OCHU

Pre-Budget Submission

for the

2010/11 Ontario Budget

to the

Standing Committee on Finance and Economic Affairs


Presentation

by the
Ontario Council of Hospital Unions / CUPE

Helen Fetterly, Secretary-Treasurer
Louis Rodrigues, First Vice-President
Doug Allan, CUPE Research




Kingston
Friday, January 29, 2010
10:15 to 10:30 a.m.
Four Points Sheraton, 285 King Street East
Limestone Ballroom C.

We would like to first of all thank this Standing Committee for allowing us to present our thoughts on the unusually important 2010-2011 provincial budget.

The Ontario Council of Hospital Unions (OCHU / CUPE) represents 23,000 nursing, service, and office workers employed by 65 Ontario hospital or health care facilities. While a large majority of OCHU members provide hospital services, some OCHU members work in long term care facilities or in Emergency Medical Services, usually (but not always) under the auspices of a local hospital board.

We have freely bargained our last four central collective agreements with the hospitals without having to resort to interest arbitration. Our central agreements have set the pattern for other workers in similar classifications in other hospitals.

We consider Ontario hospitals a key gain for all working people. We are very proud to work in hospitals and the public health care system. We like to consider ourselves one of the most dedicated advocates of Ontario hospitals and public health care.

So it is with dismay that we come before this committee of the provincial legislature.

The normal hospital budgeting process has broken down, due to the low level of funding increases suggested by the government and the uncertainty that remains about the exact level of funding for 2010-11.

This past fall, hospitals were supposed to submit Hospital Annual Planning Submissions (HAPS) and then sign on to two year Hospital Service Accountability Agreements
(HSAAs) that would set out funding and service levels. This has gone by the way-side.

The vaunted role of LHINs as funders of health care providers has been shown up
as a sham, as even they do not know where funding will end up. Now the hospitals budgeting process has been reduced to hospital management submitting in December “Management Planning and Risk Report” slide shows (MPRRs). To us, “Risk Report” does not sound like a promising name.

Budget shortfalls are driving restructuring and closures. In recent months we have seen the shut downs of emergency rooms and, now, hospitals in Burke Falls and Shelburne. Our members have received hundreds of layoff notices.

Unlike the hospital restructuring and closures of the 1990s, there is little planning evident. The hospitals report that their working capital situation has declined and that some are seeking cash advances from the Ministry to meet payroll. The hospitals are largely coming up with their own plans to deal with the inadequate funds.

Through the MPRRs, the hospitals are supposed to set out the cuts required under three scenarios: i.e. if global funding is increased 2%, or 1%, or 0%. Neither the hospitals, nor the LHINs have released these scenarios to the public, though as a union we are pursuing our right to this information. Some hospitals, have issued layoff notices, however. In the previous two fiscal years, global funding was increased 2.4% (2008-9) and 2.1% (2009-10) leading already to significant cuts in jobs and services in the hospitals. Scores of hospitals (over a third of the total) were already running deficits last year. Hospitals such as the Niagara Health System and Hamilton Health Sciences have stated their expenses will increase in the 3.5% to 4% range this coming year.

The cuts have led to rising levels of concerns around the province. This has been particularly marked in smaller communities. It is evident that a main way to deal with the funding shortfalls is to centralize services and move them out of smaller communities. One LHIN CEO noted recently: “After this process, we would still have seven hospitals in the southeast, but their roles might be different.”

The “0%” funding option should be off the table, trusting the premier. Premier Dalton McGuinty said some weeks ago that the government would have to find more money
for the hospitals:
"We're going to have to find ways to put more money in, but we're going to
have to find ways to live with a little bit less given the impact that the recession has had, not only on the Ontario economy, but Ontario's government finances".

And on Wednesday of this week, Premier McGuinty was even clearer:
"I can say one thing with absolute certainty: there will be more money
for hospitals this year, but it won't grow at the same rate that it has in
recent years".
We believe and expect the premier will keep to his word.

Recognizing the difficult economic situation, we have recently ratified a collective agreement with modest wage increases: an eight per cent wage increase spread out over four years, providing predictability for hospital expenses. In exchange, we negotiated some modest improvements in employment security. These negotiations went on with the government’s knowledge and we expect government and the hospitals to respect our collective agreements.

