1. Lessons Learned and Key Themes for Performance/Finance Risks for HSP’s
South East LHIN Community Financial and Statistical Reporting Training Day
June 6th, 2017
Presenter: D. Tooley

2. Overview of Presentation
How has risk tolerance changed since the introduction of LHIN’s?
Performance Intervention Overview Key Themes/Risks:
$5,000 threshold under Community Financial Policy
Service Delivery Change requirements
Inappropriate benefits to HSP staff
Lack of controls/documentation
Lack of forecasting and identification of surpluses
Capital projects impacting service delivery
Failure to report in accordance with MSAA requirements
How can HSP’s mitigate their risks

3. Risk Tolerance and Flexibility
With introduction of LHIN’s in 2006, the MOHLTC has evolved as LHIN’s have taken responsibility for planning, funding, integration, and performance monitoring. The MOHLTC has focused on compliance with policies/legislative requirements; especially financial areas.
As part of the Ontario Auditor General’s 2015 Final Report there was a section on LHIN’s included in the recommendations was the following (direct quote):
“LHIN’s need to better monitor health service provider’s performance –at the four LHINs we visited, we found that quality of health services is not consistently monitored, performance information submitted by HSP’s (some of which is contained errors) is not verified, and non-performing HSP’s are not consistently dealt with in accordance with Ministry guidelines. Regarding the latter, we found that the four LHIN’s we visited predominately discussed and shared information with HSP’s even for issues that have persisted for years.”

4. Risk Tolerance and Flexibility
The province is focused on ensuring value for money for the patient within the funding available
This has required the LHIN and MOHLTC to be diligent in our approach to ensuring compliance with funding requirements and Community Financial Policy
It is no longer acceptable to say we have followed processes and met policy requirements; we need evidence to confirm

5. Performance Intervention Overview Key Themes/Risks
Over the past few years, the SE LHIN has worked with a number of HSP’s as they have completed performance improvement processes
There are a number of common themes that other HSP’s can learn from and ensure their agency is in compliance before concerns arise
The SE LHIN has reviewed the common themes and worked to develop tools or improve processes to facilitate HSP’s ability to better meet the requirements – these will be highlighted as we go through the themes
The majority of the risks are due to lack of understanding or appropriate processes in place at an HSP; which is something HSP’s can work to address quickly to ensure compliance going forward

6. $5,000 Threshold for Purchases or Adjustments to Budget
Per the community financial policy any purchase and/or adjustments to budgets of $5,000 or greater require LHIN approval
Historically, there have been many instances were an HSP’s has made a purchase or adjusted budgets before seeking this approval.
In the past, the SE LHIN was able to work with the MOHLTC to accept post approval; however the requirement for evidence and focus on compliance has resulted in a number of instances where the funding was recovered within the past 2 years.
The SE LHIN senior leadership team has made it clear that evidence of approval before is required or we are not able to support HSP’s should there be the potential of a year end recovery

7. $5,000 Threshold for Purchases or Adjustments to Budget
The SE LHIN has never declined a request that meets community financial policy requirement and any parameters related to the usage of funding that must be met
In the new organizational structure for the SE LHIN, HSP’s should their Contract contact to seek approval before spending the $5,000 – Joe Sherman (Hospitals) or Rose Tremblay (Community)
Please note that the $5,000 requirement also includes one time adjustments to budget lines where the planned usage of funding is changing. For example if an HSP is funded for 2 Coordinator FTE’s and wishes to change that to 1 Coordinator FTE and 1 Office Manager FTE they would require approval before doing so
Permanent adjustments would fall under the Service Delivery Change process

8. Service Delivery Change Requirements
Health service providers (HSP) that are proposing changes to service volumes and/or financial/human resource allocations for a health care service that is funded by the South East LHIN or by the Ministry of Health and Long-Term Care (MOHLTC) are required to submit a service delivery change form (SDCF) to the South East LHIN. 
If an HSP is making changes to their budget that will impact volumes or financial/HR allocations permanently you MUST complete the SDCF process. Failure to do so would put the HSP in non- compliance with MSAA requirements and potential result in a recovery of funds at year end
Information on the process and copy of the template to complete is available on the SE LHIN website at the following link: elatedSubmissions.aspx

9. Service Delivery Change Requirements
Examples of situations that would required a SDCF submission:
Adding a new program that will utilize LHIN funded resources such as adding an additional Footcare site, or Adult Day satellite that will utilize existing LHIN resources for coordination/scheduling
Changing a specific FTE resource to another type of resource such as a NP in place of a Physician
Reduction of volumes permanently below MSAA target
Stopping the provision of a LHIN funded program

