Health minister announces deficit-reduction measures

Julie Bettney, Minister of Health and Community Services, announced today the measures to be taken by the regional institutional and integrated health boards in an effort to reduce the projected deficit for this fiscal year. The first quarter results indicated that, despite additional funding, the boards projected a combined deficit of approximately $18 million for this fiscal year.

In releasing the measures, Minister Bettney reiterated that government continues to place a high priority on the health and community services system in this province. Over the past six years investment has increased by $381 million. In this year�s budget alone, government increased its funding level by $196 million - $114 million extra into the operational budget and $82 million for capital improvements. The $114 million included $50 million into the base budgets of the 10 regional institutional and integrated health boards.

As a result of the projected deficits, Minister Bettney asked the health boards in September to initiate dialogue with the province�s public sector unions to identify cost-saving initiatives to reach balanced budgets. The minister acknowledged the solid effort of the volunteer board members, management and the union representatives in developing proposals to reduce their deficits. She said she also understands the concerns which were expressed by the unions regarding the tight time-frame in which she had asked them to respond.

"As a result, the opportunity for the unions to come forward with substantial cost-savings measures was limited," said Minister Bettney. "However, I understand these discussions among trustees, management and the unions went well. This exercise has opened the door for more positive employer-employee relations and continuing collaborative efforts to improve effectiveness. In fact, some boards have indicated cost-management committees will now be struck, involving union and management, to continue to monitor their organization�s financial situation."

Minister Bettney pointed out that since the boards submitted their plans, most of which were received by the deadline of October 15, officials of her department have closely analyzed each of the options brought forward. Overall, the target was $17.9 million and measures are now in place to address $10.6 million. As previously indicated, the St. John�s Nursing Home Board and the Peninsulas Health Care Corporation have projected balanced budgets. For the eight remaining boards, the decisions are as follows:

Central East Health Care Institutions Board

- measures of $200,000 to balance budget.

Central West Health Corporation

- measures of $1.7 million to balance budget.

Grenfell Regional Health Services

- measures of $300,000 to be implemented. (Based on projections to Oct. 15, this amount would have balanced the budget; however, recent monitoring indicates the deficit may be increasing and additional proposals may be needed to achieve a balanced budget.)

Avalon Health Care Institutions Board

- measures of $300,000 to be implemented. (Government will be seeking further information from the board and any remaining deficit will be rolled into long-term debt.)

Western Health Care Corporation

- combined measures from last year�s action plan and new measures total $1.8 million (This leaves a target of $1.9 million which government is authorizing to be repaid with annualized savings from these measures in the next fiscal year.)

Newfoundland Cancer Treatment and Research Foundation

- measures of $100,000 to be implemented. (Government has agreed to absorb the $1.8 million based on the outcome of a recent operational review.)

Health Labrador Corporation

- (Due to an improvement in its deficit projection, a new set of measures has been requested.)

Health Care Corporation of St. John�s

- measures of $2 million to be implemented.

Minister Bettney indicated her disappointment the Health Care Corporation of St. John�s did not come forward with a complete plan to reduce its projected deficit of $8.6 million as she had requested. Based on the size of the Health Care Corporation�s deficit and the fact that the corporation provides services to the entire province, government will be commissioning a full operational review of the corporation by external consultants with the first part of their mandate to present a plan to recover the current year deficit as soon as possible. The review will also identify strategies to generally contain the growth in costs in the future.

"We will continue to work closely with the boards to keep on a prudent financial course," said Minister Bettney. "We have a responsibility to ensure the people of this province have access to appropriate health programs and services. Yet, we also realize we have to achieve this within government�s fiscal framework."

Minister Bettney stated that this current exercise gives further importance to the series of regional health forums which concluded this week. The minister looks to the analysis of these discussions and the provincial health forum scheduled for later this month as the stimulus to set direction for a new model of health service delivery in an environment that is financially sustainable.

Media contact: Carmel Turpin, Communications, (709) 729-1377.

2001 11 05                             10:45 a.m.