Another early issue for me was the reversal of some of the previous government’s privatization schemes, including the outsourcing of diagnostics (MRIs and CT scans, etc.) to for-profit clinics. In our platform, we had promised to “end the Harris-Eves agenda of creeping privatization,” which we did going forward. However, when we got into office, we soon realized that a complete reversal would be prohibitively expensive in both time and money. So we allowed the private clinics to stay in business if they repos-itioned themselves as non-profits. Earnings for employees were acceptable, but not profits for the operation.
Renegotiating the P3 (private-public partnership) hospitals that were already in the works in Brampton and Ottawa was incredibly difficult. These new hospitals, both very badly needed in their communities, would have been delayed for years by cancellation, so we insisted on fundamental changes to the contracts that ensured long-term control remained in the name of the public hospital corporation. In the case of Brampton, the contract, nearly six thousand pages long, was made available for public viewing. That also was a first.
Upon arrival, I became familiar with the ministry’s traditional manner of building new hospitals. The hospital in Thunder Bay, with a three-storey atrium, was just being completed. Its cost had spiralled from an initial estimate of $140 million to a final price of $284 million, an overrun of more than 100 percent, with all of the risk borne by the province. It was in response to Thunder Bay that I coined the phrase “tajmahospital with glass atriums in the sky,” and for every day since I have had architects tell me how efficient atriums are. “Fair point,” I tell them, “but when a new hospital design forces employees to travel 50 percent farther in a shift, then maybe we weren’t focusing on the right things.”
In short, the traditional model had left plenty of room for improvement, including the annoying and expensive habit of allowing “change orders.” These are better described as blank cheques for construction companies asked to make changes while construction is already under way. Possibly because the plans weren’t studied in fine enough detail at the outset? To move a wall in the CEO’s office after construction has begun is costly, but nobody was exercising constraint on behalf of the province.
The media were always attracted to events that involved Ontario’s hospitals.
The Conservative response had been to hand the responsibility for hospital construction over to P3s. In opposition, we had been against them. But once in office, various forces combined to force us to rethink the issue. The problem was that the P3 label had become toxic. So we invented a new one — “alternative financing and procurement” (AFP) — and stipulated that, at the end of each agreement, ownership of the hospitals and the hospitals themselves must revert to the public domain in excellent working condition.
While the AFP model has its critics, particularly in the labour movement, it has been widely heralded. Without AFPs, it is very doubtful that the remarkable rebuilding of Ontario’s hospitals in the past decade could have been achieved, even if we had had the fiscal capacity to pay the price under the old model (which we didn’t). David Caplan, who was minister of public infrastructure before we switched positions in 2008, deserves much of the credit for this. Under his leadership, the government became much more sophisticated in asset management than it had been. And it was a necessary change in direction because so much of our public infrastructure — not just hospitals — had been built in the 1950s and was badly in need of replacement by the early twenty-first century. Unfortunately, many people still have the misconception that P3s (or AFPs) are free. They aren’t. At the end of the day, the government still has to foot the bill. But, like a mortgage, it is paid off over a lengthy period of time.
My biggest headache at Health was not capital spending, however; it was operational expenditures. The ministry was chronically over-budget and so was imperiling the government’s overall fiscal situation and badly undermining the ministry’s regard within the government. By the time I got there, the central agencies of government (cabinet office, finance ministry, Treasury Board) had lost all confidence in the ability of the health ministry to stay within budget. And the biggest culprit was the hospital sector, which customarily ran over-budget by hundreds of millions annually and then demanded bailouts from the government. Convenient as it might have been to let the hospitals off the hook because they have a tough and vital job to do, I instead drew a very firm line in the sand, with the premier’s backing. First, I had to make the hospitals believe that I meant what I said.
