The “Big Squeeze” on hospital budgets in Ontario: Get ready for the backlash


Since shortly after the 2008-2009 downturn, Ontario’s relatively modest economic growth has meant for public services a prolonged period of austerity. For the healthcare sector, where annual growth had previously been in the 6.5% range, the change from the base of 2010-11 to 2.6% per annum, representing a slight decline in real per capita terms, has been painful. This reduction in spending growth has been largely borne by the hospital sector, where after contracted salary increases, inflation, etc., are factored in, there has been essentially zero growth for nearly a decade. Continued restraint in health spending, which now exceeds 40% of the total, anchors the government’s 2017/18 balanced budget projection.

At the same time, the much discussed demographic shift has started. The Baby Boomers are starting to retire: the number of Canadians over the age of 65 will double in 20 years and those over 85 will quadruple. While this is surely a reason to celebrate, it also presents daunting challenges. How do we transform our acute, episodic illness focused, hospital dominated “system” into one that also accommodates to the new health care landscape filled by people with multiple, complex, chronic diseases who need, want, and should have care in their own homes and communities?

The solution, so the thinking has been, would be for us to invest more in chronic care and community-based solutions rather than in hospital care. The new care model would be more appropriate for the chronic disease paradigm, closer to home, more team-based, and cheaper. Meanwhile, hospitals would be freed up to do what they are supposed to be doing – looking after acutely ill people – rather than being overfilled with patients waiting for home and long term care. Squeezing hospital budgets will force efficiency, and we can invest proportionally more in the community resources that patients increasingly need.

So how is it turning out?

Hospitals have certainly been squeezed. Effectively flat budgets have forced some efficiencies, like some decreases in lengths of stay (despite increasing complexity of patients) and some limited improvement in wait times for targeted surgical procedures. But in broad strokes, what has happened (very simply) are hospital program cuts; real reform continues to be frustrated by the “system’s” siloism and the agonizing slowness in expanding the capacity of home and community care to relieve hospitals of ALC patients[1] and of primary care to provide care for patients 24/7. Meanwhile, the volume of patients presenting to hospital increases unabated. Emergency Departments and hospitals are more congested than ever, alternate-level-of-care (ALC) patient numbers are at an all-time high, and occupancy rates hovering around 100% (and often higher) have made “Code Gridlock” (a term used to describe the inability to move patients through the system because of congestion) a daily rather than an occasional reality. Hospital leadership teams are increasingly consumed with just getting through the day – managing patient flow – rather than having time to think strategically about reform. And so, hospitals find themselves in a position where they can’t control their inputs, can’t control their outputs, and cannot make investments outside their walls in order to influence either.

There has been some progress. The HealthLinks initiative, which aims to deliver better, more efficient care to the sickest 5% of our population, is a good example. Despite all the hype, the recent re-jigging of Community Care Access Centre (CCAC) services into a LHIN-controlled model promises no meaningful impact. No home and community care initiative is making enough of an impact to slow the relentless increase in demand for hospital services. Those in charge of and working in Ontario’s hospitals are well aware that the Ontario Government is determined to keep healthcare spending in line with economic growth and avoid a repeat of the mid-1990s when a period of austerity was followed by a catch-up spending boom . But hospitals are in crisis. They have deferred significant capital spending. They have squeezed all the efficiency they can out of their operations. Health professionals and hospital leaders are exhausted. And the demographic tsunami has only begun. Genuine reform of the healthcare “system” has to get in gear very soon because a backlash is imminent.

If patients keep coming in increasing numbers and nothing is done about their ALC patients, hospitals will need a significant cash infusion very soon. As the congestion continues to worsen, any efficiency gains that have been made will be threatened. It is crucial that new investments be targeted at “anti-gridlock” initiatives. The creation of a “pull” culture (where patients are actively moved along to the next point in their care trajectory) to replace the current “push” culture, together with a funding model whereby money follows the patient wherever they are in the system would help. Running hospitals at full capacity on the weekends, as we do during the week, would also make a big difference. Enhanced regionalization would help to knit the silos closer together. And getting community-based and hospital-based teams together to better manage the transition points in patient care is absolutely essential. It is at the transition points where mistakes are made, negative perceptions are born, and inefficiencies are generated.

There is no doubt that we need to “de-hospitalize” our system to a significant degree. But it is clear that crude budget cutting has not accomplished the reform we need. Hospitals have been squeezed, but the transition to a community-based health system remains in its very early days. These years of squeezing the sponge have bought us time, not change. And now we are out of time.


Authored by members of the Queen’s Health Policy Council:

Don Drummond
Chris Simpson
Duncan G. Sinclair
David Walker
Ruth Wilson

2 thoughts on “The “Big Squeeze” on hospital budgets in Ontario: Get ready for the backlash

  1. Donna Herold

    I disagree with this analogy to some degree. I have a good understanding of healthcare in Canada and I do not believe the funding model for CCAC to be sufficient or what patients need and want! So much funding needs to be infused into healthcare in Canada it’s almost criminal.
    Wait times are causing real harm! And many are facing crippling long term affects as a result. Physicians could change this.
    For example: I’ve had 2 grand mal seizures for no reason that we are able to figure out. For 8 mths my primary care physician has tried to refer me to a neurologist and still can not get in. So we have come up with a treatment plan between my primary care physician and myself. I now have post cumcussiin syndrome as a result of these seizures and no follow up care available. I also have TN now. And it’s taking months to get an MRI where now the cause will not likely show up.
    Wait times for #LTC facilities and costs are beyond what most can afford or wait for. Many are dying at home! Home care especially in Ontario in the GTA and north is horrible! And almost killed me with their poor hygiene practice.
    I could go on and on. But the public is in crisis when it comes to healthcare. More physicians need to be in the ER weekdays and weekends. More urgent care facilities especially outside the cities need to be open all day not just afternoons and evenings. And all weekend not just two hours sat and sun. It’s disgusting really what families get blamed for when they have no other option but to go to the ER and wait hours and hours to see the only physician working.
    Nursing is pathetic too. Especially in rural hospitals. Unless it’s an obvious emergency patients are que’d and ignored for hours while nurses sit at their stations eating or gossiping. I’ve lived this. And know this first hand.
    I also have different views on the opiate crisis! It is possible to utilize this narcotic in a reasonable responsible manner! Very possible. And with the focus on eliminating this much needed medication for some, is causing painic with many who do use this medication long term and responsibly. What about these people? Everyone is discussing taking this medication away, but no one is talking about what to replace it with or better yet, fix the problem that is causing them to require it.

  2. Kimberly Moran

    In child & youth mental health, the government has not invested in community based child & youth mental health services. In fact, funding has declined by an estimated 53% over the last 25 years. It should not be surprising then that CIHI reports that in Ontario there has been a 67% increase in in-patient hospitalizations and 63% increase in ED visits for children & youth in the last decade. We have calculated that just this increase costs the government close to $200M every year. We have further recommended investments in community based child & youth mental health which seem to be falling on deaf ears. It is of critical importance that the government make investments in community child & youth mental health care to reduce spiralling hospitalization rates.


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