Bailing Out Laurentian: The Province as Landlord?

 

Well, the Laurentian saga continues to develop in interesting ways and the latest developments are part of the rescue package by the provincial government.  Better late than never one supposes though doing things late often leads to additional complications.  Obviously, Laurentian and the province are trying to make up for what they failed to do earlier on given the preliminary report of the provincial Auditor General concluded that Laurentian did not need to file for CCAA protection. 

 

There is a detailed document related to the return to court May 30^th, but briefly the package for Laurentian to date is $35 million in operating money, COVID-19 funding of up to $6 million and up to $22 million dollars in funds to compensate for the drop in enrollment. Incidentally, applications from high school are down 43.5 percent.  However, on top of all this, the provincial government is offering to buy $53.5 billion worth of Laurentian University’s real estate – namely land or buildings.  

 

Laurentian is apparently asking the province to put the buildings of the newly independent NOSM University at the top of the list which would be 60 percent of the Health Services Education Resource Centre and the Medical School/NOSM building.  Dr. Sarita Verma, NOSM University's President, Vice Chancellor and CEO, and one of the most powerful physicians in Canada,  said she has not been privy to any discussions around the province's proposed purchase of Laurentian real estate.  But then Dr. Verma apparently was also not initially aware the province was going to make NOSM a university either.  However, lack of awareness has not stopped her from suggesting that it would be ideal if land adjacent to the two building was also part of the deal to accommodate “expansion.”  Nimbleness of narrative is an obvious requirement for broader public sector CEOs these days.

 

So, what to make of all this?  Well, for those worried about provincial government intrusion into university management, becoming a university’s landlord is definitely going to be an interesting development. If a market based rent is charged, there will be claims of gouging. If a very low or zero rent is charged, then it will be seen as a unique and special subsidy and one suspects other medical schools in the province not to mention other universities will raise the issue.  And, as for the $22 million dollars to compensate for an enrollment drop, that also sends another message from the province.  The provincial government was obviously sufficiently rattled by the prospect of a university going bankrupt on its watch that it is making a major effort now. Can other universities also count on the same assistance should their enrolment drop without having to wait for bankruptcy proceedings?  After all, to almost lose one university is unfortunate but having several go would suggest a disregard bordering on carelessness, neglect and other things we teach our children to avoid.

 

The final interesting message is for Thunder Bay and Lakehead University.  Let us be clear. There is no danger of NOSM leaving Thunder Bay or the northwest.  At the same time, should NOSM acquire convenient expansion space near its Sudbury site, the odds are the bulk of expansion is going to go into the Sudbury campus with Thunder Bay becoming a satellite in endless orbit around its Sudbury star.  Needless to say, such projections of potential outcome will be dismissed as the delusions of yet another tenured university faculty member with no real world experience.  I say, you have been served notice.

 

 

Reading the Tea Leaves in Ontario's Cabinet Shuffle

 

Premier Ford has shuffled his cabinet and put in place the team for the last year of his mandate with an eye to next spring’s election.  It has been a tumultuous year for the Premier to say the least given the pandemic but with the end of the pandemic seemingly in sight, Ontario’s government now has to plan for dealing with the aftermath of the pandemic as well as the future.  Key portfolios remain in the same hands, but there are some notable changes.

 

Health and long-term care will continue to be important portfolios and here there is both continuity and change.  Christine Elliott remains Minister of Health and is Deputy Premier an indication of both her importance as well as the centrality of health.  As for long-term care, Merrilee Fullerton has been replaced by Rod Phillips.  This change has received a lot of media attention mainly because Fullerton’s departure is seen as a demotion and the resurrection of Phillips comes after last winter’s travel escapade to St. Barts and the theatrical staging to mask his absence.   However, going to Children, Community and Social Services is not necessarily a demotion given the size of the ministry in terms of its budget share.  And as for Mr. Phillips, well he has atoned for his sins and not allowing an otherwise competent person back into cabinet does not seem particularly productive.

 

The more interesting analysis and discussion with respect to health and long-term care is what the challenges are and how Elliott and Phillips will deal with them.  In the case of health, the pandemic has disrupted the system and along with everything else the FAO now predicts that it will take years to address the backlog of surgeries in Ontario that were delayed by the pandemic.  Indeed, the elective surgery backlog will reach 419,200 procedures and the diagnostic backlog will reach nearly 2.5 million procedures by the end of September 2021.  This is on top of dealing with COVID and its after-effects, the risk of another wave in the fall should the variants outstrip vaccination efforts and the human resources issues of a stressed health care sector.  This will all cost a lot of money.

