Toronto Central LHIN Strategic Advisory Council
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1 Toronto Central LHIN Strategic Advisory Council THE CHANGING FUNDING ECONOMY AND ITS IMPACT ON HEALTH OUTCOMES May 2015
2 Toronto Central LHIN Strategic Advisory Council THE CHANGING FUNDING ECONOMY AND ITS IMPACT ON HEALTH OUTCOMES ABOUT THIS PAPER The Toronto Central LHIN Strategic Advisory Council advises the LHIN on matters of strategic importance, with a particular focus on improving population health. Comprised of system leaders from diverse sectors, its goal is to collectively identify and address areas of focus to improve population health. The Toronto Central LHIN and the community sector it supports share a commitment to achieving optimal population health outcomes through the provision of sustainable services. The community sector plays an important role in delivering services and supporting improved health outcomes. In the past decade, the community sector has been relied upon to provide an increasing portion of the province s health and social services, but at the same time, the funding economy faced by the sector has shifted in a way that presents it with serious challenges. The community sector strives to adapt and ensure continued delivery of excellent quality of care and services, but we believe a tipping point is being reached. The current situation is unsustainable. The purpose of this policy brief is to provide governments, charitable funders and community organizations with information about these changes in the funding economy and the challenges and opportunities they present for the community sector in Toronto. It is our view that these changes, if left unchecked, threaten the sustainability of many of the services provided by the community sector and are a risk to the individuals that depend on these services. A stable and efficient community sector is critical to the health of the Toronto region. Action must be taken. 2
3 THE IMPORTANCE OF THE COMMUNITY SECTOR The community sector 1 plays a vital role in meeting the health and social needs of individuals, families and communities, in developing and supporting sustainable services, and in contributing to population health outcomes in the Toronto region. It is involved not only in the provision of health services but also in other areas that directly impact health, such as housing. By addressing health care needs as well as social and community needs further upstream, it plays a critical role in health outcomes in the Toronto region. The importance and value of the community sector lie not only in what it does, but also how it does it: through civic engagement, community-building, and client participation in the model of care. In the past decade, governments at all levels have been increasingly reliant on the community sector to provide services that directly or indirectly impact health. In Ontario, delivery of health care services is shifting away from acute care facilities to the community with a goal of promoting the right place of care. A notable example of this trend is the Aging At Home strategy, which aimed to expand community living options for seniors, avoiding premature institutionalization, reducing repeat hospitalizations and preventable emergency department visits through enhanced home care and community support services. 2 Another driver is the province s prioritization of the issue of alternate level of care (ALC). 3 To improve system flow and ensure that clients are able to access the level of care they need at the right place and by the right provider, the community sector has been relied upon to provide services that support independence and help prevent avoidable hospitalization. New demands are being placed on the health sector in terms of the complexity, frequency, and volume of services delivered in addition to corresponding performance measures and reporting requirements. Reliant on funding from various levels of government, various funders and charitable fundraising, the community sector is a critical player in the province s health care system, but the changing fiscal environment is posing new challenges. Similarly, community programs and social services play an important role in addressing the social determinants of health. This is perhaps most notable in the case of housing, which in 1 For the purposes of this paper, "community sector" refers to community organizations delivering health services as well as prevention, health promotion, and other services addressing the social determinants of health. 2 Ministry of Health and Long-Term Care, The term ALC is defined by the MoHLTC as follows: When a patient is occupying a bed in a hospital and does not require the intensity of resources/services provided in this care setting (acute, complex continuing care, mental health or rehabilitation), the patient must be designated ALC at that time by the physician or his/her delegate. (Ministry of Health and Long-Term Care, 2009) 3
