Kingston Health Coalition report examines costs of for-profit medical contract

(L-R) Kingston Health Coalition’s Joan Jardin and Ross Sutherland address the media during a press conference on Thursday, Feb. 15, 2024. Photo by Dylan Chenier/Kingstonist.

A report by the Kingston Health Coalition has found that cataract surgeries performed as part of an agreement between Kingston Health Sciences Centre (KHSC) and a private for-profit clinic, Focus Medical Ancillary (FMA), have cost the public health-care system 56 per cent more than if the surgeries were conducted by KHSC alone.

According to a report titled “A Clear-Eyed Analysis of Cataract Surgery Privatization,” the coalition alleges that KHSC’s agreement with a for-profit provider has led to increased costs and comes with “significant” conflict of interest concerns. KHSC announced the partnership in February 2022 as a means to cut wait times and make cataract surgery more accessible.

The report from the coalition reviewed various documents obtained through “multiple” Freedom of Information (FOI) requests, as well as searches of the Independent Health Facilities (IHF), Out-of-Hospital Premises (OHP), and integrated Community Health Services Centres (ICHSC) databases, to “better understand the public interest implications of this ‘integrated’ privatization approach.” 

In reviewing data from November 24, 2021 to September 30, 2023, the report found the use of FMA staff and facilities came with a total price tag of $2,036,779, representing an increase of 56 per cent over what the cost would have been had the procedures taken place at a KHSC hospital, for a total added cost of $731,419. A breakdown of spending over that time showed that KHSC’s “contractual obligations to FMA” cost $1,107,991, or an average of $427.25 per procedure, the coalition said. 

An additional $518,000 was directed to FMA through “top-up funds from provincial grants,” representing $200 per procedure, the report detailed. KHSC also spent $197,488 of “its own funds for supplies… needed for the FMA surgeries.” Lastly, the report noted that $213,300 in “provincial grant money” was spent for “extra costs needed for privatization.” 

According to the report’s author, Ross Sutherland, “that money is lost from the public system.” During a press conference on Thursday, Feb. 15, 2024, Sutherland said, “It was money that was invested in stabilizing and boosting a for-profit facility when it could have been used to improve the public system.” 

With public funds being directed to a for-profit clinic, the report pointed to several potential areas of concern, including the fact that the company “could be sold, possibly to a larger chain, which may not want to continue working with the hospital.”

Sutherland also alleged FMA could use the public funds to improve its own facilities, potentially leaving KHSC without a long-term partner, noting, “They’d rather take the public investment in the facilities and do something more profitable.”

He also speculated that if the for-profit company were to go bankrupt, the public investment of more than $2 million would be lost “because whatever investment goes there, goes away.” 

While the report alleged the additional $731,419 could have been directed to KHSC to improve the public system, Sutherland was asked whether the partnership between KHSC and FMA helped free up operating rooms and other resources at the public hospital.

In response, Sutherland noted the hospital could have used the funding to improve its own services. “They started to use those operating rooms for more serious cataract surgeries, more urgent ones; they started to use them for some cancer surgeries… they started to do all that. [But] they could have added the capacity, easily, in the hospital, at 56 per cent less cost,” he said. 

In addition to the financial impact of the partnership between KHSC and FMA, the report also pointed to issues related to transparency, accountability, and quality, alleging that FMA and its clinic, Focus Eye Centre (FEC), do not appear in Independent Health Facilities (IHF) databases or the province’s database for the Out-of-Hospital Premises (OHP) program. 

The report added, “FMA’s Kingston facility, at the time of signing the November 2021 contract, was not a licensed IHF and according to the public databases, it has never been a licensed IHF in Kingston.” 

As for the nature of the contract between KHSC and FMA, the report indicated an initial agreement was signed between the two parties in November 2021 and expired on March 31, 2022. While an FOI request revealed a contract extension from April 1, 2023 to September 30, 2023, the report noted that no contract between March 31, 2022 to April 1, 2023 was included in the request. 

