Presentation delivered by John Kurvink, VP, Corporate Services, Chief Financial Officer, Georgian Bay General Hospital at the marcus evans National Healthcare CFO Summit Spring 2017 held in Orlando, FL May 15-17.

3. Surviving as a Community Hospital
Agenda
1. Who Pays for Canadian Healthcare?
2. How is our system organized, where do insurers
come in?
3. How are acute care hospitals funded, how has this
changed?
4. How do physicians interact in the system. What are
their issues?
5. What are the challenges? How can they be
addressed?

4. Canada – Pop is 36 million

5. Province of Ontario & Simcoe County
Ontario Population = 14 million
Simcoe County Population = 480,000

6. SO WHO PAYS FOR HEALTHCARE?

8. Corporate Tax Rate

9. Total Ontario remuneration Rate
Up to $200,000.00 0.98%
$200,000.01 to $230,000.00 1.101%
$230,000.01 to $260,000.00 1.223%
$260,000.01 to $290,000.00 1.344%
$290,000.01 to $320,000.00 1.465%
$320,000.01 to $350,000.00 1.586%
$350,000.01 to $380,000.00 1.708%
$380,000.01 to $400,000.00 1.829%
Over $400,000.00 1.95%
EMPLOYER HEALTH TAX

10. Ontario FY 15/16
Sources of Revenue
• Ontario Employer
Health Tax
– $5,649M
• Federal Health
Transfer
– $13,089M
• Other taxes
– $32,273M
Expenses related to
health
• Ministry of Health &
Long Term Care
– $51,011M
• Almost 42% of the
entire budget of the
province.

11. How Healthcare Is Organized in Ontario

12. WHAT DO LOCAL HEALTH INTEGRATION NETWORKS
DO?
• Fourteen LHINS in Ontario
– Local Health Integration Networks (LHINs)
plan, integrate and fund local health care,
improving access and patient experience.
• Georgian Bay General Hospital operates in
North Simcoe Muskoka LHIN #12
• Five acute care hospitals in our LHIN. Two
within 45 minute drive

13. Ministry of Health Expenditures
Local Health Integration
Networks (“LHIN”)
– $25,596,031,500
North Simcoe Muskoka
Local health integration
network
– Total $847,531,000
– Operation of Hospitals
• $562,222,223
Ontario Hospital
Insurance Program
(Physician Services)
• $18,067,651,700
• Physicians bill fee for
service in acute care
• Mix of capitation and
fee for service in
primary care

14. Health System Funding Reform (HSFR)
Evidence-based funding approach based on:
5
14
Community
Care Access
Centers (CCACs)
Best available evidence
and best practices
Number of patients or
residents cared for
Types of services
delivered
Needs of the populations
served
637
Long‐Term
Care(LTC)
Homes
85
Hospital
Corporations
$6.5B
$2.7B
$700M

15. GBGH Catchment Area

16. Catchment Area
• Population – October to March 55,000
• Population – April to September 100,000 to
150,000 with influx of cottagers
• Population over Age 65 = 22.9%
• Population of First Nations = 9,000

17. Arial Shot of Midland

18. DOWNTOWN MIDLAND

19. Midland Campus

20. Penetanguishene Downtown

21. Penetanguishene Campus

22. Hospital Stats - Inpatient
• Number of Beds = 105
– 15 Rehab
– 21 Complex Continuing Care
– 69 Acute Care
• 6 ICU
• 36 Medicine
• 24 Surgical
• 3 OB
• Annual Patient Days =35,187
• Weighted Cases = 4,355

23. Hospital Stats - Outpatient
• Emergency Visits = 45,880
• Ambulatory Visits = 19,770
• Dialysis Chairs - 9
• IP Surgical Cases = 184
• Outpatient Surgical Cases = 3,685
• Full-time Equivalents = 421

24. Hospital Financial Metrics
• Total Revenue = 56,826,780
– Global Budget = 24,170,955
– HBAM = 15,078,244
– QBP = 4,732,252
– Patient pay = 709,516
• Total Expense = 57,855,742
– Wages & Benefits = 39,037,185
– Drugs = 3,4868,492
– Bad Debt = 80,000

26. Funding in the Past
4
Health Service Providers received
75‐90% of their funding in lump sums
(global budgets)
● Few opportunities to change funding
to meet the demands of the populations
being served
●Little incentive to improve
performance or quality

27. Hospitals in Ontario and HSFR – Overview
8 8
Small&
“Other”
57
Private
6 • As of August 2016, there are 152
hospitals in Ontario
– 85 HSFR hospitals (22 are medium)
– 57 Small & “Other” hospitals
– 6 Private hospitals
– 4 Specialty Psychiatric hospitals
• Specialty Psychiatric Hospitals are excluded due
to data‐related limitations
• A hospital’s share of HBAM funding is impacted by:
– A hospital’s own expected results, including year‐over‐year changes in expected
results; and
– The expected results of all other hospitals within each of the HBAM care types
• HSFR hospitals receive a portion of their base
funding through the Health Based Allocation Model
(HBAM) and Quality Based Procedures (QBPs)
• Small and “Other” hospitals are excluded from HSFR due
to their size and vulnerability to fluctuations in funding

