The Canadian Local Health Integration Network—Business case
In Chapter 3, we introduce the reader to the Canadian Local Health Integration Network (LHIN). We include several specific examples illustrating the present status of the health care sector in the LHIN.
Ontario health care expenditure has grown to the excess of 46 percent of the provincial budget. The MOHLTC introduced 14 LHINs in an attempt to enhance health performance strategy and system integration with measurement and accountability. Geographically the LHINs comprise 150 hospital corporations located on more than 200 sites. The 126 acute care hospitals are the sources of primary care that form integrated health service plans with local health service providers.
The 14 LHINs represent health authorities responsible for the administration of health care services in the province of Ontario, Canada. LHINs’ region number and names are listed as follows:
1. Erie St. Clair LHIN
2. South West LHIN
3. Waterloo Wellington LHIN
4. Hamilton Niagara Haldimand Brant LHIN
5. Central West LHIN
6. Mississauga Halton LHIN
7. Toronto Central LHIN
8. Central LHIN
9. Central East LHIN
10. South East LHIN
11. Champlain LHIN
13. North East LHIN
14. North West LHIN
The MOHLTC accountability agreements managed by the LHINs at the local level include improving the coordination and integration of services within the local health system. In addition, to increasing access to key health care service; improving patient-centeredness, patient safety, and quality of health services; increasing sustainability, and equity of the health system.
See Table 3.1 for the number of local health service providers by LHIN in 2014.
Table 3.1 Number of local health service providers by LHIN in 2014
In 2007, the MOHLTC transitioned hospitals accountability under the Local Health Integration Act. Responsibility of the 14 LHINs is to prioritize, plan, and fund health care services including hospitals.
LHINs comprise of a comprehensive spectrum of the Canadian health care sectors because they cover a wide variety of health services, including those offered by hospitals, long-term care homes, and community care access centers.
In addition, LHINs cover health service providers in community support service agencies, mental health and addiction agencies, and community health centers. The LHINs provide governance and opportunities to explore why some regions thrive and are more efficient than others. See Figure 3.1 for the regional locations of the Ontario LHIN.
Figure 3.1 Regional locations of the Ontario Local Health Integration Network (LHIN). Source www.lhins.on.ca
According to the Canadian Institute of Health Information (CIHI), in 2013 health spending in Canada reached $211 billion or $5,988 per person. This represented 11.2 percent of Canada’s gross domestic product (GDP), down from 11.3 percent in 2012, 11.4 percent in 2011, and 11.6 percent in 2010 and 2009. Of the $211 billion, 60 percent of total health spending is directed to hospitals, drugs, and physicians. Hospitals account of total health spending decreased from 45 percent in 1975 to approximately 30 percent in the early 2000s.
Hospital spending related to compensation for the workforce is more than 60 percent of total expenditures. Consequently, improving public services, while containing costs, has become a priority for hospitals. Government expectations are that hospitals achieve better patient outcomes with fewer resources while containing costs.
In 2011, the Ontario Ministry of Health and Long-Term Care (MOHLTC) legislated a new Hospital System Funding Reform (HSFR) based on volumes of procedures.
The change in funding model and shift of care to Alternate Levels of Care (ALC) that are less expensive could affect the viability of services and levels of care in hospitals.
An imbalance in service provision could further affect sustainability of health services and result in hospital closures, mergers, or acquisitions.
A potential redistribution of health service provision could influence the following:
• Organizations’ capacity to manage strategic change processes and expose risks in organizational performance.
• Financial viability, because 5 percent of Ontarians account for 66 percent of health care expenditure in Ontario.
3.3 Efficiency and quality measures
The definition of organizational performance correlates the measure of financial performance with the quality of care and patient satisfaction within a fiscal year. Besides, hospital performance will vary and could be dependent on changes in the hospital environment such as the use of LEAN Processes on administrative services to improve patient wait times. In this section, information relevant to hospital performance is reported in the LHIN regional values.
CIHI website provides downloadable data of the Canadian Hospital Report Project (CHRP), which is accessible to the public.1
The CHRP 2013 Health System Characteristics—Hospital-Level Export Report is a summary of health system characteristics of indicator rates at the national, provincial, hospital, and region-specific.
The efficiency quality measure includes the indicator of Administrative Service Expense as a Percentage of Total Expense (ASEPTE). This indicator is a measure of the legal entity’s total expenses spent in administrative departments such as finance and human resources. However, CIHI has qualified data exclusions of outliers from the calculation of all averages and that data is only of acute care hospitals that participate in CHRP.
The numerator includes all expenses associated with the administrative, finance, human resources, and communication functional centers. The denominator includes all expenses net of recoveries. The formula for calculation is 100 × (numerator/denominator). A high percentage indicates that administrative costs are a large portion of the region’s hospital expenses; a low percentage indicates that administrative costs are a small portion of a region’s hospital expenses.
Region 6, Mississauga Halton LHIN, has consistently maintained low ASEPTE averages and in the range between the average provincial and Canadian values. In comparison, Regions 13 and 14 North East and North West LHINs respectively had the highest ASEPTE values. Most significantly, apart from the Mississauga Halton LHIN, the remaining LHINs have yet to achieve the ASEPTE provincial or Canadian average values.
See Table 3.2 for the ASEPTE average values by LHIN from 2007 to 2011.
Table 3.2 ASEPTE average values by LHIN from 2007 to 2011
See Figure 3.2 for the ASEPTE average values by LHIN from 2007 to 2011.
Figure 3.2 ASEPTE average values by LHIN from 2007 to 2011
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1CIHI: Health Care in Canada—How is the system performing?