During Thursday’s press conference, Sutherland elaborated on this apparent one-year gap, explaining that further communications with KHSC revealed the initial contract included an option to extend the agreement beyond the first year. He added that, as addressed in the report, “The only thing you have to assume is that for an entire year, it appears there was an informal agreement that governed the payment of hundreds of thousands of dollars, covering hundreds of patients’ surgeries, [with] a for-profit centre.” 

The report also examined potential conflicts of interest pertaining to the agreement between KHSC and FMA, noting, “It is clear from the FOI documents that the plans for this contract were developed between KHSC, Queen’s University, FMA, and local ophthalmologists.” According to the report, many of the relevant parties allegedly have “personal connections” to FMA, Queen’s University, and “a variety of other for-profit clinics.” 

As for how the report claimed the possible presence of a conflict of interest, the coalition suggested that with the amount of “staff crossover between Focus Eye Centre, Queen’s University, and KHSC,” there was the potential for “decision making [to be] clouded by staff having financial relationships in multiple organizations which are contracting with each other.” 

In pointing to specific examples where a conflict of interest might appear to be present, the report noted the medical director of Focus Eye Centre (FEC), Dr. Davin Johnson, is an associate professor in the Queen’s School of Medicine, “a fact prominently displayed on the FEC website.”

The report also alleged the KHSC-FMA agreement “appears to violate the Procurement Directive under the Public Sector Accountability Act.” According to the coalition, under the Act, hospital contracts exceeding $100,000 must be reached through an “open competitive process,” but “There is no indication in the documents provided that any other alternatives to FMA were considered or that a competitive process was used.” 

With the report now public, Sutherland explained some steps KHSC could take to remedy the situation, such as increasing the hours of the eye clinic at Hotel Dieu beyond 7:30 am to 3:30 p.m. daily, Monday to Friday. Had that happened when the agreement was first introduced, Sutherland said, “[KHSC] could have done more surgeries than were transferred to the clinic, for less costs.” 

In addition to expanding the hours of operation at Hotel Dieu, Sutherland noted KHSC could also transfer surgeries to other public hospitals in the region, such as the Lennox and Addington County General Hospital in Napanee. 

If the demand for cataract surgeries continues to increase along with Ontario’s aging population, Sutherland suggested KHSC and the province should consider a regional eye centre “under the control of the hospital, [or as] a division of the hospital.”

He added, “There are various ways to do it within the public system… It takes very little imagination to get there. Instead, the province and the hospital chose to spend a lot more money to fund surgeries in a private for-profit centre, which is not working in the public’s interest.”

Sutherland also called on the province to “enforce its own rules” with respect to the Public Sector Accountability Act and concerns regarding the transparency of the contract. He remarked, “[The government] could investigate this more seriously, which they have just constantly refused to do… We’re finding irregularities in the contract, which probably should be investigated more seriously than we have the capability of doing.” 

Kingstonist has reached out to KHSC with inquiries regarding the allegations contained within the Kingston Health Coalition’s report. The local medical agency — which oversees the operations of many Kingston-based hospitals, including Kingston General Hospital (KGH), Hotel Dieu Hospital, and the Cancer Centre of Southeastern Ontario — said it disputes some of the information in the report. Kingstonist will be speaking with Dr. David Pichora, President and CEO of KHSC, on Friday, Feb. 16, 2024. Further coverage of this matter is to come.

For more information on the Kingston Health Coalition or to read the report, visit the Kingston Health coalition’s website.

3 thoughts on “Kingston Health Coalition report examines costs of for-profit medical contract

  • Beware the domino effect in our Ontario health care. Private intrusion is a slippery slope.

  • The healthcare system failed seniors! KHS was unable or unwilling to hire staffing in order to schedule surgeries in a timely manner and many were left with failing vision. Even using the combination of private and public it still took over 1.5 years to get into surgery. Yes the money was taken from public health care spending – but public healthcare failed to plan for the aging population needs -and goodness knows there was enough warning that the number of seniors would be increasing each and every year in the foreseeable future.
    With respect to conflict of interest – that it a red herring – how many senior doctors at KSC also teach at Queens?????

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