The economic costs and productivity losses from poor mental health in Ontario

The economic costs and productivity losses from poor mental health in Ontario

This blog post is intended to briefly summarize the direction the Institute was taking as it endeavored to write a working paper that quantified the economic and opportunity costs associated with poor mental health in Ontario. The report was to be released in June in collaboration with the Sandra Rotman Centre for Health Sector Strategy.

We would like to thank Lori Spadorcia from the Centre for Addiction and Mental Health; Kimberly Moran from Children’s Mental Health Ontario; Aseefa Sarang from Across Boundaries; and Camille Quenneville from the Canadian Mental Health Association – Ontario for taking the time to consult with us on this project. We would also like to thank Rosemary Hannam, Brian Golden, and Will Mitchell from the Sandra Rotman Centre for Health Sector Strategy at the Rotman School of Management for agreeing to partner with us on this project, and Alejandro García Magos, PhD candidate in Political Science at the University of Toronto, for assisting with data analysis.

The World Health Organization ranks depression as the single largest contributor to the global disease burden, while anxiety ranks sixth. This is just a sliver of all mental health and substance use disorders, which, when resources for treatment and management are lacking, place a drag on the economy. In 2018, the Lancet Commission on Global Mental Health and Sustainable Development reported that mental health disorders could cost the global economy $16 trillion US between 2010 and 2030. A large portion of this cost is attributable to lower productivity among those suffering from mental health disorders such as depression, generalized anxiety, and personality disorders, all of which are predictive of work impairment after controlling for impairment due to physical disorders.

A 2012 study found that the years of life lost due to premature mortality and disability from nine mental health and addiction issues in Ontario was 1.5 times that of all cancers, and seven times that of all infectious diseases. The fact is that most Ontarians are affected, either directly or indirectly, by a mental health or substance use disorder. While healthcare spending is the largest line item in the provincial budget by a significant margin, Ontario actually spends the least per person amongst Canadian provinces, $490 below the average. Further, in 2018, the Ministry of Health and Long-Term Care’s mental health and addictions system spending was only 7.2 percent of the overall healthcare budget.

Social determinants such as income level, education, gender and sexual orientation, housing (or lack thereof), race and immigrant status, and experiences with discrimination and trauma can all increase or decrease the risk of experiencing a mental health or substance use disorder over a lifetime. Untreated mental health disorders not only exert high costs on the system, they exert a high personal toll on those that are affected. This is becoming truer every day—the future of work is increasingly knowledge-based, which will mean the economy’s main natural resources will be how smart people are, their emotional intelligence, and their overall mental health and well-being.[1]

Each year, Ontario’s Panel on Economic Growth and Prosperity highlights the province’s prosperity gap—the gap between Ontario’s Gross Domestic Product (GDP) per capita and that of the median peer jurisdiction.[2] While Ontario has performed strongly across work effort factors, the province’s productivity consistently lags and is responsible for the bulk of the prosperity gap. While many factors influence the productive output of Ontario’s labour force, including trade barriers, an inability to commercialize innovations, and regulatory barriers to foreign investment, the government should also consider the impact of poor mental health. Mental health and substance use disorders negatively impact economic productivity in two key ways: they reduce the performance of the workforce (absenteeism and presenteeism) and they exclude many people from paid work, thus reducing the skills available. 

In this blog, the Institute focuses on anxiety, depression, and alcohol and opioid abuse amongst adults, and children’s mental health disorders, and how they have the potential to impact the province’s economic prosperity.

The economic implications of poor mental health among adults

In Ontario, 2.5 percent of individuals aged 15 and over suffer from Generalized Anxiety Disorder each year, while 4.8 percent experience a major depressive episode (Exhibit 1). These numbers are consistent with the national average. Over a lifetime these figures increase to eight and 10.8 percent, respectively.

