Ontario’s budget doesn’t look good for hospitals

Now that the government of Ontario has released its budget for 2016, we have a better sense of its health care priorities. This budget underscores the Ministry’s plans to focus on community-based care, hoping this will ease demand on more expensive sectors, including hospitals and drugs. Without a clear strategy for how to respond to escalating costs in these areas, the budget suggests that more turbulent times are ahead.

The winner in the budget is community and home care, with $250 million in new funding. There is an added $16 million over three years committed to housing for people with mental health conditions and addictions, and $85 million over three years for community-governed primary care clinics. The budget also outlines reforms ahead for primary care. The government is bolstering the Local Health Integration Networks’ (LHIN) mandates, giving them responsibility over administering home care in place of Community Care Access Centres (CCAC). It is also expanding scopes of practice for nurse practitioners, registered nurses and pharmacists. For example, the Ministry has committed to expanding the role of RNs to prescribe some drugs to patients. In addition, the budget’s highlighting of the success of Health Links suggests Ontario will continue to invest in this model. Health Links is a community-based integrated care program meant to keep highly complex patients out of hospital. For perspective, while Health Links is a laudable initiative, it currently provides care for less than 0.2% of Ontarians.

The logic is simple, getting people out of hospital and keeping them out should cost less. Achieving this outcome may not be so easy. An aging population with increasing medical complexity tends to rely heavily on hospital care, despite receiving comprehensive community services.

Where does this focus on community-based care leave the rest of the system? The three largest expenses in the health care budget are hospitals, pharmaceuticals, and doctors’ services, accounting for over 60% combined. In each case, the future and funding landscape is uncertain.

Let’s begin with the physician services budget. It was not mentioned in the Ontario budget. This is not surprising given the frosty relationship between the Ministry and the OMA. The OMA has filed a Constitutional challenge in response to the Ministry’s unilateral action, resulting in a stalemate until a legal ruling or crisis. With the number and type of primary care reforms on the table, the Ministry will require the cooperation, and hopefully active participation, of doctors. Ergo, concessions on both sides will need to be made; it’s just a matter of time.

Next, let’s consider hospital funding. After four years in a 0% environment, hospitals will receive a one year 1% increase to base funding. Anyone currently working in a hospital will have experienced the effects of escalating budget constraints in the last two to three years. Programs have been cut, staff laid off or replaced with lower wage counterparts, and managers have been tasked with trimming departmental budgets anywhere they can. The austerity pressures are mounting, and a 1% increase is wholly inadequate. Consider that, according to CIHI, the cost drivers of general inflation, aging, and population growth are roughly 3% annually. To compound matters, major union negotiations are poised to absorb much of the 1% increase via higher compensation. Finally, demand for inpatient services remains high. Four of Ontario’s academic hospitals, each with an annual budget over $1 billion, consistently have occupancy rates above 90%. Things are going to get worse for hospital financing before they get better. It will take months to years to see the return on home and community care investments, especially while the administrative oversight of home care services is being transferred to the LHINs.

Now, what about the future for drug coverage in Ontario? The cost of pharmaceuticals is accelerating, especially with more cancer drugs, biologics and new Hepatitis C treatment. There is also a push for a national pharmacare program. The trouble is defining a program that suits all jurisdictions. The budget mentions redesigning drug coverage in Ontario by 2019, termed the “Patients First Drug Program”. The program would “increase fairness” and equitable access for people who “need” it and will “coordinate with individuals’ private insurance”. This doesn’t sound like the first-dollar coverage many envision, which could save governments, employers and citizens billions per year

The Ministry will be seeking public consultation on the new drug program this spring. Health care providers and patients must have a strong voice during this time, remembering that all costs are eventually shouldered by citizens as taxpayers. We need a solution that is both fiscally responsible and removes barriers for access to evidence-based treatment. Health care funding remains on uncertain ground. We must continue to focus on doing what’s best for our fellow Ontarians, while upholding our fiduciary responsibility to take care of the system as a whole.

Andrew Appleton practices General Internal Medicine in London, Ontario. He has an interest in health systems issues and innovations.