 

As for long-term care, the long and short of the matter is that bed numbers from the early 2000s to the election of the Ford government stayed flat at just under 80,000.  The pandemic and its toll on long-term care homes resulted in thousands of beds being removed from service because they were 3-4 resident bedrooms more conducive to infection spread thereby reducing capacity even further.  On top of this the government has promised raising daily hours of care per resident from 2.75 to 4 hours, hiring 9,000 more PSWs and adding another 30,000 beds to this system.  This will all cost a lot of money,

 

As for money, the spring 2021 Ontario budget provided some interesting projections of spending by general category up to 2029-30.  Between 2020-21 to 2029-30, health spending is projected to rise from $66.7 to $82.0 billion.   This may seem like a lot but if you take the medium-term population projection scenario from the Ministry of Finance, assume inflation of about 2 percent and convert to inflation adjusted dollars, once the COVID-19 spending spike dissipates real per capita health spending can actually be expected to decline by about 11 percent from 2022 to 2029.  In moving forward their priorities, one hopes that both Elliot and Phillips are really good friends with Peter Bethlenfalvy who remains Minister of Finance though his Treasury Board responsibilities now go to Prabmeet Singh Sarkaria.

 

In other news of note, Ross Romano is no longer Minister of Colleges and Universities and has been moved to Government and Consumer Services.  One suspects there has been some displeasure with the handling of that portfolio by Minister Romano given that Ontario is the first province in Canada to see a university declare insolvency and seek creditor protection under the CCCA while simultaneously creating two new universities – Hearst and NOSM.  Such a feat of creative destruction has not gone unnoticed and the move to Government and Consumer Services is hopefully not a strategy to put Minister Romano in charge of a process to have the entire province of Ontario's operations seek CCCA protection given the ballooning size of the provincial debt and deficit.

 

The new incoming minister for Colleges and Universities by the way is Simcoe North MPP Jill Dunlop who moves there from being Associate Minister for Children and Women’s Issues so this is definitely a promotion.  Given that Minister Romano was from the north and thoroughly disrupted a northern university, one is a bit concerned that there may be a curse attached to this portfolio and Minister Dunlop may be fated to disrupt post-secondary education in Simcoe County.  That is of course the home of Lakehead’s Orillia Campus and one wonders if we are in store for the freeing of yet another institution from its administrative shackles by creating another stand-alone university?  Residents of Simcoe County who are planning to create an Orillia University Liberation Army may want to take notes from the Dean of the Northern Ontario School of Medicine.  In a recent virtual town hall, the Dean apparently referred to creation of a new medical university separate from Lakehead and Laurentian as “Emancipation.” I suspect that no one ever truly realized that the poor medical students in northern Ontario had actually been enslaved for the last fifteen years.  

 

On a final note, Greg Rickford is truly now King of the North.  The MPP for Kenora-Rainy River, assumes a merged role as Minister of Northern Development, Mining, Natural Resources and Forestry, as well as Indigenous Affairs.  Mr. Rickford has gained a reputation as being quite competent and unlike some ministers, he never makes the boss look bad.  He follows the last true King of the North who was Leo Bernier, a minister in the Davis government of the 1970s.  And another of my favorite northerners and the only current cabinet minister I have ever had the pleasure of meeting, Vic Fedeli, remains Minister of Economic Development, Job Creation and Trade and is Chair of Cabinet.  Congratulations to both Mr. Rickford and Mr. Fedeli. 

 

 

NOSM Moves On. Good bye NOSM and Hello NOMU.

 

The creation of Ontario's newest universities - NOSM and Hearst - is a done deal. The successful passing of the legislation creating the Northern Ontario School of Medicine (NOSM) as a stand-alone university is not a surprise given that there is a majority government.  In addition, NOSM itself was not opposed and is in agreement with the move.  Indeed, one always wonders where the idea came from and one cannot help thinking that it was at the quiet instigation of NOSM itself given the disruption caused by the financial crisis at Laurentian and any issues with NOSM funds there. All NOSM would have to do is bring up their concerns about access to their funds - assuming there were any - and let the government's imagination do the rest. One expects there will be new capital projects in the offing to provide ribbon cutting opportunities as well as a new name for rebranding purposes - The Northern Ontario Medical University (NOMU). All governments like the sense of achievement that comes with new things even if they are a reconstitution of other people's hard work.

 

NOSM was always a unique entity in that it was essentially independent within the Laurentian-Lakehead operating framework.  The two universities helped provide its start with space and an administrative operating framework.  It was never truly a faculty within a university like all the other medical schools and that decision laid the groundwork for the day when NOSM would seek its full independence. Just imagine the provincial government trying to sever the University of Toronto medical faculty from the university - not likely. But who knows, perhaps the provincial government  will now feel inspired and free all the provincial medical schools from the tyranny of their own universities. Perhaps economics departments will be next.  As an aside, I always thought that Lakehead's economics department as a stand alone entity - The Lakehead School of Economics (LSE) would be wonderful for marketing purposes.  

