In 2022/23, LHSC continued to navigate the ongoing challenges of the pandemic while ensuring financial decisions were made responsibly and in the best interest of our teams, patients and the communities we serve. This included responding to the November 2022 repeal of Bill 124, which had previously legislated a three-year moderation period for the wages and salaries of Ontario’s public sector employees.
The repeal of Bill 124 resulted in the payment of retroactive wages and benefits to LHSC’s unionized and non-unionized employees – aligning to union arbitration. While LHSC had balanced our 2022/23 revenues and expenses prior to accounting for building amortization, these retroactive wages and benefits were a significant accrual to our expenses, adding to what would have otherwise been a balanced financial position. As a result, LHSC reported expenses in excess of revenues of $46.5 million for 2022/23, or 2.9% of expenditures.
As we look forward, we are steadfast in our commitment to advance operational priorities to return to a balanced financial position. We are prioritizing a sustainable future by optimizing our operations and advancing strategic partnerships so we can continue participating as the collaborative, leading-edge health care provider that our community expects us to be.
Opinion
The summary financial statements, which comprise the summary statement of financial position as at March 31, 2023, and the summary statement of operations and summary statement of cash flows for the year then ended, and related notes, are derived from the audited financial statements of London Health Sciences Centre for the year ended March 31, 2023.
In our opinion, the accompanying summary financial statements are consistent in all material respects, with the audited financial statements, in accordance with the basis of presentation note.
Summary Financial Statements
The summary financial statements do not contain all the disclosures required by Canadian public sector accounting standards. Reading the summary financial statements and the auditor's report thereon, therefore, is not a substitute for reading the audited financial statements and the auditor's report thereon. The summary financial statements and the audited financial statements do not reflect the effects of events that occurred subsequent to the date of our report on the audited financial statements.
The Audited Financial Statements and Our Report Thereon
We expressed an unmodified audit opinion on the audited financial statements in our report dated May 31, 2023.
Management’s responsibility for the summary financial statements
Management is responsible for the preparation of a summary of the audited financial statements on the basis described in the basis of presentation note.
Auditors’ responsibility
Our responsibility is to express an opinion on whether the summary financial statements are a fair summary of the audited financial statements based on our procedures, which were conducted in accordance with Canadian Auditing Standard 810, “Engagements to Report on Summary Financial Statements.”
(signed) Ernst & Young LLP
Chartered Professional Accountants, Licensed Public Accountants
London, Canada, June 28, 2023
Summary Statement of Financial Position
LHSC maintained a strong financial position during the past fiscal year. Liquidity remained above minimum thresholds despite an uncertain funding environment, and the global economy experienced higher inflation rates coupled with supply chain disruptions as a consequence of the continuing impact of the COVID-19 pandemic. LHSC’s current ratio of 1.13 continues to reflect a strong balance sheet, however, liabilities related to the repeal of Bill 124 have eroded the current ratio overall. Current and long-term obligations under various debt agreements are adequately covered, based on the current cash position. Looking ahead, LHSC will continue to employ deliberate strategies to support our workforce and address the health service needs of our growing and diverse community, whilst remaining fiscally responsible.
Summary Statement of Operations
LHSC ended the year with a deficit of $46.5 million. This position is largely the result of an accrual of retroactive wages and benefits for eligible employees as a result of the repeal of Bill 124, which had originally imposed a 3-year moderation period for all staff, where total compensation increases were capped at 1% annually. However, the Bill was repealed by the Superior Court of Justice of Ontario in November 2022 and this repeal triggered reopener clauses in negotiated union contracts. This led to a cost pressure for all hospitals in the province. Sustained inflation along with persistent health human resource constraints, exacerbated by the increase in complexity and acuity of our patient population, also continue to challenge the ability of LHSC to balance operations.
Actual revenues ($1,534 million) were higher than budget ($1,498 million) primarily due to revenues from the Ministry of Health that were unanticipated and hence not budgeted.
Actual expenses ($1,580 million) were higher than budget ($1,542 million) primarily due to the accrual of retroactive wages and benefits for eligible employees as a result of the repeal of Bill 124.
