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No avoiding more hospital budget cuts: Giroux

HSN needs to slash in half a current deficit of $10M
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Health Sciences North has a projected deficit of $10 million for the current financial year. That number needs to be cut in half, says the hospital’s new CEO, Dominic Giroux. (Supplied)

Dominic Giroux does not equivocate when asked if he is confident Health Sciences North can make the deep cuts to slash in half a current deficit of $10 million or more to $4.9 million in 2018-2019.

“It has to be done and it will,” said Giroux in an interview with Sudbury.com Friday.

The president and chief executive officer of HSN said he is encouraged the hospital’s 5,000 front-line health workers and medical staff can do it because they are smart, engaged and committed to the care of patients, and they want HSN to continue to be successful.

In a blog to employees, medical staff, hospital board members and others this week, Giroux said the hospital “was in trouble” because it has been living beyond its means for five years.

Audited financial statements for recent fiscal years showed slight surpluses, at least partly because year-end adjustments, which are acceptable financial practices, painted a rosier picture of the hospital’s finances than existed.

For example, one year-end adjustment was the assumption the hospital would receive $6.7 million from the province to fund the expansion of Ramsey Lake Health Centre, the hospital’s main site. It was completed in 2010, but HSN has still not received some funds related to its construction.

A round of hospital cutbacks earlier this year trimmed more than $800,000 from HSN’s budget with the layoff of several senior managers.

But hospital officials may now be forced to cut front-line staff, some programs and even some of the hospital’s 14 sites to meet its fiscal challenges.

“Hard evidence” from the last five years shows hospital activity, such as surgeries and mental health care, has risen by 1.7 per cent, said Giroux. 

At the same time, funding from the Ministry of Health and Long-Term Care, the North East Local Health Integration Network, Cancer Care Ontario and other sources has increased less than half of that, only 0.8 per cent.

Provincial funding increases have not provided any support for “cost escalation whatsoever” in the last half decade, said Giroux, the former president of Laurentian University.

Giroux has met with hospital employees in various locations 330 times since assuming the top job at HSN Oct. 2, 2017. “So I don’t want to suggest there’s a lot more efficiencies out there,” he said. “We’re really looking at reductions in staffing and reductions in programs and services.”

The cost for surgical supplies, for instance, is lower today than it was five years ago so there already has been a great deal of waste reduction at the hospital.

On his first day at HSN, Giroux said he was told the hospital had incurred a deficit of $5.3 million in the first five months of 2017, from April to August. 

In January of this year, HSN’s board of directors approved a 2017-2018 budget with a deficit capped at $5.9 million. Cost-saving initiatives had been undertaken and Giroux said the hospital’s senior managers were confident they could meet that target.

But on Feb. 20, senior vice-president and chief operating officer Joe Pilon and other senior administrators were informed by the finance department the hospital had a revised base forecast deficit of $11.9 million as of Jan. 31.

By March 5, Pilon told the board’s finance committee that administrators were “tracking” a deficit as high as $10 million as of Jan. 31.

HSN’s board of directors has approved a deficit for 2018-2019 — one per cent of the hospital’s $490-million budget, or $4.9 million.

Since Giroux sent out the blog outlining the hospital’s harsh financial realities, he’s received a good deal of feedback. Hospital staff and other employees have told him they now have a clear understanding of the hospital’s situation because Giroux is being transparent and explaining it.

“The advice I’m getting from people is, ‘OK, we need to course correct, get it done, do it fast, and then move on,’” he said.

In other words, “just right-side the operation and then let’s talk about our future.”

That future is being outlined in two strategic planning processes Giroux, board directors and senior management are compiling.

Giroux said looking at the hard evidence of the hospital’s financial health is not a “blame game.” It’s about looking at it to make sound decisions and difficult choices.

It is also his responsibility, he said, to highlight for government the public policy perspective when trends or data suggest that issues need to be addressed.

Giroux points out in his blog that health sector spending, as a percentage of Ontario government expenditures, is at its lowest in six years at 38.1 per cent.


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