Canada: Operating An Independent Health Facility - An Introduction To The Independent Health Facilities Act

Last Updated: September 16 2013
Article by Cathi Mietkiewicz, Lynne Golding and Laurie M. Turner

Recently the Ministry of Health and Long-Term Care (the "Ministry") proposed regulatory changes that are aimed at giving the Ministry the option of issuing Independent Health Facility ("IHF") licences ("Licences") to so-called "Community-Based Speciality Clinics". These clinics would conduct specific surgical procedures traditionally performed in hospitals and would be funded through facility fees paid by the Local Health Integration Network ("LHIN")1 in which the IHF is geographically located.2 The Ministry committed to moving such surgical procedures out of hospitals in its Ontario's Action Plan for Health Care released in January 2012. Those wishing to own or operate a Community-Based Speciality Clinic need to understand the legislation that governs the operation of an IHF.

Overview of IHFs

IHFs are created under the Independent Health Facilities Act (Ontario) (the "IHFA"). IHFs perform procedures that are funded by the Ontario Health Insurance Plan ("OHIP") and that are traditionally performed in hospitals. Since these procedures are either complex or too costly to perform outside of hospitals without the support of a hospital global budget, the IHFA permits the Minister of Health and Long-Term Care (the "Minister") or another "prescribed person" to fund these procedures in non-hospital premises.

IHFs may be:

  1. diagnostic facilities that provide specific classes of diagnostic imaging, pulmonary functions or sleep study tests; or
  2. ambulatory care facilities that provide surgical and other therapeutic procedures such as dialysis, abortion, laser dermatologic surgery and ophthalmic, vascular, plastic and gynaecological surgery.

The IHFA is explicitly stated not to apply to certain health facilities, persons, places and services. For example, an office or place where one or more persons provide services in the course of the practice of a health profession for or in respect of which: (i) the only charges made for insured services are for amounts paid or payable by OHIP; and (ii) no facility fee is requested from or paid by the Province of Ontario or any person, is exempt from the IHFA. Moreover, long-term care homes and designated psychiatric facilities are also exempt from the Act.3 It would appear that those health facilities / places that are exempted from the IHFA would be unable to act as Community-Based Speciality Clinics unless amendments were made to the Act and its regulations to make such health facilities / places subject to the Act generally or for the purpose of acting as Community-Based Speciality Clinics.

There are over 1000 IHFs licensed in Ontario. In November 2012, the Ministry stated that, "the largest category of services provided in IHFs are diagnostic radiology and ultrasound services – of which diagnostic ultrasound is the largest area of growth, increasing by six percent (6%) over last fiscal year."4

The IHFA prohibits anyone from charging facility fees (as defined in the IHFA) to anyone other than the Minister or a person designated in the regulations to that Act. "Facility Fees" are defined under the IHFA as:

(a) a charge, fee or payment for or in respect of a service or operating cost that,

  • supports, assists and is a necessary adjunct, or any of them, to an insured service, and
  • is not part of the insured service, or

(b) a charge, fee or payment for or in respect of a service or class of services designated by the Minister [under the Act].

IHFs can, in certain circumstances, be operated on a mobile basis at specifically approved sites.

Corporate Structure

While the IHFA contemplates IHFs being either for-profit or not-for-profit entities, the Minister has indicated that she expects Community-Based Specialty Clinics to be established as not-for-profit entities. A Licence may be held by either an individual or corporation, but may not be held by a corporation that operates a public hospital. A partnership is not permitted to hold a Licence.

The Licensing Regime

In order to establish or operate an IHF, a Licence must be obtained from the Director of Independent Health Facilities (the "Director") following the submission of a proposal in response to a request for proposals (an "RFP") issued by the Ministry for the establishment and operation of an IHF. The IHFA permits the Director to issue a Licence if in his or her opinion: (i)  the proposal meets the specified criteria in the RFP; (ii) the quality and standards of the facility or the services to be provided in the facility will comply with the regulations made under the IHFA or, if there are no regulations, that it will conform to generally accepted quality and standards for the facility; (iii) the licensee will operate the IHF competently and with honesty and integrity; and (iv) the licensee will establish and maintain a system to ensure the monitoring of the results of the services provided in the IHF. Nonetheless, the Director is not required to issue a Licence even if all of the criteria are met. Further, the IHFA gives the Minister the authority to direct the Director not to issue a Licence in respect of an RFP.

A Licence will set out the scope of services that may be provided by an IHF along with any limitation on the delivery of services. That said, an IHF may apply to the Director to add services to its Licence. 

