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RVH finalizes Hospital Improvement Plan

September 8, 2010

The Royal Victoria Hospital Board of Directors has cautiously approved a Hospital Improvement Plan, allowing RVH to meet its financial obligation to balance the hospital’s budget, while maintaining quality and safe patient care. The hospital was directed to develop the plan by the North Simcoe Muskoka Local Health Integration Network (LHIN). RVH ended the 2009/10 fiscal year with a $3 million deficit.

The plan is designed to balance the hospital’s operating budget by March 31, 2012, and comes after five months of in-depth data analysis, external benchmarking and consultation, which included hospital-wide focus groups.

According to Jon Babulic, Chair of the RVH Board of Directors, “Ontario hospitals must, by law, balance their budgets. We’ve had to make some very difficult decisions, however accumulating further debt which risks the long-term sustainability of the organization, is just not an option. Royal Victoria Hospital must focus on its core business, which is providing acute care only available in a hospital setting.”

The aggressive plan contains 22 initiatives, including a wide range of operational efficiencies, reductions in sick time and overtime, and increased revenue generation to support patient care. The hospital did undertake a comprehensive analysis of many other cost-cutting strategies however, given the 2012 opening of the Phase 1 Expansion Project, the Board of Directors felt significant cuts to services would have an extremely negative impact on patient care; would damage the hospital’s ability to retain and recruit staff; and would not support the priorities of the provincial government or the North Simcoe Muskoka Local Health Integration Network.

“Since 2006 RVH has implemented over $12 million in cost-cutting measures, including the closure of 42 beds. Despite those efforts, operating costs continue to rise, the demand for services grows and revenues are not keeping pace with inflation,” says Janice Skot, RVH President & CEO. “Thanks to the hard work, innovation and dedication of the hospital’s staff, physicians and volunteers, we have developed further efficiency opportunities that minimize the impact on patient care. There’s no question though, we will continue to be challenged because the plan does not allow for any increase in patient volume or program expansion. RVH will be cutting back at the same time as we double the size of the hospital and prepare to hire 1,000 more employees and that’s something our staff – and our community – have a hard time reconciling.”

RVH’s expenses will climb 3 per cent this year, while provincial government funding will increase no more than 1.5 per cent. The RVH annual operating budget in 2010-11 will be almost $210 million, while base funding from the provincial government is projected to be about $142 million. Without aggressive action, the hospital’s deficit would balloon to $12 million by March 31, 2012.

While the plan identifies a reduction of about 60 positions, it is hoped very few people will actually leave the organization, although they may be redeployed to other areas of the hospital. RVH will make every effort to minimize adverse effects on employees by taking advantage of the numerous vacant positions that exist in the hospital, retirements, voluntary exits and leave coverage. RVH will soon launch a major recruitment drive to hire 1,000 new employees over the next few years to staff its Phase 1 Expansion Project.

The ability to achieve the hospital’s goal of a balanced budget depends on a number of external factors, such as collective agreements, increasing benefit and drug costs, and costs associated with outbreaks such as C. difficile. The next step for the Board is to secure approval from the North Simcoe Muskoka Local Health Integration Network for the proposed plan.

Background

• Barrie is the fastest-growing metropolitan area in Canada, growing 24 per cent between 2001 and 2006, which represents almost 25,000 more residents. That remarkable population surge has led to significant fiscal and over-capacity challenges for RVH.

RVH has made great efforts in implementing over $12 million in cost-cutting measures and additional revenue initiatives since 2006, including:
• Improved utilization
• Restructured management
• Consolidated supply chain initiatives
• Increased revenue generation
• Investment in technology allowing greater efficiency
• Program efficiencies, in both clinical and non-clinical services
• Consolidation of ambulatory care clinics
• Reductions in clinical and non-clinical services
• Bed closures

Despite those efforts, operating costs continue to rise, the demand for services continues to grow and revenues are not keeping pace with inflation. Royal Victoria Hospital recorded a deficit of $1.2 million in 2007-08; $2.6 million in 2008-’09; and $3 million in 2009-10. RVH’s expenses will increase 3 per cent this year, while provincial government funding will increase no more than 1.5 per cent. RVH annual operating budget in 2010-11 will be almost $210 million, while base funding from the provincial government is projected to be about $142 million.

RVH is currently under construction to double in size – a project which will require the hiring of an additional 1,000 employees.

THE PLAN
RVH is required to develop – and committed to achieving – a balanced operating position by March 31, 2012 while continuing to provide safe, high quality healthcare.

The plan was developed, based on a series of principles, including:
• Safety, quality patient care
• Minimal staffing impact
• A commitment to honour collective agreements
• Focus on the hospital’s core business of patient care; services which can only be provided in hospital
• Alignment with government and LHIN priorities

PLAN INCLUDES:
• Increased revenue generation to support patient care
• Increased operational efficiencies – support services
• Increased operational efficiencies – clinical services
• Management reductions
• Reduced sick time/ overtime

DETAILS OF PLAN
 Increased revenue generation to support patient care
o Retail food strategy
o Maximize imaging, laboratory and rehabilitation revenue through billable services
o New parking system





 Increased operational efficiencies – non-clinical service
o Management reductions, non-filled vacancies
o Elimination of overtime in most areas
o Reduced sick time through Workplace Wellness initiatives and modified work program
o Central patient registration and booking
o New information communication technology contracts
o Voice recognition dictation
o Increased utilization and consolidation of clerical support
o Two-year wage freeze for non-union employees, including management *** previously announced by provincial government
o Investigate potential to contract manage support services such as security, nutrition and food services, sterile processing, housekeeping and laundry *** previously announced
o Develop retail food strategy ***previously announced

 Increased operational efficiencies – clinical services
o Reduce length of stay, where appropriate
o Minimize medication costs by requesting patients undergoing planned, non-complex procedures bring their own medication to hospital
o Strategic closure of OR at quieter times of year i.e. Christmas holidays, summer, March Break
o Surgical efficiencies, including better utilizing surgical services available in community when appropriate
o New staffing mix, which maximizes scope of practice of all nursing professionals *** previously announced
o Closure of 18 beds, to reflect increased bed capacity in community *** previously announced