4 Ontario has been primarily funded by municipalities since The community sector plays a critical role in administering affordable housing in the Toronto region, and by extension, shoulders a great deal of responsibility for health outcomes. Although the community sector has been innovative and responsive to emerging issues, new service gaps may soon emerge in the Toronto region if not proactively identified and addressed. To prevent this from occurring, it is critical that we examine the nature of these fiscal challenges, the impact they are having, and the ways agencies have been adapting in an effort to support client needs. THE CURRENT FUNDING ECONOMY At the same time that the community sector is being faced with new and changing responsibilities as part of regional and provincial transformation initiatives, it also faces new fiscal challenges. Government and charitable funders have changed both the amount and the nature of their funding. According to an analysis by the United Way, two important trends stand out in this changing funding economy: 5 Constraints on government funding. Facing budget pressures, governments at all levels are for the most part reducing public spending, including spending on health and social services. 6 This trend of fiscal restraint has been ongoing for many years and there is no reason to expect it to abate in the near future. In addition, new government funding consists primarily of targeted increases tied to new program costs, and does not always account for inflationary increases in the cost of existing services or operating expenses. Government and charitable funders have shifted to project funding. The new funding economy increasingly relies on a contract-based service funding model rather than core or base funding. Concurrent funding cuts from various sources mean less funding from all levels and increased competition for those funds. Meanwhile, project (or program-based) funding, with its higher emphasis on measurable outcomes, may be preferable to funders but for community sector organizations it presents particular challenges: 7 4 Auditor General of Ontario, Thawar, Notable examples include federal cuts to immigration services (Citizenship and Immigration Canada, 2013), provincial fiscal restraint (Ministry of Finance, 2014), and the Toronto core service review (City of Toronto, 2012). 7 United Way Toronto,
5 It is generally short-term, unpredictable, restricted and subject to change. It often involves a reduction or elimination of non-service activities that could improve services and quality in the longer term (e.g. planning, research and evaluation, etc.). Observers state that there is a concern that project funding may include community service organizations as contractors rather than partners in social services. 8 This approach has an impact on the sustainability of organizations and the services they provide. Meanwhile, many providers report increasing demand for their services. 9 Combined with overall cuts to government funding, this situation presents risks to the individuals who rely on those services. AND ITS CHALLENGES In early 2014, health service providers in the Toronto Central LHIN completed a Community Accountability Planning Submission, in which they were asked to identify any risks they might foresee in the next three years as well as their plans to mitigate those risks. Their responses provide valuable insight into the funding pressures faced by the community sector and the service gaps that could ultimately emerge if these pressures are not addressed. Two of the risk issues they identified are of particular importance. Rising costs Service providers face rising costs from several sources, including: increasing wages due to collective agreements and / or government policy (e. g. the recently legislated wage increase for some personal support workers) gradually increasing operational / non-discretionary costs like utilities, rent and insurance inflation, which increases the cost of existing services and operating expenses capital and infrastructure costs, which, with few exceptions, are not funded by the LHIN or the provincial government in the same way they are for hospitals Providers facing these rising costs attempt to maintain the level and volume of services they provide, with no corresponding change in base funding and, in many cases, project funding that does not cover operating and administrative costs. 8 United Way Toronto, Thawar,
6 Increasing client acuity / complexity The community sector is serving more and more clients with complex needs. For example, the provincial government s implementation of the Aging At Home strategy means that increasing numbers of older adults with cognitive impairment, behavioural issues and various comorbidities are being served in the community sector. As agencies open their doors to people with more complex needs, their existing services may become inadequate. Community sector agencies have shown flexibility in adjusting to these changes, but this is a pressure that will only increase as the population both clients and caregivers continues to age. The combination of rising costs and increasing client complexity, in the context of constraints in government funding and growing overall demand for services, presents serious challenges. Unless action is taken, at some point safe and timely care will be compromised. HOW THE COMMUNITY SECTOR IS CONTINUING TO MEET THE NEEDS OF THE COMMUNITY IN THE FACE OF THESE CHALLENGES Community sector agencies have not been idle in the face of these changes and challenges. To mitigate these risks to client services, organizations report a variety of strategies. There has been widespread adoption of best practices in business and administration, investment in capacity-building, leadership and organizational development, and innovation, as well as structural changes such as voluntary integrations. Six strategies stand out: Turning to other funding sources. Some agencies are strategically increasing their charitable fundraising goals in response to reduced or stagnant government funding. Charitable funding has become increasingly important; one agency CEO estimates that for some agencies philanthropic funding now accounts for up to 30 per cent of budgets in some areas. Some agencies are studying social finance mechanisms as a