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The Ontario government has rejected a proposal to have 1,500 knee replacements done at a private Toronto hospital, even though it would have helped reduce waiting times and cost $1,000 less per knee than in the public system.

A letter obtained by The Globe and Mail shows that the Health Ministry considered the proposal from Don Mills Surgical Unit Ltd. to be "relevant." And at $5,800 a case, it was described as being "less than the provincial case cost."

In fact, the Don Mills Surgical proposal, made in late January, was $1,082 lower than what the government now spends to have the same knee-replacement surgery performed at a community hospital. If the proposal had been accepted, Ontario taxpayers would have saved more than $1.6-million.

In a letter written to Brenda Rasmussen, president and chief executive officer of Alegro Health Corp., parent of Don Mills Surgical, a government official wrote that the "initiative you are proposing is relevant, particularly in light of ample evidence pointing to a very significant growth in demand for hip and knee joint replacements.

"As our processes dictate, however, it is important that we first review the hip and knee volumes already allocated to hospitals in Ontario before moving forward with your proposal," said the letter from Hugh MacLeod, associate deputy minister, health system accountability and performance division.

But any enthusiasm about the proposal was extinguished when Ontario Health Minister George Smitherman told a news conference last week that he would never support funding knee operations at a private, for-profit hospital.

Yesterday, Karli Farrow, Mr. Smitherman's chief of staff, reiterated that sentiment, saying the Ontario government has always been committed to not-for-profit health care. She said the Health Ministry has received similar proposals to help reduce waiting times, but it remains committed to the public health-care system. And she stressed that hospitals are also working to reduce their costs per case.

"We are starting to see results in the public system and we're not going to shift gears now and start investing in capacity in a parallel, for-profit system," Ms. Farrow said in a telephone interview yesterday.

If Ontario did sanction such a proposal, it would be following in the steps of British Columbia, Alberta and Manitoba. Those provinces have contracted out procedures to private clinics in an attempt to reduce lengthy waiting times. In Ontario, however, private hospitals, including those that provide publicly funded care and do not allow queue-jumping, remain a hot-button issue.

Don Mills Surgical is one of three surgical hospitals that operate under the province's Private Hospitals Act. Also known as Don Mills Surgical Centre, it was allowed to continue private operations in Ontario after the public health-care system was introduced. The 44-year-old hospital does cosmetic surgery and unfunded prostate cancer therapy, in addition to provincially financed cataract and orthopedic services such as knee arthroscopy and cataract surgery.

Public dollars that go to a private hospital for publicly funded procedures must be audited, and the private facility must also sign an accountability agreement, Gilbert Sharpe, a health lawyer who is on the board of directors of Alegro Health, has said.

Mr. Sharpe declined comment yesterday; Ms. Rasmussen could not be reached for comment.

The Don Mills Surgical proposal has raised this question: What role do private hospitals and clinics have in a publicly funded health-care system?

In fact, Don Mills Surgical is already part of the government's waiting-times strategy. According to a government news release, dated April 28, 2006, it was awarded $51,000 to do 68 cataract operations. Given that, Ontario Conservative Leader John Tory has raised the issue in the provincial legislature for the past two days.

"Why is it okay for this hospital with public funds to perform cataract surgery for people on the wait list," he asked, "but it's not okay for them to perform knee-replacement surgery for people who are waiting months and months in pain to have their surgery?"

Mr. Smitherman said in the legislature that the Ontario government believes "the not-for-profit model moving forward in the context of our public health-care system is the way to move forward to produce continuing results for the people of the province of Ontario."

Not content to let it rest, Mr. Tory asked Premier Dalton McGuinty a similar, follow-up question.

Mr. McGuinty responded that Don Mills Surgical, which he described as a "private, for-profit operation," is doing about .2 per cent of Ontario's cataract surgery.

In an interview yesterday, Mr. Tory labelled the government's "out-of-hand" dismissal of the Don Mills Surgical proposal as "inexcusable."

Waiting times are a particularly sensitive issue for the Ontario government, which has been feverishly working to reduce some of the lengthier queues. Although progress has been made -- waits for knee replacement, for example, have dropped by 30.2 per cent or 133 days since August/September of 2005 -- queues remain long.

Specifically, 90 per cent of patients requiring knee replacements had them done within 307 days, according to Ontario figures for December of 2006 to January of 2007.

The backlog is not limited to Ontario: Queues for joint replacements have been a chronic Canadian problem.