TORONTO - Ontario's governing Liberals promised Thursday to rein in skyrocketing health-care costs by introducing new reforms that would see hospitals compete for cash and their executives get paid based on how well their facilities perform.

Among the measures outlined in Monday's throne speech, hospitals would narrow their range of services with the aim of doing surgeries and treatments more cheaply than their rivals. Those who can do it cheaper would get additional funding from the government.

"Patients will have greater choice about where they can access the best quality treatment," Lt.-Gov. David Onley said in the throne speech.

Ontario's outdated hospital system will be modernized with a bill that "taps into the expertise of community partners and all health-care professionals" while an expert panel drafts guidelines on patient care, he said.

Legislation will also be introduced to make health-care providers and executives accountable for improving patient care, Onley said.

For example, hospital executives would see their bonuses tied to hospital performance, such as lowering wait times or C. difficile rates, government officials said. Hospitals may also be compelled to publicly report other indicators of patient safety, they added.

Ontario needs to be smarter with its health-care cash, which accounts for nearly half of every dollar it spends, Premier Dalton McGuinty said following the speech.

The expert panel will ensure that Ontarians get "all the health care they need, and no more than the health care they need," he added.

For example, hospitals around the world already follow certain rules when a patient comes in with a hurt ankle, he said.

"Unless there are certain indications are there, you're not getting an X-ray," he said. "You don't want an X-ray because you don't want to wait in line for an X-ray. I don't want to give you an X-ray because it costs too much money."

As for hospitals competing for cash, McGuinty said he's merely expanding the so-called "patient-based" payment model that's used in half of Ontario's 154 hospitals to reduce wait times for certain procedures, such as cataract surgery.

Forcing hospitals to underbid each other for services will hurt small and rural communities that can't compete with their big-city counterparts, leaving patients to travel further for care, said Natalie Mehra of the Ontario Health Coalition.

When a similar plan was introduced in the United Kingdom about a decade ago, it led to a host of new administrative costs and massive privatization of hospitals services, she said.

"They are playing with fire," she said.

"There is little that will galvanize Ontarians as much as forcing them into an impossible situation where they cannot access health-care services from their local communities."

It's an "interesting" idea, but the government isn't saying which procedures will be included, said NDP Leader Andrea Horwath.

"What I don't want to see is the government using any kind of model to simply pull all kinds of money out and create a situation where people don't have access to good health care close to home," she added.

Others argue the patient-based payment model will create a more efficient system and encourage hospitals to improve patient care.

Small hospitals and teaching hospitals would need to be funded differently, however, because they don't have enough volume to compete for cash, said Tom Closson, president of the Ontario Hospital Association.

"But with those provisos, the concept makes a lot of sense," he said.

The proposed changes come amid concerns over rising hospital deficits, emergency room closures and lingering resentment over the eHealth scandal, in which $1 billion spent was spent to develop electronic health records with very little to show for it.

Even though provincial law forbids hospitals from running deficits, about 40 per cent couldn't balance their books last spring, according to Closson.

The government has said it will increase the base funding for hospitals, but the most hospitals can hope for is an increase below last year's 2.1 per cent boost.

Critics complain an increase of one or two per cent - less than inflation - is so meagre it will force beleaguered hospitals to close beds and cut services.

The government Liberals have said that's all they can afford, given the unprecedented $25-billion deficit they're facing this year.

But after foisting a health tax of up to $900 per person on Ontario taxpayers in 2004, those excuses ring hollow, opposition parties say.