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  • 8 min read

Deficits, Ontario Hospitals and You

Post premise: There is absolutely no way the deficit swing that occurred for 102 hospitals between FY22 and FY23 can be kept from public scrutiny.

This post comes after we audited Ontario Hospital’s audited financial statements for FY22 and FY23. We found a 209% increase in the number of hospitals in deficit, from 33 to 102.

For the 102 in deficit, we found a 992% increase in average deficit (-$545k to -$5.9M) and a 3300% increase in total deficit (-$17.9M to -$610M).

These financial statistics reveal broader issues within the healthcare funding framework and underscore an urgent need to reassess funding strategies and allocation, particularly in the face of rising operational costs and inconsistencies in provincial funding​.

Our data points to significant failings at multiple levels. Our public healthcare crisis can be attributed to a combination of mismanagement by healthcare boards and inadequate funding and policy support from the Ministry of Health.

This chronic underfunding and poor strategic planning have led to an unsustainable healthcare system. Hospital boards and the Ministry of Health must share responsibility for this predicament, necessitating immediate and collaborative action to address the funding gaps and operational inefficiencies to salvage the province’s public healthcare system.

Ontario hospitals are about to experience a massive financial crunch

For the sake of brevity, three reasons why [with a subscription to…]

Just kidding, Ontario hospitals are in dire financial straits due to:

  1. Chronic underfunding
  2. Removal of one-time funding
  3. Bill 124 retroactive payment (and its accounting treatment)

Moreover, the removal of one-time funding, Bill 124 retroactive payment and chronic underfunding are about to collide.

Chronic underfunding

This means year-over-year funding and refers mostly to what “flows-through” from the Ontario government to Hospitals throughout the province.

Ontario’s healthcare spending on public hospitals has not kept up with any measures, really, but for the sake of discourse, consider that our government’s healthcare funding has failed to meet what we’ve just invented called the “fair and reasonable amount of dollar spend on people not dying” litmus test.

We say this definitively: Ontario’s hospitals have been grossly (like, sickeningly) underfunded — pun intended.

Our analysis shows, on average, Ontario Hospitals received a 3.25% year-over-year increase in Total Funding between FY22 and FY23. This might explain why 102 hospitals posted a deficit… if it weren’t for those pesky 300-dollar-an-hour private nurse agency rates hospitals were essentially forced to pay for the past four years.

It seems, editorially, that perhaps public funds have irresponsibly or incompetently or otherwise gone… “elsewhere” if the same government that allows private nursing agencies to enact a hostile takeover then uses public funds (read: taxpayer dollars) to pay for said private nursing agencies to enact said hostile takeover while public hospitals subsequently become unable to afford to pay said private nursing agencies for their “services.”

Chronic underfunding has left Ontario hospitals reliant on one-time funding such as pandemic (COVID funding) and Year End Pressure (YEP) funding to keep the lights on.

Removal of one-time funding

One-time funding refers to things like pandemic (COVID) funding, year-end pressure, working capital, and gain on sale.

Pandemic funding, in particular, is noteworthy as it (was) a special allocation provided to handle the extraordinary circumstances brought about by the COVID-19 pandemic. It was intended to cover expenses like personal protective equipment (PPE), increased staffing for testing or vaccination clinics, and infrastructure adjustments to manage patient flow and maintain social distancing.

Our analysis of FY22 and FY23 financial statements gave insight into how much one-time funding 71 hospitals received in FY22 and 75 hospitals received in FY23.

As far as we could gather, in FY23 more hospitals leveraged one-time funding at what appears to be a significantly lower total amount. This indicates a downward trend in one-time funding from FY22. However, if 102 hospitals couldn’t pay their debt in FY23… how will they do it now?

The answer is a massive move away from private agency use (hurrah). But will patients and healthcare workers be returning to mere husks of their former hospitals – or no hospitals at all?

Here’s the FY22 vs. FY23 breakdown

For monies deemed pandemic funding

  • FY22: $1,173,183,000 (count: 71 hospitals)
  • FY23: $871,917,000 (count: 75 hospitals)

Based on what we could gather, it looks like FY23 saw more hospitals leverage pandemic funding, but there was $306.2 million less to go around.

