Health region will hit budget target

By Dan Hilborn
Published Feb. 18, 2004


The Fraser Health Authority is within range of meeting its budget target for this year, and may even have a smaller deficit than planned, the region's chief financial officer said this week.

Brian Woods, chief financial officer for the most populated health region in the province, said he is basically "on track" for meeting his $1.54-billion spending plan for the 2003/04 fiscal year.

"The board had approved a budget with a $10-million forecast deficit and, at the end of the third quarter, we're slightly favourable to that plan," Woods said.

But meeting the spending limits has not been easy. The FHA budget included a section called its 'deficit recovery plan,' which set a 'cost saving target' of $64.5 million. Although the plan is only 65 per cent implemented by the end of the third quarter, the region subsequently found another $8.1 million to cut. According to the executive summary of Woods' third quarter financial report, if everything goes as forecast, the region will make 77.9 per cent of its deficit recovery plan this year, and then realize a new annualized savings of $85.5 million by its 2004/05 budget year.

Woods said that the region will make most of its savings from the "outsourcing" of the region's housekeeping department, which is expected to result in a savings of $50.4 million over the next five years.

Other 'outsourcing' programs have included a $9.35-million reduction in security costs over five years and a $5.8 million reduction in costs for laundry services in the Fraser East division over the next 10 years. "Those contracts had been implemented over the past six to nine months, so the full impact of the savings won't be noticed until the next fiscal year," Woods said.

Recently, the board approved the outsourcing of retail food services at several of its hospitals, which will result in another savings of about $2.5 million over five years, and staff were given the go-ahead to negotiate two new laundry services contracts for the rest of the region at this month's board meeting.

And things are not going to get any easier in the future, Wood said.

"It's safe to say the environment we work in has some constraints," Woods said. "We're working in an environment where the revenue may not increase at all for the next four years. So you might anticipate this has the prospect of creating more financial pressures, and we haven't worked that through yet.

"My biggest concern right now is the cost side of our business," he said. "We're headed into a new round of collective bargaining, and it needs to be concluded within our financial capacities. Our assumption is that we'll get zero, zero, zero for labour costs as well, and you would put that in the category of a big concern."

Woods said his other big concern is making sure the public has adequate access to medical care during tough economic times.

"In the ideal world, we'd like sufficient funds to meet our emergency department overloads and waits. I do have a concern if there will be sufficient revenue to make sufficient progress on that side. The problem there is maintaining access amidst this tight money."

His third concern is trying to find money to increase the availability of the region's community care programs, such as residential care, home care and assisted living programs.

"We hope to expand in those areas and to strengthen that as a resource in the hopes of taking some of the pressure off our acute care facilities," Woods said. "Our planning to date anticipates greater spending in those areas."

While the region hopes to find an adequate funding to spend another $40 million on its community care programs by the 2006/07 year, Woods said that money has not come through yet.

"Out strategic plan sees us investing in the community by a fairly significant amount in an effort to take pressure off our acute care sites," Woods said. "But our biggest challenge is to find and secure adequate funding or being able to reallocate our funding internally. Right now, we need to do both simultaneously.

"The second challenge, I believe, is on the human resources side - finding and securing adequate human resources such as nurses and caregivers to staff this expanded community development. So basically, it's money and people. This is kind of the perpetual challenge in the health-care system."