While we have elements of democracy in our public life, the work world is not a democracy. It is in many respects a dictatorship. The employer directs and the employee follows direction. Collective agreements with employers temper this relationship and provide protection for workers. So they are hard fought by both sides. We will not let our collective agreements go without using every means at our disposal to protect them. We believe this is true of others in the labour movement as well. We believe that most reasonable voices in the provincial government understand this, but we remain on guard.

If there are politicians here who are in favour of quashing or overriding collective agreements, we invite them to raise it here, openly, honestly, and to our face.

It is also with concern that we note some leading forces are focusing on reducing support services in hospitals. This continues a long tradition. Approximately 50,000 support workers are employed in Ontario hospitals performing a variety of tasks. They are the lowest paid workers in hospitals, with most earning between $17 and $20 per hour – significantly less than the average hourly wage or industrial wage. The large majority are women.

Spending on hospital support services has fallen. The Canadian Institute for Health Information (CIHI) has reported that hospitals had actually cut the dollars spent on support services over the years: Housekeeping spending had been cut (on average) 1.8% per year; Material management cut 2.2% per year; Patient food services cut 3.1% per year; Plant administration and operation cut 1.1% per year. Indeed, a 2005 CIHI study indicates that since the mid-1970s, hospital spending on support services has been squeezed– dropping from 26% to 16% of hospital spending.

This policy has not been beneficial. “Food” served in hospitals is now often produced in distant factories and shipped to hospitals frozen or chilled across the highways, rather than produced in local kitchens with fresh ingredients. Little (or sometimes no) cooking is actually done in local hospitals. Even where there are kitchens, the changes have been depressing. Some long term care patients will live the rest of their lives without ever eating a fresh vegetable again – all vegetables now come in a bag, frozen. These same residents may well be served a steady diet of what are in effect leftovers: one or two fewer dietary staff can be used if the food is put together the day before.

Hospital acquired infections (HAIs) are another major problem. Each year in Canada, more than 200,000 hospital acquired infections result in 8,500-12,000 deaths, and the rates are rising. One in nine hospital patients in Canada get an HAI. Such infections are the fourth leading cause of death in Canada. The incidence of methicillin-resistant Staphylococcus aureus (MRSA) in Canadian hospitals increased 17-fold between 1995 and 2006. The rate of patients contracting C. difficile increased almost five-fold between 1991 and 2003. Outbreaks of other types of healthcare associated infections are also on the rise.
Cleaning, laundry, and other support services are a vital element of infection prevention and control strategies. Pathogens such as C. difficile, VRE, MRSA, norovirus, influenza, and severe acute respiratory syndrome (SARS) associated coronavirus can survive in the healthcare environment for extended periods of time, even months. In fact, these infections are inherently well adapted to survive in dust and on floors, bedrails, telephones, call buttons, curtains and other surfaces. Washing hands is important, but if bacteria and viruses are not eliminated from the environment, hands will quickly become contaminated again. And without high quality and regular cleaning, the bio-hazards build up.

“Breaking the chain of infection” requires well-resourced, well-trained, and stable in-house healthcare teams attacking all of the links of transmission; sufficient beds, equipment and staff to achieve best practice occupancy rates; modern high-quality infrastructure and equipment, and; standardized procedures, monitoring and public reporting.
The direct costs of hospital acquired infections in Canada are estimated to be $1 billion annually. So, for example, a survey of Canadian hospitals found that managing the care of a patient infected with MRSA cost between $16,836 and $35,000 (in 2004 dollars).
In 2009 the British trade union UNISON sponsored a study by HAI expert and microbiologist Dr. Stephanie Dancer. The Dancer study found that lives would be saved and millions of pounds could cut from budgets if hospitals took on just one extra cleaner on each ward. The findings revealed that enhanced cleaning led to a 32.5% reduction in microbial contamination at hand-touch sites, while cases of MRSA fell in the six months of targeted cleaning on one of the wards. They rose again when the extra cleaner moved to another ward, which in turn saw the number of cases fall.

