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Hospitals to be rewarded for efficiency.

In a dramatic change from tradition, Ontario's hospitals are now being told to prepare balanced budgets. And they will be rewarded for their operating efficiency.

"The reality is that government is not going to fund hospital deficits any longer," comments Mark Hurst, the executive director of North Bay Civic Hospital.

"Hospitals that achieve increased efficiencies in patient care are eligible for further funding," adds Warren Chant, associate executive director of Port Arthur General Hospital in Thunder Bay.

Chant reports that Port Arthur received extra funding under this incentive because its cost per patient was less than the average for similar-sized hospitals in Ontario.

According to Ontario Hospital Association president Dennis Timbrell, hospitals have responded well to the ministry's request for balanced budgets.

However, the hospitals are faced with few cost-cutting options when half of their costs are related to staffing.

In Northern Ontario hospitals have responded by closing unused beds, cutting staff, rationalizing services, performing more day surgeries and out-patient services, and cutting back on supplies, travel and professional development.

Carl Roy, the assistant executive director of Sudbury General Hospital, says closing beds is the major means of saving needed dollars.

"Fewer beds means savings in the staff required to service the beds," he explains.

Most hospitals officials say that the overall the quality of care has not been jeopardized. However, they warn that further cutbacks will result in a review and priorization of services.

"It is conceivable that longer waiting periods will be experienced," says Hurst.

For hospitals that service a large area, maintaining services is becoming increasingly difficult.

"Because of our location we have to maintain a certain level of core services. This is getting more difficult to maintain," says Randy Belair, the associate executive director of Lake of the Woods Hospital in Kenora.

However, in larger centres such as Sudbury, North Bay, Sault Ste. Marie and Thunder Bay, where two or more hospitals exist, a rationalization of services has been implemented.

North Bay Civic and St. Joseph's hospitals, for example, have shared some services for several years already, but the financial crunch is accelerating their plans for further streamlining.

"Our two hospitals are looking at merger possibilities consisting of one board and one administrative structure operating two sites," says Hurst.

The ministry is actively promoting such rationalization. Health Minister Frances Lankin has asked the local health council in each of the major northern centres to examine how this can be achieved.

Hospitals are also implementing plans to share services with community-based groups.

"The Sudbury General and Network North are going to co-ordinate mental health services in the fall," reports Roy.

Meanwhile, wage settlements continue to be worrisome unknowns for hospitals. According to Timbrell, three collective agreements are currently in arbitration because of salary increase disputes. These will be decided in September.

"Those decisions could further complicate and accelerate the downsizing in the system," warns Timbrell.

Ontario's hospitals have been limited to a 3.4-per-cent total funding increase for this fiscal year and a two-per-cent increase in 1993/94.

According to ministry figures, between 1981/82 and 1991/92 payments to hospitals grew at an average of 9.7 per cent. Based on this average, funding increases for hospitals has been reduced by almost two-thirds.

"We are still increasing hospital budgets, just not at the pace we used to," says Lankin.

Ontario hospitals should count themselves lucky says Peter Elson, executive director of the Ontario Public Health Association. He notes that funding was frozen for many of their counterparts in other provinces.
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Author:Campbell, Joan
Publication:Northern Ontario Business
Article Type:Industry Overview
Date:Aug 1, 1992
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