Who are we in debt to?
Like many of you, our expertise is health care – not finance – but understanding how VCH is funded and the implications of spending more than we take in is important. Today, we try our best to answer submitted questions about VCH finances and more. For earlier answers, read our September 19 article and previously published submissions to VCH News-Vancouver.
To learn more about our plans and direction; consult our interactive Vancouver Strategic Plan.
If you have a question about delivering quality health care services while tackling our budget challenge, we encourage you to email VancouverAll-StaffForum@vch.ca. We welcome your questions.
Today’s answered questions
Q. Who are we in debt to? If VCH is over budget, how do they operate? Where do we get the money from? If we are in debt, how do we pay it back since we are non-profit?
A. These are great questions and answering them will require an explanation of the difference between debt and deficit. But let’s start at the beginning: Where does VCH get its money?
VCH is primarily funded by B.C. taxpayers — people just like us. Our taxes provide the B.C. government the funds it needs to deliver public services and about 40% of all government revenues is spent on health care. As a health authority, we receive our public funding directly from the Ministry of Health.
The B.C. government has made a commitment to a balanced budget — in other words, it doesn’t want to spend more money than it brings it. The Ministry of Health has in turn directed all B.C. health authorities to do the same.
Historically, VCH has operated within its annual budget — and we aim to do so again this year. We are not in debt, nor have we been in debt, but this year we risk running a deficit if we don’t achieve our targeted savings by the end of the financial year on March 31. (Deficit is defined as the amount by which spending exceeds revenue during one budget year.) We ‘re at risk of running a deficit because we’ve projected our costs and it’s clear that they’re rising faster than the pace of government funding increases. In addition, we need to invest in our future by replacing outdated information systems.
Over the course of a year, our spending has its ups and downs, and when we spend more money than we bring in, the actual cash comes from VCH working capital, which is reserves that all have businesses have — basically, savings from past years when we may have been in surplus. If we use too much of our working capital (think of it as out rainy day fund), we won’t have enough money to cover the peaks and valleys of our spending. In the most extreme case, we wouldn’t have enough cash to meet our payroll obligations — but don’t worry, we won’t ever let ourselves get to that point!
In the end, if we’ve spent more than what we brought in over the course of the financial year, we will have run a deficit. If VCH were to run a deficit, we would be placing the Ministry of Health in a deficit position as well. And when the B.C. government accrues deficits, it accumulates debt. (Debt is defined as a build-up of annual deficits.) The government must then borrow money to pay the bills — and that’s how provincial and federal governments end up in debt. How do we pay off the debt? There are only two ways: reduce spending and/or increase taxes. Either way, it comes down to the B.C. taxpayer — people just like us.
Q. In our own small work place, at EPI in Vancouver Community Mental Health, the real impact of this change to a 37.5-hour work week is the loss of a day and a half of nursing time and the shortening of the hours of operation for clinicians. Availability to access service for the public is lost — not gained — by this change. Your comment in previous answers about the 37.5-hour work week, that the “new rotations result in 26 more days of service per year,” completely obfuscates these facts. Moreover, it reveals the sense that is worsening over time, that management doesn’t really understand or care about the work being done by front line staff… Having employees at work for more days (and less hours per day), really accomplishes nothing for anyone (except perhaps managers who don’t have to figure out who is in and when). It costs clients and dramatically impairs the quality of caring work done. Keeping an ability to care is the most essential skill in doing this work.
A. We can assure you that each and every one of our managers and directors do, indeed, care. That’s why these changes continue to be so difficult. Beyond that, the longer work week has enabled us to provide an additional 7.5 hours weekly of available staff time in EPI. Granted, there will be times when a mismatch will occur between client need and EPI operations. That’s why we encourage you to continue talking with your managers to ensure we can track unmet need to determine if it’s a trend or a blip. In either case, we believe we can be nimble enough to adjust in a way that will meet client need.
Q. You’ve recently modified the work schedules of a large percentage of employees without consultation or notice. How is this harmful erosion of our work/life balance “engaging” or treating the workforce with dignity and respect?
Laura responds:
A. As you may have heard me say at the All-Staff Forum in July, I know from personal experience how difficult it is to adjust to a regular five-day-a-week schedule. When I was a nurse in what is now Fraser Health, I lost my earned days off as well. However, and as our unions agreed through the Cooperative Gains process, it was a necessary move to achieve more consistent daily levels of staffing and reduce our need for backfilling. Most importantly, though, our new rotations have resulted in approximately 26 more days of service per year for our patients and clients. More than 200 of our units have been able to increase service on evenings, weekends or during the week. This isn’t an issue of dignity or respect. The fact remains that demand for health care continues to increase at a pace that is challenging our ability to respond. Frankly, it is no longer possible – or publicly palatable – that health care operates on a four-day-a-week schedule in a five-day-a-week world.
Q. Maybe administration should look at all the “freebie” parking — that’s revenue for the hospital.
A. In 2009, Fraser Health assumed responsibilities for parking when parking became a consolidated service among the Lower Mainland health authorities and Providence Health Care. Parking fees support direct patient care, as well as cover operating costs to provide safe parking, such as snow clearing, lighting, security patrols and repaving. If we didn’t receive parking revenue, the funds would have to come from other sources. Having said that, parking represents a very small proportion of health authority budgets. Complimentary parking represents an even smaller portion. Here’s why:
Very few “free” parking passes are issued. Exceptions are made for volunteers, who generously donate their time and energy to us, and our VGH & UBCH Hospital Foundation board members. A small handful of administrative staff who frequently travel among corporate offices to VGH and to other VCH acute care sites receive passes as well. In these cases, this is the most cost-effective route for VCH.
In the spirit of being People First, we also provide some patients free or discounted parking rates if it is felt that parking costs are impacting or would impact their ability to receive the care they require. It is the right thing to do and the numbers, again, are relatively small.