Hospital needs $32 million to balance its books

Sault Area Hospital has been given the green light to go for a $32 million line of credit.

At last night's SAH board of directors meeting, hospital administrators were authorized to use as much as $32 million to meet projected cash-flow expenses for the year.

One of those projected expenses is a $20 million cash advance from the North Eastern Local Health Integration Network (LHIN) that SAH is expected to repay by the end of the fiscal year.

But the LHIN has said it will give SAH another cash advance for $25 million a month later, board treasurer Ralph Barker told the meeting.

"It allows us to reduce our interest costs by about a half million dollars over the year," explained SAH Chief Executive Officer Ron Gagnon in an interview after the meeting.

SAH is predicting it will finish this fiscal year more than $10 million over budget if things keep going as they are, said Gagnon.

SAH, like and every other hospital in the province, signed a funding agreement with the province indicating it agreed to balance its budget.

"The consequences are outlined in the act and they can lead all the way up to the replacement of the board and replacement of management," said Gagnon. "It could mean somebody single-handedly making choices on what care will be delivered and how in Sault Ste. Marie."

To avoid this, the hospital is looking at every possible way of finding efficiencies without undercutting patient services.

But it's a difficult task when SAH is funded, roughly, for 87.5 percent occupancy, but is running at over 90 percent more than half the time.

When asked after the meeting, Gagnon wouldn't go so far as to say the hospital is underfunded.

"It is difficult if you don't receive your right amount of funding to do what you need to do to be able to operate in a balanced position," he said. "However, I think it's premature for anybody to be able to speculate on that being the actual case and that's why we've undertaken the in-depth analysis, which is a very thorough review of the entire operation."

Gagnon said it would be premature to discuss any idea of laying people off to balance the books.

"At this point in time, it's too early to speculate on that," said Gagnon. "The in-depth analysis is still going on."

So SAH is looking at best practices used at other hospitals and how they might be applied here.