28. Funding Today: Health Based Allocation
Model (HBAM)
• HBAM estimates expected
volumes and the cost of
delivering them at the hospital
level;
• This provides hospitals with a
form of risk‐adjusted global
funding that takes intoaccount
the type and number of patients
hospitals serves and the cost of
providing these services;
• Similar to QBPs, HBAM is based
on a Price X Volume X Patient
Acuity approach that is
redistributed using a pie‐sharing
approach
• $5.15B is redistributedusing
HBAM
6
Unit Cost
Adjustments
HBAM
Actual
Expense
Data
Actual
Service
Volume
Teaching and
Hospital Type
Rural
Geography
Economies of
Scale
Specialized
Services
Service
Component
Adjustments
Clinical &
Demographic
SES/Rurality/Age
Adjustments
Population
Growth
Service
Component
(Volume)
Unit Cost
Component
(Price)
Expected Expenses
Financial
data
Clinical
data

29. Quality Based Procedures (QBPs)
7
2012-13:
1. Primary hip replacement
2. Primary knee replacement
3. Cataract
4. Chronic Kidney Disease
2013-14:
5. Chronic obstructive
pulmonary disease
6. Stroke
7. Congestive heart failure
8. Non‐cardiac vascular
9. Chemotherapy
10. Gastrointestinal endoscopy
2014-15:
11. Hip fracture
12. Pneumonia
13. Tonsillectomy
14. Neonatal jaundice
2015-16:
15. Cancer Surgery ‐ Prostate
16. Cancer Surgery ‐ Colorectal
17. Knee Arthroscopy
Provincial
Price
Hospital’s
QBP Volume
Hospital’s
Acuity (CMI)
Hospital’s
QBP
Funding
Allocation
• Quality Based Procedure (QBP)
funding is allocated for targeted
activities based on a price x volume
approach premised on evidence‐
based practices and clinical and
administrative data
• QBP funding comprises $2.3B*
*Includes both LHIN and CCO‐managed QBPs

30. What is a QBP?
 Introduced by MOHLTC to address variations in clinical
practice and cost across the province for homogenous clinical
populations (e.g. COPD, CHF, Unilateral Hip Replacement, etc.)
 Clinical Expert Panels identify the criteria for inclusion and
develop a best practice care path
 Activity is funded to hospitals on a ‘volume X price’ model
 Current pricing model is heavily reliant on each hospital’s own
average case weight (CMI) within each QBP

32. QBP Elements/Opportunities
 QBP rates fund direct and indirect (e.g. facility,
housekeeping, etc.) resources
 QBP rates are based on total length of stay (including ALC
days)
 QBP Clinical Handbooks provide evidence based clinical
pathways to assist in standardization of care
 Inclusion of CMI in pricing model provides an opportunity
for hospital’s to impact their funding

33. Classification of Elective vs. Urgent/Emergent

34. Survival Tactics
 Reductions in LOS do matter. Model assigns
prescribed HIG weight for typical cases
(Irrespective of LOS).
 Therefore, facilities who have effective care management
strategies and can discharge patients in a timely fashion
will receive full HIG credit and will also have bed
available to see additional patients
 Thereby increasing volumes and weights (an important
factor in HBAM)
 Model does adjust for patient age and acuity through HIG
weights and tertiary adjustment factor

35. Survival Tactics
 Demographic information is required for patient
activity to be considered within funding model
 Importance of capturing postal code, HCN, and other
demographic information
 HIG weights go beyond traditional notion of
complexity. Other factors influence HIG weight i.e.
flagged interventions, ICU days, home care
referral; vent, etc.
 Importance of robust clinical documentation should
not be underestimated

36. GBGH Quality Based Procedures
Procedure Price Case Mix HBAM Cost per
Case
COPD $5,352 1.78 $9,552
CHF $5,110 1.52 $7,751
Ischemic Stroke $4,970 1.38 $6,884
Hemorrhagic
Stroke
$5,452 2.10 $11,434
Knee Arthroscopy $5,270 0.22 $1,150

37. GBGH Quality Based Procedures
Procedure Price Case Mix HBAM Cost per
Case
Unilateral Hip
Replacement
Rehab
$9,005 0.71 $6,399
Unilateral Knee
Replacement
Rehab
$8,873 0.63 $5,592
Unilateral Cataract $3,533 0.14 $496

39. THANK YOU
• Any Questions?
• john.kurvink@rogers.blackberry.net
• (705) 427-7829