Exhibit 1: Rates of Generalized Anxiety Disorder and Major Depressive Episodes, Ontario and key jurisdictions

Depression and anxiety disorders can be triggered by stressful and uncertain life events such as the loss of a job, the breakdown of a relationship, or the death of a loved one. This explains why the lifetime rates for these disorders are much higher than the 12-month rate, which contrasts with disorders such as Bipolar 1 which has very close 12-month and lifetime rates and is much more likely to develop in an individual who has a close relative with the disorder.[3]

Substance abuse and dependence often co-occurs with other mental health disorders, and in many cases, unmet mental health needs pre-date substance abuse, a sign that individuals are self-medicating.

In any given year, 3.1 percent of Ontarians will meet the criteria for alcohol abuse or dependence, rising to 15.7 percent over a lifetime.[4] Despite the cultural tendency to downplay issues related to alcohol, it exerts the most significant impact of any mental health or substance use disorder in terms of years of life lost. In 2016-17 there were 201 hospitalizations entirely caused by alcohol for every 100,000 people in Ontario. The primary cause: chronic alcohol use disorder.

While not nearly as widespread as alcohol abuse, opioid addiction has become a visible issue due to its high death toll across the country—nearly ten people died each day between January 2016 and March 2018 as a result of a drug overdose. In Ontario, the rate of emergency department visits for opioid poisonings increased 73 percent between 2016 and 2018.

It is estimated that one in five Canadians live with chronic pain and may face lengthy waits for treatment. Numerous factors, including liberal prescribing, have resulted in Canadians being some of the highest consumers of prescription opioids in the world.  In British Columbia, 56 percent of individuals who died of an opioid overdose had sought health services for pain in the year prior to their death. One in seven (14 percent) Ontarians filled an opioid prescription in 2015-16, totaling over nine million prescriptions, a number which does not include opioids prescribed as part of addiction treatment. While one-quarter of prescriptions filled were for a one-time, immediate-release opioid for less than two weeks, nearly a quarter of all newly prescribed opioids were for a daily dose which exceeded clinical guidelines. In a 2017 survey of Ontario adults, 2.8 percent reported non-medical use of opioids in the past year.

However, the number of hospitalizations and overdose deaths attributable to opioids is not being driven by prescribed opioids but rather has jumped dramatically in line with the presence of illicit fentanyl and synthetic fentanyl-like drugs in the drug supply (Exhibit 2).

Exhibit 2: Rates of emergency department presentation and overdoses attributed to opioids, 2003-2017, Ontario

There is no question that untreated mental health and substance use disorders impact an individual's ability to perform their job functions. In a 2017 survey of Canadian employees with mental health issues, 78 percent reported missing work due to their mental health—31 percent missed one week or less, 12 percent missed two weeks to one month, and 34 percent missed more than two weeks. In 2018, the average Ontario worker lost 7.2 days due to illness or disability, while an additional two days were lost due to personal or family responsibility (Exhibit 3).

Exhibit 3: Days of work lost per year due to illness or disability and personal or family responsibility, full-time employees, Ontario, Canada, and peer provinces, 1998 to 2018

Longer-term detachment from the labour force due to mental health and substance use disorders not only reduces productivity, it lowers tax revenues and results in higher costs associated with benefit provisions. Thirty-five percent of all short-term and 44 percent of all long-term disability claims for employees at Manulife, an insurance company, are for mental health.

But absence alone may not help employers identify mental health issues amongst their employees—27 percent of employees said that they were able to continue with their usual daily routine or work while suffering from depression or overwhelming anxiety. Presenteeism is the action of employees coming to work despite having a sickness that justifies an absence, resulting in sub-optimal performance. A survey of Canadian employees with a mental health condition found that 68 percent reported being able to perform their job optimally 70 percent of the time or less.  Unlike absenteeism, presenteeism can be hard to quantify, but nonetheless, it is widely accepted that it contributes to lowered productivity.

