Private health centres in Ontario: changes to current regime after a decade of no new licences

On February 23, 2023, the Ontario government introduced Bill 60 as a means to “expand access to publicly funded community-based health services”¹ through the licensing of integrated community health services centres (Centres). The Centres are health facilities where surgical and diagnostic services paid for by the Ontario government (i.e., public pay) may be performed².

What you need to know

• Replacement of previous regime. After receiving royal assent, the Integrated Community Health Services Centres Act, 2023 (the Act) will replace the Independent Health Facilities Act (the Previous Act) and provide for the licensing and regulation of Centres and related matters. It is expected that new Centres will be issued licences—the last licence under the Previous Act was issued a decade ago³.
• The Act lays out several requirements to receive a licence. Factors that will be considered when issuing a licence include the nature, extent, impact, costs and necessity of services. In addition, applicants will have to adhere to quality and safety standards and abide by a “truthfulness” requirement. The application will require a plan to improve patient wait times, expand access to care and integrate with the provincial health system. The Act also places importance on the past conduct of applicants.
• The issuance of a licence is discretionary. The Director, appointed by the Minister of Health, will issue a call for new applications and specify the process. While the Act outlines several requirements for consideration, the issuance of a licence is discretionary⁴.
• There are risks and restrictions for applicants hoping to establish Centres. The Director may specify limitations or conditions as set out in a licence. The Centres will be subject to inspections and must abide by compliance orders. Corporate licensees will be subject to change of control and share transfer rules.

Licensing details

Requirements to receive a licence

In general, to be issued a licence, the applicant will need to comply with all the requirements under the Act and meet the applicable quality and safety standards⁵. The applicant must demonstrate that it will establish and maintain a process for receiving and responding to patient complaints and a process to review incidents (any unintended event that results in harm).

Additional requirements include:

• a description of the services to be provided;
• an account of the projected costs for the Centre;
• a consideration of the potential overall impact the Centre will have on health services in Ontario;
• an analysis of the current and future need for the Centre’s services, considering the needs of diverse, vulnerable, priority and underserviced populations as well as linguistic needs;
• an explanation of how the applicant will promote connected and convenient care, including whether the Centre will improve patient wait times, expand access to care and integrate with the provincial health system; and
• the past conduct of the applicant to indicate that the Centres will be operated with honesty, integrity and in accordance with the law and not in a manner that is prejudicial to the health, safety or welfare of any person⁶.

Discretionary issuance of licences

The issuance of a licence, as well as several aspects of the licensing process, are left to the Director’s discretion. When deciding whether to issue a licence, the Director can consider any matter they believe is relevant to the management of the health care system⁷. Furthermore, the Director can specify limitations and conditions for a licence (i.e., the types of services that can be offered) and determine whether a licence gets renewed or revoked⁸.

Fundamental to the Act is the requirement that patients who receive publicly funded surgeries or other treatments at the Centres must not be charged for access. The Minister can refuse to pay, pay a reduced amount or require reimbursement of the amount paid to a Centre if it is determined that the health service provided by the Centre contravened the Act⁹. Licensees cannot charge patients for insured services, or charge or accept payment for providing an insured person with a preference in obtaining access to an insured service¹⁰. While strict compliance with these billing rules has been stressed by the government, some stakeholders have expressed concerns that patients will feel pressure to accept “upcharges” at Centres for receiving uninsured health services in conjunction with those covered by the public system.

Other considerations

Entering a government-regulated industry brings with it the costs of regulatory burden. The Act grants power to inspectors for the purpose of ensuring compliance with the Act. Inspectors can request any information or reports they consider necessary or advisable to assess compliance, and may enter Centres at any reasonable time, examine records, question staff and call on experts¹¹. In addition, an inspector or the Director can order a licensee to “do anything, or refrain from doing anything, to achieve compliance” with the Act¹². Thus, the powers of an inspector are broad, and licensees are required to cooperate and assist.

Corporate licensees should be aware of the change of control rules. A licensee cannot enter into a contract that may result in a change in the beneficial ownership of the licence. Corporate licensees cannot enter into a contract where a person acquiring or increasing an interest affects the control of the licensee corporation¹³. These rules will need to be considered in the context of structuring of acquisitions or investments in businesses that operate these Centres.

Offenses under the Act carry penalties: (a) for individuals a fine of up to $100,000 and/or imprisonment up to 12 months, and (b) for corporations, a fine of up to $500,000 for each day or part of a day on which the offence occurs or continues¹⁴.

Practical implications

Bill 60 is a clear sign the Ontario government is looking to expand the number of private Centres and surgical and diagnostics offerings outside of the hospital setting. The issuance of new licensees will create opportunities for investors to gain access to an industry where the last licence was issued a decade ago.

The cost of conducting a health care business will be impacted by the regulatory burden of the Act: inspections, applicable quality and safety standards, and the regulations yet to be introduced. Given the press reports of the concerns of the federal government regarding unlawful billing of patients for insured health services, licensees should expect that their billing practices within the Centres will be highly scrutinized.

It remains to be seen whether private Centres will ease the burden in the health care system. Some stakeholders have expressed concerns that health professionals will migrate to the private Centres, and therefore exacerbate the current staffing issues in hospitals. The application requirements are aimed at mitigating against this concern; however, this regime will likely be in flux unless, and until, a reduction in wait time is actually achieved. Navigating compliance for establishing and operating Centres will become clearer over time as future regulations and guidance are implemented.