Achieving financial stability

The 2006-07 annual report issued several weeks ago by Labrador-Grenfell Health provided a good overview of where the health authority stands today. Following the amalgamation of Labrador Health and Grenfell Regional Health Services in 2005, a significant effort has been devoted to bringing together two regions under a single entity. Add to that the challenges associated with meeting the public's demand for better health services, recruiting qualified professionals and the need for preventative measures and it's clear it's not an easy task to make it work.

The thread that ties all of this together - as in any large corporation or government-funded agency - is money. The financial picture presented in the annual report didn't pull any punches. In fact, it stated plainly that Labrador-Grenfell faces some serious financial challenges. While that's true, the situation isn't quite as bad as the numbers might indicate.

For the past several years, the health care system in Northern Newfoundland and Labrador has been underfunded. The Liberal administrations which preceded the Williams government tried to rein in health care expenses and at one point directed GRHS and other health boards to slash spending. The reality is that delivering health care and community services is an expensive proposition. So when the Conservatives came to power in 2003, they followed through on a promise to reduce the number of health boards and use the anticipated savings to provide services.

There may be instances where savings were achieved through consolidation, but overall, it's much easier to say it than prove it. Since amalgamation came into effect, Labrador-Grenfell Health hasn't managed to align its costs with the revenues it has received from government and user fees. In the year that ended March 31, 2007, the health authority would have shown a deficit of some $4.7-million on expenditures of $127-million. The province, however, made a contribution of $3.9-million which it called stabilization funding. As a result, the deficit was listed as a modest $845,520. In the current fiscal year, which comes to an end on March 31, Labrador-Grenfell Health has been advised by Health Minister Ross Wiseman that it will receive another infusion of some $3.9-million. It's another shot of stabilization funding, and while we won't know the health authority's financial status until sometime after the end of March, it's a good bet another deficit is being incurred.

All of this should send a clear message to the provincial government. It's time for the Department of Health and Community Services to provide Labrador-Grenfell Health with sufficient revenues so it can do its work and meet the needs. Rather than come through with stabilization funding year after year, wouldn't it make more sense to align the projected expenditures with sufficient revenues? Stabilization funding sounds like a hand-out and it makes the financial accounting look worse than it actually is.

No one is suggesting that the health authority be given a blank cheque to spend as it pleases. There are checks and balances in the system, and if there was an area where spending was suspect, it should be scrutinized.

Now that we're three years into amalgamation, both government and the health authority should have a good handle on what it costs to deliver the programs and services. The Labrador-Grenfell Health Authority states in its annual report a goal to have a plan in place to achieve a balanced budget. Starting with the 2008-09 fiscal year, the provincial government should step up and provide the health authority with the revenue it needs to reach that objective.