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  Management Discussion and Analysis The intent of this analysis is to assist readers of these financial statements in assessing the hospital’s financial position and operating results for the past year, and their relationship to the organization’s strategic priorities of patient care, research, education and a focus on people. Since its incorporation in 1998, Toronto Rehab’s fiscal management has adhered to the principle of always living within the hospital’s means. This entails preparing an annual operating plan with an associated breakeven budget and maintaining a positive working capital position. The hospital’s working capital position has been consistently positive since 1998 and, at March 31, 2008, was approximately $6.2 million. Toronto Rehab views working capital as a contingency fund that allows the organization to respond to emerging capital priorities and special projects that will further Toronto Rehab’s objectives and/or cover extraordinary operating pressures. The reader of the financial statements will note a significant deficit ($3.1 million) in the audited financial statements for the past year and may conclude that the hospital exceeded its budgeted expenses given the board policy of living within its available resources. In fact, the hospital ended the year with a $1.4 million surplus as a result of salary and benefit savings. This $4.5 million difference between our performance according to our approved plan and the audited results is explained by:
Toronto Rehab’s cash position remains strong with approximately $19 million invested in short-term investments for operating requirements. Long-term investments include the funds being held for Board approved high priority capital and special projects that are identified each year as part of the operating plan process. The Board has placed an internal restriction on the net assets of the organization in anticipation of these future expenditures. As of March 31, 2008, the Board has restricted $18.8 million of the hospital’s net assets against high priority capital and strategic needs including:
The remaining portion of Toronto Rehab’s long-term investments represents: an $8.9 million advance from the Province of Ontario to cover the planning and other related costs of the redevelopment of the University and E.W. Bickle Centres, $2 million in construction and equipment advances for the hospital’s major research project, iDAPT, including related support facilities; and the long-term portion of accumulated unused employee sick-time of $1.9 million.
This past year marked the completion of the third year of Toronto Rehab’s 2005-2010 Strategic Plan. A notable component of this plan was the realignment of the Complex Continuing Care and Musculoskeletal Rehabilitation Programs to better meet the needs of patients who require highly specialized services. This services transformation was largely completed in fiscal 2007. During the past 12 months, the organization has focused on the development of a Low Tolerance, Long Duration (“LTLD”) program for clinically complex populations within the restructured Complex Continuing Care Program, and on planning for a $10 million refurbishment of the facility which will begin in the fall of 2008 with funding support from the Ministry of Health and Long-Term Care and the Toronto Rehab Foundation. As of March 31, 2008, Toronto Rehab operated 575 inpatient beds. Of these, 224 are dedicated to complex continuing care, 223 beds are for rehabilitation and 128 are for long-term care. The beds, occupancy rates and number of discharges by program in 2007/08 (fiscal 2008) are highlighted in Figure 1. Figure 1: Beds and Discharges by Program
Figure 3 indicates the referral sources for our Complex Continuing Care and rehabilitation patients. For all services other than Geriatric Psychiatry and the Cardiac Program, the majority of referrals (approximately 91% of all admissions) are from acute care hospitals. The Cardiac Program has initiated a diabetes and lifestyle management service that has increased the number of home referrals by family physicians over the past two years. Figure 3: Referral Source April 2007 - March 2008
The hospital also benefits from a close relationship with the Toronto Rehabilitation Institute Foundation (”Foundation”). The Foundation’s ongoing support of Toronto Rehab is focused on support for research programs and capital expenditures. During the reporting year, the Foundation contributed approximately $1.9 million in support of research chairs, research operations, the hospital’s share of major renovation and redevelopment projects, and other education and operating priorities. In January 2007, the Hospital signed its second Hospital Accountability Agreement (HAA) with the MOHLTC covering the fiscal year 2007/08. This contract with the MOHLTC, approved by the Board of Directors, formalizes agreed to performance indicators, including the goal of operating, at a minimum, on a breakeven basis. The agreement also sets out the obligations of the hospital and the MOHLTC, as well as the processes to be followed and the consequences for the hospital should it be unable to meet its HAA targets. On April 1, 2007, this agreement was assigned to the TCLHIN, one of 14 not-for-profit crown agencies across the Province of Ontario reporting to the Ministry of Health and Long-Term Care and responsible for planning, overseeing and paying for the provision of certain health care services in their respective regions. Performance results for fiscal 2008 are reported to TCLHIN. The following table clearly shows that the hospital has met all but one of its performance targets set out in the HAA. While Complex Continuing Care weighted days were below target because of difficulty in recruiting staff for the new LTLD program, the hospital has exceeded the minimum action threshold. The margin reflected in the chart below refers to the “budget” performance results as explained earlier in this document. Toronto Rehab strongly supports this enhanced level of accountability between the TCLHIN, MOHLTC and Ontario hospitals.
Capital Renewal On April 13, 2006, The Honourable David Caplan, Minister of Public Infrastructure Renewal, announced that the province had approved the construction phase of the redevelopment and expansion of University Centre. The Minister also announced that the project would be funded through ReNew Ontario, the Ontario government’s five-year $30 billion strategic infrastructure investment plan to modernize and replace many of the province’s hospitals, schools and post- secondary institutions. The project will be financed through a new approach called Alternative Financing and Procurement (AFP). Project and construction contract management of this project will be the responsibility of Infrastructure Ontario (“IO”), a Crown Corporation, and the hospital. In the spring of 2007, the MOHLTC and IO announced that an Early Works project to complete the demolition of the South Tower of the University Centre had been approved in principle, and this project is now well underway. In October 2007, the RFP for the UC redevelopment was released to qualified bidders and tender results were received on April 23, 2008. Toronto Rehab is optimistic that the project will proceed through commercial and financial closes and commence in late summer 2008. During the year, the hospital continued planning of the iDAPT research facilities (funded by the Canada Foundation for Innovation, the Ontario Innovation Trust, the Ontario Ministry of Research and Innovation, the Foundation, University of Toronto, corporate partners and private donors). The iDAPT research facilities are largely integrated into the redevelopment of the University Centre and when complete, will represent a $36 million investment in research facilities and equipment at Toronto Rehab by the year 2011. In summary, Toronto Rehab has been able to maintain a solid working capital position during the past year while achieving solid operating results and significantly advancing the University and Bickle Centre redevelopment projects. In addition, the hospital continues to provide for priority capital equipment needs related to patient and staff safety and the implementation of an electronic patient record. Looking forward to 2008/09, Toronto Rehab will focus on the following key operating themes.
Toronto Rehab’s traditional breakeven operating budget position is significantly challenged by a $1.2 million annualized decline in WSIB in-patient revenues representing less than 1% of Toronto Rehab’s operating budget. This decline has occurred over the past two years and is the focus of a significant organization-wide revenue enhancement initiative for fiscal 2009.
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