The savings per hospital were estimated at £30,000 to £70,000 (approximately $51,000 to $119,000 CAD). This study is particularly interesting as improved cleaning has often been viewed as less relevant for MRSA than C. difficile, or VRE.

Yet the official plan is often to cut support services in Ontario hospitals.

Hospital beds have been reduced dramatically over the last 18 years. Since 1990, the number of hospital beds has decreased from just over 49,000 to just over 30,000 in 2008, a loss of 19,000 hospital beds. Most of the bed cuts are acute care bed cuts (over 15,000 acute beds have been cut). As beds declined, reports of bed occupancy have become increasingly scarce. Reports from our members and other sources however suggest that the hospitals are constantly near full occupancy. And indeed, the hospitals have reported that 29,839 beds were occupied on the average day in 2008 – or an incredible 98.53% of the hospital beds in Ontario.

This is a shocking level and accounts in large part for the backlogs in our emergency rooms, the offload delays for our ambulances, and the cancelled surgeries. We note that Britain aims to keep bed occupancy lower than 85% to combat hospital acquired infections, which are associated with high bed occupancy. Other countries have lower bed occupancies levels and reduced hospital acquired infections. Unfortunately, the media and politicians have not yet seized on this important issue.

While the reduction of hospital beds has slowed over the last decade, the current budget squeeze has increased the reports of bed cuts around the province. This will worsen bed occupancy, and the problems associated with high bed occupancy.

Ontario hospitals have a record of efficiency. Ontario hospitals have a lower acute inpatient hospitalization rate than any other province. The average patient resource intensity weight is over 10% higher than all the other provinces. Despite this, the average length of stay in Ontario hospitals is less than the other provinces (at 6.12 days, over 1.75 days less), and Ontario has fewer medical / surgical hours worked per patient day. Meanwhile hospital costs per capita have risen only modestly since 1991, increasing from $967 to $1084 in constant 2002 dollars.
There are some positive developments. Registered Practical Nurses (RPN) now receive more education, two years, up from 10 months when the classification was “Registered Nursing Assistants” (RNA). But it is only now that hospitals have begun to allow RPNs to work to a fuller scope of practice. We think this trend should continue and be encouraged by government. This should result in significant savings for the hospitals.

There is also significant savings to be had by the elimination of the many privatized P3 hospital projects the province has planned. In the 2003 election, the Liberals campaigned against the privatized P3 hospitals in Brampton and Ottawa started by the previous Conservative government. After the election, however, they re-christened the model ‘alternative financing and procurement’, made a few small changes, and claimed their ‘new’ model solved the problems.

Attempts by CUPE and others to get hard information about the Brampton P3 hospital project were resisted fiercely. Finally, however, the Auditor General was able to get key information. Here are the ‘highlights’ from the mess he found:

· Cost increases: the facility’s construction costs increased from an initial estimate (under public procurement) of $357 million to $614 million under the P3. Despite this, the project’s size actually shrunk.
· High cost of ‘risk transfer’: The risk transferred to the private sector was costed at $67 million, 13% of the total cost of the facility. Rightly, the Auditor General questioned this cost.
· Costly P3 consultants: The hospital and the Ministry engaged approximately 60 legal, technical, financial, and other consultants at a total cost of approximately $34 million. About $28 million of these costs related to the work associated with the new P3 approach, yet they were not included in the P3 cost.
· The total P3 costs were $1.153 billion, or $194 million more than the public model.
· This $194 million advantage for the public model does not include the $107 million in higher private sector financing costs for the P3 (nor even the $63 million in modifications required after close).

These conclusions are consistent with what critics have said about privatized P3 hospitals for years. Nevertheless, the scope of the problems established remains astounding. These P3 projects are an obvious area for savings.

Other Issues
We are concerned that the introduction of the Harmonized Sales Tax is biased against lower and moderate income earners. In contrast to income taxes, sales taxes tax moderate income earners at the same rate as the rich. Incredibly, businesses will receive billions of dollars in refunds for the sales taxes they pay. (This on top of the $2 billion a year give-away in corporate tax cuts.) We need progressive tax reform that provides sufficient revenue but doesn't favour a few wealthy people at the top while the rest of us pay more. Indeed, we need to reverse this dynamic and increase taxes on the wealthy. We also understand that hospitals have not yet been made exempt from the HST. We do not understand what public benefit would be provided in taxing hospitals – hospitals which are funded almost exclusively from the same public purse and which are cutting back services due to funding shortfalls.