potential revenue source. Others have considered increasing self-generated, unrestricted revenue, for example by commercializing some of their services. Finding internal efficiencies. Agencies do this through a variety of means. The CEO of one organization noted that through process mapping, cost analysis, and restructuring, the agency was able to improve efficiency between five and 10 per cent in each area with no new investment, ensuring the sustainability of the services they offer. Engaging in partnerships with other agencies. Some agencies have invested in shared services and bulk purchases. IT support, human resources, and other back-office services can be pooled between agencies. The sector is also increasingly relying on collaboration and partnerships as a strategy to be more efficient and effective in addressing the needs of more complex clients using existing resources. 6
7 Integrations, mergers or amalgamations. In recent years, some providers have strived for more efficient service delivery through voluntary integrations. At the same time, there is concern that the creation of larger and fewer organizations will reduce client choice and lead to agencies that are less responsive to the community. Refraining from filling staff vacancies. This strategy, while sometimes necessary, can lead to organizational strain and may require corresponding service level adjustments. Adjusting levels of service. Facing increased demand for services while already working to capacity, and with no increase in funding, agencies often must adjust service levels. This may involve reducing client programming or offering services in group format rather than individual. Some agencies wean lower-need clients off services to make room for new ones. Others become more selective when taking on new clients. POTENTIAL IMPACT ON HEALTH IN THE TORONTO REGION The theme that emerges is that community sector agencies have been working diligently to adapt to the pressures they face. They have been doing so on their own initiative, using a patchwork of methods. Over the past decade, organizations have trimmed and adjusted in order to mitigate risks to clients and to offset shortfalls but are finding it increasingly difficult to keep up. Some find that their fiscal wiggle room has been progressively squeezed out in the past 5 years; they have found efficiencies but are concerned about their ability to continue doing so going forward. Many organizations feel they are nearing the point where they will be unable to bridge the fiscal gap. Thus far, community agencies have been able to minimize the effect on services, but this is not sustainable. As noted above, some agencies have reduced client programming and become more selective in choosing clients. Some agencies are finding that higher program demands and increased funding pressures have led to longer wait times for client appointments. For many agencies, the issue comes down to simple arithmetic: if budgets are flatlined but costs are increasing, services will eventually erode. Left unchecked, these fiscal challenges will further impact the ability of local providers to deliver services and programs to clients who depend on them. 7
8 A CALL TO ACTION Agencies have done a remarkable job of insulating clients from the fiscal pressures they face but they will find it increasingly difficult to continue doing so. Organizations are struggling to meet the increasing demand for their services. Unless action is taken, the TC LHIN s mandate around population-level outcomes could be compromised. Service gaps must be contained. There are a variety of levers that can be used to adapt to this environment. It is recommended that funders and providers explore the following levers: For funders: 1. Ensuring stable funding: Sustainability of existing services requires a stable funding environment. To avoid further erosion of services, alternative funding models should be explored. In a recent series of research papers on the funding environment in the Toronto region, United Way Toronto outlined some promising funding models and practices that may benefit the community sector. 10 In particular, research indicates the benefits of funders offering general operating support funding that supports an organization s operations as a whole rather than specific projects. 11 By fostering stability and predictability, this model allows agencies to plan long-term while remaining responsive to emerging client needs and priorities. 12 This funding model need not involve any sacrifice on the part of funders in terms of their expectation of accountability or measurable results. Funding that extends general operating support can be negotiated to include specific deliverables and performance indicators. Evidence suggests that this model can be highly impactful; researchers have introduced the concept of impact funders : funders that are strategic and focused on results, offering unrestricted core funding and thus allowing agencies to be flexible, nimble, and take advantage of opportunities. 2. Enabling funder coordination: There is a need for change management strategies to recognize the impact of multiple transformation agendas. Funders should model the change they want to see. Also, government and other funders can develop mechanisms that support coordination across funders, leading to improved collective impact of the funding and better community outcomes. 10 United Way Toronto, United Way Toronto, 2013: 2 12 United Way Toronto,
