a daily report on infection rates,  has hired new permanent cleaning staff, and has allocated more funds for disinfection procedures.  Following a recent C. Difficile outbreak in the Sault Ste. Marie hospital, cleaning staff were also increased.

        Bottom line:  Hospital support staff play a vital role in hospitals.  Hospital Acquired Infections (HAIs) are becoming more virulent and more difficult to treat. Hospital managers and politicians must know that they will be held to account if they cut corners by privatizing or slashing cleaning services.    Basic standards of care such as a clean environment should be the last thing to suffer— it is always easier to prevent an illness than to cure it.  Consistent, high quality disinfection of surfaces is required in hospitals. 

        The increase in post-infection cleaning is becoming commonplace with these outbreaks.  But better pre-infection cleaning – to prevent infections – would be a better antidote. We are beginning to receive reports of significantly increased budgets for hospital cleaning. 

        Finally, a key ministry of Health and LTC advisor on this issue has advocated public reporting – something we strongly support.   Reportedly, the OHA and the OMA have been meeting with the MOHLTC to implement a reporting system for HAIs.  That includes how it will be conducted, measuring of infections, how the data will be collected and to whom hospitals will report. 

        Public Private Partnerships

        The provincial Liberal government continues to pursue “P3” hospital projects. 

        This issue continues to be a major issue in the local communities saddled with these projects.  We expect about twelve or thirteen such projects.  It is apparent that many other hospital projects (perhaps 25) will not be blighted by long term private financing and the privatization of jobs.

        More work is needed to intensify the union and community campaign against the P3s.

        CUPE Health Care Workers across Canada

        Work through the CUPE National Health Care Committee continues to be an important way to broaden and deepen our struggle for public health care.  The scary role of Stephen Harper and the federal Conservative government may well make this work even more important.

        COPE 491/dm

        H:NATIONAL REPSDoug AllanReport to the April 2008 OCHU Convention - Apr 22-08.doc