What to know
- Two University of British Columbia health policy experts say Canada’s hospitals face mounting financial pressure.
- They argue an aging population and rising spending on innovative drugs are driving costs higher.
- The experts say hospital funding is struggling to keep pace with growing demand and operating expenses.
- They warn governments may need to rethink how healthcare is funded to avoid further service reductions.
Canada’s hospitals have been a cornerstone of our national identity and solidarity. But clear across the country hospitals are facing a fiscal challenge of unprecedented proportions.
Editor’s note: The views expressed in this opinion article are those of the authors and do not necessarily reflect the views of Now Toronto.
Provincial governments are all in serious debt, and no level of government is bailing out our hospitals. This is impacting hospitals’ ability to deliver quality care to Canadians with front-line staff layoffs and regional hospital closures already happening in multiple provinces.
The economic strain on hospitals is only mounting.
So, who is going to bail out our struggling hospitals? If we want to protect them and the social solidarity they provide, we need a radical rethink of how we fund and deliver healthcare. And we had better do so quickly.
The numbers are staggering: in 2025, governments spent $283 billion in public funds on healthcare, and spending on healthcare represents approximately 12 per cent of Canada’s entire economy. But this only tells part of the story.
Hospital finances are extremely strained. In Ontario, the London Health Sciences Centre is reporting a $130 million deficit, with Trillium and Windsor hospitals also reporting large operating deficits, announcing staff cuts and lengthening emergency department waits.
Across the country hospitals are pleading for an injection of funding for operations and deferred upkeep. Ontario has provided a four per cent increase in hospital spending, but hospital costs are growing faster. Pleas for more money are falling on deaf ears as governments are already drowning in debt and unwilling to open the spigot for further funding.
And yet, things are only going to get worse for hospitals. There are two economic tsunamis we have yet to face.
The first of these financial crises for hospitals is demographic.
According to Statistics Canada, there are now 8.1 million seniors in the country, meaning that nearly one out of every five Canadians – 19.5 per cent of the population – is 65 years of age or older.
This demographic shift is not merely a social change; it is a massive fiscal weight. The Canadian Institute for Health Information (CIHI) notes that seniors account for nearly half of all healthcare spending due to the natural progression of frailty, the management of chronic diseases and the increasing necessity of long-term care.
The scale of this challenge is set to accelerate rapidly, with the number of seniors projected to grow by 25 per cent to 10.5 million residents by 2040.
Unless we fundamentally rethink how hospitals operate and change how much they cost, the sheer demand for care driven by an aging population will grind costs shockingly higher for the next fifteen years.
The second tsunami is the projected explosion in the cost of specialized drugs.
In 2025 alone, provincial and territorial insurance programs spent $15.6 billion on prescribed drugs. The math is fuzzy though, as this figure undercounts public spending on drugs, with additional billions spent on drugs dispensed within public hospitals or funded through specialized provincial cancer agencies.
The “kicker” for healthcare systems is the rising cost of pharmaceutical innovation. Public spending on drugs has recently increased by 9.2 per cent, with no sign of slowing down.
The mainstreaming of diabetes drugs for weight loss is expected to become a massive driver of future public spending on drugs.
The high rate of spending growth on drugs creates a zero-sum game for our public institutions. The reason is simple: there is only one pot of money and hospitals are competing against the rapidly rising drug costs for their share of money.
Unless provinces are willing to make the politically impossible choice of refusing to pay for life-saving new therapies, or unless total healthcare spending jumps significantly, the competition for constrained healthcare budgets will become hotly contested.
The tsunamis are visible on the horizon and cost pressures on hospitals are set to escalate. Further cuts in service are on the horizon. The question remains whether our provincial leaders have the courage to build the necessary sea walls before the water reaches the door.
Dean Regier is the Director of the Academy of Translational Medicine and Associate Professor in the School of Population and Public Health at the University of British Columbia’s Faculty of Medicine.
Jason M. Sutherland is the UBC Professor of Health Services and Policy and Director of the Centre for Health Services and Policy Research in the School of Population and Public Health at the University of British Columbia.