9 3. Building capacity and facilitating collaboration: Funders can support leadership development and share resources or tools with agencies in order to help enhance quality of care and performance measurement. They can also facilitate communication, collaboration, coordination between agencies, and integration where appropriate. They can support and foster innovation by identifying promising practices and how they can be leveraged. For providers: 4. Exploring alternative funding models: The adoption of alternative funding models such as community impact bonds or partnerships with the private sector are some avenues that agencies can explore. 5. Engaging in collaboration and partnerships: Agencies can explore partnerships that pool human resources, IT support, and other back-office services. They can also pursue collaborations that aim to more effectively and efficiently address the needs of more complex clients. 6. Building capacity: Agencies can also build on current successes and collaborate through communities of practice, shared services, and community research and evaluation. Funders and community sector agencies agree on the need to rationalize resource use and reduce redundancies, within individual organizations and in the community sector as a whole, in order to ensure continuity and quality of client services. They agree on the need for collaboration, coordination, innovation, and the use of best practices in resource management and reporting. Community sector agencies are actively involved in all these activities, as demonstrated in this paper. Their focus is on ensuring the sustainability of services for the populations it serves not on the sustainability of individual organizations. They also agree with funders on the need for accountability and performance measurement. Both can be achieved, and the capacity of individual agencies and the community sector can be enhanced, by the adoption of more sustainable practices. The individuals who need their services deserve nothing less. The health of the Toronto region depends on a strong community sector. Now is the time to act. 9
10 Sources Auditor General of Ontario (2009) Annual Report. Available at Accessed March 27, City of Toronto (2012). Service Review Program. Available at 89RCRD. Accessed March 27, Citizenship and Immigration Canada (2013). Interim Federal Health Program Policy. Available at Accessed March 27, Ministry of Finance (2014) Ontario Budget: Budget Speech. Available at Accessed March 16, Ministry of Health and Long-Term Care (2010). Ontario's Aging at Home Strategy. Available at Accessed October 2, Ministry of Health and Long-Term Care (2009). Ontario Wait Times. Available at Accessed October 15, McIsaac, Elizabeth & Moody, Carrie (2013). Sector Signal: The Integration Agenda. The Mowat Centre. Available at Accessed February 6, Thawar, Tasleem (2012). PEST Analysis. Commissioned by United Way Toronto. United Way Toronto (2013). Community Priority #3: Ensure a stable community services sector. Research paper: Brief summary. 10
11 APPENDIX A: Members of the TC-LHIN Strategic Advisory Council Camille Orridge, CEO, TC LHIN; Co-Chair, Strategic Advisory Council Vania Sakelaris, Senior Director, TC LHIN; Co-Chair Strategic Advisory Council Dr. Yoel Abells, TC LHIN Primary Care Advisor Mohamed Badsha, COO, Reconnect Mental Health Services; Lead, Central West Toronto Health Link Lenna Bradburn, Vice President, Resident and Community Services, Toronto Community Housing Sheila Braidek, ED, Regent Park Community Health Centre; Lead, Mid East Toronto Health Link Kathy Bugeja, Executive Director, OMA, District 11 Stacey Daub, CEO, Toronto Central CCAC; Lead, West Toronto Health Link Mike Federico, Deputy Chief, Corporate Command, Toronto Police Service Dr. Phil Ellison, TC LHIN Primary Care Advisor Mary MacLeod, Vice-President Clinical Services, St. Joseph's Health Sciences Centre; Lead, South Toronto Health Link Dr. Aryeh Gitterman, ADM Policy Development and Program Design, Ministry of Children and Youth Services Linda Jackson, Vice President, Residential, Community & Brain Health, Baycrest; Lead, North West Toronto Health Link Anne Babcock, President and CEO, Woodgreen; Lead, Don Valley Greenwood Health Link Sylvia Maracle, ED, Ontario Federation of Indian Friendship Centres and Board Chair; Noojimawin Health Authority Toronto Gilles Marchildon, Executive Director, Reflet Salvéo Susan McIsaac, CEO, United Way Dr. David McKeown, Medical Officer of Health, Toronto Public Health Malcolm Moffat, Executive Vice-President, Sunnybrook Health Science Centre; Lead, North East Toronto Health Link Marilyn Monk, Executive Vice-President, Clinical, Hospital for Sick Children Dr. Pauline Pariser, Lead Physician / Chair, Taddle Creek Family Health Team; Lead, Mid West Toronto Health Link Dr. Tia Pham, Lead Physician, South East Toronto Family Health Team; Lead, East Toronto Health Link Dr. Samir Sinha, Director of Geriatrics at Mount Sinai Hospital and Provincial Lead, Ontario s Seniors Strategy Dr. Andrew Smith, Chief, Odette Cancer Centre; Regional Vice-President, Cancer Care Ontario Dr. Sarita Verma, Deputy Dean, Faculty of Medicine, University of Toronto Dr. Catherine Zahn, President and CEO, Centre for Addiction and Mental Health
12 APPENDIX B: Members of the TC-LHIN Strategic Advisory Council Fiscal Challenges Working Group Dr. Yoel Abells, Primary Care Advisor, Toronto Central LHIN Pedro Barata, United Way of Toronto Sheila Braidek, Regent Park Community Health Centre Kathy Bugeja, OMA District 11 Jenn Miller, City of Toronto Sarah Rix, City of Toronto Beatrise Edelstein, Toronto Central LHIN Sophia Ikura, Toronto Central LHIN Vania Sakelaris, Toronto Central LHIN Writing support from Jean-Francois Crepault, Centre for Addictions and Mental Health 12
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