A Letter to The Community

Jan. 24, 2012

London Health Sciences Centre and St. Joseph’s Health Care London proactively release compensation information for past senior executives

On Jan. 3, 2012, London Health Sciences Centre (LHSC) and St. Joseph’s Health Care London (St. Joseph’s) posted compensation information for all current executives. This information showed that our hospitals’ current executive compensation practices benchmark very well against our peer comparators. They are also aligned with the Manley report released Dec. 9, 2011- an independent assessment of compensation best practices for Ontario hospitals.

Today, we are proactively releasing compensation information for past senior executives (who provided consent) employed by our hospitals on or after Jan. 1, 2007. This disclosure further extends our hospitals’ commitment to improving how we share information and engage the public.

The information released today reflects the compensation necessary at the time to attract and retain highly skilled clinical and business leaders. Then, as now, we relied on independent benchmark data gathered from comparable organizations in the healthcare industry, and in some cases, the private sector, to determine the appropriate compensation provisions.

Whether past or present, we recognize that executive compensation practices in the public sector are often difficult to rationalize from the taxpayer perspective, particularly in challenging economic times.  In addition, we know that people will look at our hospitals’ executive leadership team changes between 2007 and 2010 and have questions about severance and retention payments totaling approximately $4.1 million.

We understand the concerns this may create, however it is important to step back and put the broader story into perspective. The period in question was one of great turmoil and challenge, and indeed, accomplishments for our hospitals.

We were in the midst of a massive restructuring and construction mandate, unlike anything seen in this city or province previously – literally one-billion dollars of redevelopment of London’s acute care services, over a decade in the making, all focused on improving and streamlining the patient care experience and re-invigorating our hospitals’ teaching and research mandates.

The new, state of the art North Tower, opened last year, is a shining example of what the scope of hospital renewal represents. Its long-awaited opening permitted the continued movement of clinical programs between LHSC and St. Joseph’s, and opened up space to be renovated at St. Joseph’s Hospital and LHSC’s University Hospital.

Today, our overall hospital renewal venture is almost completed, on budget, and with a city-wide care, teaching and research enterprise totaling some $1.6 billion in annual operations. We have much to be thankful for; including the leadership, physician, staff, volunteer and community resolve to help see it through.

At the very time we were embarking on this new future of hospital care in London, LHSC also found itself in a serious financial situation, having run with significant deficits for several years. Despite independent operational reviews that validated LHSC’s efficient operations, ongoing annual deficits continued as patient needs of the community and region drove costs beyond the revenues being provided annually to the hospital. The deficit drove interest and debt repayment costs in excess of $20 million per year. LHSC’s working capital was also a significant issue, causing the provincial government to stall continued hospital renewal pending resolution of the financial difficulties.

At St. Joseph’s, operational challenges were also experienced as the St. Joseph’s Hospital site began to transform from a traditional inpatient hospital to its future as an acute ambulatory care and surgery centre. St. Joseph’s was also preparing for the divestment of some mental health inpatient services to communities across the region. This, along with inflationary budget pressures, would see $27.4 million in operational reductions from St. Joseph’s between 2007 and 2010. On the positive side, St. Joseph’s working capital remained healthy.

The combination of massive, long-term restructuring requirements and the difficult financial realities created an exceptionally challenging environment – one that required the very best leadership qualities. Putting the hospitals back on a stable foundation to enable transition to a new future, while sustaining care, required a unique mix of abilities and consistency of leadership to work with governments across a changing political spectrum, to attract and retain physicians, researchers and other health care professionals, and to work with partners to develop new approaches to service.

Through the implementation of many tough business decisions, new processes and tight financial controls, as well as successful negotiation with the Ministry of Health and Long Term Care to garner operational support and secure new funding levels, LHSC was able to eliminate debt, balance the budget, and even create surpluses.

Thanks to the continued support of the province and the work of our foundations with the community, LHSC and St. Joseph’s were also able to continue to meet the required community contributions to hospital renewal after a delay of some 18 months between 2006 and 2008. This resumption of construction re-ignited our teams and resulted in approximately 425 construction workers on site per day during the peak of construction.

Overcoming these major challenges set the stage for the very positive state of healthcare in London today. When you look at the magnitude of the transformation that was achieved, leadership team costs through this turnaround period pale in comparison to the positive results achieved by the organizations.

Londoners take great pride in the breadth of our hospital and health services, which are extensive for the size of our community. Just as London is the economic engine for the region, our hospitals, academic and other health and social services extend far beyond our city boundaries. This affords us all levels of care, from the most basic to the most specialized, right here at home.

Today, our city and the Southwest region are well served with two teaching hospitals, state of the art facilities, realigned and consolidated patient care programs, more net new hospital beds and enhanced outpatient and evolving community services. Together, we have been able to address the challenges and find new synergies to achieve better outcomes and to ensure greater value for the investments made by taxpayers. Moreover, we have been able to create vibrant work and care environments and build on our research strengths, attracting tens of millions of dollars in grants and funding to London each year.

Combined, our hospitals represent the largest, most advanced integrated hospital system in Ontario.  And we are proud to say these organizations are also among the most financially stable in the country, ensuring that we can continue to invest in providing quality care, education and innovation. We are grateful for the support from government and our many constituents who continue to help us address challenges and secure an exciting future for generations to come.

As volunteers serving our community, our boards welcome greater openness and discourse about the future of health care. We support our leaders and all those who are called to work in health care. There have been bumps along the road, and there are undoubtedly more changes and challenges to come, but our journey together has placed London in a stronger position, poised to respond to future health care needs and build on a remarkable legacy.

Please use our feedback form if you have any questions

Marcella Grail
Chair, Board of Directors, St. Joseph’s

Ruthe Anne Conyngham
Vice-Chair, Board of Directors, LHSC

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