Small Hospital Integration in Ontario
August 2, 2018 | Blog post by Brent Maranzan
The other day I developed a benchmarking template for the Hospitals I work with and it prompted an interesting question. One of our member Hospitals is a corporation which operates several Hospital sites in different communities and asked if we could amend the peer groups that we had established in the tool to show a multi-site Hospital group to aid them in their analysis. I thought that was an interesting idea, however I knew of no existing information source to show which Ontario Hospitals were multi-site corporations and which weren’t. I kept this request on the back-burner until I found a few hours to make my own source of this information.
I took my existing database of Hospital information and invested a morning in going through webpages, annual reports, etc… of all small Hospitals in Ontario to figure out which Hospital corporations managed multiple Hospital sites. In the end, I was rewarded with a fascinating picture of the diverse integration activities in Ontario in the past 10 years (and beyond).
Of the 65 Hospital corporations in Ontario with annual (fund-type one) expenses of less than $43M (in 2016/17), we found 9 (14%) which managed multiple (two or more) Hospital sites under one, consolidated Corporate entity. Another 17 Hospitals had some form of co-managed Hospitals in a different model. For example, the MICS Group operates three Hospitals (in Cocherane, Iroquois Falls and Matheson) as separate Corporate entities, with one unified Leadership Team. There were several examples of this model, and some hybrids as well, such as North Wellington Health Care, which manages two Hospitals (Palmerston and Mount Forest) under one Corporation and Fergus Groves Memorial under another Corporation. In the end, we found evidence of Hospital consolidation in one form or another affecting 26 of 65 (40%) of the small Hospitals in Ontario, most of which appeared to have taken place within the last 10 years! It’s important to note that this doesn’t include all of the vertical integration activities that have taken place as well. Anecdotally, we noticed many Hospitals having recently integrated clinics, long-term care homes, home care programs, etc… Very few Hospital corporations showed no signs of any significant horizontal and/or vertical integration within the last 10 years.
In future, we’d like to take this data and compare to other benchmarked results to see if there is evidence of one or the other model showing to be the preferred model of integration. This would help inform integration business cases going forward. What is clear however, is that an incredible amount of Hospital consolidation has taken place in the past 10 years in Ontario. Some of this is likely as a result of political and fiscal pressure, but also “opportunistic” integration activities due to significant retirements and human resource challenges. These tend to be more significant driving factors in small communities. This trend will likely continue into the next 10 years as the pace of retirements accelerates and populations continue to migrate from small rural communities to large urban cities.
We have been involved in writing a few business cases for Hospital integration activities. In a future post, I’ll discuss some of the things we have found which indicate a good fit for integration, versus some of the pitfalls and risks to look out for.