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Wednesday, 19 April 2017 09:41

Cypress Health Region facing a significant budget shortfall

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The Cypress Health Region is facing a significant financial challenge as a result of a decrease of about seven per cent in funding in the recently announced 2017-18 provincial budget.

Cypress Health Region Interim CEO and Chief Financial Officer Larry Allsen provided details about the budget for the new financial year at a regular meeting of the Cypress Regional Health Authority board, April 12.
“Budget day was not kind to the Cypress Health Region,” he said. “Our budget target for reduction is $9.2 million. So a rather daunting number for our region, but we will continue to work through that. We’ve got some initiatives that we’ll work through, trying not to affect patients or staff.”
The health region was expecting a reduction in funding for 2017-18, but the size of the shortfall came as a surprise to him.
“Obviously I was expecting something because we know the financial situation the province is in and leading up to budget there has been a lot of talk about tightening and trying to get back to balance,” he said. “I was expecting something, I was not expecting that big number. It’s rather large.”
A significant part of the challenge for the health region is it received a zero per cent increase in base funding for the 2017-18 financial year.
“We needed actually more money in our base funding to cover collective bargaining agreements, inflationary pressures and those types of things,” he said. “Every year we do an analysis on what we actually think we should get. So what we thought we would get and what we actually got, which was no increase at all, is about a seven per cent decrease.”
He anticipates the health region will have a surplus of about $1.4 million at the end of the current financial year, which will be used to cover the $9.2 million shortfall. The health region will also be using funds from its unrestricted surplus and some internal reserves, which was set aside for different projects, to balance the budget.
“We’ll be presenting a balanced budget to the ministry, but it’s going to be tight,” he said. “We won’t have any room for capital investment. If something breaks we won’t have those reserves to rely on, which is unfortunate.”
Cypress Health’s unrestricted surplus at the end of last year was around $8.9 million, but  some of those funds have already been allocated towards upgrades at the long-term care facility in Leader and towards the purchase of medical equipment for the health region. As a result, the health region will have about $4 million available to use towards the budget shortfall.
“Once it’s all said and done, we’re probably having to find about $1.5 million, which on a normal budget year is sort of an average thing we have to find,” he said. “I don’t anticipate us having much problem trying to find that $1.5 million, although this now leaves us very tight in the region, although our region will cease to exist at some point during this year.”
The provincial government announced in January that the 12 existing regional health authorities will be consolidated into a single provincial health authority and that transition has already started.
“All our financials throughout the province will be rolled up into one provincial health authority,” Allsen said. “We have to start thinking now as one, not just the Cypress Health Region, although we do have to manage our budget in the short term until the enactment of the provincial health authority legislation.”
The 2017-18 provincial budget includes an increase in long-term care fees and some program reductions that will result in a financial saving of about $800,000 for the Cypress Health Region.
According to Cypress Health Vice President Primary Health Care Bryce Martin the reductions announced on budget day will have an impact on seven health programs in the province. The program reductions that will have an impact on Cypress Health Region are the changes to podiatry and the Parenting Mentoring Program of Saskatchewan (PMPS). Three staff members in the health region were affected by these reductions.
“The podiatrist that we did have on staff has already moved into a private practice instead of a publicly funded practice,” he said. “So the podiatry service is still available in exactly the same way that it was before, the same provider, although the funding of that program is no longer in place from the public purse. It is now an entirely privately offered program and service with the exception of the fact that low-income folks who are eligible for supplemental health or family health benefits are covered for podiatry services.”
Appointment of P3 compliance officer at The Meadows:
The Meadows long-term care facility in Swift Current is Saskatchewan's first public-private partnership (P3) health care project for the design, construction and maintenance of the facility. The building will therefore be fully maintained by the private partner company, the Plenary Group, over a 30-year period and the health region therefore has to appoint a P3 compliance officer to ensure the company's adherence to the terms of the agreement during the maintenance phase.
The Cypress Health board approved the appointment of a one-year, temporary, full-time P3 project compliance officer for The Meadows at a cost of $105,075 that will be fully funded from the unrestricted surplus.
“We're basically doing it as a temporary to actually do an analysis on what it is we need,” Allsen said. “This individual will be setting up standard work on how when things come in we deal with them, what's the flow supposed to be. So some of those things will get done in this year. Then we'll still do an analysis to say should this be a permanent position to have and maybe it's not one, maybe it's two or three.”
He noted that the P3 procurement model is a new approach for the Cypress Health Region and the need for this position was therefore identified.
“We're into it for almost a year, May it will be almost a year, and we got to have somebody monitoring the contract, making sure everything is working as it's supposed to,” he said. “Basically we're dedicating a resource to clean up the backlog and get some processes in place and move forward.”

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Matthew Liebenberg