With an Ontario budget that seeks to put a lid on health-care funding, hospitals are entering a new era of austerity that, experts say, could lead to widespread job losses and salary freezes, provoking a repeat of the 1990s, when tough times drove a significant number of the province’s nurses and doctors to seek work south of the border.

At least one veteran hospital executive expressed concern the Obama administration’s extension of health-

insurance coverage to millions of Americans will fuel demand for Ontario’s health-care workers, leading to a brain drain reminiscent of the 1990s.

“If there are 32 million more people who are insured, they will want health care. And the United States, like us, are short of nurses. And they will want to recruit Canadian nurses and Canadian physicians,” said Michel Bilodeau, chief executive of the Children’s Hospital of Eastern Ontario.

In the face of a 1.5-per-cent increase in base funding — less than the two per cent that had been expected — hospitals across the province are girding for further cuts to beds, services and staff, which health-care watchdogs and unions warn could compromise patient care.

The funding increase is not enough to cover the rising costs of wages and medical supplies, which typically add between three and four per cent annually to hospital expenses. As a result, hospitals must slash spending to make up the shortfall.

“There will be surgery rollbacks,” said Natalie Mehra, director of the Ontario Health Coalition, which advocates for a stronger publicly funded health system. “There will be continued bed closures. It means longer waits for patients in emergency departments because there are no hospital beds. It means delayed surgeries.”

And with the government imposing a two-year public-sector wage freeze, starting with non-unionized employees, unionized nurses are bracing for an end to a decade of wage increases that have risen at triple the rates of core inflation.

The impact of such budget pressures is expected to vary, depending on the hospital. As Eastern Ontario’s largest health-care provider, The Ottawa Hospital could feel the pain more deeply than others.

The hospital has already said it plans to reduce operating-room time and eliminate nursing and support-staff jobs, assuming a two-per-cent funding increase.

With 1.5 per cent, it will have to find an additional $5 million in savings, on top of the $20 million in cuts it has already identified, to balance its $1-billion budget.

Nicolas Ruszkowski, the Ottawa Hospital’s vice-president of communications and outreach, said the hospital is prepared to adjust its budget plan accordingly. But he stressed it’s not yet clear whether all hospitals would receive an across-the-board 1.5-per-cent increase, or whether regional health authorities would have the discretion to allocate slightly more funding to larger hospitals. “We’re likely not to be 100-per-cent sure on the details until June,” said Ruszkowski.

Meanwhile, CHEO is expected to balance its $200-million budget even with a 1.5-per-cent increase. Most of the $500,000 shortfall could be covered by up to $400,000 in savings from a salary freeze imposed on its non-unionized staff, said Bilodeau.

CHEO has already found $3.8 million in savings by controlling administrative spending and selling assets, such as several houses it owns, to raise extra revenue.

But the real challenge for hospitals is expected to come in March 2011, when collective agreements for Ontario’s 55,000 registered nurses expire. With Thursday’s budget signalling that any newly negotiated salary increases would not be funded by the government, the nurses’ union is bracing for a fight.

“We’ve got shortages happening at the same time that we have layoffs happening,” said Linda Haslam-Stroud, president of the Ontario Nurses Association. “The message out there to nurses is, ‘You’re not wanted, you’re not needed. And by the way, we’re going to freeze your wages as well’.”

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