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Wednesday, February 26, 2014
St. Joseph’s Health Care London
St. Joseph’s Health Care London shares budget plan for fiscal 2014/2015

Hospital Board approves plan to implement $10.95 million in savings to address projected costs vs. funding levels, and uses another $8.4 million of own funds to sustain services and support transition.

Today St. Joseph’s Health Care London’s president and CEO Dr. Gillian Kernaghan announced a budget plan to meet a savings target of $10.95 million to help balance the multi-sited hospital organization’s operating budget for fiscal year 2014/15 which begins April 1. The plan also includes an $8.4 million deficit which will be covered by St. Joseph’s own reserves to sustain services and support one-time costs associated with continued hospital transition, particularly in mental health care.

“This budget plan is a tribute to our leaders and their teams, who worked hard making difficult yet necessary choices to balance our budget, while sustaining patient care volumes and delivering the best possible care for our region. The plan also recognizes the strong commitment our Board continues to make to the transformation of our hospital system,” states St. Joseph’s board chair, Margaret McLaughlin.

In addition to the $10.95 million cost savings target, St. Joseph’s has submitted a plan that includes a further $8.4 million deficit projection related to three other significant health system requirements: one-time costs to complete regional mental health care transformation; ongoing operating costs to sustain forensic psychiatry services in the absence of planned post- construction operating funding from the province; and operating costs to help sustain the Transitional Care Unit at St. Joseph’s Parkwood Hospital.

Hospitals are required by legislation to submit balanced budget plans each year, however, in keeping with provincial requirements, St. Joseph’s has ensured these needs will be funded from the organization’s own working capital and resources.

“St. Joseph’s has been covering all costs associated with mental health care restructuring over several years, thanks to careful long-range planning and resource investment,” states Dr. Kernaghan. “This includes operating costs to sustain services until the move to a new specialized mental health care facility takes place later this year, all costs supporting program and staff transfers and changes, and all costs associated with helping long-stay patients move from hospital to community living.”

“This transformation, mandated by the province and endorsed by the LHIN, could not have been completed otherwise,” adds Dr. Kernaghan. “The St. Joseph’s board and staff have demonstrated our commitment to a new future in mental health care as this transformation unfolded over the past 15 years, and now in 2014/2015 this journey will be fully realized. We are, however, looking to the province to meet its commitments in relation to post construction funding for the new forensic psychiatry facility in order to be able to open the nine additional forensic psychiatry beds which are urgently needed in Ontario. People with mental illness who are under court order are waiting in jails for treatment.”

Every St. Joseph’s team and department shares in cost savings.

The $10.95 million target represents about three percent of the hospital’s $413 million annual operations, and was set to address a number of continued hospital system funding pressures including provincial base operating funding freezes; inflationary costs for utilities, supplies, staff salaries and benefits; operating costs to support advanced technology and information systems; and the new hospital funding formulas under Ontario’s Health Based Allocation Model (HBAM), which are resulting in funding reductions in several key patient care areas.

First, corporate savings were identified, including areas where there were opportunities to reduce areas with year-over-year positive budget variances without impacting patient care, along with ongoing efficiency efforts including supply savings and re-negotiating supply and service contracts. Then, leaders and teams were asked to find two percent in cost savings from all departments and services.

These steps resulted in achieving about two thirds of the overall cost saving target.

No reductions in patient care volumes, but there will be changes in how care and service is provided, resulting in human resource impacts.

“In addition to the challenges of base funding freezes over the past several years, the impact of the HBAM provincial funding formulas are now taking effect, resulting in reduced funding in specific patient care areas,” states Dr. Gillian Kernaghan. First, we were informed half way through this current fiscal year that we would be receiving $1 million less than the previously year due to HBAM funding adjustments, and therefore needed to add that to our annualized savings target in our 2014/2015 plan. In addition, the continued implementation of HBAM will be felt in our Complex Continuing Care Program at Parkwood Hospital this coming year.

In Complex Continuing Care, St. Joseph’s most recent results show that the HBAM actual cost per case is approximately 25 per cent higher than the province’s expected cost. While the program has been moving toward the lower expected cost, a new model of care must now be introduced including different levels and mixes of nursing and support roles.

For staff, this means the reduction of some positions and the introduction of new positions, ensuring that the new staffing skill mix upholds quality, safe patient care.

Complex Continuing Care is a vital link in Ontario’s health care system today. For people living with life-altering and life-long conditions, this program helps, for example, people on ventilators to live outside an intensive care unit. For many others, it is a place to regain the ability to return to home or to a long term care environment with supports.

“The care landscape has shifted from programs such as this one at Parkwood being places where people live indefinitely or for very long periods of time, to a place of recovery and transition. Our challenge is to continue to make this shift with great care and within in expected cost per case,” states Elaine Gibson, St. Joseph’s Vice President, Complex, Specialty Aging and Rehabilitative Care.

Dr. Kernaghan adds, “All model of care changes are carefully considered to ensure quality, safe patient care is being carried out by people in appropriate, trained roles. We benchmark our models with others across the province to ensure consistent approaches.”

Human resource impact facts:

17 new positions – 9 full time and 8 part time – are being added as part of changing models of care, including Primary Care Partners and Registered Practical Nurses.
32 full time positions and 1 part time position are being reduced. However, 19 of these position reductions will happen through attrition.
The total number of staff receiving lay-off notices at this time is therefore 14 – all positions are full time.
The lay-off notices touch all parts of the organization: 7 are non-union; 7 are union.
Of the 7 union lay-off notices, 6 are Registered Nurses.
A total of 3 leadership positions are being reduced (This equates to 9% of the total layoffs issued.)
The notice period for lay-offs is 5 or 6 months. During this time, St. Joseph’s and its union leaders work together to mitigate as much actual job loss as possible through further attrition and early retirements.
St. Joseph’s is committed to supporting staff as they make decisions about their employment choices.

Dr. Kernaghan states, “Any changes that impact people are difficult for the entire St. Joseph’s community. At the same time, we must continue to change if we are to address the fiscal constraints, ensure quality and be prepared to meet future needs.”

Like all Ontario hospitals, St. Joseph’s will continue to manage the complex changes in health funding as new funding formulas and an array of other policies and projects continue to be introduced. “Hospitals must be provided with their funding levels and approved volumes well in advance of the fiscal year to allow appropriate planning to improve access, manage wait times, and deploy resources effectively if we are to have the quality, safe care Ontarians expect and deserve,” states Dr. Kernaghan.

For a summary of St. Joseph’s 2014/15 budget plan and to review facts and stats, please click here: http://www.sjhc.london.on.ca/our-performance/budget-2014-2015.

Media Contact:

Anne Kay
Communication and Public Affairs
St Joseph’s Health Care London
519-646-6100 ext 42470
Anne.kay@sjhc.london.on.ca