If Muskoka Algonquin Healthcare (MAHC) stays on its current course and ends this fiscal year with a now-projected deficit of $2.3 million, that debt will be added to an already large amount of money owed by the organization.

At the Nov. 6 board meeting, MAHC directors were presented with a financial statement that projected the year-end deficit would be double what was originally proposed, and has been approved by the North Simcoe Muskoka Local Health Integration Network (LHIN).

In addition, a balance sheet shows the current debt load being carried by the organization to be around $7.7 million.

At the end of March MAHC’s debt stood at $2.4 million, according to the balance sheet.

John Frederick, chief financial officer for MAHC, explained to this newspaper the main reason for the huge spike in money owed is a $3-million interest-free loan given to the organization by the LHIN in August.

The money was given as part of the Hospital Annual Planning Submission (HAPS) agreement and was a means of helping MAHC offset some debt costs.

Mike Provan, MAHC board chair, said the $3 million will be repaid this fiscal year under the agreement, adding that when MAHC was first established the organization would often get one-year interest-free loans to offset banking costs and would repay the money through funds it received for its operations.

 “We’ve been in existence for about four years and every year it seems we have another million-dollar deficit,” Provan told this newspaper of his frustration with the financial situation.

“We can’t go on like this. It’s costing us almost $300,000 a year just on the interest, on the line of credit, and every million dollars we go over, that’s money that should be going towards patient care that (ends up) going towards the banks,” he said.

In fact, Frederick told this newspaper that the interest on the organization’s short-term and long-term debt combined could cost approximately $400,000 this year, depending on what the interest rates do over the course of the next several months.

The organization and its board have now turned their sights to solutions to this ever-expanding fiscal imbalance.

Recently MAHC gathered community and business leaders to have discussions on revenue-generation possibilities for the organization.

Provan said from those meetings a list of about 150 ideas emerged that the organization will now investigate.

“Some of them are bizarre to be fair, but I mean people are thinking, which is great. In order to survive and do well we’re going to have to form a niche and get maybe something different, maybe something that people aren’t offering,” he said.

Dr. David Mathies, chief of staff for MAHC, said that revenue generation is important for the business, especially now that the organization has seen a drop in other sources of revenue like the cafeterias and fees from out-of-province patients.

“If there are ways we can leverage our facilities and land it needs to be looked at,” he said when asked whether he agreed with revenue generation ideas that would provide services outside of OHIP. “I’m not an expert on business development. It is a good idea generally, sure. Specific things, I don’t know.”

On the other end of the spectrum, the board must now consider the real possibility of service cuts, but Provan said that wouldn’t happen without public consultation.

Although the HAPS agreement states the board must present a final plan for submitting a $1-million deficit this year and a balanced budget next year to the LHIN by Dec. 1, Provan said that timeline is no longer feasible due to the enormity of the situation.

He said the board will be presented with ideas the first week of December, after which public meetings will be held throughout the region to discuss the different actions that can be taken by the board to improve the financial situation.

“But at this time I don’t know what the (exact) timeframe would be,” he said.

When asked if MAHC was going to be able to reach its $1-million deficit goal for this fiscal year, Provan replied, “I don’t know.”

He continued, “I think we can do some things and (still) maintain a rather excellent health-care service. The concern we have is, how far down the road do you keep on going before some of our issues that are driving our costs have to be resolved?”

Provan cited issues such as alternate level of care patients, who should be housed in places like a long-term care facility but end up occupying hospital beds because there is nowhere else to go. That has long been cited as a significant budget strain for the organization, with as many as 40 per cent of MAHC beds occupied by ALC patients on any given day.