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.