Tough road ahead for LHSC as deficit to hit $150M: Acting CEO

The deficit at London’s largest hospital will nearly double in one year, rocketing to $150 million by next spring from $78.1 million in March this year, London Health Sciences Centre reported at its board of directors meeting Wednesday.

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The hospital is looking to cut costs and reduce spending and has an eye on administration and senior executive ranks, David Musyj, acting chief executive, said.

“The road ahead will be tough,” he said, with inflationary pressures outpacing funding. “Supply costs, interest rates (on debt), equipment costs, construction,” are all higher, Musyj said.

“When we replace equipment now, it is not plug and play. We have to redo the entire room because of new technology and machines are 10 years old.”

A seasoned hospital administrator, Musyj is about a month into his new job as LHSC’s acting chief executive. LHSC requested his secondment from Windsor Regional Hospital, where he is chief executive.

Musyj voiced concern over budgeting practice at LHSC. Two years ago, the hospital received a “balanced budget waiver” from the province giving it five years to balance its budget. There was no plan in place on how to balance the budget prior to his taking the helm at LHSC in May, he said.

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“We are in Year 2 of that. So, we have to develop a plan, that is why I was brought in. There is no plan,” he said. “It is one of my concerns.”

Musyj said he has met with more than 50 people in health care in London to gauge feedback and has heard a consistent message about the “organizational structure” being top heavy.

He said he’s implementing “benchmarking” to identify programs at other hospitals that are better than LHSC’s. LHSC will reach out to the hospitals to find out what they are doing differently, Musyj said.

“It has identified the organizational structure is offside of other similarly situated hospitals,” he said. “The issue becomes what we need to do and it takes time, but I want to put in place an organizational structure that meets the need, but is also sustainable into the future.”

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Musyj said he has hired a firm, Benchmark Intelligence Group Inc. (BIG Healthcare), that reviews hospital operations for savings, to help develop an organizational chart based on other similar hospitals in Ontario. It will take about 90 days to complete the review of the organizational structure of the hospital.

“We will be able to go back to it, look at it,” Musyj said. “When I am long gone, it will be the operative document for whoever becomes CEO and president moving forward.”

He said he will reach out to staff, including doctors, for feedback on the chart.

“We will look, area by area, at other similarly situated hospitals and develop a plan,” Musyj said

When that plan is complete, he will share it with the provincial government and look to implement it, he said.

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For the 2023-24 fiscal year that ended March 31, LHSC managed to reduce its deficit to $76 million only after it received “tens of millions” of dollars from the provincial government in one-time payments, Musyj said. The deficit would have been higher if the hospital had not received the funding, he said..

Add to that rising costs across the board and the number has risen.

“This fiscal year, LHSC is not unique,” ​​Musyj said. “You will hear about other hospitals that may have had a surplus last year projecting a deficit this year. The magnitude of the deficit here is bigger.”

He dismissed notions of replacing or overhauling the hospital’s board of directors, saying “that is above my pay grade.”

Musyj said the volunteer board is “putting in a ton of hours” to review the hospital structure.

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“They are very supportive. I am working with the board,” he said.

A senior team at the hospital will begin to review every job posting, Musyj said. The goal is not to freeze hiring, he said. “It’s just good management practice; it is due diligence.”

The hospital’s operational budget for 2024-25 is $1.6 billion, up from about $1.5 billion the previous year.

One of Canada’s largest acute-care teaching hospitals, LHSC operates three hospitals and has more than 15,000 staff.

The financial report presented Wednesday is the first under Musyj. He came into the job with a reputation as a prudent fiscal manager, an executive not afraid to act and someone with close ties to the Ontario government, health-care sector observers said upon his arrival.

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Musyj replaced Jackie Schleifer Taylor, who had been chief executive since 2021. Schleifer Taylor went on a leave of absence in November 2023 and the hospital announced June 11 she is no longer employed at LHSC. The board of directors announced her departure as the hospital wrestled with its rising deficit and dealt with the fallout of trips for senior executives and staff totaling more than $470,000.

Schleifer Taylor made $803,584 in salary and taxable benefits in 2023, making her Ontario’s highest-paid hospital executive outside Toronto. Hospital officials have declined comment on Taylor’s severity package.

Only on the job two years before she took a leave, Schleifer Taylor’s tenure was a stormy one. She left with the hospital facing the deficit, while it has 22 senior executives including three presidents on the payroll. It paid $1.5 million to five departed executives in 2021, and has signaled its intention to cancel a formal collaboration agreement with St. Joseph’s Health Care London.

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LHSC also has been under investigation by Ontario’s Ministry of Health since November 2023 after it planned to send senior executives and staff on three trips.

A total of 22 executives traveled to Portugal and the United Arab Emirates last fall. The hospital canceled a planned trip in November by 11 senior staff to Australia two days before they were supposed to depart after The London Free Press reported details of the first two trips.

Schleifer Taylor succeeded Paul Woods as chief executive after he was fired in 2021 amid blowback over his border-crossing travel during the COVID-19 pandemic. Woods sued LHSC for $3.5 million over his dismissal and later reached a settlement with the hospital.

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