Message from Brenda Bird
Treasurer, Board of Directors
I am pleased to report on the financial results of London Health Sciences Centre (LHSC) for the fiscal year ended March 31, 2018.
LHSC’s reported revenue over expenses is $8.2 million or a margin (surplus as a per cent of total revenues) of 0.7%. This is the 12th straight year of generating small surpluses and this has allowed LHSC to build a strong balance sheet and invest in key areas of the hospital. The Ontario Hospital Association has recommended that hospitals need to generate at least 2% of total margins for reinvestment in capital.
Our focus on fiscal discipline, financial flexibility and liquidity has served the hospital well. As we enter 2018/19, there is a need to further invest in infrastructure, medical capital equipment and information technology. Our financial position allows us to strategically invest in these focused areas for the benefit of our patients. We do however, recognize the need to reduce our current level of occupancy and address volume pressures in many of our clinical areas.
In this regard, we will continue to invest in quality-focused initiatives that reduce inefficiencies, increase patient access and explore regional opportunities with our other community and hospital partners. Our new President and CEO, Dr. Paul Woods has stated that he wishes to actively partner in building a strengthened and regionally integrated health system. LHSC is well positioned to help lead these changes which align with our strategic objectives to improve health outcomes and enhance the patient experience.
I would like to sincerely thank the volunteer members of the Finance and Audit Committee for their dedication to our committee, our patients and our hospital during the past year. On behalf of the Finance and Audit Committee, I would like to thank our staff, physicians and management for their commitment to ensuring we place our patients first.
Brenda Bird
Treasurer, Board of Directors
London Health Sciences Centre
INDEPENDENT AUDITORS’ REPORT ON THE SUMMARY FINANCIAL STATEMENTS
To the Board of Directors of London Health Sciences Centre
REPORT ON THE SUMMARY FINANCIAL STATEMENTS
The accompanying summary financial statements, which comprise the summary statement of financial position as at March 31, 2018, and the summary statements of operations and cash flows for the year then ended, and related basis of presentation note, are derived from the audited financial statements of London Health Sciences Centre for the year ended March 31, 2018. We expressed an unmodified audit opinion on those financial statements in our auditors’ report dated May 30, 2018.
The summary financial statements do not contain all the disclosures required by Canadian public sector accounting standards. Reading the summary financial statements and the auditors’ report thereon, therefore, is not a substitute for reading the audited financial statements and the auditors’ report thereon of London Health Sciences Centre.
MANAGEMENT’S RESPONSIBILITY FOR THE SUMMARY FINANCIAL STATEMENTS
Management is responsible for the preparation of a summary of the audited financial statements on the basis described in the basis of presentation note.
AUDITORS’ RESPONSIBILITY
Our responsibility is to express an opinion on whether the summary financial statements are a fair summary of the audited financial statements based on our procedures, which were conducted in accordance with Canadian Auditing Standard 810, “Engagements to Report on Summary Financial Statements.”
OPINION
In our opinion, the accompanying summary financial statements derived from the audited financial statements of London Health Sciences Centre for the year ended March 31, 2018 are a fair summary of those financial statements on the basis described in the basis of presentation note.
MANAGEMENT’S SUMMARY FINANCIAL RESULTS – MARCH 31, 2018
SUMMARY STATEMENT OF FINANCIAL POSITION
London Health Sciences Centre (LHSC) continued its strong financial performance during the past fiscal year. Liquidity remained above minimum thresholds despite a challenging funding environment. LHSC’s current ratio of 2.15 is the result of 12 consecutive surpluses and reflects a deliberate financial strategy of financial sustainability, flexibility and cost containment. Current and long-term obligations under various debt agreements are adequately covered.
SUMMARY STATEMENT OF OPERATIONS
LHSC ended the year with a surplus of $8.2 million. This position is mainly the result of revenue related to a capital project settlement from the MOHLTC/LHIN, combined with the under spending of our capital budget. This is the sixth straight year that revenues have not kept pace with inflationary costs on labour, medical/surgical costs, drugs and other supplies. In addition, continued patient demands in most of our clinical programs created unbudgeted cost pressures that had an impact on our bottom line.
SUMMARY STATEMENT OF CASH FLOWS
LHSC invested $29.9 million in clinical capital, building service equipment, information systems and buildings during the year. In addition, LHSC spent $15.2 million in externally funded or recoverable capital projects.
