Acute care restructuring in Newfoundland and Labrador: the history and impact on expenditure

To document the history of regionalization and its effects on the Newfoundland and Labrador acute care health system, and to describe changes in acute care expenditure in the St John's region where hospital redesign, closure and aggregation occurred in relation to other regions not exposed to aggregation.

Interviews were conducted with senior health officials. Transcripts and other reports were reviewed. Financial data were abstracted from audited general ledger statements received from the Ministry of Health.

Regionalization achieved its objectives of hospital aggregation in St John's. The average number of full-time equivalent employees increased slightly by 2% (5304-5416). In some regions, integration of services was delayed because of conflict and resistance to change. There was some disparity between the Provincial Government's objectives for cost control and the CEOs' perceptions of economies of scale. Between 1995/96 and 2002/03, total expenditures for the St John's region and the other five regional hospitals increased by 46% and 54%, respectively; total personal income of the population and government revenues increased by only 18% and 16%, respectively.

Regionalization in Newfoundland and Labrador facilitated aggregation of hospitals, but did not control the number of front-line workers and, consequently, total acute care expenditure. Expenditure increased significantly between 1995 and 2002, at a rate which exceeded the increase in government revenues. The government's ability to pay for acute care will not be achieved unless employee costs are controlled or provincial income increases.