Niagara Health System takes immediate steps to balance budget by 2012-2013

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Posted Feb 3rd, 2009

NIAGARA, ON:  The Niagara Health System (NHS) is taking a number of immediate steps to balance its budget by 2012-2013.

“Ontario’s hospitals like most other companies and organizations are trying very hard to balance their budgets and function within their means during these very difficult economic times,” says NHS President and CEO Debbie Sevenpifer.  “As we close off the current fiscal year on March 31, 2009, we will have a $17.8-million deficit on a budget of $370 million.”

Heading into 2009/10, Ontario hospitals, including the NHS, are anticipating a 2.1 per cent increase in provincial funding. Expenses for things like supplies, drugs and utilities are growing at a rate of 3.5 per cent more than last year, resulting in a $4-million shortfall.

“Some very difficult decisions have had to be made as part of what we need to do to bring our annual operating budget into line by 2012/13,” says NHS Chief Financial Officer Angela Zangari. “For 2009/10 we have identified $11.4 million in cost-savings measures that we will have to make. Today we are announcing the impact and details related to $8.0 million of the $11.4 cost-savings target.”

Approximately 90 positions will be impacted through $ 8 million in cost-saving measures. Thirty of these positions are currently vacant and will be permanently removed from the NHS. Although this means 30 fewer jobs within the system, there will be no lay-offs as a result of this change. Of the approximately 55 to 60 employees potentially impacted, there are options and provisions in the respective collective agreements that will hopefully minimize the number of staff that receive lay-off notices. 

“We are committed to doing our best to minimize job loss, and in the next several weeks we will work through all of the processes as outlined by the collective agreements and our human resources policies,” says NHS Vice President Human Resources Terry McMahon.

In the case of nurses, any nurse who is laid off will have the opportunity to remain with NHS by moving into other vacant positions. Appropriate training will be available for affected nurses who may need to update or develop new skills for such opportunities. There are similar opportunities with the other unions to use vacancies and reassignments as a way to minimize layoffs. Constructive discussions have already been held with our unions on this issue, and the NHS remains committed to working with the unions in this regard.

The $11.4 million in cost savings for fiscal 2009/10 ending March 31, 2010, come from four main initiatives:

  • Savings from implementation of Year 2 of HCM                        $5.5 million
  • Other Initiatives                                                                       $2.5 million
  • Savings from closing beds based on reduction in 
    Alternate Level of Care (ALC) patients                                     $3.0 million  
  • Centres of Excellence                                                               $0.4 million

The staffing impacts announced today pertain to the $5.5 million savings from Year 2 HCM and the $2.5 million savings from Other Initiatives. Further staffing impacts are expected in the coming months related to the remaining $3.4 million as details are finalized.

With the $11.4 million in savings for 2009/10, NHS continues to forecast a deficit of $11.5 million for March 31, 2010.  Savings achieved in 2009-10 are instrumental towards NHS’s ability to balance its budget by 2012/13. 

“Delivering quality patient care and balancing our hospital budget becomes more and more challenging every year,” says Mrs. Sevenpifer.  “With the recent drastic downturn in the economy, there will be even greater challenges when it comes to cost containment yet fewer opportunities to increase revenues.  The changes we are making have been identified because they will enable us to do what we must do -- balance our budget while providing accessible, quality healthcare to the people of Niagara.”

For more information, please contact:

Caroline Bourque Wiley
Consultant, Public Affairs
905-378-4647, ext. 43113
cwiley@niagarahealth.on.ca

BACKGROUND

HCM: In September 2007, the NHS engaged Health Care Management Group (HCM) in an operational improvement process to identify cost savings opportunities. Over the last year, $6.5 million of the $12 million of savings identified through the HCM initiative have been implemented. NHS is now moving forward with the second phase or year two of HCM savings which total $5.5 million. After implementing the HCM savings, the NHS will be one of the most efficient hospitals in its peer group, performing better than 85 per cent of its hospital peers with respect to efficiency. Some of the main HCM savings are:

  • supply chain efficiencies which includes product standardization and common warehousing of supplies with other hospitals. This accounts for nearly half of the year two HCM savings; and
  • increased revenues, primarily through the introduction of paid parking for staff and visitors at Port Colborne, Douglas Memorial and Niagara-on-the-Lake sites.

Other Initiatives: Total savings identified through Other Initiatives for 2009/10 are $2.5 million. These include:

  • Changes to staff mix to better reflect patient occupancy and patient acuity. Staffing mix changes will be guided by the principle of patients getting the right care, at the right time, in the right place by the right kind of health provider;
  • Reviewing out-patient services to determine what services currently provided in hospital would be more appropriately provided in a community setting; and
  • Increased parking rates.

ALC: Over the next four years, NHS expects to achieve $9 million in savings related to the closure of 82 beds occupied by Alternate Level of Care (ALC) patients. At any given time, NHS has had up to 200 ALC patients occupying acute care beds. The closure of the 82 beds will only be possible with a significant reduction in the number of ALC patients in hospital through new investments in the community. For 2009/10, $3 million in ALC savings through related bed closures has been identified. The specific beds to be closed in 2009/10 will be determined over the next three months in consultation with our clinicians. This will be informed by new initiatives being introduced through the provincial Aging at Home Strategy to reduce the number of ALC patients in hospital by the Hamilton Niagara Haldimand Brant (HNHB) Local Health Integration Network (LHIN). As beds are closed in response to these new investments in community based services, we will need to closely monitor the impact to admit-no-bed patients in Emergency Departments (ED) and patient wait times in the EDs.

CENTRES OF EXCELLENCE: In the HIP, $400,000 in savings was identified through the creation of Centres of Excellence. More details will emerge over the next three to six months as the HIP implementation process gets underway. More details will emerge over the next three months as the HIP implementation details are more fully developed in consultation with our clinicians

PARKING FEES 
Parking fees for staff and physicians will increase in two steps over the next year. Parking rates for visitors remain the same.

Effective February 16, 2009, parking rates for staff and physicians will increase to $16 per pay (every two weeks) from the current $12. A second increase will occur on September 28, 2009, to $18 per pay for all staff and physicians. The new rates will put NHS in line with rates charged at hospitals throughout southern Ontario. Staff and physician parking rates throughout Ontario vary from a low of $24 per month to a high of $50 per month.

Parking charges will also be introduced for staff, physicians and visitors at Douglas Memorial, Niagara-on-the-Lake and Port Colborne sites. Dates for the introduction of paid parking for staff and visitors to the small sites are as follows: Niagara-on-the-Lake –March 1st; Port Colborne – March 15th; and Douglas Memorial – March 31st

Niagara Health System