Harris had to stop hospital cuts after two years – what about Wynne?

When Health Minister Deb Matthews spoke at the closing of this year’s Ontario Hospital Association (OHA) HealthAchieve, the hall was two-thirds empty. Only two days before there was standing room only for Canadian astronaut Chris Hatfield.

Attendance at the final morning of the OHA’s annual get-together is usually smaller than the preceding two days, but we’ve never seen it this sparse.

Former Health Minister George Smitherman could usually command a decent audience on the final day. For Deb Matthews, the reception might be connected to how hospital executives are feeling about the restraint they are under.

Two years ago the OHA reminded the province that the Harris Tories had planned three years of cost cutting at Ontario hospitals but had to abandon the effort after year two.

Not only did the Tories halt the last $507 million in cuts in 1998, but had to substantially increase their restructuring budget.

The OHA maintains those were days when hospitals could better afford the haircut.

Two years into the present freeze on nominal base funding – a real cut of between 3-5 per cent annually – there is no fat left to cut at Ontario’s hospitals. Unlike Harris’ planned three-year freeze, the Wynne government remarkably expects to keep this up until 2018.

Like the 1990s, the province is embarking on a shift in funding, but there is too little new community investment to accommodate the resulting downloading from cash-strapped hospitals. The OHA noted that the benefits from restructuring in the 1990s were not realized until years later. You can’t just add community services on Friday and except to reap the benefits to the hospitals on Saturday.

The OHA concludes of the Harris cuts: “The lack of that essential, coordinated strategy to achieve spending cuts, the insufficient time allowed for captured proposed savings and the desire to avoid sweeping service reductions meant that budget targets were not achieved.”

Just in case the present government missed it, the OHA bolded the preceding summary.

The OHA argues that this was the beginning of the deficit problems that began to plague Ontario hospitals. The Ministry found itself advancing millions of dollars so that hospitals could even make payroll. It also became a major priority for the Local Health Integration Networks.

The OHA did make several recommendations in 2011 that the government did eventually implement. The OHA recommended that funding for the Community Care Access Centres increase by 5.5 per cent. Last year the government did increase home and community care by 4 per cent and upped it to 6 per cent this year.

Similarly we saw a recommendation that a significant effort be made to fund both hospital and community mental health with similar scale increases. That never happened.

They also suggested the government devise a strategy to deal with high-impact, high cost users of the system. The government recently embarked on this strategy by bringing together both care providers and social service agencies into the Health Links. The jury is still out on whether it is having an impact but most remain optimistic.

What the OHA really wanted and didn’t get was capacity planning – a point they made in their uncharacteristically critical response to the spring budget. The last time capacity planning had been done was in the 1990s – the targets now considered to be badly out of date.

They argued that capacity planning includes setting benchmarks “for things like the number of hospital beds, long-term care beds, assisted living spaces, home care hours and primary care services – to name but a few requirements.”

“Unforeseen cost pressures arise due to lack of capacity planning at the system level,” the OHA warned. “The result is gaps in service; greater demand for hospital care if appropriate alternatives are not available; and reactive funding decisions when cost and demand pressures become too great.”

Ontario has among the lowest number of hospital beds per capita in the developed world. The OHA maintains the situation is made worse by the additional beds required to meet wait time targets for such initiatives as hip and knee replacements.

The 2011 paper never sets an appropriate funding level for hospitals, although the OHA did remind government that had Ontario hospitals been funded at the average of all other provinces, annual funding would be $3.5 billion higher.

If the OHA is expecting the government to follow the Harris lead and cut short their austerity plan for public hospitals, there has been little sign that this is about to happen.

Just before the last general election the Auditor General called the government’s three-year projections for health spending “aggressive.” We should be reminded those forecasts had called for three per cent increases in overall health spending. What we got instead was even less – this year it is just slightly more than two.

The system is being held together by a series of Band-Aids, including a $600-$800 million relief fund announced in 2011 for hospitals with serious working capital deficits (working capital: current assets are less than their current liabilities). The trick is you have to be running balanced budgets to qualify — a difficult proposition during a funding freeze.

For the Harris government it was the image of ambulances trying to find an open ER that turned the tide. For a minority government likely to go into a spring election, the Wynne Liberals are betting that they can continue to hide the real cutting that is taking place under the guise of system transformation. Between now and then reality could come crashing in.

We’re not sure if we were in the Premier’s shoes that this is a gamble we’d like to take.

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