MUSKOKA — A series of one-time costs means Muskoka Algonquin Healthcare’s deficit may climb as high as $4 million by the end of the current fiscal year, according to MAHC finance consultant Karen Berti from Prism Partners Inc.
Combined with a $2.24-million deficit from 2008-09, and the flailing hospital organization’s total debt load from the past two years could be as much as $6.24 million.
Previously, this number was estimated at $5.8 million.
Severance packages for Burk’s Falls health centre employees, double the expected payout in overtime, bad debts and a retroactive salary payout are the main culprits, said MAHC interim chief executive officer Barry Monaghan, who said otherwise, operationally the organization is tracking to budget.
These factors could cause the previously estimated 2009-10 deficit of $3.5 million to jump to $4 million.
Numbers from January, which include some of these one-time costs, show the deficit has already surpassed the estimated figure. As of the first month of the year, MAHC was $3.65 million short, according to documents from the latest board meeting.
The fiscal year ends at the end of March.
To deal with the budget deficits, which hospitals are not legally allowed to have, MAHC has submitted a deficit recovery plan to the North Simcoe Muskoka Local Health Integration Network to help balance its budget.
This fiscal year, however, there are a few extra costs.
Overtime at the multi-site hospital is almost double than the $469,000 allocated in the budget, resting at $919,000.
Monaghan says that’s because of a combination of factors: sick days or staff shortages, which require you to fill positions with overtime, for example. “When you bundle these together, you run into a significant overtime challenge,” he said.
MAHC has struck an overtime working committee to address this, said Berti.
It’s also paying out $307,000 in severance payments to former employees of the Burk’s Fall Health Centre. It closed seven beds and the urgent centre there last year.
Also under salaries and benefits, is a retroactive salary payout for $264,000. There was also an unbudgeted bad debt to pay off, according to vice-chair Sven Miglin. No money was set aside in the budget for either of these, he said at the board meeting.
Monaghan maintains that MAHC has tightened up its practices and procedures and doesn’t expect some of these one-time costs to occur again. “We’re very confident all of our budgeting and accounting practices are going to preclude us from having these surprises in the future,” he said.