By Ross Maund and Dave Wilkin
This is the first article in our series on the Big Challenges facing Canadians in the decades ahead. We begin with some key growing social issues, and in this article we focus on the challenge of escalating cost of health care. This topic is extremely important to all Muskoka residents, especially given the open questions surrounding the future of our local hospital redevelopment and the implications that arise from it.
Global health-care costs are increasing at over 5.4 per cent annually, more than double general inflation or GDP growth. It has pushed health-care spending to become the single largest budget item in all Canadian provinces, consuming about 41 per cent of all provincial program spending on average. In Ontario, hospitals gobble up 36 per cent of the massive $60B health care budget. This challenge is what precipitated provincial premiers’ recent call for Ottawa to boost provincial health care transfer payments (covering 1/4 of health care spending in Ontario) from 3 per cent to 5.2 per cent annual growth.
The principal drivers of the rising health-care costs are well understood, and they are most prominent in developed countries:
- Demographics – aging (increase in human longevity) and the high level of chronic disease associated with this segment of the population
- Unhealthy lifestyles and diets
- Growing societal stresses, mental illness and addiction
- Increasing expectation by the public for costly new drugs and advanced clinical treatments
This situation becomes more urgent as governments face slowing economic growth, a growing list of spending priorities and rising debt levels. Canadian economic growth is stalling with real GDP per capita growth recently turning negative (Ontario just above zero).
Clearly, the current path is not sustainable, and solutions must be found. There is no silver bullet to easily solve this cost dynamic. These key elements are emerging as important parts of most governmental strategies and investment priorities:
- Population wellness and prevention/reduction of escalating chronic disease.
- Early diagnosis and intervention (particularly mental health and addiction) that supports keeping people out of inpatient care.
- Expanded capacity of senior living infrastructure and in doing so vacating high cost ALC beds in acute care hospitals.
- Improved operating efficiencies and effectiveness through new technology
- Streamlined overheads, administration structures, processes (e.g. capital planning).
- Purchasing standardization and aggregation.
- Extend lifetime of existing infrastructure – increased emphasis on regular maintenance/upkeep
- Align user expectations to limitations.
It is clear that we are at the beginning of major transformational change in health care. Investment in these (and more) priorities should slow accelerating health-care demand and cost escalations. Given governments’ growing fiscal challenges, investment in these priorities is critical, or significant reductions elsewhere is inevitable.
So how does this impact us locally? Muskoka Algonquin Health Care’s (MAHC) recently submitted hospital redevelopment plan to the Ministry of Health more than doubles the existing hospitals’ footprints, expands bed count by 64 per cent, and pushes up un-escalated operational costs by 40 per cent. This, despite a forecasted ten per cent population growth and a senior population share increase of eight per cent during the same 14-year period. Adding new MRI and stroke rehabilitation services/beds is very positive, but the overall scale of the increases seems out-of-line.
MAHC’s submission also lowered the local share cost from $148M (recommended by their consultant) to $94M, a $54M reduction. This reduction was achieved through a $19M Furniture Fixtures and Equipment & Information Technology (FFE&IT) reduction, plus the reuse of almost all existing FFE&IT assets, valued at $35M. This seemingly overlooks the existing $9M FFE&IT deficit and is un-aligned with priority #4 above – Investing more capital in technology and equipment supporting new services and capabilities and less in large new buildings is a better use of scarce health care funds.
This cost estimate is well out-of-line compared to other hospital infrastructure projects. In addition, all amounts are stated in 2019 dollars and so they exclude significant cost escalations expected in the future.
Our conclusion remains as stated previously: MAHC’s plan runs counter to the above government priorities and is well out-of-line with what other communities actually receive. Our Municipal and District governments should not wait for the province to reject it, which could take years. Instead, they should demonstrate leadership by sending a clear message to MAHC that it is mistaken – in fact ‘Municipal support is NOT growing’.
Watch for our next article, which lays out our suggestions for a better pathway forward!
Read related article: Canada’s challenges are jeopardizing our future
Ross Maund, career senior executive
Dave Wilkin, P. Eng, M.Eng.
Both are Huntsville residents, and former MAHC board directors
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Hugh, MAHC consultants comparative data would be most welcome. We don’t have the same access to deep data that they should have, so seeing what they come up with would be most enlightening. Don’t hold your breadth though. I publicly called out this same problem over 2 years ago, and they never responded to my call for their consultants to show comparative data.
