Fiscal 2011-2012 Resource Performance Report
Endings and new beginnings
In a number of ways, 2011-2012 marked the end of an era and the start of a new journey. The June 2011 transfer of the St. Joseph’s Hospital Perinatal program, including the Neonatal Intensive Care Unit, was the final major transfer of inpatient programs to London Health Sciences Centre (LHSC). The first transfer in acute care hospital restructuring happened over 14 years ago with the transfer of inpatient acute psychiatry care from St. Joseph’s to LHSC.
And while this was a year of remarkable celebration of history at St. Joseph’s Hospital, the third major phase of redevelopment for this site took flight this year. This Milestone 2, Phase 3 project will transform the front façade of the hospital, with new clinical and research space and improved accessibility within an environment prepared for the next generation of care.
Change and transition to achieve provincial directives and a new vision for specialized mental health care also continued this year. The second major divestment step – transferring 59 beds and related services to Windsor Regional Hospital - occurred in November 2011. We also broke ground on our two new facilities with construction continuing on time and on budget.
The total estimated hospital or ‘local’ share contribution for these three major redevelopment initiatives is $43.3 million. In addition, we also began transforming the Mount Hope Centre for Long Term care site through the long-awaited demolition of the St. Mary’s Annex. With new green space and gardens, the site will be completed this summer.
Sound fiscal and service results
St. Joseph’s tradition of sound fiscal and service results continued in fiscal 2011-2012, and we remain committed to improved openness and transparency. On April 1, 2011, the Broader Public Sector Accountability Act (BPSAA) came into effect. The new standards primarily related to procurement practices and expense policies. St. Joseph’s embraced these standards as a real measure of accountability to community. We have taken the necessary steps to ensure that all organization policies and practices comply with these new BPSAA requirements.
St. Joseph’s ended the fiscal year with a Generally Accepted Accounting Principles (GAAP) surplus of $8.1 million, firstly achieved through investment income, net of unrealized losses, totaling $4.4 million. The remaining $3.7 million surplus came from operations, representing less than one per cent of our annual operating budget – a remarkable achievement considering the complexities of change and transition.
These results were made possible through the implementation of over $7 million of budget efficiency savings, required to achieve a balanced budget going in to the year. We are grateful to all who worked hard to bridge the gap between increasing inflation on expenditures and decreasing base funding levels.
Having a clear set of planning and decision making principles helps to navigate the complexities between meeting needs and balancing budgets. Still, the decisions can be difficult. This requires us to be constantly focused on our mission, grounded in our values of respect, excellence and compassion and as leaders of innovation and change.
All volume performance accountabilities as established in the Hospital Services Accountability Agreement (H-SAA) between St. Joseph’s and the South West Local Health Integration Network were met. Although certain volumes have decreased from prior year due to program transfers and divestments, after allowing for these planned reductions, the 2011-2012 volume levels were consistent across the organization. One exception was a 5.3 percent increase in ambulatory care volumes due, in part, to the receipt of $1.1 million in post construction operating funding for St. Joseph’s Hospital, enabling planned increases in volumes over the next three years.
Healthy working capital
St. Joseph’s working capital remains strong at 1.3:1 ratio, and is well within the framework established through our H-SAA. For hospitals, a healthy capital position allows for the restriction of funds to ensure facility and equipment investment and renewal in the short and long term.
St. Joseph’s restricted investments for current and future commitments remain secure and total $184.6 million at March 31, 2012. These investments are externally managed by professional firms under the stewardship of an investment sub-committee of our Board.
Supporting St. Joseph’s care, teaching and research mission, capital investments during the year totaled $20.0 million. Of this total, $7.7 million was spent on building projects and $12.3 million on capital equipment. These expenditures were supported by $12.8 million in internal funds and $7.2 million in external funds mainly through contributions from the provincial government and the St. Joseph’s Heath Care Foundation. The generous support of donors through the St. Joseph’s Health Care Foundation is vital to our ability to invest in the future while responding to today’s care, comfort and research needs.
Taking the next steps
The transfer of St. Joseph’s hip and knee surgeries to LHSC on April 1, 2012 and the transfer of cardiac rehabilitation services from LHSC to St. Joseph’s Hospital this fall will mark the final steps in the provincially-directed realignment of acute care services in London.
While the second phase of resizing our veterans care inpatient services at Parkwood Hospital was delayed this year due to an unexpected sustained demand for service, we continue to work with Veterans Affairs Canada to determine when this step can be taken.
Completion of the divestments of inpatient mental health services to St. Joseph’s Healthcare Hamilton and St. Thomas Elgin General Hospital is scheduled for 2012-2013. At the same time, our two new specialized mental health care facilities will open, first in Central Elgin a year from now, and then in London in the fall of 2014.
This year has been a time of significant visioning and strategic planning as we set our course beyond the major changes and transitions of the last 15 years. St. Joseph’s is poised to take on a future where our care, teaching and research programs are well-prepared to meet the most prevalent health care needs our region is facing.
At the same time, St. Joseph’s is faced with more significant reductions in infrastructure and administrative costs to meet the new size and configuration of our organization post redevelopment.
In addition, the Minister’s recent announcement of Health System Funding Reform will impact all Ontario hospitals in the current and future years. Historically nearly 100 per cent of provincial hospital funding has been provided to hospitals’ Base or Global budgets, with additional revenue coming from several sources including provincial funding for specific programs, wait time funding and in the case of St. Joseph’s, federal funding for the care of Veterans and provincial long term care funding.
In March, the Minister of Health and Long Term Care announced that the Ministry will begin shifting the traditional model of provincial hospital funding. They will shift funding from the Base or Global budgets to two new “Patient Based Funding” categories including a Health Based Allocation Methodology which allocates funding to hospitals based on the characteristics and demographics of the people they serve and Quality Based Procedure Funding which provides fixed ‘price points’ and volumes for procedures that are set by the Ministry.
Over the next three years, this shift will see Base or Globe funding comprise 70 percent of our total funding.
St. Joseph’s is just starting to learn about this funding shift from our LHIN and for the upcoming year, we know that the Quality-Based Procedures model will apply to cataract surgery and inpatient hip and knee replacement rehabilitation.
Change, economic uncertainty and growing need continue to be the backdrop for health care and indeed all sectors of our society. Through this, St. Joseph’s upholds a mission of service, rooted in strong values, a clear mission and durable fiduciary and leadership principles. This helps us to ensure a sound foundation on which we can take new innovative steps and work in partnership with others to address the compelling care needs of today and tomorrow.
St. Joseph’s is blessed with the support of dedicated, skilled staff and physicians, compassionate volunteers, and a supportive community. It is with appreciation to all that we present these financial results.
Treasurer, Board of Directors
Vice President Corporate Services and Chief Financial Officer