Finally, OCHU urges the government to use local procurement of steel products – this is one key step in a jobs strategy that will reinforce Ontario jobs.

We believe that the main way to solve the budget deficits is through job creation. Cutting public services will not create jobs but creating jobs will cut the deficit. The province of Ontario must focus on job creation, including public sector jobs as a necessary component of this strategy.

At the conclusion of our written remarks we also raise the issues of energy and trade. While we do not have the time to review these issues today, we urge the committee to review our thoughts.

We would like to thank the Committee for listening to our concerns and invite any questions or comments on our remarks.



Energy
As many will know, Ontario hospitals are major and often inefficient consumers of energy in the province, and energy costs represent a substantial and growing portion of a hospitals annual budget. Not only are there opportunities for significant efficiency and conservation improvements in the hospital sector, but many hospitals have the potential to not only meet there own energy needs but to contribute as well to the energy service needs of their communities, through cogeneration and renewable energy projects.

Fortunately recent reforms implemented by the Green Energy Act (GEA) open the door for hospitals to play this larger role. These reforms are a welcome and overdue departure from policies of privatization and de-regulation that represented the Harris Government’s agenda for Ontario’s electricity sector. The Green Energy Act repudiates those policies by re-establishing the key role that government direction and regulation must play if the electricity sector is to meet the needs of Ontario consumers and do so in a manner that addresses pressing environmental imperatives.

These reforms point to the emergence of new paradigm for the power system of the province – one in which local planning, distributed generation, renewable power, aggressive conservation and demand management are driving forces.

The Ontario Energy Board is now implementing this new policy direction. Unfortunately, in doing so, the Board is attempting to renovate a regulatory structure that is obsolete and which must be replaced not fine tuned. This structure was created when government policy actively promoted the corporatization and privatization of the electricity distribution sector, and planning was, according to the market model, simply unnecessary. Under that construct, the role of public ownership was to diminish, even disappear.

Government direction to the Board is now needed to remove the lingering pro-privatization bias that still colours Energy Board policies and practices. Because free trade rules apply the electricity sector, privatization of electric power generation not only threatens Ontario energy security but will also increase the cost of power to Ontario consumers, including public hospitals and care facilities. At the same time, if hospitals don’t receive the support they need, important opportunities for them to play a greater role on the both the supply and demand side will go by the board. The cost of energy to the health care sector is too high, and privatization will only cause it to increase. Hospitals and other health facilities can play a key role in reducing energy costs, and improving supply reliability, but they need more support from this Government if they are to do so.
TRADE
A little over a year ago the provincial government signed two agreements under the Agreement on Internal trade concerning dispute resolution and labour mobility. To implement the latter, the government has since passed Bill 175: An Act to enhance labour mobility between Ontario and other Canadian provinces and territories (the Labour Mobility Act). This past September the Government made public a free trade agreement with the province of Quebec that went into effect on October 1, 2009. The government is also cooperating with the federal government in regard to international trade initiatives with the European Union and the United States concerning public procurement.

These so called “trade” initiatives have far reaching and adverse implications for maintaining the quality, availability, and reasonable cost of public services in Ontario including those in the health and hospital sector. OCHU, the Ontario Federation of Labour and the Council of Canadians have commissioned legal opinions exposing the serious risks engendered by these free trade projects.

It is beyond the scope of these submissions to do more than illustrate the problems these initiatives present, so we include only a few examples.