The showdown came at a meeting at the Microsoft headquarters on Mississauga’s “Pill Hill” (as it is known, because it is home to many pharma-ceutical companies). Tony Dagnone, CEO of London Health Sciences, chair of the Ontario Hospital Association, and thought to be no friend of Liberals, took centre stage to tell me the facts of life in the sector. I told him and his expensive suit that there was a new sheriff in town who was packing a concealed weapon (“accountability agreements,” as they came to be known). Word of the dramatic encounter spread. Soon after, Lawrence Bloomberg, the prominent financier who was then chair of Mount Sinai Hospital, gave me a sheriff’s badge, which I placed in the middle of my desk as the most precious among my many keepsakes. I have had to fight off advances from both my children, Kayla and Michael, to claim it as their own.
This event reinforced my view that the hospital CEOs had to be put squarely on the hook. Accordingly, I shaped legislation that would require their hospitals to sign accountability agreements committing them to balance their budgets within a two-year time frame. If they failed to balance, the CEOs’ salaries would be docked. This was an attention-getting device. It was all about reversing the onus, and it worked. But like a good tennis match, onus can pass back and forth. The hospitals now had to tell us how they would get back to balance. It was a trade-off. On the one hand, we could have just told them to arrive at a balanced budget however they wished, and they would have immediately exacted a heavy toll on the government with hurtful cuts to patient services. On the other hand, signing off on proposed cuts meant we owned them.
A more particular problem was the limited capacity of the ministry to evaluate 154 proposals covering $13 billion in spending within a period of weeks or short months. There simply wasn’t the in-house expertise to evaluate all that detail. Hence I called in reinforcements in the best form I knew: consultants Michael Guerriere and John Ronson. Guerriere, a medical doctor and former executive vice-president at Toronto General Hospital, was managing partner of the Courtyard Group, a health care consulting firm. Ronson, a lawyer with Liberal ties, was co-founder of Courtyard. I had known these two guys for decades and appreciated their depth of knowledge in the field. I was convinced that, if we were going to analyze the hospital’s budgetary proposals properly, I needed somebody on our side with real-world experience — that is, somebody who knew where the bodies were buried in the numbers. So I instructed the deputy minister of health, Ron Sapsford, to get these guys into our stable. Why no tender? I had three days, not three months, to get the job done. This decision proved to be one of the most consequential during my time as minister of health. While the controversial matter of a sole-source contract later drew all the attention, I haven’t any doubt that the move saved billions of dollars for the province.
That said, the hospitals now had the upper hand in how cuts would be characterized. And they knew we were vulnerable when it came to nurses. One of the features of nursing contracts is that if there is a change in role, the nurse is laid off and then rehired, resulting in many “layoffs” where no job was actually lost. This phenomenon created a tremendous communications challenge for us, because the budgetary proposals from the hospitals included a total of 857 layoffs of nurses. Since we had campaigned on a promise to INCREASE the number of nurses, this was, to say the least, awkward for me and the government. Even though I knew the number was largely an illusion, it was nearly impossible to communicate that fact. The Star ran with the “857 layoffs” story, and Elizabeth
Witmer, my Conservative critic and a former health minister herself, latched onto it. This was richly ironic, given the way nurses were demeaned by the Harris government. (As premier, Mike Harris had compared nurses to workers in a hula hoop factory.)
To fight back, I brought together Doris Grinspun of the Registered Nurses Association (the professional body) and Linda Haslam-Stroud of the Ontario Nurses’ Association (the union) and created a $25 million nursing retention program, a safety net of sorts for any laid off in the budgeting process. Grinspun and Haslam-Stroud were named as trustees of the fund. Quite recently, the press reported that none of the money was actually spent. The good news is that this fact proves the spate of predicted layoffs didn’t occur. The bad news is that, because the funds were made available on an emergency basis, we used a year-end funding mechanism that left little capacity to claw the money back once distributed. The trustees were left in control.
With Doris Grinspun, a key stakeholder as leader of Ontario nurses.