The worst outcome of an untreated or poorly managed mental health or substance use disorder is early death. Often when an individual with a mental health or substance use disorder dies, it happens before mid-life, at the time when most Ontarians are at or about to enter the peak of their career. Between 2010 and 2012, there were 3,555 deaths by suicide or self-inflicted injury in Ontario resulting in 103,010 potential years of life lost, or 29 years per death, compared to just six potential years of life lost per person for all other causes of death over the same period.[5] Similarly, in 2015 there were 29,410 years of life lost due to opioid-related deaths in Ontario stemming from 728 deaths, for an average of 40 years per death.[6]

As the opioid overdose epidemic has swept across North America, there has been limited sociodemographic information collected about the people dying beyond that they were overwhelmingly likely to be young and male—75 percent of opioid-related overdoses across Canada happen to men, with the most common age range between 30 and 39 years old. This changed with the release of statistics collected by the British Columbia Coroner’s Office – across the province, 44 percent of people who died from an illicit drug overdose were employed at the time of their death, and 26 percent had been employed in each of the five years before. Forty percent had not received any social assistance in the five years prior to their death.

The opportunity and caregiving costs associated with mental illness among youth

In Ontario, about 20 percent of children and youth face mental illness at any given time, and approximately 70 percent of people with mental illness experience initial onset during childhood or adolescence.[7] Children and youth are increasingly seeking care for their mental health—between 2006 and 2014, there was a 25 percent increase in outpatient doctor visits for mental health and addictions care, and a 40 percent increase in the rate of children and youth seeing psychiatrists.[8] However, not all are getting the care they require: in 2014, 11 percent of students participating in the Ontario School Mental Health Survey reported needing professional help for mental health concerns, but nearly half of those students said they had not yet received it. 

This failure to provide students with mental health care when they first express that they are experiencing symptoms explains why there was a 72 percent increase in emergency department visits, and a 79 percent increase in in-patient admissions for children and youth with mental health issues over the past decade. Generally speaking, ‘first contact’ visits to the emergency department for mental health or substance use disorders are an indication that a child did not receive access to timely care in the community, meaning that there is an opportunity to prevent the need for such visits.[9]

There are numerous sociodemographic issues which contribute to poor mental health amongst youth. Rates of emergency department visits for self-harm and suicide rates are higher for children and youth living in the lowest income neighbourhoods and in northern Ontario, while children and youth living in the highest income neighbourhoods see psychiatrists most often.[10] Despite representing only 4.3 percent of Canada’s population, the suicide rate amongst Indigenous youth is five to six times higher than the rate seen in the rest of the population.

Children’s mental health disorders can influence their development, educational attainment, and the potential to become a productive adult. One longitudinal study in the United States followed children with psychological conditions over 40 years and found large effects on their ability to work and earn as adults, with adult family income reduced by $10,400 (or 20 percent) per year for a lifetime cost of $300,000 in lost family income. Mental health promotion and illness prevention interventions targeted at children and adolescents have been shown to have high returns on investment, ranging from $1.80 to $17.07 for every dollar spent.

Children’s mental health also has productivity implications for parents and guardians whose caring obligations may hinder their labour force participation. Women with children have higher absenteeism rates, losing 13.1 days per worker in 2018 compared to 11.7 days lost for women without children, while men actually have slightly higher absenteeism rates without children.[11] According to a 2017 survey, 25 percent of Ontario parents have missed work days to care for their children facing anxiety and the productivity loss as a result of this absenteeism was calculated to be $421 million.

Current challenges accessing treatment for mental health and substance use disorders

There are many Ontarians with mental health and substance use disorders who could benefit from additional support in their community. For example, for some individuals with mild to moderate depression, short-term cognitive behavioural therapy (CBT), a type of short-term structured psychotherapy, can be more effective than medication. For individuals with more complex needs, increased community-based support can keep an individual healthy and living more independently out of hospital. Yet, many do not receive the care they require in a timely manner.