For monies deemed Bill 124 write-off/accrual

  • FY22: None found
  • FY23: -$126,847,000 (count: 16 hospitals)

For monies deemed Other (YEP, WC, Gain on Sale etc)

  • FY22: $34,705,000 (count: 7 hospitals)
    • Sault Area, Pembroke Regional, St Thomas Elgin General, Campbellford Memorial, Ontario Shores Centre for Mental Health, Mackenzie Health – Richmond Hill & Cotellucci Vaughan, Headwaters Health Care Centre – Orangeville
  • FY23: $3,500,000 (count: 1 hospital)
    • Georgian Bay General Health – Midland)
    • Fun fact: GBGH was the only hospital with a deficit in FY22 and a surplus in FY23. It wouldn’t have happened without a Gain on Sale of $3,500,000.

Bill 124 retroactive payment and its accounting treatment

Bill 124, known as the Protecting a Sustainable Public Sector for Future Generations Act, 2019, was introduced to control (suppress) public sector wage increases in Ontario. It limited salary increases to 1% per year for public sector employees, including healthcare workers.

Bill 124 was recently ruled unconstitutional. Its effects on recruitment and retention have been unfathomable. In the context of financials, we have attempted to examine how much hospitals set aside in case the legislation was repealed.

We could only find 16 hospitals that made their Bill 124 deduction/accrual status clear on their financial statements for FY23. They set aside $126 million. Extrapolating this to the full contingent of 138 hospitals should give you an idea of how much Bill 124 will cost public hospitals in retroactive payments. And that’s just hospitals.

The hospitals varied greatly in size, so using an average won’t work. Proper estimates of how much each hospital has set aside to pay back healthcare workers may be impossible, considering the lack of standardization in financial reporting across Ontario Hospitals. A broad-scale exploration of board meeting minutes is strongly recommended to determine if other amounts can be ascertained.

What does this mean for Ontario Hospitals?

The increase in the number of hospitals operating at a deficit could lead to reduced services, staff burnout, and potentially, closures of departments or entire facilities. This may result in longer patient wait times, reduced access to healthcare services, and increased pressure on the remaining operational hospitals.

As it stands, our data indicates that the rug is about to be pulled out from under a terrifying number of hospitals across Ontario:

  • Chronic underfunding has led to significant financial strain, making it difficult for hospitals to maintain operations and provide essential services. This has been exacerbated by rising operational costs, particularly in staffing.
  • The dependence on temporary funding sources and the subsequent removal of such funding will contribute to financial instability. Hospitals have struggled to plan long-term or invest in critical areas due to the uncertainty and temporariness of these funds.
  • The requirement to adjust for Bill 124 repayment has contributed to financial difficulties, impacting the ability of hospitals to manage their budgets effectively.

What does this mean for you?

This situation isn’t just about hospital budgets – it’s about your right to accessible, timely, and quality healthcare. The financial crisis in our hospitals could lead to a scenario where only those who can pay for private care get timely treatment while others are left waiting. This goes against the principles of equitable healthcare access and is a concern that affects us all.

Here, we’ve outlined the implications of the widespread deficits across Ontario hospitals:

  • Longer Waits, Less Time with Doctors: Imagine needing care and waiting longer for appointments. With financial strains, doctors and nurses are spread thin, impacting how quickly you’re seen and the attention you receive.
  • Tired Nurses, Stressed Doctors: Overburdened staff due to budget cuts means your caregivers are likely working longer hours under more stress. This affects the level of care you receive, as tired and stressed healthcare workers struggle to provide the best care.
  • Fewer Treatment Options Locally: Budget issues might lead to cuts in specialized services. You might have to travel farther for certain treatments or face difficulties in finding necessary care.
  • Overcrowded Hospitals and Overwhelmed Staff: As some hospitals reduce services or close, those remaining open become (more) overcrowded.
  • Changing Caregivers and Lack of Continuity: The government’s increasing reliance on temporary staff over the past four years means patients have likely had different nurses or doctors each visit. This can be particularly challenging for those with ongoing health needs, as continuity in care is crucial.
  • Potential Need to Pay for Private Services: One of the most concerning impacts of widespread hospital deficits is the potential need for patients to resort to private services for timely care. This raises issues of fairness and accessibility, as not everyone can afford to pay for private healthcare.