Financial Statement Highlights

Chair of Finance


The global economic climate is the biggest financial story of the last year. The uncertainty the growing recession has caused and the real business impacts have not missed health care. Like many publicly funded organizations, the impact on hospitals will be more gradual.

At LHSC we are fortunate that our funding promises from the Ministry of Health and Long-Term Care were sustained for 2008/09 and reaffirmed for 2009/10. This has provided some stability, and at the same time some of our costs have decreased. However, we anticipate restricted funding growth in the coming years, along with the certainty that inflation and demand are bothexpected to increase as the economy recovers.

Overall for LHSC the 2008/09 financial results were positive. We had a surplus of $23.3 million (2.4% operating margin), and our working capital deficit has again been reduced to negative $18 million (-$48.5 million, 2008) as of March 31, 2009.

Our staff has once again managed within available resources, and this performance, plus a combination of cost savings, debt repayment, and new funding support, have made this improvement in our financial position possible.

Inpatient activity and emergency visits remained stable over the year with ambulatory visits increasing by 3.6%. In 2008/09 we met the required service levels for our Hospital Services Accountability Agreement.

As has been our priority for the last number of years, we have been rebuilding our financial health and investing for the future. In 2008/09, LHSC invested $60.8 million in capital, including $25.0 million in land and redevelopment, and $35.8 million in capital equipment including clinical, major maintenance and repairs, computer leases and information management. In addition, the completion of the new North Tower at Victoria Hospital has proceeded as announced in 2007/08. Under the arrangements with the province these assets will transfer to the hospital on substantial completion. As at March 31, 2009, the North Tower Project is 46% complete and is on schedule and on budget.

Total Revenue by Type
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Total Expenses by Cost Component
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Total Expenses by Cost Type
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We now await the announcement by the province of multi-year funding to assist in planning for 2010/11 and 2011/12. Given the lasting effects of the recession on government revenues and the significant costs facing London in completing our restructuring plans, we expect to be faced with significant financial constraints.

As I approach the end of my term as Chair of the Finance and Audit Committee, I wish to thank the volunteer members of the Committee for their support and leadership. I also wish to thank the staff, physicians, and management of LHSC for their ongoing commitment and support of patients, their families, and our communities.

Paul Andrews
Chair, Finance and Audit Committee
Board of Directors


London Health Sciences Centre’s (LHSC) condensed financial information is the result of corporate systems and processes that ensure the reliability and effectiveness of our financial information and reports.

Our strategic, operational and financial planning cycles align with the timelines established by the Local Health Integration Network (LHIN). This alignment allows us to anticipate service level requirements and economic pressures in advance of negotiating our Hospital Services Accountability Agreement (HSAA).

In 2008/09 we examined administrative and clinical areas for efficiencies and continuous improvements, through the utilization of peer benchmarking information. While we submitted a two-year plan to the LHIN in 2007/08, new operating pressures required additional savings to be identified in order to maintain a balanced budget for 2009/10, and to continue to meet our patient service obligations. The refreshed 2008/09 plan ultimately resulted in an operating surplus due to higher than expected revenues and positive expense variances.

One of our most significant issues is meeting our growing capital replacement needs, a task which has been complicated in recent years due to a significant working capital deficit. This issue has improved and our working capital at March 31, 2009 shows an improvement of $30.5 million over 2008.

The condensed statements provide a brief summary of financial results, activity, and resource allocation. Audited financial statements are available by visiting the ‘Accountability’ page at


The accompanying summarized statements of financial position, operations, and cash flows are derived from the complete financial statements of London Health Sciences Centre as at March 31, 2009 and for the year then ended on which we expressed an opinion without reservation in our report dated May 12, 2009. The fair summarization of the complete financial statements is the responsibility of management. Our responsibility, in accordance with the applicable Assurance Guideline of the Canadian Institute of Chartered Accountants, is to report on the summarized financial statements.

In our opinion, the accompanying financial statements fairly summarize, in all material respects, the related complete financial statements in accordance with the criteria described in the Guideline referred to above.

These summarized financial statements do not contain all the disclosures required by Canadian Generally Accepted Accounting Principles. Readers are cautioned that these statements may not be appropriate for their purposes. For more information on the centre’s financial position, results of operations and cash flows, reference should be made to the related completed financial statements.

signature chartered accountants

Chartered Accountants
Licensed Public Accountants
London, Canada 12/05/09


Condensed Statement of Financial Position

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Condensed Statement of Financial Position

LHSC’s financial position improved significantly over the past 12 months. Through cost reductions and optimization of revenues, LHSC was able to generate an operating surplus for the third straight year. Increased emphasis on cash management resulted in an improvement in working capital, a reduction in debt, and less reliance on the LHIN for short term cash advances compared to previous years. A current ratio of 0.83:1 continues to demonstrate an improvement in working capital and LHSC increasingly focuses its attention on increased liquidity in order to deal with expected future funding and operating challenges. Current and long term obligations under various debt agreements are covered and supported by sound business plans and cash flows. Total cash of $39.1 million consists of restricted cash of $6.0 million in order to discharge certain future obligations and $33.1 million in unrestricted cash. Future spending on facilities and equipment to fulfill our obligations under the HSRC (Health Services Restructuring Commission) directives is $326 million with the government funding $264 million and the hospital funding $62 million.

Condensed Statement of Operations

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Condensed Statement of Operations

LHSC ended the year with an operating surplus of $23.3 million or an operating margin of 2.4%. These financial results are not entirely unexpected. During the past two fiscal years, as well as this one, Management developed an operating and capital plan with the intent of replenishing working capital while still ensuring overall financial health. These strategies include a focus on clinical efficiencies, alternative optimization of revenue sources, rebuilding of LHSC’s capital asset base, retirement of debt, and replenishment of working capital. In 2008/2009, the LHIN funded one-time restructuring expenses for the completion of Phase 2 of Milestone 2 redevelopment. $30.4 million of our revenue relates to deferred external grants to offset $59.8 million in amortization of our capital assets.

Condensed Statement of Cash Flows

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Condensed Statement of Cash Flows

LHSC invested $29.6 million in clinical capital, building service equipment, information systems and buildings during the year. In addition LHSC spent $16.1 million in Milestone 2, Phase 2 redevelopment costs which is funded on a cost share basis with the MOHLTC and $16.1 million in externally funded or recoverable capital projects. Capital spending is financed through a combination of operations and deferred contributions from both levels of government and the London Health Sciences Foundation.