Wait times

In Ontario, it is common for wait times for mental health treatment ranging from counselling to residential addictions programs to exceed one month and sometimes take significantly longer (Exhibit 4). For children and youth, the average wait time for counselling and psychotherapy services in Ontario is 78 days, with wait times up to 18 months in certain parts of the province. While the government has mandated legislation to create benchmark targets, mandatory tracking, and reporting of wait times for other key health care services since 2005, there is no wait time strategy in place for psychiatric care.

Exhibit 4: Wait times (in days) for mental health case management/supportive counselling (top) and residential addictions treatment (bottom) in Ontario, February 2019

Source: Institute for Competitiveness & Prosperity analysis based on data from ConnexOntario.

While the literature shows that many mental health and substance use disorders are most appropriately treated in the community, insufficient capacity and long wait times often mean patients’ condition worsens, requiring them to seek emergency care. On average, one-third of emergency department visits for mental illness or addiction are by people who have never been assessed and treated for these issues before.

Additionally, over the 2011-2015 period, approximately one in ten beds in specialty psychiatric hospitals in Ontario were occupied by patients who no longer needed to be treated in the hospital but could not be discharged due to the lack of available beds in supportive housing or at long-term care homes.[12] If Ontario’s four specialty psychiatric hospitals had been able to find a place to discharge their patients as soon as required in 2015-16, the cost of their care in supportive housing or long-term care homes would have been $45 million less and they would have been able to serve 1,400 more patients.[13]

Limited providers of talk therapy

Getting referred to publicly funded talk therapy (also known as psychotherapy) in Ontario can be a challenge. Ontario currently has a restriction in place which limits the public system from paying anyone except for psychiatrists on a fee-for-service basis for talk therapy. While psychologists, counsellors and other therapists (occupation, psychotherapy, etc.) can provide talk therapy, it is not covered by the Ontario Health Insurance Plan (OHIP), but may be covered by private health insurance.

This is doubly problematic when you consider that Ontario has a shortage of psychiatrists who are unevenly distributed based on the province’s population. In 2014, there were just 15.3 psychiatrists per 100,000 people in Ontario with wide variations based on geographic location—for example, there were 61 per capita in Toronto and just 4.2 in the Central West Local Health Integration Network (LHIN).[14] In total 40 percent of Ontario psychiatrists worked in the Toronto Central LHIN where just 10 percent of the population resides. A study conducted by the Ministry of Health and Long-Term Care and the Ontario Medical Association estimates that Ontario will need 300 new psychiatrists by 2030 to meet growing demand. Currently, nearly half of Ontario’s psychiatrists graduated from medical school at least 30 years ago.[15]

The UK and Australia have both responded to poor access to psychiatrists by integrating their services and social workers into the publicly funded system, whereby psychiatrists adopt the role of consultants as they are paid more for consultations than for psychotherapy.[16]

It’s not just psychiatrists who are in short supply, there are also not enough mental health workers who bill private insurance or the patient. There are approximately 8,450 psychologists in Ontario, of which approximately half are located in Toronto.

A lack of team-based care

A team-based approach, whereby mental health nurses could also prescribe medication or a social worker could provide counselling, has the potential to significantly increase access to services for many Ontarians while also driving down the cost of care.

In Ontario, multidisciplinary Assertive Community Treatment (ACT) teams provide intensive treatment, rehabilitation, and support services for individuals with serious and complex mental health needs, with the goal of supporting them in their recovery and desire to live in the community. In an Ontario study, ACT clients used an average of 76 hospital days in each of the two years prior to admission into the program, whereas they used only 25 days after one year in ACT, 16 days after four years, and seven days after six years. In 2016, the average length of stay in a psychiatric hospital Ontario was 66 days (Exhibit 5).