 

The structure of the medical school was a political compromise twenty years ago so that both universities could have a medical school sparing the government of the day the political difficulty of picking one over the other.  The current government has no such political qualms because they already know the extent of their support within both Sudbury and Thunder Bay given their voting patterns over the last few decades.  There was no political cost to them.

In terms of the future, NOSM will not be leaving its main operations in Thunder Bay or Sudbury given they are  the northern Ontario communities with the largest concentrations of population and physicians.  However, that is not the same as not leaving the Lakehead and Laurentian campuses and setting up shop elsewhere in the cities. That is a distinct prospect in the longer term leaving both universities with the additional capital infrastructure and its associated costs.  As for the additional costs to the provincial government, it has already demonstrated by its actions that it is not worried about those costs.   NOSM's future as a stand alone entity is an undiscovered country and will be watched with interest by medical associations and medical faculties throughout North America.  Such is the way of the world.  

 

 

Woes of Northern Ontario Universities: Bad Medicine at NOSM

 

In the wake of the news of the Laurentian layoffs and the provincial government’s unwillingness to assist the situation there in any direct financial fashion, a new disruption to northern Ontario’s universities was announced.  The Ontario Government apparently without consulting with the affected stakeholders is now proposing that the Northern Ontario School of Medicine and the Université de Hearst become independent, stand- alone universities.  The Northern Ontario School of Medicine (NOSM) opened in 2005 and is currently a not-for-profit corporation of Lakehead University in Thunder Bay and Laurentian University in Sudbury.  Obviously, the province is using the current restructuring and chaos at Laurentian to pursue other agendas that include interfering in existing corporate arrangements.  Clearly, it does not have enough on its hands with the pandemic.

 

The creation of NOSM was a long-term effort by many in northern Ontario and since its opening 2005 an ongoing partnership has been forged with university faculty and staff on both campuses, health-care providers, Indigenous communities, community and regional business leaders.  The academic oversight provided by Lakehead and Laurentian has created a unique curriculum that has trained over 600 physicians in a learning model that spans the entire region and conducted research and training relevant to health needs in the north. NOSM has made use of infrastructure – buildings, administration, services and otherwise – on both campuses that have generated substantial cost savings for the government. Given the Ontario government has already stressed university finances by cutting tuition 10 percent and freezing it and keeping provincial grants frozen, why would it continue to stress specific institutions in northern Ontario further by subjecting them to the disruption and costs of tearing asunder something that is working?

 

This development is really quite remarkable, and one wonders if the province is planning to sever the Michael G. DeGroote School of Medicine from its affiliation with McMaster or unilaterally grant the University of Toronto’s Faculty of Medicine independent status also?  Probably not, because those are settled southern schools in the provincial heartland and the core of Ontario civilization which is nestled in a 10-kilometer swath alongside the 401 Highway corridor.  Meanwhile, the Northern Ontario School of Medicine is so far away and therefore is still considered part of Ontario’s colonial administration heritage. The colonialist overtones of this intrusive activity are even more remarkable given that NOSM in particular has a focus on rural/remote and indigenous health and services.  Or, has the provincial government already obtained buy-in from First Nations in Ontario’s North?  There has been silence so far from Alvin Fiddler, the Grand Chief of Nishnawbe Aski Nation who is usually quick to respond to injustice.

 

The provincial government news release calls this action “Steps to Strengthen Postsecondary Education in Northern Ontario.”  How making NOSM with 460 students and Hearst with 160 students separate independent degree granting institutions strengthens the system by adding two tiny universities that will require endless subsidization beyond what they are already getting is considered sound public policy is a good question.  And one imagines that in the case of NOSM, the fact that it was on two campuses was never something that it liked and may even be complicit with the government in getting separate status so they can move to a shiny new campus in one location. After all, even if the province did not consult with Lakehead or Laurentian before announcing their proposal, they must have discussed it with NOSM’s administration, right? I would not be surprised if NOSM’s future new stand-alone home is a nice new mega building and campus in Sault Ste. Marie, home of the current minister of Colleges and Universities.  Who benefits from government policy is always a good question to ask.

 

Northern Economist Visiting NOSM

I will be visiting the Thunder Bay Campus of the Northern Ontario School of Medicine on January 26th to give a seminar in the Human Science Seminar Series.  My talk will overview trends in health spending in Canada over the longer-term and provide some recent estimates of aggregate value for money from this spending.  Looking forward to the visit.