Message from Brenda Bird
Treasurer of the Board of Directors
As we enter 2019/20, there will be continued focus on reducing our current level of occupancy and addressing volume pressures in many of our clinical areas in order to return to an operating surplus and to provide better access to services and to enhance patient care."
I am pleased to report on the financial results of London Health Sciences Centre (LHSC) for the fiscal year ended March 31, 2019.
This has been a pivotal year of reflection and change for LHSC. Under new leadership, LHSC completed a strategic plan that will guide our organization through 2020, and allow LHSC to be responsive to changes in the health care system. LHSC has made critical investments in areas of information technology, infrastructure and medical equipment to support continued improvement to the high level of care provided today.
LHSC’s reported expenses in excess of revenues is $23.9 million (or a negative margin deficit as a per cent of total revenues of 1.9%). This follows 12 consecutive years of generating small surpluses that have allowed LHSC to build a strong balance sheet, enabling us to fund small deficits as well as support targeted investment in key areas of the hospital that align with LHSC’s strategic plan.
As we enter 2019/20, there will be continued focus on reducing our current level of occupancy and addressing volume pressures in many of our clinical areas in order to return to an operating surplus and to provide better access to services and to enhance patient care. LHSC will be considering how we provide care, where we provide care, when we provide care, and how we best engage our community partners to minimize hospital stays after care is provided.
In this regard, we will continue to invest in innovative and quality-focused initiatives that reduce inefficiencies, increase patient access, improve patient experience and explore regional opportunities with our other community and hospital partners. Our President and CEO, Dr. Paul Woods, has stated that he wishes to actively partner in building a strengthened and regionally-integrated health system. LHSC is well-positioned to help lead these changes that align with our strategic objectives to improve health outcomes and to enhance the patient experience.
This is my final year as Treasurer. This experience has been full of challenge and opportunity and it has been a pleasure to support LHSC along this segment of our journey towards continuous improvement. I would like to sincerely thank the volunteer members of the Finance and Audit Committee for their dedication to our committee mandate in service to our patients and our hospital. On behalf of the Finance and Audit Committee, I would also like to thank our staff, physicians, and management for their commitment to advancing our mission.
Brenda Bird
Treasurer, Board of Directors
London Health Sciences Centre
INDEPENDENT AUDITORS’ REPORT ON THE SUMMARY FINANCIAL STATEMENTS
To the Board of Directors of London Health Sciences Centre
Opinion
The summary financial statements, which comprise the summary statement of financial position as at March 31, 2019, and the summary statements 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, 2019.
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 29, 2019.
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 consistent in all material respects, with 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.”
MANAGEMENT’S SUMMARY FINANCIAL RESULTS – MARCH 31, 2019
SUMMARY STATEMENT OF FINANCIAL POSITION
London Health Sciences Centre (LHSC) struggled to maintain its strong financial position during the past fiscal year. Liquidity remained above minimum thresholds despite a challenging funding environment. LHSC’s current ratio of 1.79 is the result of 12 previous consecutive surpluses and reflects a deliberate financial strategy of financial sustainability, flexibility and cost containment. Current and long-term obligations under various debt agreements are adequately covered, based on the current cash position.
SUMMARY STATEMENT OF OPERATIONS
LHSC ended the year with a deficit of $23.9 million. This position is mainly the result of overages in compensation, medical/surgical supplies, drug costs and some one-time costs associated with corporate priorities and labour adjustments. Health care inflation continues to outweigh the ability of LHSC to balance operations. In addition, patient demands continue to increase in most of our clinical programs and create unbudgeted cost pressures.
SUMMARY STATEMENT OF CASH FLOWS
LHSC invested $40.4 million in clinical capital, building service equipment, information systems and buildings during the year. In addition, LHSC spent $14.9 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, the London Health Sciences Foundation and Children’s Health Foundation.
Current assets include restricted cash and portfolio investments of $12.7 million in order to discharge certain future obligations and $193 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. The complete audited financial statements can be obtained here.
| SUMMARY STATEMENT OF FINANCIAL POSITION | ||||
|---|---|---|---|---|
| As at | March 31, 2019 | March 31, 2018 | ||
| (000's) | (000's) | |||
| ASSETS | ||||
| Current assets | $ | 288,169 | $ | 310,726 |
| Restricted cash and investments | $ | 19,045 | $ | 17,942 |
| Capital assets, net | $ | 925,499 | $ | 922,914 |
| $ | 1,232,713 | $ | 1,251,582 | |
| LIABILITIES, DEFERRED CONTRIBUTIONS, UNRESTRICTED NET ASSETS AND REMEASUREMENT LOSSES | ||||
| Current liabilities | $ | 160,996 | $ | 144,467 |
| Long-term liabilities and deferred contributions | $ | 772,816 | $ | 783,121 |
| Unrestricted net assets | $ | 311,481 | $ | 335,362 |
| Accumulated remeasurement losses | $ | (12,580) | $ | (11,368) |
| $ | 1,232,713 | $ | 1,251,582 | |
| SUMMARY STATEMENT OF OPERATIONS | ||||
|---|---|---|---|---|
| Year ended | March 31, 2019 | March 31, 2018 | ||
| (000's) | (000's) | |||
| REVENUE | ||||
| Ministry of Health and Long-Term Care, South West Local Health Integration Network and Cancer Care Ontario | $ | 1,035,112 | $ | 1,003,462 |
| Other | $ | 208,462 | $ | 204,950 |
| $ | 1,243,574 | $ | 1,208,412 | |
| EXPENSES | ||||
| Salaries and benefits | $ | 798,970 | $ | 747,315 |
| Other | $ | 468,485 | $ | 452,869 |
| $ | 1,267,455 | $ | 1,200,184 | |
| EXCESS (DEFICIENCY) OF REVENUE OVER EXPENSES | $ | (23,881) | $ | 8,228 |
| SUMMARY STATEMENT OF CASH FLOWS | ||||
|---|---|---|---|---|
| Year ended | March 31, 2019 | March 31, 2018 | ||
| (000's) | (000's) | |||
| CASH PROVIDED BY (USED IN): | ||||
| Operating Activities | $ | 17,322 | $ | 46,967 |
| Financing Activities | $ | 13,499 | $ | 12,431 |
| Investing Activities | $ | (5,503) | $ | 2,275 |
| Capital Activities | $ | (55,301) | $ | (45,099) |
| Net increase (decrease) in cash and cash equivalents | $ | (29,983) | $ | 16,574 |
| Cash and cash equivalents, beginning of year | $ | 223,048 | $ | 206,474 |
| Cash and cash equivalents, end of year | $ | 193,065 | $ | 223,048 |
TOTAL EXPENSES (%) BY TYPE
($1,267 MILLION)
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- Administration and Support 18.0%
- Inpatient Services 28.0%
- Outpatient Services 13.3%
- Diagnostic and Therapeutic 20.2%
- Other Votes 6.2%
- Undistributed 9.7%
- Amortization 4.6%
TOTAL EXPENSES (%) BY COST COMPONENT ($1,267 MILLION)
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- Salaries and Wages 52.5%
- Employee Benefits 10.5%
- Supplies and Other 14.2%
- Medical and Surgical Supplies 7.6%
- Drugs 9.8%
- Amortization of Capital Assets 4.6%
- Interest and Other 0.8%
TOTAL REVENUE (%) BY TYPE
($1,244 MILLION)
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- MOHLTC, SW-LHIN and CCO 83.2%
- Non-patient 8.6%
- Patient 4.9%
- Preferred Accommodation 0.8%
- Amortization of Deferred Capital Contributions 2.2%
- Interest 0.3%