Page 36 - CEO Orientation

were modeled to allow for conservative sensitivity analysis and assumptions of potential savings and
efficiencies. The two-year lag in the HSFR funding formula was also recognized as was timing for
savings realization and investments. The Health Based Allocation Model (HBAM) revenue projections
were modeled on current state and assume a straight line improvement within the provincial HBAM
formula. It is anticipated that the positive HBAM funding impact would be approximately $1 million
under the 6% scenario and $1.5 million under the 8% scenario. If other organizations also make gains
in HBAM, the projected revenue may not be realized.

Summary of Net impact – year over year (based on six and eight per cent scenarios)
In summary, as illustrated by the table below, it is expected that ongoing operational savings will be in a
range of $7.8 million to $12.8 million. When adjusted to show the net impact of those efficiencies under
health system funding reform assumptions (specifically, the Health Based Allocation Model), the
network could benefit by investing between $8.8 million to $14.3 million in year-over-year savings into
direct patient care.

Post Year 3 Ongoing Savings 6% scenario 8% scenario

Corporate Support / Back Office Efficiencies $ 15,000,000 $ 20,000,000
Less: Ongoing Incremental Costs $7,200,000 $7,200,000

Add: HBAM Positive Impact $1,000,000 $1,500,000

Net Impact $8,800,000 $14,300,000

Of note, the mid-point of the ongoing incremental cost estimates were included in the modelling. In all
years under the six and eight per cent scenarios, savings were achieved and the net impact was positive
despite transitional expenses.

4.5 BOARD GOVERNANCE
The three organizations are overseen by the leadership of strong local boards of directors with a diverse
set of skills. Governance of the newly integrated organization will be key to its long term success.

The new network’s inaugural board will be made up of 18 volunteer members in addition to ex-officio
members including representatives from the MAC, MSA and a Chief Nursing Executive along with
University of the Toronto and the Archbishop of the Toronto Diocese or his designate. The volunteer
directors were selected by a joint Governance and Nominations Committee made up of a director from
each of the three organizations and supported by a third-party recruitment firm. The inaugural board
has been endorsed by the CHSO and each of the three boards of directors.

Sixteen of the appointees were chosen from the legacy boards – three from Providence Healthcare, five
from St. Joseph’s and eight from St. Michael’s. Two external board members will be chosen through an
external process post amalgamation.

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