Strathroy Review Nets Savings - at a Cost

Strathroy Hospital is transforming. This message was at the top of the agenda at the regular monthly meeting of the Middlesex Hospital Alliance (MHA) Board of Directors, held Wednesday October 29, 2008.

"Strathroy's transformation is fueled by the provincial legislative need to present a balanced budget for approval to the South West Local Health Integration Network (SW LHIN) - with the funding dollars allocated," Ineke Haan, Chair of the MHA Board, explains. Strathroy Middlesex General Hospital (SMGH) is not alone in this; two other hospitals in the SW LHIN have not yet balanced their budgets either.

"This situation - of attempting to provide critical healthcare services to our community within the funding dollars allocated by South West Local Health Integrated Network (SW LHIN) - is not new. The board and administration have been grappling with the issues it creates since at least March of this year," Haan says.

In March 2008, the Board of Directors for the MHA was facing a projected annual deficit of $2.2 million at SMGH ($2.6 million for 2009/10) and $500,000 at FCHS - and a legislated need to balance budgets at both sites.

FCHS developed a number of restructuring initiatives, some of which take into account changes already implemented in the laboratory and out-patient clinics. Additionally, FCHS had equity which could be used to offset its budget shortfall. A proposal was made by the MHA to the South West LHIN to use FCHS's reserves to carry the budget for an additional year - basically allowing the hospital to balance over three years instead of two. The SW LHIN approved this proposal.

At SMGH's insistence, the SW LHIN initiated an external review process to compare the hospital's operations with other similar-sized hospitals. (The LHINs have this authority under the legislation passed that requires balanced budgets in Ontario's hospitals by 2010.) The hiring of an external reviewer and consultant team are paid for by the SW LHIN.

"While the External Review Team has recognized the excellent quality of the healthcare services provided at SMGH; the main objective of the Review is to align SMGH costs to that of similar-sized hospitals through a benchmarking comparison," Mike Mazza, CEO of the MHA, says.

With input and support from staff and physicians, the MHA has already initiated and implemented cost saving initiatives of $900,000 since March 2008.

Phase I reduced 4 full-time positions and 4 part-time positions - all in Nursing Departments. In this current Phase II of staffing changes, there have been 7 full time positions laid off and 2 part-time out of a staff of 395 individuals.

The MHA put in place a staffing freeze last April 4, 2008 to facilitate the re-absorption of displaced staff where possible. It has also reduced hours of work in a number of areas in order to minimize the number of full-time layoffs.

The MHA administration will make adjustments as opportunities arise. But no further phased reductions are anticipated in this fiscal year.

In December 2007, SMGH had 77 beds. Throughout Phase 1 and Phase II, beds have gradually been reduced with the target of 64 active beds in service by December 2008.

However key cost pressures remain at SMGH including:

Regional Shared Information Technology (IT) Support Program
Major increase in both elective and emergency Orthopaedic Procedures
Increase in Liability Insurance Premiums
Increased cost of Physician Recruitment
Borrowing cost for loan to deal with unforeseen asbestos during rebuild project

The board of directors also heard a presentation of a consultant's report regarding the asbestos issue. It indicated that the Administration continues to pay out on a loan, to cover the costs of dealing with the asbestos encountered in the recent Ambulatory and Emergency department renovation project. And further, that the existence of this contained toxin will cause any future renovations to also suffer additional expenses.

In addition to these continued cost pressures, the SMGH has seen a shift in volumes of activities at SMGH, says SMGH Chief of Staff, Dr. Paul Ferner. Most notably, there is a decrease in Emergency Department Visits (along with a corresponding increase in the severity of illness of patients visiting the ED), and also decreases in Obstetrics and Inpatient Admissions. Offsetting these are increases in Surgery, Orthopaedic Procedures, Day Surgeries, Medical Admissions, Ambulatory Care and CT Exams. "The way in which people are using the hospital's services and the types of services required are changing," Dr. Ferner says.

"This Board recognizes the need to be responsive to this changing healthcare environment," Haan says, "After collaborative discussions with the External Review Team, the SW LHIN and the Executive Committee, the Board has authorized the MHA Administration to proceed to transform SMGH to balance the requirements of patient services with the financial resources available."

"We are being asked to find about two million dollars of operating money - no small amount for SMGH. Departments are looking at supply costs, opportunities to generate revenues and staffing to find ways to reduce cost or increase revenue. Every department of SMGH will see some type of impact on the way they do business," Mazza says.

According to Mazza, the transformation will further eliminate Strathroy's long term care services, including beds on the fourth floor, and increase the focus on surgeries required by the local population, such as the highly praised Hip and Knee program. "Our wait times for these procedures are excellent, some of the best in the province," Mazza says.

Says Board Chair Haan; "We want to thank the community, our staff and physicians for their support as we go through this challenging time of change."

Connecting with the Future of Care

Strathroy Review Nets Savings - at a Cost