Ontario hospitals told to find savings; ministry doesn’t rule out service cuts

TORONTO – Ontario’s Ministry of Health has tasked hospitals struggling with deficits to come up with a three-year plan to balance their budgets, and service cuts and bed closures do not appear to be off the table for extreme cases.

The Ontario Hospital Association has said that hospitals ended last year $360 million in the red and need an additional $1 billion in funding this year to keep pace with population growth and inflation.

However, government guidance to hospitals on the balanced budget plans, obtained by The Canadian Press, suggests belt tightening is on the way.

For the financial planning exercise, hospitals were told to assume annual funding increases of two per cent — half of what they have received in the past three years. The parameters are not confirmation of funding intent, the government says in the document, but the hospital sector is reading the tea leaves.

“It was quite clear to us when the Ontario budget was handed down after the general election that the province was no longer in a position to meet our full revenue needs as a sector for the current fiscal year,” said Ontario Hospital Association president and CEO Anthony Dale.

“(This budgeting exercise) is a prudent thing to do, given the realities facing the province today, which is our economy is under direct threat from the trade war initiated by the United States. It’s quite clear, based on the report of several weeks ago from the financial accountability officer, that Ontario faces a very large deficit stemming in part from that trade war.”

The FAO projected that impacts of the tariffs will have Ontario in deficit at least until 2030, and that the province’s plan to balance in 2027-28 is based in part on “significantly lower” program spending growth.

Hospitals were told that any “low risk” cost-saving moves, with “no or minimal clinical front-line reductions, achieved primarily via attrition,” should be implemented immediately. Low-risk examples include looking for more non-ministry revenue, optimizing the use of operating rooms, and consolidating services across sites of a hospital network where it has little or no impact on patient access.

Any potential plans that are deemed high risk would be assessed by regional and provincial planning tables. That would include measures that do have service impacts for patients, and should only be considered if all lower-risk options are exhausted, the guidance says.

“Maintaining patient access to hospital services is a top priority for the Ministry of Health,” the government writes in the document.

“Service changes and/or reductions are within the context of the hospital’s local and regional environments, with consideration for regional solutions that could result in better outcomes, access, continuity of care and patient experience. Any service reductions and bed closures should be clearly communicated in the plan and will only be considered when there is a case where it would be an opportunity to provide services more effectively.”

Tim Vine, president and CEO of the North Shore Health Network, with sites in northern Ontario, said this planning process has been unorthodox and has him concerned.

“Given the growing population of Ontario and demands of an aging population, I worry that on the current trajectory Ontarians will have fewer health services available to them in 12 months’ time,” he wrote in a statement. “And even more difficulty accessing them.”

Lee Fairclough, the Liberals’ hospitals critic and a former hospital president, said hospitals have already been finding efficiencies for decades and have very little in the way of “low risk” moves to make.

“I think it’s always good to do due diligence around your budgeting and how you’re spending and are we using taxpayer money to the very best purpose,” she said.

“But I feel that they are ignoring the way that these deficits have accumulated over the last several years…Hospitals in Ontario are the most efficient by far in the country, so I’m not sure they’re going to get to the result that they want here.”

A spokesperson for Health Minister Sylvia Jones did not directly answer how many hospitals contemplated service reductions in their balanced budget proposals, which were submitted last month.

“It is not only appropriate, but responsible for the government to ask hospitals to plan for long-term stability,” Jackson Jacobs wrote.

“This ensures that each community’s needs are reflected in the province’s broader health system planning as we continue to strengthen and modernize hospital care across Ontario.”

Kevin Smith, the president and CEO of the University Health Network, said he doesn’t believe this government will cut access to care.

“No one has given anyone permission to reduce clinical care, but I feel as though it was a, ‘How bad could this look if we had a really, really cataclysmic economic circumstance…what would that look like?” he said.

“I don’t think that’s different, frankly, than what we’d done pre-COVID annually.”

This report by The Canadian Press was first published Oct. 20, 2025.