How do we measure financial performance?

Revenue Breakdown The following chart illustrates the breakdown of revenue sources for 2008-09. Approximately 85 per cent in base and one-time funding was received from the Ministry of Health and Long-Term Care and the Hamilton Niagara Haldimand Brant (HNHB) Local Health Integration Network (LHIN) during the fiscal year. 

Expense Breakdown
The following chart illustrates the breakdown of expenses for 2008-09. The majority of funds are directed towards direct patient care, 77.9 per cent in 2008-09 compared to 76.9 per cent in 2007-08, representing a one per cent decrease in the administrative support category.

Average Inpatient Cost Per Day $946
The average cost per day of an inpatient stay is $946. Approximately 77 per cent of expenses are related to direct patient care like nursing, pharmacy, diagnostic imaging, laboratory and therapies. An additional 14 per cent is related to support services like housekeeping, food and maintenance. The remaining 9 per cent is for administrative costs like administration, human resources, finance, material management, information and communication services.

Average Emergency Visit $221
The average cost of an emergency visit is $221. Eighty per cent of expenses are related to direct patient care like nursing, pharmacy, diagnostic imaging, laboratory and therapies. An additional 10 per cent is related to support services like housekeeping, food and maintenance. The remaining 10 per cent is for administrative costs like administration, human resources, finance, material management, information and communication services.

Equipment
In 2008-09, the hospital invested $11.6 million in equipment and building infrastructure upgrades. The majority of capital spending is financed through the provincial government and local Foundations and Auxiliaries.

In the absence of positive working capital and cash, the NHS must rely solely on donations from Foundations and Auxiliaries to fund necessary new and replacement medical equipment. Annually, the NHS’s equipment needs exceed $14 million. Last year, $4 million was raised through local fundraising activities and $1 million was drawn from operations to deal solely with unfunded emergency purchases.

The outstanding equipment list for new and replacement equipment at the end of March 2009 was $30 million. Estimated equipment requirements over the next five years will exceed potential sources of funding by an additional $8 million (approximate) each year.

Hospital Improvement Plan
The NHS’s operating revenue is not sufficient to cover the expenses associated with the delivery of services currently being provided. This is one of the key reasons the NHS developed a Hospital Improvement Plan (HIP) in July 2008. The HIP is a framework for the NHS to enhance quality of hospital care across Niagara over the long term while at the same time balance financial pressures, the needs of Niagara’s aging population and the challenges of the ongoing shortage of doctors, nurses and other health professionals. The plan was endorsed by the HNHB LHIN in December 2008.

The HIP includes more than $28 million of savings over the five-year period through the creation of Centres of Excellence, improved quality and efficiency initiatives and by working collaboratively with the HNHB LHIN and other community agencies to ensure patients are cared for in the most appropriate setting.

Approximately $7 million in savings were achieved during the 2008-09 fiscal year.

However, until 2012-13, Niagara Health will continue to operate annual deficits requiring further cash advances from the LHIN and bank financing in the absence of additional funding. The increased reliance on cash advances, the lack of positive cash flow and the ability to obtain additional bank financing to finance cash flow deficit from operations is in jeopardy without additional funding.

Hospital Accountability Agreement
The NHS has signed the Hospital Service Accountability Agreement with the HNHB LHIN for the 2008-09 and 2009-10 fiscal years. This agreement, posted on the NHS website, sets out the roles and responsibilities of both parties with respect to funding, performance and service.

In addition, Niagara Health has undergone the following significant reviews to ensure due diligence in the spending of taxpayer dollars:

• Independent Efficiency Review
  In November 2007, the Niagara Health System engaged Health Care Management Group in an independent comprehensive benchmarking process to identify efficiency and productivity improvements by, for example, standardizing supplies and ordering in bulk with other hospitals. The review identified $12.3 million in savings over a two-year period and indicated that Niagara Health was one of the most efficient hospitals in its peer group.
• Dr. Jack Kitts Review
  Dr. Jack Kitts and his team from Ottawa were selected by the HNHB LHIN as expert advisors to review in detail the elements of the HIP, including our financial outlook, as well as to elicit feedback from the community. The review supported that Niagara Health is an efficient organization compared to our peer hospitals and that additional funding is required.
• Deloitte Special Review Engagement
  The Niagara Health System engaged Deloitte Canada in February 2009 to provide an objective assessment of our current processes, policies and procedures around expenditures, cash management and the budget and reporting process. The overall Deloitte report supports that the Niagara Health System has effective
  policies, procedures and management oversight.