Code red: How more Ontario hospitals are struggling with balancing the books

Critics say the situation at the London Health Sciences Centre speaks to a larger issue, with health experts warning that most Ontario hospitals are projecting a deficit.
Last week, the London Health Sciences Centre announced $14 million in staffing cuts. The hospital network eliminated 59 positions and reassigned 71 others.
This announcement follows the hospital reporting a $78-million deficit for the last fiscal year and a $150-million deficit for the upcoming 2024-25 fiscal year.
But London is not alone. The CEO of the Ontario Hospital Association said early forecasts indicate that many hospitals will likely be projecting deficits for the 2024-25 fiscal year.
“While the government of Ontario delivered a significant investment in the hospital sector in the 2024 to 2025 budget, many hospitals are facing financial challenges due to a greater demand for hospital services and the increased cost of doing business. From labour to supplies, hospital-sector costs have been rising and continue to do so,” Anthony Dale said.
This was echoed by the Ontario Health Coalition’s executive director, Natalie Mehra, who said that while it is fair for people to be upset by the inflated compensation for CEOs and the number of vice-presidents leading to some of the overages in London, the main issue is a lack of funding from the province.
“Hospital funding in this province is the lowest of any province in Canada by far, and Canada is actually very low compared to our peer nations. Why? It’s about privatization,” Mehra says. “Every service cut from public hospitals is privatized and handed over to for-profit industries, and that has really driven the downsizing of our public hospitals.”
In response to comments made by the Ontario Health Coalition, Hannah Jensen, a spokesperson for the minister of health, said the provincial government has invested over $85 billion this year alone, a 31 per cent increase from 2018.
“Facts matter, and while the Ontario Health Coalition, an out-of-touch, NDP-backed special interest group, has spent the last decade accomplishing nothing while standing ideologically opposed to innovation taking place in the health care system, our government is taking bold action to connect more people to the care they need, when they need it,” Jensen wrote.
Jensen also pointed to the government’s efforts to add more nurses to the workforce and make it easier for internationally trained nurses to practise in the province.
“Together these changes have allowed Ontario to achieve some of the lowest wait times across the country and the highest attachment rate to primary care and are all investments the opposition have voted against,” Jensen said.
Dale notes that on a per-capita basis, Ontario hospitals have been operating with very low bed numbers compared with other provinces and countries for many years.
“Steadily growing demographic pressures, a shortage of services elsewhere in the health system (home care, long-term care, primary care and more) has led to tight hospital capacity and lengthy wait times for Ontarians, as hospitals remain the backstop of the system,” Dale said.
Mehra said staffing shortages throughout the year have led to the closure of emergency departments throughout the province over the last few years. She adds that provincial money is not keeping pace with inflation, and hospitals are increasing operating costs.
“All year, the hospitals ran with real dollar cuts in the worst staffing crisis we’ve ever seen, with more costs for overtime, more costs for staffing, private for-profit staffing agencies and so on,” Mehra said.
Dale added that in recent years, a lot of work has gone into shoring up services across the health system, like adding 3,500 new hospital beds, funding for additional procedures, addressing the diagnostic backlog, and pediatric care and mental health.
But he notes while hospitals have tried to make the most of these investments by working to shorten hospital stays, maximizing the use of day surgery, and helping people avoid hospital admissions where possible, they continue to face financial challenges.
The Ontario NDP health critic France Gélinas warns that the health-care system is in crisis.
“There is a law in Ontario that hospitals cannot have a deficit — they have to have a balanced budget or a surplus. Of the 142 hospital corporations in Ontario, the great majority of them, if not all, have asked to ask the government for exceptions to the legislation because all of them are facing a deficit,” she said. “The number one reason for the deficits, though, is Bill 124.”
Both the Ontario Hospitals Association and Ontario Health Coalition say that Bill 124’s overturning in November 2022 compounded the financial issues hospitals face.
Bill 124 capped salary increases for broader public sector workers at one per cent a year for three years, but after the Court of Appeal for Ontario ruled it unconstitutional, the government repealed it.
“It led to multiple arbitration decisions providing additional compensation payments to affected staff. An unprecedented and unplanned event, hospitals were required to make retroactive payments covering two to four years over a compressed timeline,” Dale said.
The Ontario Hospital Association’s CEO said that while the province’s Ministry of Health has funded a portion of incremental labour expenses, hospitals are currently waiting for additional in-year funding to address this pressure and balance their books at year-end.
“The OHA is continuing its discussions with government to ensure financial stability of the hospital system and to plan for the future,” Dale said. “These pressures underscore the very urgent need for new solutions that can revitalize the hospital sector, augment the work that is already in progress, and redesign health-based services in Ontario to meet the future demands that will be placed on it.”