Private health care providers are cashing in as Ontario hospitals fall further behind

Ontario is expanding private surgical care while hospitals struggle with staffing levels and patient loads

Ontario’s hospital funding crisis is the result of a deliberate provincial policy choice to underfund public hospitals while funnelling public dollars to for-profit providers.

In a submission to the provincial government ahead of the spring budget, the Ontario Hospital Association stated that the hospital sector faces a structural deficit of $1 billion and needs a predictable, multi-year funding plan. This deficit is not surprising—data reveal that the province continues to have the lowest per capita hospital spending in the country at $1,967, behind B.C. ($2,111), Quebec ($2,113), and Alberta ($2,169). That underfunding has persisted for years.

As a result, Ontario now has one of the most below capacity hospital systems in the industrialized world. Ontario had five per cent fewer hospital beds per 100,000 people in 2022 than in 2009, based on the most recent data available.

At the same time, the Ontario government is expanding outsourcing contracts with for-profit surgical facilities. These facilities perform publicly funded surgeries under the Ontario Health Insurance Plan (OHIP), focusing on lower-risk, high-volume procedures that were previously handled within the public hospital system.

In December, the government announced four new private orthopedic surgery facilities as part of a $125 million scheme over two years to increase for-profit involvement. This is the largest injection of public dollars into for-profit health care delivery in Ontario, and one of the largest such investments in Canada.

For investor-owned providers, it’s a time of plenty. For public hospitals, austerity is the order of the day.

Despite assurances by the Ontario government that for-profit facilities securing lucrative contracts with the government would have to show how they would not harm staffing levels in the public system, no concrete guarantees have been made public. The reason is straightforward: the introduction of for-profit surgical facilities has only one place to draw specialized staff from—existing public sector staff. Canada already faces chronic shortages of nurses, anesthesiologists, and technologists, and expanding surgical capacity is constrained less by physical space than by the availability of trained health workers. There is no secondary workforce waiting in the wings.

To continue down this path ignores the growing body of evidence from Canada and internationally. The experience of the Alberta private surgical initiative is instructive.

After pouring $154 million of public funding into for-profit surgical facilities between 2019-20 and 2023-24, the initiative only added 16,493 of the least-complex procedures to the province’s surgical capacity, an eight per cent volume increase. At the same time, hospital surgical activity declined by one per cent. The private surgery initiative simply shifted surgeries and the workforce required to for-profit facilities at the expense of public hospitals.

What did this mean for patients?

Wait times increased for nine out of 11 priority procedures, including all priority cancer surgeries, which are only performed in the hospital setting. Now, Alberta has among the longest waits for key procedures in the country.

As the Ontario government prepares the 2026 provincial budget, it still has an opportunity for sober second thought. As things stand, handing contracts out to investors to pull staff and resources from the public system isn’t sound health policy. It simply makes Ontario’s wait times worse.

The Ontario government can support patients and the public hospitals they rely on by addressing the hospital funding crisis.

First and foremost, the provincial government should provide predictable annual funding increases of between five and six per cent in order to account for population growth, aging, and inflation. The government’s 2025 budget plan, according to the Ontario Financial Accountability Office, only increases health sector funding by 0.7 per cent. For context, health care spending grew at an average rate of five per cent annually over the 34-year period from 1990 to 2023.

In order to avoid cuts to current service levels, Ontario will need to increase health sector spending by $6.4 billion in the upcoming budget. However, immediate emergency funding is needed now to alleviate the $1 billion structural deficit facing Ontario hospitals. As the Ontario Council of Hospital Unions warns, at least 1,000 jobs are already being cut in hospitals in North Bay, Hamilton, Ottawa, Niagara, and the Greater Toronto Area.

While these numbers may seem big, Ontario spends less than three per cent of its Gross Domestic Product (GDP) on hospitals, and less than eight per cent of GDP on the broader health sector. Indeed, rather than helping heal the gaping wound of hospital finances and staffing, the Ontario government’s current spending plans are making the hemorrhage worse.

Andrew Longhurst is a senior researcher with the Canadian Centre for Policy Alternatives.