Government & policy
Ontario hospitals told to expect
– The Ontario government has informed the province’s 154 publicly funded
hospitals to prepare for a possible funding freeze next year. A freeze
would lead many organizations to cut services that affect patients.
Health Minister Deb Matthews (pictured) said the government might have no choice
but to freeze hospital budgets to help the province sustain an
extraordinary period of multi-year, multibillion-dollar deficits.
In the worst-case scenario, hospitals will get no increase in their
budgets for the fiscal year beginning April 1, 2010, she said in an
interview with the Globe and Mail. The best that hospitals can hope for,
she said, is an increase of less than the 2.1 percent they received this
But even then, hospitals would be forced to make some cuts because the
extra money would not keep pace with rising costs for drugs, medical
equipment and supplies.
“I know that hospitals are being challenged by it, but our fiscal
reality is that we’ve got to really take a hard look at every dollar we
spend,” Ms. Matthews said.
Hospitals usually know well before this time of year how much funding
they will receive for the coming fiscal year. But the government is
dealing with enormous uncertainty in its own revenue numbers, which have
fallen dramatically during the economic recession.
“I’m certainly aware that they would like that number as soon as
possible and I’m just not in a position to give it to them yet,” Ms.
Earlier this month, hospitals submitted operating plans to her office
for the next fiscal year under three scenarios - a funding freeze, a
1-per-cent increase, and a 2-per-cent increase. The minister wants to
see what impact freezing the budget will have on hospitals.
“All across Ontario, there will be reductions in the scope of services
that hospitals provide,” said Natalie Mehra, director of the Ontario
As a result, she said, patients would have to travel longer distances
for physiotherapy and other services or wait longer in emergency rooms
before seeing a doctor.
Healthcare executives said the province’s hospitals are already among
the leanest in Canada, leaving no room to cut further without
compromising patient care.
Even with a 2.1-per-cent funding increase, to just over $14.5-billion in
fiscal 2009-2010, dozens of hospitals have been forced to close beds,
cut patient services and lay off staff in an effort to balance their
books. The budgets have not kept pace with the rising costs of drugs,
medical equipment and supplies.
The Niagara Health System, which operates seven hospitals, will close 39
beds next year as part of a four-year plan to find $28-million in
savings and eliminate its deficit.
Chief financial officer Angela Zangeri said the Niagara hospitals’ plans
are based on the assumption they will receive a 2-per-cent funding
increase in fiscal 2010-2011.
“Anything less than that would require significant service reductions,”
If funding is frozen for next year, the Niagara hospitals would be
forced to find another $9-million in savings, she said.
Nearly one in every three hospitals in Ontario ended fiscal 2008-09 with
a deficit. Of the 61 hospitals in the red, those of the Niagara Health
System were among the hardest hit, with a deficit of $18.3-million.
The gap between funding and expenses is forcing more and more hospitals
to borrow money to repay cash advances needed to replenish dwindling
Tom Closson, president of the Ontario Hospital Association, said this is
becoming a growing problem for the sector.
He said he hopes the government will continue to invest in hospitals at
a reasonable level. The sooner hospitals know how much funding they will
receive, the better, he said.
“Regardless of what the number is, they need a target, they need to
For their part, Ottawa-area hospitals are facing at least $51.6 million
in cuts just to balance their budgets, and some are contemplating
closing beds and laying off staff. The cuts represent about 2 percent on
total budgets of $1.8 billion among the city’s six hospitals, and the
shortfall could grow if the province imposes a funding freeze next year.
“If we get a zero-per-cent (increase), we’re going to have to close some
beds,” said Daniel Levac, chief financial officer of Bruyère Continuing
Some, such as the Queensway Carleton Hospital, are planning for the
worst by warning their employees of potential job losses. Others, such
as The Ottawa Hospital, Children’s Hospital of Eastern Ontario and
Montfort Hospital, are taking a wait-and-see approach.
“We have some ideas about what to do,” said Michel Bilodeau, CHEO’s
chief executive. “None of them is palatable in terms of service to the
population. .It would be irresponsible for us to start raising the worry
of the population
for something that may not happen.”
Ontario has a $24.7-billion deficit and plunging tax revenues.
So the best that hospitals could hope for is a two-per-cent funding
increase, which would still force them to make less severe cuts. But
some analysts maintain a funding freeze is inevitable.
“The hospitals that are being prudent and those that are looking at no
(funding) increases are being very realistic,” said Doug Angus,
University of Ottawa health economist. “I think if they get anything
above a zero-per-cent increase, it’s just going to be a bonus.”
Posted Dec. 24, 2009