Friday, 17 January 2020

Why Hospitals (And Long-Term Care) in Ontario Need More Funding


When it comes to provincial budget season, Ontario’s health sector invariably will lobby for more funding.  As part of the string of posts I have been doing on health care spending in Ontario starting in November dealing with the four “ages” of Ontario spending, I want to explore the case for more funding for one aspect of the Ontario health care system in particular – hospitals.  In the lead up to the 2020 budget, the Ontario Hospital Association has made the case that with Ontario’s aging and growing population, there are too many patients waiting for beds.  Given that Ontario spends less per capita than any other provincial government in Canada, it needs this year an increase of $922 million for hospitals – a 4.85 percent increase – simply to maintain access. 

While the shortfall compared to other provinces is a good point, the case for hospitals is evident even if one looks at Ontario hospital funding on its own.  Figure 1 plots both nominal and real (in $2019) per capita hospital spending in Ontario from 1975 to 2019 using data from the Canadian Institute for Health Information’s National Health Expenditures (NHEX) database.  Real per capita nominal spending has grown from $210 in 1975 to reach a peak of $1,494 in 2019.  This may seem impressive until one adjusts for inflation and reveals an increase from $1,118 to $1,494 instead.  Indeed, real per capita spending has essentially declined since 2010 when it peaked at $1,583.  In other words, Ontario hospital spending has not kept up with the combination of both inflation and population growth since 2010 and has actually declined by 6 percent.

 

Things look even worse when you look at the average annual growth rate of real per capita spending that compares hospitals to the other categories as done in Figure 2.   

 
The capital category – which of course means new or expanded facilities such as hospitals and long-term care homes as well as equipment has dropped on average -4.8 percent annually.  So much for all of that infrastructure money at both the federal and provincial levels.  Where has it gone is a good question.  After capital, the next largest declines average annual declines are for other professionals at -2.3 percent (i.e., provincial funding for things like eye exams are a factor here),  hospitals at -0.6 percent and then other institutions – which include mainly long term care homes.  The increases are for physicians, drugs, and most dramatically public health, administration and “other health spending” which includes things like home care services.

Institutional care in Ontario – namely hospitals and long-term care – are one area that needs some spending revitalization (including both capital and operating spending) if there is to be any hope of dealing with both rising costs, as well as the greater service demands from a population that is both aging and growing.