SBGHC: Small, rural, and looking to find $622,000

When the province introduced its new hospital funding formula, it specifically highlighted its intention not to subject small rural hospitals to it.

Evidently when the Minister meant small, she meant very small.

South Bruce Grey Health Centre is reporting that the new hospital funding formula means they will be facing a $622,000 shortfall next year.

SBGHC is made up of four very small hospital sites in Walkerton, Durham, Kincardine and Chesley. With four hospitals, it’s total budget is about $41.7 million, of which $29.5 million comes directly from the Ministry of Health (another $6.3 million comes in MOH physician funding).

The community makes the argument that had these four hospitals not been amalgamated, they would not be subject to this punitive funding formula.

$41.7 million might seem like a lot until you think about budgets of regional hospitals in other centres. The Peterborough Regional Health Centre, for example, operates a single site with a budget of a little more than $230 million.

Four small rural hospitals, SBGHC is less likely to be able to make up for the loss by increasing wait times procedures that are funded separately by the Ministry. Due to its size, SBGHC simply can’t take advantage of funding for procedures like hip and knee replacements.

Worst still, the hospitals that are losing funding as a result of the new formula appear to be located in areas that are already experiencing some level of economic hardship. The CEO of Windsor Regional Hospital has already highlighted his challenges under the formula.

Having a rational behind how hospitals are funded makes sense, but the present formula doesn’t really work, especially when small rural-based hospitals are being caught in this dilemma. The minimum price of change should have been an agreement to effectively red circle hospitals that would be negatively impacted by the formula. That didn’t happen in the new austerity environment.

There are also questions about whether introducing a new funding formula is appropriate at a time when hospitals are getting zero base budgets. It makes the transition that much more difficult and places services at unnecessary risk.

The phase-in of the new formula shouldn’t make winners and losers, but instead find a reasonable way to make sure community hospitals receive appropriate funding to respond to population need. That will be very difficult in the coming year if SBGHC and other small hospitals are going to balance their budgets by the end of 2013-14.