There was another financial runaway train when I arrived at the ministry: prescription drugs. The cost of providing these drugs under various government programs was rising at a double-digit annual rate — an increase of 140 percent since 1997. I slowed the pace down dramatically through an ambitious piece of legislation called Bill 102, “Transparent Drug System for Patients Act,” which reshaped the pharmaceutical landscape in Ontario. Introduced on April 13, 2006, and passed into law on June 19, the bill was more than just a pricing mechanism. Rather, it was a highly complicated balancing of interests in the pharmaceutical system, which has a lot of moving parts: pharmacies (independents and chains), pharmaceutical companies (brand-name and generic), prescribers, and patients.
To get the pharmacists onside, I increased their compensation for using their expertise to advise patients. In effect, what I did was force a change in their business models. As a former shop-owner myself, I knew that retailers normally face their customers. But customers mostly saw the backs of pharmacists as they prepared prescriptions. I wanted to get higher value from pharmacists by turning them around to talk to their customers and to counsel them on the appropriate use of their medications. After all, a pharmacist has six years of education, the same as many practising doctors. We needed to make better use of their training.
The pharmacists welcomed this change. However, they did not appreciate the quid pro quo: limitations on the promotional rebates (I called them “kickbacks”) they were getting from generic drug firms for favouring their products. Many pharmacists said Bill 102 would drive them out of business. This was a concern for me. I did not want be remembered as the health minister who caused the death of the community drug store. I applied the “Tweed test” to our policies to make sure that didn’t happen. (Tweed is a bucolic town in eastern Ontario with a population of six thousand. The policy was designed to ensure that towns like Tweed, with only one non-chain pharmacy, did not lose their drug stores.) As a result, only one pharmacy actually closed, and it operated only a few days a week anyway.
As for the pharmaceutical manufacturers, we proposed to use the government’s bargaining power as a major buyer of prescription drugs to force down their prices significantly. Not surprisingly, they reacted negatively. I was lobbied heavily on the issue by both the brand-name companies and the generics. The generic firms, in particular, hated Bill 102, even though it proposed greater interchangeability of their products with the brand-name drugs. The generics were afraid we would hold down their prices but not their expenditures (the rebates). The most heated intervention I recall was from Barry Sherman, founder and CEO of Apotex, the generic giant. (A decade later, he and his wife were found brutally murdered in their Toronto home; the case is still unsolved.) Sherman was a very smart man with many admirable qualities, but he was far from reserved in advancing his point of view. At a meeting in my office, I held my ground, but Sherman warned me: “Minister, this won’t be the last time you hear from me on this matter.” Indeed, it wasn’t, but the policy prevailed and the players have adapted.
The brand-name companies, most of them foreign-owned, also had their grievances. I remember meeting with the CEO of one Big Pharma company in the lobby of a Toronto hotel. His firm had developed a drug to treat schizophrenia, and he was offering it to me at a discount (nudge nudge, wink wink). I was tempted by the proposition, but I was also struck by how isolated I was in making a decision like this. Why should a politician be the direct arbiter of such medical issues? So, under Bill 102, I shifted the decision-making structure around drugs in Ontario to limit the political input and expedite decisions.
I believe that the decision to delegate my powers to an executive officer who was then empowered to enter into competitive agreements has been one of the most transformative initiatives influencing public drug pricing across Canada.
Many of the brand-name pharma companies were more perturbed by the proposed constraints on their prices. They felt the Ministry of Health was motivated by cost savings (it was) and had ignored their investments in Ontario, where several of them had branch plants involved in both research and manufacturing. They went over my head to Premier McGuinty, who at that time was also serving as his own minister of research and innovation. In that role, he would attend the annual American Pharma conference, where representatives of Big Pharma lobbied him and threatened to pull their investments out of Ontario. But I never felt undue pressure from the premier — the kind of pressure exerted unhelpfully when you are asked to make a win-win out of opposing principles or objectives. This was a test of his backbone, and he had plenty of it.