Capital spending is financed through a combination of operations and deferred contributions from both levels of government, the London Health Sciences Foundation and Children’s Health Foundation.
Current assets include cash and cash equivalents of $231.3 million, consisting of restricted cash and portfolio investments of $8.3 million in order to discharge certain future obligations and $223 million in unrestricted cash and cash equivalents.
BASIS OF PRESENTATION
The information contained in the summary financial statements is in agreement with the related information in the complete audited financial statements. The summary financial statements contain major subtotals and totals from the complete audited financial statements. The complete audited financial statements can be obtained on the LHSC website.
| SUMMARY STATEMENT OF FINANCIAL POSITION | ||||
|---|---|---|---|---|
| As at | March 31, 2018 | March 31, 2017 | ||
| (000's) | (000's) | |||
| ASSETS | ||||
| Current assets | $ | 310,726 | $ | 291,362 |
| Restricted cash and investments | $ | 17,942 | $ | 14,434 |
| Capital assets, net | $ | 922,914 | $ | 934,910 |
| $ | 1,251,582 | $ | 1,240,706 | |
| LIABILITIES, DEFERRED CONTRIBUTIONS, UNRESTRICTED NET ASSETS AND REMEASUREMENT LOSSES | ||||
| Current liabilities | $ | 144,467 | $ | 129,537 |
| Long-term liabilities and deferred contributions | $ | 783,121 | $ | 800,308 |
| Unrestricted net assets | $ | 335,362 | $ | 327,134 |
| Accumulated remeasurement losses | $ | (11,368) | $ | (16,273) |
| $ | 1,251,582 | $ | 1,240,706 | |
| SUMMARY STATEMENT OF OPERATIONS | ||||
|---|---|---|---|---|
| Year ended | March 31, 2018 | March 31, 2017 | ||
| (000's) | (000's) | |||
| REVENUE | ||||
| Ministry of Health and Long-Term Care, South West Local Health Integration Network and Cancer Care Ontario | $ | 1,003,462 | $ | 980,022 |
| Other | $ | 220,042 | $ | 203,356 |
| $ | 1,223,504 | $ | 1,183,378 | |
| EXPENSES | ||||
| Salaries and benefits | $ | 791,192 | $ | 775,306 |
| Other | $ | 424,084 | $ | 405,111 |
| $ | 1,215,276 | $ | 1,180,417 | |
| EXCESS OF REVENUE OVER EXPENSES | $ | 8,228 | $ | 2,961 |
| SUMMARY STATEMENT OF CASH FLOWS | ||||
|---|---|---|---|---|
| Year ended | March 31, 2018 | March 31, 2017 | ||
| (000's) | (000's) | |||
| CASH PROVIDED BY (USED IN): | ||||
| Operating Activities | $ | 46,967 | $ | 63,140 |
| Financing Activities | $ | 12,431 | $ | 17,659 |
| Investing Activities | $ | 2,275 | $ | 1,222 |
| Capital Activities | $ | (45,099) | $ | (43,351) |
| Net increase in cash and cash equivalents | $ | 16,574 | $ | 38,670 |
| Cash and cash equivalents, beginning of year | $ | 206,474 | $ | 167,804 |
| Cash and cash equivalents, end of year | $ | 223,048 | $ | 206,474 |
TOTAL EXPENSES (%) BY COST COMPONENT ($1,215 MILLION)
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- Salaries and Wages 54.2%
- Employee Benefits 10.9%
- Supplies and Other 12.1%
- Medical and Surgical Supplies 7.6%
- Drugs 9.5%
- Amortization of Capital Assets 5.0%
- Interest and Other 0.7%
TOTAL EXPENSES (%) BY TYPE
($1,215 MILLION)
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- Administration and Support 18.1%
- Inpatient Services 27.8%
- Outpatient Services 13.5%
- Diagnostic and Therapeautic 22.7%
- Other Votes 6.4%
- Undistributed 6.6%
- Amortization 4.9%
TOTAL REVENUE (%) BY TYPE
($1,224 MILLION)
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- MOHLTC, SW-LHIN and CCO 82.0%
- Non-patient 9.8%
- Patient 4.9%
- Preferred Accommodation 0.9%
- Amortization of Deferred Capital Contributions 2.2%
- Interest 0.2%