Our Transformation and Infrastructure ‘Finish Line’ is in Sight; Planning for the Future Continues
With 15 years of acute care program transformation behind us, 2013/14 was a year focused on our continued transformation in specialized mental health care, as well planning for the next phase of change for the veterans care program, in response to the decline of the veteran population requiring inpatient, long term hospital care.
With much excitement we opened and occupied the new Southwest Centre for Forensic Mental Health Care (Southwest Centre), located in St. Thomas, in June 2013. The Province of Ontario through the Ministry of Health funded the majority of the $153.7 million cost, with the hospital also contributing our local share according to terms of the agreement. There were immediate positive impacts for patients as they moved in to private rooms with private washrooms, and an overall environment that truly uplifts and fosters dignity and healing. After a few system glitches were addressed, staff too have expressed their accolades for the facility and much-improved working conditions.
The last of four planned Tier II transfers in mental health care (since 2010/11) was also completed with the transfer of 14 inpatient beds and related services to St. Thomas Elgin General Hospital in January 2014.
With our partners at Veterans Affairs Canada, we prepared for the second phase of program changes, which was the reduction of 20 inpatient care beds, completed on April 1, 2014.
Facilities construction remained a very visible area of focus this year. Construction at St. Joseph’s Hospital, a three-year project transforming the front façade with full accessibility features and new research and administrative spaces, will be completed in January 2015. Known as Milestone 2, Phase 3, this project was most noted this year with EllisDon’s pink crane garnering considerable public attention not only for the building, but for St. Joseph’s Breast Care Program. As part of the planned completion, we look forward to re-opening the Chapel, carefully protected during construction, along with re-introducing this site to our community.
Equally noticed and much anticipated is our new specialized mental health care building set to open this November, on the same site as Parkwood Hospital in south London. As with the Southwest Centre, this facility and its accompanying outpatient and community teams, will mark the long coming shift in our mental health care system, focusing on recovery and rehabilitation. A new vision – a new community of care, recovery and rehabilitation – is emerging as our mental health care programs join our complex care, rehabilitation and geriatric care programs in one geographic location.
The total estimated hospital or ‘local share’ contribution for our three major redevelopment initiatives is $43.3 million.
Sound Fiscal and Service Results
St. Joseph’s financial statements have received a clean audit opinion, which is a testament to our continued focus on operational and fiscal responsibility. We ended the fiscal year with a GAAP surplus of $10.1 million, which can be attributed to investment income of $6.7 million and $3.4 million of one-time unplanned revenues. The favourable performance in investment income reflects the great gains we have witnessed this year in the financial markets. St. Joseph’s does not rely on investment income to support or fund hospital operating budgets in any way but rather uses this money to reinvest in strategic capital needs such as major repairs to unfunded building infrastructure needs, advancing with the Enabling Technology plan and investment in other strategic capital needs.
The majority of the one-time funding relates to Post Construction Operating Plan (PCOP) funding for Mental Health Care that was announced in the last month of our fiscal year. We have been advocating for this funding with the Ministry of Health for some time now. This was done to align with the opening of the new Southwest Centre due to the increased capacity that was created through construction to address the high demand we are seeing for forensic psychiatry services. The funding is also one key component in our plan to open nine new, currently empty beds, in the new Southwest Centre. The related base funding of this announcement will allow us to open four new inpatient beds during the coming fiscal year and based on the provincial PCOP funding process and time lines, we hope to open the remaining five beds as soon as the government process permits.
It is also noted that the operating results include $2.5 million of unfunded costs for restructuring. However, these costs have been funded by a favourable result from “normal hospital operations” of an equal amount. This amount ($2.5 million) represents 0.6% of the total hospital budget of $432 million. This is a remarkable achievement, considering that this result was achieved during another year of transformational change amid the continuation of hospital funding reform.
St. Joseph’s working capital ratio remains healthy at 1.7:1 and well within the guidelines in the Hospital Services Accountability Agreement with the South West Local Health Integration Network. For hospitals, a healthy working capital position allows for the restriction of funds in support of reinvestment and renewal of facilities and equipment, both in the short and long term.
St. Joseph’s restricted investments for current and future commitments remain secure and total $192.8 million at March 31, 2014. Most of these investments are externally managed by professional firms under the stewardship of the Investment Subcommittee of the Board.
Supporting St. Joseph’s care, teaching and research mission, capital investments during the year totaled $162.8 million. Of this total, $146.6 million was spent on building projects and $16.2 million on capital equipment. These expenditures were supported by $14.0 million of internal funds and $148.8 million in external funds, primarily through contributions from the provincial government and St. Joseph’s Heath Care Foundation. The generous support of donors through the Foundation is vital to our ability to invest in the future while responding to today’s care, comfort and research needs.
All volume performance accountabilities as established in the Hospital Services Accountability Agreement between St. Joseph’s and the South West Local Health Integration Network were met. Volumes continued to decrease from prior years as a result of program transfers and divestments.
Our Next Steps….
As noted earlier, the second phase of resizing Veterans Care inpatient services at Parkwood Hospital was completed in April 2014. Leaders and teams are now focused on the practice and system changes associated with the implementation of HUGO – Healthcare Undergoing Optimization and the preparation needed to ensure a successful move to the new mental health care building in November, including staff and patient orientation, logistics planning and community engagement
We continue to learn more about the future impacts of provincial Health System Funding Reform (HSFR) and at the same time, sustain rigorous budget planning processes to ensure readiness and responsiveness for both the short and longer term in a climate of continued fiscal and political uncertainty.
Funding reform of this magnitude will hold challenges for all hospitals, including St. Joseph’s. Our organization is one of only four teaching hospitals in the province impacted by all five different service modules of the Health Based Allocation Methodology. This speaks to the complexity of our enterprise and the scope of our roles in the hospital system.
The funding formulas are driving change and we have responded, particularly this past year in Complex Care, with strategies that will drive our cost structures towards the Ministry’s expected costs per case.
As was the case a year ago, it must be noted that the timeliness of Ministry funding confirmations, including volume expectations, must be improved to support the ability of all hospitals to respond while sustaining the delivery of quality, safe patient care and balanced operations.
Our work ahead includes continuously reviewing our infrastructure and administrative costs in alignment with the emerging new size and configuration of our organization post redevelopment and transformation. The last three fiscal years have demonstrated we have met the challenges of supporting the organization through complex transitions, within shrinking resources. With our hospital facility and infrastructure transformation ‘finish line’ in sight, St. Joseph’s remains well positioned to take on a future where care, teaching and research programs are well-prepared to meet the most prevalent health care needs.
Change, economic uncertainty and growing need continue to be the backdrop for health care and indeed, all sectors of our society. St. Joseph’s continues to rise to the challenges through our mission and ministry of service, rooted in strong values, a clear strategic plan, and durable fiduciary and leadership principles. All this, and the constant engagement of patients, leaders, physicians, staff, volunteers, and donors helps us to ensure a sound foundation on which we can take new innovative steps and work in partnership with others to address compelling care needs, today and tomorrow.
St. Joseph’s is blessed with the support of dedicated, skilled staff and physicians, compassionate volunteers, responsive partners, and a supportive community. It is with appreciation to all that we present these financial results.
David Van Trigt
Treasurer, Board of Directors
Vice President Corporate Services and Chief Financial Officer