Licences may be transferred or an IHF may relocate only upon the consent of the Director. The Director may request any information he or she deems necessary in order to decide whether to approve a relocation. In order to decide whether to approve a transfer of an Licence, the Director is required to treat the proposed transferee as if the transferee were an applicant for a Licence. The IHFA also places other restrictions the activities of its licensees. For instance, a licensee that is a private company5 may not permit an issue or transfer of its voting shares that may result in any person acquiring or increasing an interest affecting the licensee's control unless the licensee's licence includes conditions as to the ownership and control of the licensee and such issue or transfer would not breach such conditions. 

Licences are issued for a maximum of five (5) years, but may be renewed upon expiration. 

The IHFA permits the Director to revoke, suspend or refuse to renew a Licence where, among other things:

(a) the licensee or any member of the licensee's staff or is in contravention of the IHFA or its regulations or any other law that applies to the IHF or to the licensee;

(b) there is a breach of a limitation or condition of the Licence;

(c) any person has made a false statement in the proposal submitted to the Director in respect of the IHF;

(d) any person has made a false statement in the application for renewal of the Licence or in any report, document or other information required under the IHFA, its regulations, or any other act or regulation applicable to the IHF;

(e) there are reasonable grounds to believe that:

  • the IHF is not being or will not be operated in accordance with the law and with honesty and integrity;
  • the IHF is not being or will not be operated in a responsible manner in accordance with the IHFA or any other Act or regulation that applies to the IHF;
  • the IHF is being operated or will be operated in a manner that is prejudicial to the health, safety or welfare of any person; or

(f) the licensee has ceased operating the IHF for a period of at least six (6) months and is not taking reasonable steps to prepare the facility to re-open.

Further, the Minister may, at any time, direct the Director to revoke or refuse to renew a Licence or remove certain services from a Licence.  In order to make such a direction, the Minister must consider such things as (i) the nature of the services provided or to be provided in the IHF; (ii) the extent to which such services are already available in Ontario; (iii) the current or future need for such services; and (iv) the projected cost and availability of public money to fund the IHF.

The Director may order an immediate suspension of a Licence if he or she has reasonable grounds to believe the IHF is, or will be, operated in a manner that poses an immediate threat to the health or safety of any person.

Monitoring

Inspections

The IHFA permits the Minister to appoint inspectors and authorizes the Director to direct such inspectors to conduct an inspection of an IHF if the Director is of the opinion it is necessary to ensure that the IHFA and the limits and conditions of the Licence are being complied with. Licensees and staff are required to cooperate fully with an inspector.

Assessments

An assessor appointed under the authority of the IHFA carries out assessments of the quality and standards of the services provided in an IHF. The IHFA permits the College of Physicians and Surgeons of Ontario to appoint assessors. Additionally, if the Director is of the opinion that it is advisable to assess the quality and standards of service provided by an IHF he or she may require a professional regulatory body that regulates the healthcare professional who is providing services for which the IHF is licensed to appoint an assessor. The Director is under no obligation to notify the licensee that an assessment will be carried out. The licensee and the licensee's employees and staff must cooperate fully with the assessor during an assessment.

Quality Advisor

The General Regulation under the IHFA6 mandates that an IHF must appoint a quality advisor to advise the licensee with respect to the quality and standards of services provided in an IHF. The quality advisor must be a health professional who provides services in or in connection with the IHF and must have adequate training that enables him or her to advise the licensee. If all of the insured services provided in the IHF that support the facilities fees that the licensee may charge are provided by physicians, then the quality advisor must be a physician. Every IHF must have an advisory committee comprised of health professionals who provide health services in or in connection with the IHF to advise the quality advisor appointed by the IHF.

Conclusion

The above is an overview of some of the more significant elements of the IHFA. The IHFA sets out other requirements for the operation of an IHF including those pertaining to record keeping and notifications to the Ministry. It also sets out a funding mechanism for IHFs. Given the serious ramifications for an IHF that fails to comply with the IHFA, it is important that licensees and potential licensees fully understand all the requirements under the IHFA.

For further information please contact the authors.

This bulletin is the 3rd in a 3 part series regarding regulatory changes affecting Community-Based Speciality Clinics.

Footnotes

1.LHINs are created under the Local Health Systems Integration Act, 2006 (Ontario) and currently provide funding to public hospitals, private hospitals and certain other health service providers within specified geographic regions.

2.For more information please see the Fasken Martineau DuMoulin Health Law Group Bulletin dated August 14, 2013 accessible at  http://www.fasken.com/en/proposed-regulation-changes-would-permit-lhins-and-cancer-care-ontario-08-14-2013/

3.For a full list of the health facilities, persons, places and services exempt from the IHFA, see the IHFA and Regulation 649 to the IHFA.

4.Ministry of Health and Long-Term Care Presentation to the Independent Diagnostic Clinics Association Conference, November 16, 2012.

5.As defined in the Securities Act (Ontario), RSO 1990, c S.5.

6.O. Reg 57/92.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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