Capital District Health Authority decided recently to remove the Tim Hortons located inside the Halifax Infirmary cafeteria, instead replacing it with a dialysis unit, saving the hospital millions in annual expenditures. More importantly, though, the decision highlights an ongoing issue in Nova Scotia and, perhaps, across the country: hospitals are spending money to keep cafeterias and good outlets up-and-running, reducing the amount of funds available for healthcare-related expenses. This is precisely why Tim Hortons is not simply relocating in mid-March, but closing its operations altogether.
Last year, a spokesperson told CTV that food-service wages account for 65 per cent of food-related expenditures, suggesting that labour expenses are a primary determinant of financial unsustainability in the hospital food-service sector.
Hospital food-service workers are unionized and subsequently compensated at levels much higher than the industry standard. Employees of at Tim Hortons located in Nova Scotia hospitals earn nearly $20 per hour, in addition to benefits. On the contrary, non-hospital Tim Hortons compensate workers roughly $10.10 per hour.*
Since many individuals rely on hospital food services, however, the province continues to fund their operations. This problem is not unique to Nova Scotia, though, and other provinces across the country are dealing with incredible losses. For instance, hospitals in British Columbia, New Brunswick, and Ontario have all reported similar losses from their Tim Hortons locations. (The effect also applies to other food-service operators.)
Although Nova Scotia’s Liberal government has begun reviewing provincial policies, the process will take time and the government has yet to consider any specific adjustments.
Currently, outsourcing staff or contracting hospital food operations to private companies is not an option. However, these options should be available and it is unreasonable to suspect that private companies could not ensure food quality and meet patient and non-patient demands in a more efficient manner.
Unlike public ventures, private companies must operate in the most economically efficient manner possible or else they risk failure. The propensity to incur deficits, therefore, is much less and delegating these operations to the private sector would afford hospitals extra revenue to expend on healthcare, as opposed to servicing cost overruns.
In any case, the cost of publicly provided hospital food services illustrates how policies and regulations enacted to provide a public good, such as healthcare, could create extreme inefficiencies. Healthcare spending is a controversial topic and the cost of food-service operations begs the question of whether the government is spending taxpayer dollars efficiently–servicing cost overruns for food-service operations demonstrates that it may not be.
Reforming the current system and allowing a more capable provider to resume hospital food-service operations is a small, albeit necessary, part of creating a more viable, long-term healthcare system that could set the stage for reforms throughout the country. By saving money through contracting food services, hospitals can spend more on technology, renovation, and wages of those providing healthcare services. The Liberal government and acting health authorities have the ability to amend these policies and the sooner they do so, the sooner they cant start spending on what matters: healthcare.
Rachel Lowe is a 2013-2014 Atlantic Institute for Market Studies’ Student Fellow. The views expressed are the opinion of the author and not necessarily the Institute