Hamilton's hospitals say they're losing money on joint replacements, cataract surgery and renal dialysis treatment as the province changes how it funds a growing number of services.

The new funding will force 60 per cent of hospitals to lower their costs because it's based on the 40 per cent that spend the least.

“It's going to be fairly daunting,” said Dr. Bill Evans, president of Juravinski Hospital and Cancer Centre.

“Whether it's truly possible to deliver the volume of care at that level of funding remains to be seen.”

Health Minister Deb Matthews denies it's particularly tough on large teaching hospitals, which tend to have higher costs because they care for the most complex cases and train students.

But Kevin Smith, the Hamilton hospital CEO implementing the funding across the province, acknowledges there are legitimate concerns.

“There are issues, particularly in teaching and research, that we really need to better understand and those won't dovetail always with the lowest cost,” said Kevin Smith, CEO of St. Joseph's Health System and a member of Ontario's Health System Funding Steering Committee.

“I've heard lots of concerns, but I think there has been recognition that we will break some eggs along the way and we'll come back and look at it.”

The new funding started April 1 and cancer care will be added next year. The formula will be based on the number of patients a hospital treats.

“We have currently, without these reforms, a very inexplicable way of funding hospitals,” said Matthews. “It's impossible to explain why any hospital gets the budget it does. So we're moving to a patient-based funding model … We will pay hospitals more if they care for more people.”

It has Hamilton's hospitals crying foul because the amount they get for those patients is based on the 40th percentile. That means 60 per cent of hospitals in Ontario spend more per case, including every hospital in Hamilton.

“It's saying if someone can do it at that rate, that's the rate we're willing to fund it at,” explained Smith. “If it's apples to apples, I think that is fair. If it's not apples to apples, that's the more difficult part. We're going to have a policy discussion about how we're going to handle that.”

Hamilton's hospitals say there is no way they can match the costs of community hospitals that send their toughest cases to them. They want to be compared against other hospitals that care for the sickest and most complex patients.

“Fortieth percentile seems terribly low to me,” said Evans. “But it is what it is and we'll just have to work with it.”

The new funding also doesn't take into account that Hamilton's hospitals teach while treating patients. They point out that doctors in training are less efficient than experienced physicians.

“We are concerned about it,” said Dr. Wes Stephen, chief of surgery at Hamilton Health Sciences.

Matthews says 30 to 40 per cent of cases at teaching hospitals are already within the new funding parameters. But hospitals worry about the gap from the other 60 to 70 per cent.

“What the hospital is trying to grapple with right now is what impact will this new funding have,” said Dr. Anthony Adili, chief of surgery at St. Joseph's Healthcare.

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