Scarborough/Rouge: Surprising merger talk despite evidence pointing to higher costs

When the Central East Local Health Integration Network (LHIN) asked the Scarborough and Rouge Valley hospitals to work together to plan hospital services in the eastern most part of Toronto, few would have thought the CEOs would come back talking merger instead.

Given the impetus for the talks was The Scarborough Hospital’s difficult financial situation, a merger could be a costly and risky response. Robert Biron, new CEO of The Scarborough Hospital, said no final decision will be made until residents, staff and doctors are first consulted.

“Almost all studies suggest that hospital consolidations raise costs of care by at least two per cent and, in the U.S., sometimes significantly more,” states retired consultant Thomas Weil in a 2010 edition of the Journal of Health Services Research and Policy.

A 2012 UK report on hospital mergers in that country also concluded the “financial performance declines, labour productivity does not change, waiting times for patients rise and there is no indication of an increase in clinical quality.”

It may be one of the reasons why we have seen so few of them in the second decade of the century after witnessing so many in the first. With funding already extremely tight, who would want to risk making the situation worse?

A recent presentation to the LHIN suggested that with a continued funding freeze by the province, the impact of inflation on the two hospitals would be $28.4 million by 2014-15. That is based on 5 per cent growth in costs due to an aging and growing population, wage settlements and more expensive insurance, medical supplies and drugs.

The joint presentation to the LHIN by Scarborough and Rouge was blunt: “hospitals have reduced administration costs and changed service delivery models to respond to revenue shortfalls. To ensure that they continue to balance, they may have to decrease (reduce/divest) services going forward.”

“Decreasing services” is sure to prick up the ears of community members who may have thought they recently won their battle to protect the hospital.

A merger between these two hospitals would create one large hospital system for Scarborough, but it would also likely restart talk in Durham to separate the Ajax-Pickering hospital (one of two sites that presently make up the Rouge Valley Health System) and merge it with Lakeridge Health.

The original restructuring plan that raised the ire of Scarborough residents was officially off the table last week. That included moving birthing exclusively to the Birchmount campus of The Scarborough Hospital. Birchmount would have also been reduced to hosting day surgeries, more complex procedures being transferred to the main campus. An expert panel said the original plan, intended to save $4.7 million, could have jeopardized patient safety.

Less discussed are the cuts that are already in the works. The Scarborough Hospital announced in May it plans to reduce another 100 staff positions this summer. This is on top of the 98 positions lost in the spring, including 70 nursing jobs. The hospital is also closing two operating rooms and 20 surgical beds. It just closed down its rheumatology clinic at the end of June.

Merging with Rouge will hardly improve The Scarborough Hospital’s bottom line. While Rouge finished last year’s operating budget in the black, it reported in June that it still has a working capital deficit (assets minus liabilities) of $35 million.

Given the difficulties surrounding formal mergers, other hospitals have been alternatively seeking working partnerships as a means of coordinating care services within their geographic region. This winter the Windsor and Hotel Dieu hospitals were quick to distinguish between such a partnership and a merger.

However, there have still been several formal mergers in recent years. St. John’s Rehab merged with Sunnybrook last year, and in 2011 Trillium merged with the Credit Valley Hospital.

The Ontario Ministry of Health has never conducted its own study to see if the large number of hospital mergers in the early 2000s had any impact on either cost or quality of services.

Given most of the evidence around mergers is negative, we have to wonder what evidence the Health Minister’s office is using to determine whether such plans go forward. The LHINs do not have authority to approve a hospital merger.

 

One response to “Scarborough/Rouge: Surprising merger talk despite evidence pointing to higher costs

  1. We constantly hear feel good buzz words from the Minister of Health regarding “evidence based procedures ” and most recently “quality based procedures “, those of us who actually work in Healthcare are finding out that decisions are not based on evidence or quality and more correctly are based on cost. As a health care provider it is reprehensible that we should be basing decisions based on cost over quality of care and standards of care.

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