Hydro rates hurting hospitals
If Jane Rufrano can count on anything, it’s that her hydro bill will rise each year like clockwork.
Many Ontario residents know the pocketbook pain of paying more for electricity, but for the chief executive officer of Hotel Dieu Shaver Rehabilitation Centre in St. Catharines the issue is more complicated than it can be for homeowners.
It’s the math that becomes a problem.
The rehab centre has an annual budget of about $ 32 million. Of that, some $ 21 million is consumed by salaries and benefits, leaving only $ 11 million for operating costs for a centre that treats about 134 inpatients and has 40,000 outpatient visits annually.
In the past several years, hydro costs are eating an increasingly larger part of that $ 11 million.
In 2011, Hotel Dieu Shaver paid $ 296,240 for hydro. By 2016, that bill was $ 497,803.
“It is an issue because we don’t have a lot of flexibility in our budget,” Rufrano said recently.
To cope with the rising cost of power, Hotel Dieu Shaver had to be creative, Rufrano said.
In 2015- 16, she said, Horizon Utilities said it had under- billed Hotel Dieu Shaver in the past and so the rehab centre owed the utility $ 240,000.
“I told them we couldn’t afford that, so they reduced it to a $ 150,000 payment, which I told them was still too much,” Rufrano said.
She eventually negotiated the utility down to $ 76,000 which is being paid in $ 25,000 instalments over three years on top of annual per kilowatt- hour rate increases.
The rehab centre is doing what it can to make its facility more energyefficient, Rufrano said, including by installing LED lights and other measures. But ultimately, rising rates continue to take a bite out of operational costs that would otherwise go toward patient care.
The situation is similar, albeit less dire, at Niagara Health, which has seen hydro bills rise from $ 3 million in 2011 to $ 6.4 million in 2016.
Angela Zangari, Niagara Health executive vice- president, finance and operations, said the increase is due in part to rising rates — she said the hospital system had faced a 26 per cent increase in hydro rates from an average of $ 0.12 to $ 0.16 per kWh across all their sites — but also because of energy- intensive equipment.
The St. Catharines hospital’s radiation machines for cancer treatment use an enormous amount of power, which will naturally drive up the institution’s bills.
Zangari said a large hospital system will feel the sting of rising hydro rates less than a smaller institution such as Hotel Dieu Shaver simply because of its scale. Niagara Health’s annual budget is about $ 500 million, with some 62 per cent going to salaries and benefits.
“We face several inflationary costs each year, and hydro is one of them. But is it the largest or most important? No,” said Zangari, noting the increases in the costs of drugs, equipment and supplies can outpace hydro rate increases.
It’s why hospitals co- operate via bulk purchasing agreements that can reduce some costs, she said.
The hospital system also benefits from having the relatively new St. Catharine site, which despite being significantly larger than the older Garden City hospitals it replaced, is a more modern, energy- efficient building. Niagara Health has also upgraded its older facilities.
The impact of Ontario’s rising hydro rates has become part of the Canadian Taxpayer Federation’s campaign against high energy costs. Last week the organization issued a news release about Hotel Dieu Shaver’s costs as part of a series of freedom of information requests on hospital budgets it made this year, said spokesperson Christine Van Geyn.
Rufrano said the federation’s release is accurate save for how many beds the rehab centre could buy. The release said the rehab centre could buy 156 patient beds for the difference in its 2011 and 2016 bills. Rufrano said in reality Hotel Dieu Shaver could buy 40 beds for the more than $ 200,000 difference.