Update on our 2009/10 financial performance

Health care is experiencing times of great opportunity and great challenges. Fraser Health has an ambitious agenda to reform and improve how we care for our rapidly-growing communities. Concurrently, the economic situation has brought forward the sustainability issues that everyone in health care has long foreseen. Provincial funding for health authorities is at record levels and will grow by more than 20 per cent cumulatively over a three-year period. However, you will recall from my updates in July and August that Fraser Health faced the most significant cost pressures of BC’s health authorities, up to $160 million this year or about 6.5 per cent of our overall budget. These pressures were due to the growing service volumes driven by our region’s unique demographics and unavoidable increases in costs such as new capacity, wages, technology and inflation.

To balance the 2009/10 budget, we announced in August a range of initial measures that are evidence-based. These measures would:

• Improve revenues and reduce costs;
• Redesign the efficiency and effectiveness of how we deliver clinical and non-clinical services; and
• Manage cost pressures on core services.

Since the August update, the senior leadership team and the management teams in each portfolio have been implementing these initial measures, monitoring our progress and developing further measures that would complete our work of balancing our budget.

This work required dedication and professionalism at all levels, whether that be responsible management of supplies and overtime or difficult decisions about staffing levels or changes to services. I wish to thank all the leaders, employees, physicians and other participants who worked to identify, evaluate, adapt and implement these solutions to our financial challenges. They have demonstrated courage, a spirit of collaboration and a commitment to follow our strategic imperatives and our goal of improving the health of the population we serve. While there is a financial challenge and difficult decisions were required, we took actions consistent with improving practice and systems. Advancing quality, safety and effectiveness are fundamental to sound health care management and should be pursued regardless of the economic cycle.

Fraser Health will continue to seek as many non-clinical savings and revenue opportunities as possible to protect the service gains we have made in recent years. We will aggressively pursue reductions in administration and support costs with a goal of reducing overhead costs to less than 10 per cent of overall expenditures. We will also pursue opportunities to consolidate leases for offices and clinic space and to sell surplus land assets where appropriate.

Fraser Health is also announcing today some changes in services at a number of sites. In making these changes, we evaluated the levels of utilization, potential for redesign of services to be more efficient and effective, and opportunities to reinvest into alternative services.

Please refer to the fact sheet also available on our website for more information and timelines on changes affecting some of our services. Plans are being put into place to offset and mitigate closures that include:

• Winter and spring break shutdowns for outpatient and ambulatory care clinics;
• Convalescent care and hospice at Queen’s Park Care Centre in New Westminster;
• Residential care on the third floor of Weatherby at Peace Arch Hospital;
• Adolescent psychiatry unit at Abbotsford Regional Hospital; and
• Withdrawal management unit at Chilliwack General Hospital.

These and other measures previously announced and some still in development will advance us considerably towards balancing our budget. At the mid-point of our fiscal year, our updated financial forecast was for a $10 million deficit by year’s end, or less than 1 per cent of our overall budget. The situation will still require responsible fiscal management throughout the remainder of the year. Improving from $160 million to $10 million is considerable and encouraging progress to date especially given rising service volumes and the uncertainty associated with H1N1.

I do want to acknowledge that employees, physicians and others are being affected by change. The wellbeing of our workforce and for the people we serve is a concern shared by leadership, the Board and by our community, municipal and provincial representatives. We commit to continuing to observe the requirements of collective bargaining agreements, employment policies and standards, and are working to redeploy as many affected people as possible into new roles within Fraser Health.

It is important that I also recognize that we are taking many exciting and innovative steps to improve how we provide care and service. Community partnerships and key capital projects continue to advance on schedule. Under clinical integration, our new program model, physician leadership structure and practice enhancement are moving along with considerable pace. Sustainability is not a challenge just for today. Our regional programs with management and physician leadership working together are attracting increased recognition as more integrated, efficient and effective systems for delivering care.

I wish to thank each and every one of our employees for continuing to deliver vital health services to our communities and for contributing to the phenomenal enterprise that is Fraser Health. Our region is very fortunate to have such dedicated health professionals at their service.

Sincerely,

Dr. Nigel Murray
President & CEO, Fraser Health