IMHO … We need a detailed study done by a non-political non-biased group, not by a biased government reporter / agency etc etc! No rock should remain unmoved nor no basis for the increase in this and that .. for the ALL health care services and cost ! We need the facts … not emotion and certainly not all the politically correct BS or narrative! We need the WHO, WHAT, WHERE, WHEN and HOW .. based on USER numbers ,, the truth! No ‘category’ should be shelved because of political correctness! We need the causes and impacts and consequences! We need to face the reality of current decisions regarding the hospital debate ie how on earth do we think we can support 2 hospitals in the future when they both are on the financial edge .. NOW! ? Think hard … about the future and reality! Not looking good or sustainable!
Hugh, last Quarter (Q3), Canada accepted 103,751 new immigrants to Canada. We also brought in 82,438 non-permanent residents. This is the highest on record, so 2019 final numbers will likely be significantly more than 330K.
In 2018, Canada’s population grew by over half a million, or 528,421 people. International migration accounted for 80.5 per cent of the growth, representing a combined total of 425,245 new immigrants ( ~320K) and temporary residents (~105K) to the country.
Here is good reasonably reliable source for the latest immigration news that this data comes from: https://www.cicnews.com/2019/03/new-immigrants-made-up-61-of-canadas-population-growth-in-2018-0312086.html#gs.oumzs8
Ralph, for the record, Canada does not take in 500,000 immigrants per year. The number in 2019 was 330,800 less 62,000 that emigrated to other countries, leaving a net increase of 278,800. Emigration to the USA has slowed dramatically due to policies and actions of the Trump Administration. Of the 330,800, 58% were economic immigrants to bring skills needed by industry and business, 27% were spouses. partners, children and grandparents to help ensure that the needed economic immigrants remain in Canada, and 14% were refugees from war-torn countries.
With all the lotteries we have paying out millions of dollars, and people buying tickets like crazy, could one of them not go to health care, like it used to? People seem happy to hand over $4, $5 or $10 if they think they have a chance to win millions. So it would be a win, win situation for everyone.
It is difficult to do a meaningful comparison between Muskoka and southern Ontario costs, due to unique geography and population density factors, and the topography of lakes and rock. These factors generally result in longer driving distances for all concerned, and the need for significantly more banks, grocery stores, LCBOs, police stations and fire stations per capita to service northern Ontario. And these factors drive higher costs of construction and environmental protection than in southern Ontario.
It can be argued that in order to encourage future development away from the already crowded GTHA, and the Cambridge-Belleville-Barrie triangle without gobbling up even more valuable farmland, Muskoka is one of the more attractive bets.
The alternatives to the two new hospitals are a) two renovations, or b) one new central hospital. When external costs are considered, both of those alternatives have been estimated to cost almost the same as two new hospitals, but with fewer benefits.
However, the data provided here does indeed invite explanation by the MAHC planning group. The Ministry generally uses the same “unbiased” consultants for all hospital projects, so why not invite Hanscomb to come to Muskoka to help explain the apparently higher numbers to Muskoka Councils and citizens?
Very generous idea of yours – thank you. Please note that as much as $150M feels like a lot of money to most of us, in the context of Ontario’s accumulated debt of 3/4 of a trillion dollars and growing annually and the multi billion dollar annual provincial healthcare costs the amount would hardly make a dent.
The scale of Ontario’s healthcare costs is astronomical and given the demographic evolution of our Ontario population, things are likely only to get worse given the current course.
Ross
If health care in Ontario is so much of an expense what would happen if we all pitched in $10.00 a year on our taxes I think the population of Ont is around 15 million so $10.00 each would be 150 million might not solve everything but would sure help as long as the Govt did not use the money for something else. I’m a senior living on just the Govt pension but I don’t think 10 or even 20 dollars a year would hurt all that much. Who else is old enough to remember before ohip when we had to pay for doctor insurance plus hospital insurance of pay for both out of pocket. Just a thought maybe it would not work but to my way of thinking we are going to have to pay for health one way or the other.
Escalating health-care costs.
Just too many people for the current system.
Thousands of baby boomers coming on line.
Trudeau brings in 500,000 new patients every year.
There is no time allowed for ketchup in services
vs the population.
A rest period is needed to let the
system settle and accommodate the population we have now.
Will they ever learn?