The pushback against Bill 102 also caused some turbulence for my colleagues in cabinet and caucus, particularly the threat of rural and remote pharmacy closures. But the reforms were projected to shave costs of $200 million in the first year, and the finance ministry had already taken that amount into account in its calculations for my ministry’s budget. So if my colleagues were opposed to the adjustments in Bill 102, they knew the $200 million would have to be found elsewhere. That’s the rub in politics. It is often appealing to give in to the demands from interest groups, but if you do it too often you soon bump up against fiscal reality. Government is all about the allocation of scarce resources. For ministers and senior bureaucrats, that tension is part of their daily routine.
One last word on prescription drugs: the system would work far more efficiently if there were a national pharmacare plan instead of ten provincial ones, which sometimes work at cross-purposes. I was constantly mystified by the lack of interest in this idea in Ottawa. Given the federal role in the regulation both of drugs and of international trade, it would seem to be a natural shift of responsibility. But the federal government, under both Liberal and Conservative leadership, always shied away from it, seemingly because of the potential cost pressures. I had given up hope that it would ever happen. However, just recently the federal government, under Prime Minister Justin Trudeau, has signalled its intention to launch a national plan. I hope it comes to fruition. But if it doesn’t, I think we should consider three or four regional prescription drug plans, with Ontario teaming up with the Atlantic provinces both to exercise our purchasing power and to agree on a common drug formulary. That would likely both save money and expand coverage.
The latter — which drugs are to be covered by government plans — is a tricky issue. I was repeatedly hammered, often on totally unscientific grounds, about the lack of coverage for new cancer drugs. Because cancer touches almost every family, an emotional argument can be made in favour of covering any and every new drug. People see us at war, with cancer as the enemy. “We must defeat it, at all costs,” they say. So there was enormous pressure on me to make decisions that would cost the government tens of millions of dollars to pay for products that, at best, would add weeks to a cancer victim’s life. Andre Marin, the provincial ombudsman, was the source of much of this pressure. He went well beyond his mandate to articulate the idea that EVERY cancer drug should be funded, regardless of
its efficacy. There were also numerous newspaper stories — notably by Lisa Priest of the Globe and Mail — about cancer victims desperate for a new drug that was financially beyond their reach. These stories cut me to the bone; I took them very personally. But emotion and hope cannot be our only guides in health care decisions.
* * *
My term as health minister was not all about spending restraints. Far from it. There were also major investments in the sector, notably in mental health, an area that had been underfunded for too long. My first announcement as minister came at St. Joseph’s Healthcare in Hamilton. It was also the occasion of my first unburdening. “We are all touched by mental health problems, and the people who say they aren’t are liars,” I said.
For a roadmap to reform, I turned in part to a report that had been prepared for the previous government by Michael Wilson, the former federal minister of finance under Brian Mulroney. Having lost a son to depression and suicide, Wilson had become a strong mental health advocate. But after asking for his advice, the Tories never formally received his report. That’s an even worse fate than having your report shelved. I received the report and made it public, against the advice of many. (I was told it would increase pressure on me to spend more. I said: “Who cares? It would be about time, and why shouldn’t mental health get to call out for resources since everyone else does?”) The Wilson report recommended a pivot away from the acute-care model for mental health to a community-care model. I increased annual spending in the area by $185 million. It still wasn’t enough, but it was more than my predecessors had accomplished in the sector, which was the square root of zero over ten years.
We also made significant new investments in primary care, notably in the establishment of the aforementioned family health teams (FHTs). Because of underfunding of primary care by the previous Conservative regime and the deliberate restriction of new doctors by the NDP government in the early 1990s, we faced a dire situation when we took office: the looming prospect that millions of Ontarians would have no family physician. We dramatically increased the supply of physicians: there are 15 percent more today than in 2003, and family practice has flourished with the introduction of new practice models.
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