Summary Statement of Cash Flows
LHSC invested $48.8 million in clinical capital, building service equipment, information systems and buildings during the year. In addition, LHSC spent $22.1 million on externally funded or recoverable capital projects.
Capital spending is financed through a combination of operations, debt and deferred contributions from government, the London Health Sciences Foundation and Children’s Health Foundation.
Current assets include restricted cash and portfolio investments of $7.3 million in order to discharge certain future obligations and $244.1 million in unrestricted cash and cash equivalents.
Basis of Presentation
The information contained in the summary financial statements is in agreement with the related information in the complete audited financial statements. The summary financial statements contain major subtotals and totals from the complete audited financial statements. View the complete audited financial statements
| YEAR ENDED | March 31, 2023 | March 31, 2022 |
| (000’s) | (000’s) [restated – Note 1] | |
| REVENUE | ||
| Ministry of Health and Ontario Health | 1,272,533 | 1,253,559 |
| Other | 261,489 | 199,940 |
| 1,534,022 | 1,453,499 | |
| EXPENSES | ||
| Salaries and benefits | 991,013 | 925,937 |
| Other | 589,477 | 529,242 |
| 1,580,490 | 1,455,179 | |
| Deficit | (46,468) | (1,680) |
| YEAR ENDED | March 31, 2023 | March 31, 2022 |
| (000’s) | (000’s) [restated – Note 1] | |
| CASH PROVIDED BY (USED IN) | ||
| Operating activities | 42,911 | 98,756 |
| Financing activities | 15,926 | 39,807 |
| Investing activities | 1,937 | 1,554 |
| Capital activities | (70,819) | (60,356) |
| Net (decrease) increase in cash and cash equivalents | (10,045) | 79,761 |
| Cash and cash equivalents, beginning of year | 254,173 | 174,412 |
| Cash and cash equivalents, end of year | 244,128 | 254,173 |
| AS AT | March 31, 2023 | March 31, 2022 |
| (000’s) | (000’s) [restated – Note 1] | |
| ASSETS | ||
| Current assets | 391,498 | 418,910 |
| Restricted cash, investments, and interest rate swaps | 12,943 | 13,641 |
| Capital assets, net | 948,885 | 938,603 |
| 1,353,326 | 1,371,154 | |
| LIABILITIES, DEFERRED CONTRIBUTIONS, NET ASSETS AND REMEASUREMENT LOSSES | ||
| Current liabilities | 346,578 | 304,886 |
| Long-term liabilities and deferred contributions | 788,462 | 805,469 |
| Internally restricted net assets | 37,714 | 31,781 |
| Unrestricted net assets | 180,367 | 232,768 |
| Accumulated remeasurement gains (losses) | 205 | (3,750) |
| 1,353,326 | 1,371,154 | |
Note 1- As a result of adopting Public Sector Accounting Standard 3280 – Asset Retirement Obligations effective April 1, 2022, the comparative financial statements for the year ended March 31, 2022, have been reclassified from statements previously presented to conform to the presentation of the 2023 financial statements.
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Total Revenue (%) by Type $1,534 Million |
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Ministry of Health and Ontario Health: 82.9% | |
| Non-patient: 9.5% | ||
| Patient: 4.8% | ||
| Preferred accommodation: 0.4% | ||
| Amortization of deferred capital contributions: 2% | ||
| Interest: 0.4% | ||
|
Total Expense (%) by Cost Component $1,580 Million |
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Salaries and wages: 52% | |
| Employee benefits: 10.7% | ||
| Supplies and other: 14% | ||
| Medical and surgical supplies: 7.7% | ||
| Drugs: 10.9% | ||
| Amortization of capital assets: 4.2% | ||
| Interest and other: 0.5% | ||
|
Total Expenses (%) by Type $1,580 Million |
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Administration and support: 19% | |
| Inpatient services: 27% | ||
| Outpatient services: 14% | ||
| Diagnostic and therapeutic: 18% | ||
| Other votes: 6% | ||
| Undistributed: 12% | ||
| Amortization: 4% | ||