Bill 175 – the Labour Mobility Act
The Act is the first to give formal legislative expression in Ontario to a federal/provincial/territorial agreement negotiated under the auspices of the Agreement on Internal Trade (the AIT). Among other problems the Act threatens to undermine the training and other qualification standards for health care professional licensed to work in Ontario.
Requiring regulators to recognize occupational certifications given in other provinces with more modest standards will create pressure to reduce standards to a lower common denominator. The requirement for regulatory authorities to harmonize their standards with those of other jurisdictions will add to this pressure.
In addition, by prohibiting residency requirements as a condition for certification in Ontario while lowering the bar for certain certifications, Bill 175 will likely increase competition for skilled jobs and professional employment in Ontario at a time of relatively high unemployment and create downward pressure on wages and benefits.
In simple terms, Bill 175 will do nothing to enhance the competence, skill, or integrity of Ontario tradespersons and professionals and is in fact likely to have the opposite effect. By ensuring certifications to those trained to a lower standard, Bill 175 will unnecessarily put at risk public safety, and the health and well-being of Ontarians.
Moreover, there is no demonstrable rationale or need for Bill 175. Most significant labour mobility issues have been successfully addressed over recent years through inter-provincial cooperation and other voluntary initiatives such as the Red Seal Program for skilled trades. To the degree that mobility issues remain, they are better addressed through the mix of negotiation and diplomacy than has proven successful to date.
Rather than represent a response to a demonstrable and significant problem, the
labour mobility provisions of the AIT which Bill 175 seeks to implement reflect an ideological commitment by the Harper Government to reduce the role of government
in regulating the economy. In its Throne Speech (November 19, 2008) the federal government committed to working with the provinces “to remove barriers to internal trade, investment and labour mobility by 2010.” The Conservative election platform (October 7, 2008) went further by stating that a Harper government “will work to eliminate barriers that restrict or impair trade, investment or labour mobility between provinces and territories by 2010 . . . We hope to see further progress, but are prepared to intervene by exercising federal authority if barriers to trade, investment and mobility remain by 2010.”
It is obvious that Ontario should not be putting the safety and well being of Ontario residents at risk to further a broad Harper Government agenda under the rubric of removing largely non-existent barriers to interprovincial labour mobility.

Ontario-Quebec
The Trade and Cooperation Agreement between the Provinces of Ontario and Quebec (“TCA”) raises similar concerns. Under the guise of removing interprovincial barriers to trade, investment and labour mobility, the provincial government has agreed to impose sweeping constraints on what otherwise would be the lawful exercise of governmental authority.

The TCA has no statutory foundation, nor has it otherwise been put before the Legislature for its consideration or approval. In fact, the Agreement was only made public after it was signed on September 11, 2009, and went into effect less than three weeks later on October 1, 2009.

While the TCA is simply a political arrangement between the McGuinty and Charest governments, it nevertheless empowers private tribunals to impose monetary penalties
- ultimately to be paid by the taxpayers of the province - whenever a government or other public body refuses to rescind a policy, law, program or other action the tribunal determines has offended the broad constraints of this interprovincial scheme. It is no defence that the impugned government action is entirely lawful and proper under the laws of the province and the Constitution.

Furthermore, the essential thrust of Ministers’ scheme has much less to do with interprovincial trade, investment and labour mobility than it does the promotion of an agenda for de-regulation and privatization that will diminish the capacity of present and future governments to address the social, economic and environmental needs of the province.

The most onerous of TCA obligations is the prohibition on existing and future government measures that “operate to create an obstacle to trade, investment and labour mobility” unless such measures are exempt under the regime. Because “measure” is defined very broadly, virtually all actions by government may be regarded as offending this broad prohibition. After all, everything that a government does affects the market in some manner, otherwise there would be no need for it to act in the first place. A priori, all measures affect the rights and opportunities of companies and individuals to conduct business, make investments or provide services, and are therefore vulnerable to being challenged under the TCA for doing so.

TCA rules may also create a means for challenging measures that are necessary to establish public sector services. A partial reservation for education, health and social services may provide some protection for such measures, but under the TCA the Parties are entitled to ‘mix and match’ provisions of the Agreement on Internal Trade (the AIT) and those of the TCA in a manner that may circumvent this safeguard. Moreover, some public services, such as water and waste management, are not covered by this exception and others, such as child-care, may not be.

The TCA is yet another element of a program, largely being driven by the federal government, to establish a complete and internal framework of so called ‘trade’ rules that will in fact entrench policies of deregulation and privatization with the intent of putting them beyond the reach of successive governments that may wish to once again have the government play a more active role in responding to societal needs.