10. Inappropriate Benefits to HSP Staff
Transfer payment dollars are not to be used for benefits outside staff salary and benefits (medical, dental, etc.) as part of their core compensation package
Ineligible benefits would be gift cards, travel/food expense claims for non business work, subsidizing staff rent/housing costs, or year end bonuses not included as part of staff contract
A couple of HSP’s that have undergone in depth audits over the past 2 years that has resulted in funding being recovered due to inappropriate benefits to staff; including
paying for staff to go to a spa,
gift cards, year end bonuses, and
subsidizing housing costs for staff that was not part of their work requirements

11. Lack of Controls/Documentation
Almost every performance intervention the LHIN has undertaken with an HSP has found lack of controls and associated documentation that resulted in the Board/ED being unaware of potential risks until it was too late
HSP’s should be regularly reviewing internal processes to ensure they are up to date and that the HSP has financial controls in place; including regular reporting to governance and clear policies related to the use of funding/purchases
Staffing turnover, managing multiple portfolios, and various levels of business expertise are a recipe for risk to the HSP if there are not solid processes and policies in place

12. Lack of Controls/Documentation
Why are controls and documentation so important?
Reduces opportunities for staff to be tempted to misappropriate funds
Ensures governance is able to discharge their fiduciary duty
Ensures funding is used within parameters and meets community financial policy and transfer payment guidelines
Reduces risk that mistakes will occur that will negatively impact ability to balance budget
If you don’t document it, the MOHLTC will recover it

13. Lack of Forecasting and Identification of Surpluses
SE LHIN policy is that HSP’s retain 30% of any identified surplus if they can identify an appropriate usage of the funding
SE LHIN has had a number of instances where HSP’s identified a surplus at Q2 that was recovered, yet was needed at year end and returned
Historically, the SE LHIN had very low year end recoveries from community agencies; however this has changed in recent years with a significant increase in post year end recoveries.
Funding recovered by the MOHLTC after year end is funding that is lost to the residents of the SE LHIN
At the same time in year reallocation requests continue to increase

14. Lack of Forecasting and Identification of Surpluses
There are 3 reasons an agency would have a year end surplus that couldn’t be identified earlier in the fiscal year:
A forecasted expenditure was not required – this would be rare
Lack of forecasting
The HSP’s held on to surplus “just in case”
The SE LHIN has developed forecasting tools that are available for HSP’s if they currently do not have a robust forecasting tool
The old habit of holding on to a surplus “just in case” is no longer acceptable considering the LHIN will return surplus dollars at year end if they are truly needed
In a parameter was added to the in year reallocation request process that precludes an HSP from applying for funds until Q3 if they had an undeclared year end surplus the previous year

15. Capital Projects Impacting Service Delivery
In a few instances the focus and drive combined with the funding draw of completing a capital project has negatively impacted an HSP
The MOHLTC has introduced a community capital process and HSP’s must be working through this process to major capital initiatives
The SE LHIN can provide a maximum of $100,000 for capital related expenses in a fiscal year
A number of HSP’s have moved forward with capital purchases not supported by the SE LHIN or they did not seek endorsement from SE LHIN before moving forward. In these instances the SE LHIN is not able to provide any funding assistance

16. Failure to Report in Compliance with MSAA Requirements
A number of performance interventions have been required as a result of HSP’s failing to report in compliance with MSAA requirements
The MSAA is a legal document that outlined specific requirements of the HSP and any additional funding letters are considered a legal addendum to the MSAA
Every HSP should be well versed in the requirements outlined in their MSAA and should review it quarterly to ensure they have met all requirements.
If for some reason you don’t have a current copy of your MSAA it can be found on the SE LHIN website or you can Rose Tremblay directly to get a copy, as well, if you need assistance understanding your MSAA please contact Rose or Joe

17. Failure to Report in Compliance with MSAA Requirements
Financial penalty process is fully implemented – to date no HSP has received a penalty
Performance Indicator Initiative (PII) is fully implemented and HSP’s are required to complete information in the data centre for their performance obligation/indicators. A presentation will be provided today on this tool and how it will assist HSP’s in meeting this requirement
Integration reporting is due June 30th, 2017 and information can be found at the following link n.aspx

18. How can HSP’s mitigate their risks
Use the tools that the LHIN has developed and identify tools that could be developed that you would find beneficial
Regularly review internal policies and procedures as well as the HSP’s MSAA
Identify a peer mentor HSP that can complete a 3rd party review of your processes/procedures to identify improvement opportunities
Review the Community Financial Policy

19. Questions?