Ontario Hospital Funding Facts Backgrounder

Ontario Hospital Association
200 Front Street West, Suite 2800
Toronto, Ontario, M5V 3L1
Tel: (416) 205-1345 Fax: (416) 205-1360
Visit our Web Site: http://www.oha.com

Friday, September 3, 2004

For the 2004-05 fiscal year, operating costs for hospitals will increase by 7.9 per cent, based upon a forecast prepared by the OHA from financial information supplied by hospitals. OHA’s methodology was audited by Deloitte & Touche.

For 2004-05, cost increases in hospitals are estimated as follows:

Serving the health care needs of a population that is growing in size by almost 150,000 people each year – 1.2%
Providing care an aging population, and their more complicated health needs – 0.4%
Paying for increases in modern surgical supplies and equipment – 0.4%
Drug cost increases – 0.3%
Physician payment increases – 0.4%
Utilities, insurance, food and equipment depreciation – 0.6%
The balance of the increase to hire more health care professionals, including full time nurses, health and safety initiatives, as well as increases in wages, salaries and benefits

With a combined total deficit of more than $600 million, the funding gap facing Ontario hospitals is too large to close without affecting patient care.

Starting in 1992-93 until 1997-98, hospital budgets declined by an average of 3% per year, (representing a total cut of more than $1.3 billion from hospital budgets) as the provincial government took steps to stabilize Ontario’s public finances. In doing so, thousands of beds were eliminated and there was a very significant impact on our health care professionals, including nurses as health services were cut.

From 1998/99 to 2002/03, the Ontario government increased spending on hospitals significantly because it was playing catch-up for several years of significant spending cuts, population growth and cost increases in other important areas of providing hospital care.

Unfortunately, despite these increases, on a per capita basis spending on hospitals in Ontario remains at 1993 levels, and Ontario hospitals and their patients remain the lowest funded compared to all other provinces ($958 per capita vs. a national average of $1,058), according to data published by the Canadian Institute for Health Information.

Hospital operating funding has fallen as a share of Ontario Gross Domestic Product (GDP) from 2.8% in 1992 to 2.1% in 2004.

The Ontario government’s stated multi-year funding plan falls far short of patient care needs. Unless additional funding is provided, hospital services will be short by up to:

16,000 hospital staff by 2006/07, and
42,800 less in-patient surgeries will then be performed by 2006/07.

· In addition, notwithstanding a government commitment to increase hospital beds by 1,600 over four years, hospitals will be forced to cut at least 1,600 hospital beds by 2006-07 due the funding shortfall.

-30-

For further information:
Stefan Baranski, OHA Public Affairs
416-205-1305