Ontario Hospitals Defy Balanced Budget Law, Rack Up Millions in Private Bank Loans

A startling investigation has revealed that more than 60 percent of Ontario hospitals ended the 2025 fiscal year operating in the red, with many turning to private banks for loans to cover their costs. This practice directly contradicts provincial legislation that requires hospitals to plan for balanced budgets each year, raising serious questions about healthcare funding and financial management in Canada's most populous province.

Deficit Spending Despite Legal Requirements

According to findings from the Investigative Journalism Bureau, Ontario hospitals collectively logged more than half a billion dollars in annual operating deficits by March 2025. This persistent financial shortfall occurs despite clear legal requirements under Ontario law that mandate hospitals to maintain balanced budgets. The situation represents a significant departure from previous years, with data showing hospitals have ended the year in deficit more than 100 times since 2022, compared to only nine instances between 2016 and 2020.

The scale of borrowing has reached alarming proportions, with Ontario hospitals owing banks more than $66 million as of March 2025. This debt comes with substantial interest payments that divert public healthcare dollars away from patient care and toward financial institutions.

Major Hospital Systems Accumulating Substantial Debt

Several of Ontario's largest hospital systems have accumulated significant bank debt to maintain operations:

Hamilton Health Sciences owed $40 million on two lines of credit and paid nearly $2 million in interest to private banks during the 2024-25 fiscal year
Niagara Health System owed $3.6 million to a bank and paid over $1 million in interest on short-term borrowings
Perth and Smiths Falls District Hospital paid $226,000 in bank interest last fiscal year
Brockville General Hospital paid $214,429 in bank interest during the same period

Hospital administrators acknowledge the necessity of these loans despite their cost. Hilary Rodrigues, chief administrative and financial officer at Hamilton Health Sciences, stated in a written response that "the hospital will continue to draw on our operating line of credit as is necessary to continue to provide the care our community, region and province needs and deserves."

Financial Strain Amid Healthcare Funding Challenges

The financial challenges facing Ontario hospitals occur within a broader context of healthcare funding constraints. Ontario spends less per person on healthcare than any other Canadian province, yet healthcare remains its largest budget item at approximately 40 percent of the provincial operating budget, or about $90 billion annually. About one-third of this amount is allocated to hospitals.

Many healthcare experts argue that current funding levels are insufficient to meet patient needs. The financial strain manifests in tangible ways for Ontario residents, including:

Extended emergency room wait times
Patients being accommodated in unconventional spaces such as hallways, closets, and break rooms
Significant delays for elective surgeries
Tragic outcomes, including the February 2024 death of a 16-year-old Oakville teen after reportedly spending eight hours in an emergency room

Costly Borrowing Terms Drain Healthcare Resources

The financial burden of these loans extends beyond principal amounts to include substantial interest payments. During the last fiscal year alone, hospitals paid at least $4 million in bank interest on operating lines of credit. The terms of these short-term loans can be particularly onerous, with rates reaching as high as prime plus 5.7 percent, meaning some hospitals are paying interest rates approaching 10 percent.

This expensive borrowing represents a significant drain on healthcare resources that could otherwise be directed toward patient care, medical equipment, staffing, and facility improvements. The practice raises fundamental questions about the sustainability of hospital financing in Ontario and whether current funding models adequately support the healthcare needs of the province's population.

The situation highlights a growing disconnect between legislative requirements for balanced hospital budgets and the practical realities of healthcare delivery in Ontario. As hospitals continue to rely on private bank financing to bridge funding gaps, the long-term implications for healthcare quality, accessibility, and financial stability remain uncertain.