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  1. Denyse Lynch

    The solution to improving health care focuses heavily on pouring more money in to the system. How that is the solution for the kinds of problems I’ve experienced as a patient and caregiver is questionable and a big concern. My lived evidence (experiences) have had more to do with incompetent stakeholders, providers who were deficient in the appropriate skills, knowledge, motivation/willingness, to ensure the health system can operate to ” established quality standards. Quality is conforming to standards. A few excellent performers who meet standards cannot carry the work load required of an entire health system.

    All stakeholders (people) need to be proficient or, trained, coached to be proficient in planning, organizing skills, working collaboratively together to execute plans, interpersonal communication skills, integrating communications between/among the various health care silos, reducing wastage, recruitment practices, establishing and monitoring standards against stakeholders’ performance, coaching, and holding themselves and others accountable for the smooth performance of the health system. These are “people-competencies” – who possess the right knowledge, capabilities and skills required and relevant to their role/function in the system. Throwing more money at the system is NOT a priority approach. Let’s ensure the people organizing the silos understand their function, and that the silos are structured to function as needed and designed so each silo ultimately has the right people, with the right stuff to perform their function, seamlessly in delivering health care.

  2. Susan

    my lived experience with the medical profession has been extensive Without going into detail l support the doctors in theiri fight with the province we seem to forget that the majority of doctors worked up to 60 hours a week are on call and make tremondous adjustments in their lives in order to carry out their practices.I support all medical professionals and would also to see an equitable solution to this problem and an understanding by the Wynne government that letting this problem fester will erode our medical system further when there an aging population and not a recovery in the future generations to support this

  3. Nicholas Leyland

    “This budget underscores the Ministry’s plans to focus on community-based care, hoping this will ease demand on more expensive sectors, including hospitals and drugs. ”

    The important operative word in this statement is “hoping”. I understand that if our system treats patients in the community and focuses on strategies to prevent illness that our system will improve. However, as a hospital based provider, I must point out that we have reached a critical point in the squeeze of acute care hospitals in this strategy. Clinicians like me on the front lines are trying to reduce costs by the provision of the least invasive care and innovating to reduce hospital length of stay as well as many, many other changes. In many cases the new technologies enabling providers to accomplish these goals are available but simply too expensive in the present environment (e.g. robotic surgery, minimally invasive technologies, technological alternatives to hysterectomy, etc.). The cutbacks have stagnated or blocked completely the ability to adopt and utilize appropriate new techniques and technologies to provide what ought to be the standard of care based on clinical practice guidelines and the best available evidence. This is just simply not possible in the system with have today because each year we are being asked to cut budgets significantly for every service in our acute care sector.
    There is also ample evidence that many of the services provided in the hospital setting are less expensive and safely provided in regulated not for profit free standing centers. At the present time there is no viable opportunity to explore such innovation.
    I fully support innovative strategies to transform the health care system. However, I believe that we are disrupting the ability to provide appropriate hospital based care with the present direction the government is forcing on the acute care sector. Continuation of this strategy has and will continue to impact on our ability to provide effective evolving care within acute care hospitals.

    Nicholas Leyland, Chief and Chair of OB/GYN, McMaster University and Hamilton Health Sciences

  4. Chris

    Its not the hospitals! Hospitals might be poorly engineered for what they try to accomplish but cutting their funding will not accomplish any more!!! Instead, Investigate doctors for; mass pushing narcotics and opiates for the pharmaceuticals!, Over crowding waiting rooms for exrta consulting fees and other chargeable fees on the Ontario health care budget. Statistics show enough narcotics are being prescribed to drug the population of north america three times over! Also the narcotics and opiates that you recieve from prescription, are they actually safe for consumption? Or does your pain medication simply mask the pain while destroying your kidneys and liver, thus requiring more prescription for the “complicated side effects”, also if “death or heart failure, etc. is on the list of side effects for any drug, thats more of a main effect not a side effect! Ask yourself when visiting your doctor: “is this doctor following their hippocratic oath to help you or just help themself in trying to make the next boat payment?”

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