Exhibit 5: Median and average length of hospital stay for mental illness or addiction, Ontario and Canadian peers, 2016-17

There are currently 79 ACT teams funded by the Ministry of Health and Long-Term Care serving 6,000 patients across Ontario. In February 2019 the average wait for access an ACT team was 31 days to determine eligibility and an additional 128 days to receive the service (up from 90 days to receive service in 2016).[17]

A lack of follow-up after a hospitalization

When an adult is admitted to the hospital in Ontario for mental health or substance use disorders, more than two-thirds do not follow up with a doctor within seven days of leaving. Among children, only 38 percent visited a physician within seven days of discharge and just 16 percent saw a psychiatrist within the same timeframe, rates which have not significantly changed over time.[18] Follow-up rates post-hospitalization are worse among men, lower income individuals, and people in rural areas.

In 2011, the Government of Ontario introduced bonus payments to encourage psychiatrists to provide rapid access to patients within 30 days of discharge from the hospital and for six months after a suicide attempt, but research has found that these incentives did not increase follow-up care. Without appropriate follow up after a crisis that is severe enough to warrant hospitalization, those suffering from mental health issues are likely to end up back at the hospital. Approximately 12 percent of adult patients admitted for a mood disorder will be readmitted to hospital within 30 days in Ontario.[19] Among children and youth, 8.9 percent were readmitted within 30 days in 2014, a 33 percent increase from 2006.[20]

Not enough supervised consumption sites

The Government of Ontario announced in March 2019 that following a review of Consumption and Treatment Services applications it had approved 15 sites in areas with the greatest need—six in Toronto, three in Ottawa, and one in each London, Guelph, Hamilton, Kingston, St. Catharine’s and Thunder Bay. The announcement meant that some existing operating sites would have funding revoked. The provincial government previously announced in October 2018 that they would be rebranding supervised-consumption and overdose-prevention sites as “consumption and treatment services,” and that it would cap the number of sites at 21, a move that was widely criticized for restricting services vital to reducing opioid-related overdose deaths.

Harm-reduction organizations do have the option to apply directly to Health Canada for funding and an exemption to the Controlled Drugs and Substances Act (1996). Currently, 24 sites in Ontario have an exemption. There are currently no safe consumption sites operating in the City of Brantford, Belleville, or Sault St. Marie, the three Ontario census subdivisions with the highest age-adjusted rate of hospitalizations for opioid poisonings in 2017.


Individuals with mental health and substance use disorders are predisposed to experiencing housing insecurity and homelessness, while at the same time poor mental health can be triggered or aggravated by a lack of safe, affordable housing. Without their basic needs being met, including a safe space to sleep at night, it is incredibly difficult to effectively treat underlying mental health or substance use disorders.

In 2016, 8,780 Ontarians reported being a usual resident at one of 305 shelters. In Toronto, more than 16,000 unique individuals used the City-administered emergency shelter system in 2016, while 22 percent (3,583 people) were homeless for more than six months, meeting the federal definition of chronic homelessness. These individuals are more likely to face complex challenges and require supportive housing.

Where do we go from here?

The Institute believes that there is an economic case to be made for higher investment in appropriate mental health and substance use disorder treatment. While the Institute will not be able to carry on this work and make full recommendations to the public and private sector in a Working Paper, we feel strongly that those organizations with the capacity to continue examining the links between economic productivity and prosperity and poor mental health do so. In support of that continued research, the one recommendation we will put forward is that more data must be collected in order to build an evidence base for future policy decisions.

One of the largest challenges identified by stakeholders the Institute consulted with, as well as in the process of seeking out data to inform the writing of a Working Paper, was a lack of concrete data. While the federal government has engaged in two Canadian Community Health Surveys specifically examining mental health in 2002 and 2012, these surveys did not keep questions consistent nor did they capture the full scale of mental health disorders, such as asking about all anxiety disorders. Additionally, the survey did not capture data about sexual orientation and racial background, both of which can influence the likelihood of suffering from a mental health or substance use disorder as well as one’s experience interacting with healthcare services and receiving treatment. It is challenging to assess just how much of an opportunity cost and how much productivity losses are a result of poor mental health in Ontario without the data that demonstrates the scale of these issues.

