Health Minister Terry Lake has ordered a strategic and operational review of Fraser Health to help contain rising costs and deal with persistent hospital congestion.
The health region is B.C.’s largest – it consumes $3 billion a year on behalf of 1.6 million residents – but it’s running over budget once again this year and Lake said it will require another infusion of extra money to meet patient demand.
The Fraser region population has grown by 1.3 per cent a year over the past three years and the authority has received budget increases averaging six per cent a year – more than the 4.8 per cent average for other health regions.
Despite that, Fraser went one per cent over budget last year – the third year in a row it’s failed to stay within its allocation.
“That doesn’t add up for us,” Lake said. “Fraser has not been able to manage the budget targets and we want to understand why.”
He said continued budget hikes of five to seven per cent can’t continue either.
“We’ve been very clear that we need to bend the cost curve down on increases in health because it’s simply not sustainable.”
It’s too soon to say how far Fraser will overshoot this year’s budget but another one per cent overrun would take an extra $30 million – money Lake said will be found from the core operations of the health ministry, not raided from other health regions.
The review comes after unionized nurses said understaffed emergency rooms are packed at hospitals across the region, in addition to the newly opened ER at Surrey Memorial.
Fraser Health officials have also grappled with other high-profile incidents in recent weeks, including the case of a 90-year-old blind woman sent home after midnight via taxi from Delta Hospital.
Lake said the review won’t examine such incidents and he denied claims the system is in chaos, calling hospital congestion nothing new.
Fraser is the province’s fastest growing health region, with a large number of older residents who are expected to put great demand on health budgets in the years ahead.
Lake said the review doesn’t mean he wants service cuts but a wide search for solutions, including how spending is balanced between acute care in hospitals versus preventative primary care that can keep people healthier and avoid admissions.
“The answer to every problem is not more money,” he said.
One option to be examined is a possible boundary change for the health region.
The Fraser and Vancouver Coastal health authorities already jointly procure many services and supplies in an effort to control costs, but Lake hinted more might come.
“Does it make sense to have the boundary where it is?” Lake asked, noting there have been no changes since the health authorities were set up 12 years ago.
Fraser Health’s board will submit a new three-year plan next spring to start in the 2014-15 fiscal year and will also submit a revised version of this year’s fiscal plan to address the expected overrun.
Lake will appoint officials from his own ministry, the finance ministry and various health regions to the strategic review committee to work with Fraser Health in examining its current operations and identifying priority areas for action by next May.
The new three-year plan is to identify service targets, operational and financial objectives and outline how Fraser Health’s programming and structure can help achieve them.
Lake insisted he still has confidence in Fraser’s leadership.
Fraser Health board chair David Mitchell said the board welcomes the chance to work with other health experts in a “collaborative and constructive” search for best practices.
NDP health critic Judy Darcy said Fraser Health has run with too few beds and staff for years, creating systemic problems and routinely overflowing ERs.
“Because of the underfunding we’ve seen a whole series of cuts as well as this crisis in emergency rooms that’s getting worse,” she said.
She questioned where the review team will look for savings.
“What is it they’re going to cut?” Darcy asked. “We’re already seeing cuts that are pretty damaging, to mental health in particular.”
Fraser CEO open to talk of merging health regions
Fraser Health CEO Nigel Murray says he has no opinion on whether the health authority should merge with neighbouring Vancouver Coastal to create a single giant health region to save more money.
A review of Fraser ordered by Health Minister Terry Lake to search for cost savings will also look at the structure of the authority and consider possible changes to boundaries.
“Nothing should be off the table,” said Murray, adding he welcomes the review.
But he said he’s more concerned with ensuring there’s seamless care when patients are handed back and forth between the health regions.
“We often get distracted by structure as opposed to function,” Murray said.
“I don’t think patients really care if there’s two health authorities or one. What they care about is getting services that are timely, in the right place for them and that are high quality, and that as a taxpayer they’re efficient.”
Murray said the two Lower Mainland health authorities have jointly procured various services and supplies for years to get more competitive pricing.
The shared services strategy has expanded over time to other functions, such as consolidating the two regions’ pharmacies and labs.
Much of that has been done primarily to standardize patient care, he added.
Merging the two health authorities would potentially save some portion of the administration costs of their twin bureaucracies.
Fraser lists $253 million a year as “corporate” costs in its service plan, while Vancouver Coastal spends around $296 million.
Fraser’s corporate spending, at about 8.3 per cent of the overall budget, is the lowest share going to administration of any health region in the country, Murray said.
Fraser has repeatedly tried to redesign its services over the years, in an ongoing search for health innovations to do more with less money.
Murray called the review an exciting chance to get a fresh strategic view of the challenges and possible solutions.
Vancouver Coastal includes Vancouver, the North Shore and Richmond, while Fraser Health covers the rest of Metro Vancouver and the Fraser Valley from Burnaby to Boston Bar.