When Charles Sousa unwraps his Ontario budget on Thursday there likely won’t be any new money for expanding hospital infrastructure.
Coming out of the Harris era, the McGuinty/Wynne government faced a considerable backlog of infrastructure needs, including updates to many Ontario hospitals.
To date there have been more than 100 major hospital infrastructure projects – or a project for two out of every three hospital corporations in the province. About a third of these projects have been costly long-term public-private partnerships where the private sector is responsible for the design, construction, financing and maintenance.
Paul Rosebush, CEO of the South Bruce Grey Health Centre told Bayshore Broadcasting that the economic forecast has raised some red flags that essentially mean that if you are not on the existing list for a rebuild, you won’t be.
RVHS CEO Rik Ganderton with TSH CEO Robert Biron looking on during Wednesday’s Central East LHIN Board meeting.
The two CEOs representing the Scarborough and Rouge Valley hospitals appeared before the Central East LHIN this morning following news last week that their proposed merger was off – at least for now.
Both Rik Ganderton and Robert Biron looked nervous knowing at least in this venue the decision to pull back from the brink would be regarded as a disappointment. Had the two merged, they would have formed the seventh largest hospital corporation in the province.
The outcome of the meeting was predictable – the LHIN would work with the two hospitals to further an integration agenda and develop next steps. Both CEOs agreed to come back in April after meeting with the LHIN senior staff.
LHIN CEO Deborah Hammons tried to put the best face on the situation noting that the $3.8 million already invested in the merger was not entirely lost –getting the public to understand the position of the hospitals was “money well spent.”
In the end the price was too much.
The merger between the Scarborough and Rouge Valley hospitals appears to be sidelined after months of intense activity including unprecedented community consultation.
March 15 The Scarborough Hospital board passed a resolution that abandons the amalgamation “effective immediately,” although provides faint hope that the province will reconsider merger conditions set by the two hospitals, including funding for one-time costs.
Those costs are substantial – the two hospitals would be looking for about $30 million in one-time basic merger costs and an additional $5 million annually for salary adjustments. The province did ante up $3 million.
The two hospitals were also looking for more than $2 billion in new buildings to replace aging infrastructure and to double the size of the Ajax-Pickering hospital.
That’s a steep price when hospitals are likely to enter their fifth year with base funding either frozen or well below real costs. That funding restraint includes two years of zeros and counting.
Robert Biron quietly came into the Central East LHIN board meeting and sat as a spectator. The CEO of the Scarborough Hospital silently left the room again after the LHIN gave him most of what he came for.
One of the conditions of a potential merger between The Scarborough Hospital and the Rouge Valley Health System was seed money towards a feasibility study for a new Scarborough mega-hospital to replace the three outdated sites – Birchmount, Scarborough General and Centenary – as well as an expansion of hospital services in West Durham.
The LHIN had no problem endorsing the “service and program elements” of the pre-capital submissions, but realized that any decision on West Durham would likely have to involve the other major regional hospital: Lakeridge Health.
After being spurned by Toronto East General and eventually finding a dance partner with the Rouge Valley Health System, the Scarborough Hospital may be a little bashful about turning even further East to take Lakeridge Health out on a date.
The LHIN stresses that any contact with Lakeridge would be about capacity planning and not integration. It’s purely platonic even if Lakeridge has a very lovely cancer centre and a recent history of balanced budgets.
The reasons behind the two capital plans are very different. The Scarborough General is an oddball warren of add-ons and their operating rooms are among the oldest in the province. The two hospitals also like to remind us over and over that Centenary is only six kilometers from the Scarborough General Hospital. The Ajax-Pickering Hospital (RVHS) recently completed a significant modern expansion, but the planning was never sufficient for the rapidly expanding community.
In a perfect world hospitals would be publicly funded to meet the health needs of their communities. That would be it.
When the government started talking about funding reform, the thinking was that at last we would be moving closer to a rational system of allocation.
What we got instead was a hybrid of global funding, competition, and a funding formula that was supposed to take into consideration both existing usage and local demographics. Layered on top is a base funding freeze to at least 2018. Money has always been a driver in the health system, but suddenly it appears to be driving everything.
The evidence suggests that the complex and confusing system of funding allocation is creating new inequities that may be even worse than the ad hoc system of the past.
The South Bruce Grey Health Centre, for example, has argued to the South West LHIN that they are being penalized for efficiently combining the resources of four small rural hospitals. The Scarborough Hospital and the Rouge Valley Health System have made it clear that the complex demographic needs of their two communities are not being recognized in their base funding allocation.
What the new funding system appears to be doing is driving a new wave of costly and disruptive hospital mergers. You can’t blame the hospitals for seeking such mergers because they are simply acknowledging the new rules of the game set by the province. In this new world bigger gets more clout gets more funding.
The merger of The Scarborough Hospital (TSH) with the Rouge Valley Health System (RVHS) will not come cheap. Last night the hospital boards approved the idea of merger but only under very specific and costly conditions.
Nor will the merger necessarily stem the tide of cuts The Scarborough Hospital has been experiencing. At last night’s special meeting of the TSH board, CEO Robert Biron was asked whether continuing cuts would be seen as a failure of the merger?
Biron said funding constraint is part of the government’s transformation agenda and that merged or not, the hospitals would have to navigate it anyway. He told the board that together they were more likely to minimize the impact of such restraint.
Given an estimated $29.5 million in one-time fixed costs around the merger plus a wage harmonization bill of $5.4 million, these costs are likely to be held up against the loss of any services the merged hospital decides to shed in the future. There is still resentment over the loss of $17 million worth of services earlier this year to balance TSH’s budget.
Tonight The Scarborough Hospital and Rouge Valley Health System are having their second public telephone town hall to discuss the benefits and risks of a merger.
The first town hall on September 24 attracted more than 8,000 participants.
The irony of this process is that it has provided incredible amounts of information but many have still come away feeling that they don’t have enough detail to make a decision to support or reject merger.
Scarborough CEO Robert Biron says there is no hidden agenda.
He is right. What we have are two large urban hospitals that are under similar pressures to 149 other hospital corporations in Ontario due to the province’s decision to freeze hospital funding at least until 2018.
Most, however, have decided not to examine formal merger to deal with the funding freeze as have these two hospitals.