Senior leadership with the Chatham-Kent Health Alliance admit the organization is “cash poor.”
However, they are working on plans to dig the CKHA out of their financial hole.
Ken Deane, interim CEO for the CKHA, said the hospital is projecting an operating deficit of $3 million dollars on hospital operations for the fiscal year ending March 31, 2017.
He said this figure has been reported to the Erie-St. Clair Local Health Integration Network and the Ministry of Health and Lon Term Care.
When adding the building depreciation/interest, the consolidated surplus shows a $4.5 million dollar deficit, Deane added.
Deane said CKHA’s cash is depleted, due to recurring deficits in six of the last seven years and from capital expenditures.
In order to meet its financial obligations, including payroll, Deane said the CKHA increased its bank line of credit from $4 million to $8 million in 2015 and then again to $10 million in March 2016.
“We’re in a cash problem… a huge cash problem,” Deane said.
This year, the CKHA has obtained a cash advance from the Ministry.
The preparation of next year’s financial plan is underway, and based on current information, the forecast financial gap for 2017/2018 is between $3 million dollars and $5 million dollars for hospital operations, Deane said.
Given how the funding formula works, Deane said it is not enough to focus on the next fiscal year but rather develop a multi-year plan that will put CKHA back on stable financial footing and reduce the negative year-over-year impact of deficit financing.
Preparation of the financial plan will be informed by bench-marking prepared by external experts, who will compare the CKHA’s performance against other Ontario hospitals.
Deane said the firm they hired to complete this analysis found if the CKHA achieved 40 percentile efficiency, they would save $12.3 million dollars.
“It say to us that we can become more efficient,” he said.
“Then you take those numbers and you look at where we’re going to be over the next couple of years and we are estimating , based on our assumptions at this point, that is we don’t do anything to address our deficit by 2018/2019, we’d have a deficit of $8 million dollars. So we need to remove $8 million from our budget.”
Deane added: “That’s our plan, is to identify and develop a plan between now and the middle of April to identify how we can reduce our expenses by $8 million dollars. We’ll have four different working groups. We’ll look at clinical, we’ll look at diagnostic and therapeutic, we’ll look at administration and support and we’ll look at management to identify cost improvement opportunities in all of those areas. It will be a structured, systematic process that we go through.”
Deane said the bench marking process is a key aspect of the process as it demonstrated that other organizations have achieved success under the same funding formula.
Deane, along with Rob Devitt, the Ministry-appointed supervisor for the CKHA met with members of the media on January 18 to provide an update for the community.
Here is our coverage from the meeting:
– CKHA plan is to redevelop the Sydenham Campus
Watch for more coverage stemming from the meeting.
– Photo credit: Aaron Hall