The lack of linked, routinely collected data that can highlight the benefits of increased spending on mental health is one of the biggest hurdles to making a strong business case for mental health reform. In its 2016 report, the Ontario Auditor General pointed out that the Ministry of Health and Long-Term Care and the LHINs were not collecting relevant information for funding decisions and had not done analysis on why general hospital emergency room visits related to mental health were increasing.[21] A 2018 follow-up found that there was little to no progress on the recommendation to collect relevant information from specialty psychiatric hospitals. Additionally, Health Quality Ontario’s 2018 annual report acknowledged that some children, youth, and adults who did not see a doctor for mental health care before an emergency room presentation or hospital discharge “may have received care from a nurse practitioner, psychologist, or other non-physician practitioners in the community, but data on those visits are not currently available for Ontario.”[22] Data about follow-up visits with a non-doctor provider following discharge is also not available.

Written by: Margaret Campbell

Photo credit: Liana Monica Bordei, iStock


[1] Dr. Kwame McKenzie on "Ontario Election 2018: Mental Health and Dental Care,” The Agenda with Steve Paikin.  Aired May 14, 2018.

[2] Peer jurisdictions were chosen based on similarity across three characteristics: sectoral composition (distribution of employment across sectors of the economy), population size, and level of education. Peer jurisdictions include British Columbia, Quebéc, Indiana, Michigan, Ohio, Tennessee, Wisconsin, Australia, the Netherlands, and Sweden.

[3] Bipolar 1 12-month prevalence is 0.7 percent, while lifetime prevalence is one percent.

Institute for Competitiveness & Prosperity analysis based on data from Statistics Canada’s Canadian Community Health Survey, 2012.

[4] Institute for Competitiveness & Prosperity analysis based on data from Statistics Canada’s Canadian Community Health Survey, 2012.

[5] Institute for Competitiveness & Prosperity analysis based on data from Statistics Canada Table: 13-10-0742-01 (formerly CANSIM  102-4313).

[6] Institute for Competitiveness & Prosperity analysis based on data from Gomes, Tara, Simon Greaves, Mina Tadrous, Muhammad M. Mamdani, J. Michael Paterson, and David N. Juurlink. “Measuring the Burden of Opioid-related Mortality in Ontario, Canada." 2018.; and Public Health Ontario’s Interactive Opioid Tool.  

[7] Institute for Clinical and Evaluative Studies. The Mental Health of Children and Youth in Ontario: 2017 Scorecard. June 2017.

[8] Ibid.

[9] Health Quality Ontario. Measuring Up 2018. 2018.

[10] Ibid.

[11] Institute for Competitiveness & Prosperity analysis based on data from Statistics Canada Table 14-10-0194-01 (formerly CANSIM 279-0033).

[12] Lysk, Bonnie. “Chapter 3, Section 3.12: Speciality Psychiatric Hospital Services,” Annual Report 2016, Volume 1. Office of the Auditor General of Ontario. 2016.

[13] Ibid.

[14] Kurdyak, P, J Zaheer, J Cheng, D Rudoler, and BH Mulstant. “Changes in Characteristics and Practice Patterns of Ontario Psychiatrists, Can J Psychiatry, 62 (1): 40-47. 2017.

[15] Ibid.

[16] Ibid.

[17] Institute for Competitiveness & Prosperity analysis based on data from ConnexOntario.

[18]Institute for Clinical and Evaluative Studies, The Mental Health of Children and Youth in Ontario: 2017 Scorecard.

[19] Institute for Competitiveness & Prosperity analysis based on Canadian Institute for Health Information Regional Mental Health Services Indicators, Ontario. 2016.

[20] Institute for Clinical and Evaluative Studies, The Mental Health of Children and Youth in Ontario: 2017 Scorecard.

[21] Lysk, “Chapter 3, Section 3.12: Speciality Psychiatric Hospital Services.”

[22] Health Quality Ontario, Measuring Up 2018.

Category: Talent, Health Care, Life satisfaction, Productivity, Public Policy, Social Policy