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July 24, 2014

PUBLIC ACCOUNTS COMMITTEE

Pursuant to Standing Order 68, Tom Hedderson, MHA for Harbour Main, substitutes

for Eli Cross, MHA for Bonavista North.

The Committee met at 9:00 a.m. in the Assembly Chamber.

CHAIR (Bennett):

Good morning, everyone.

This is a meeting or hearing of the Public Accounts Committee of the Province of

Newfoundland and Labrador, and I am the Chair.

My name is Jim Bennett.

I am going to ask individuals to introduce themselves momentarily.

The procedure that we follow is when we begin questioning, members each

use approximately ten-minute allocations back and forth, and it is maybe a lot

less low key than a person might think it is.

We are really interested in looking for answers, explanations,

information, and so on.

Some people appearing who are with the AG's office have already been sworn.

It is not necessary for them to be re-sworn, because they have been sworn

before the Committee in this session.

The other individuals who are witnesses can be sworn or affirmed as they

see fit. Ms Murphy is our Clerk,

and I am going to ask the individual members to introduce themselves first

starting with

MR. OSBORNE:

Tom Osborne, Member of the House of Assembly.

MR. K. PARSONS:

Kevin Parsons, Member for the District of Cape St. Francis.

MR. PEACH:

Calvin Peach, Member for the Bellevue district.

MR. HEDDERSON:

Tom Hedderson, Harbour Main.

MR. MURPHY:

George Murphy, MHA for St. John's East.

MR. PADDON:

Terry Paddon, Auditor General.

MR. SULLIVAN:

Brad Sullivan, Audit Senior.

MR. KEATS:

Don Keats, Interim CEO .

MS LEHR:

Sharon Lehr, Chief Performance Officer, Eastern Health.

MR. BUTT:

George Butt, Vice-President, Eastern Health.

MS MOLLOY:

Debbie Molloy, Interim Vice-President, Eastern Health.

MR. BEARNES:

Reece Bearnes, Director of Medical Services, Eastern Health.

MS RUSSELL:

Sandra Russell, Deputy Auditor General.

MS TURPIN:

Carmel Turpin, Vice-President, Eastern Health.

CHAIR:

Thank you.

Ms Murphy will administer the oath to those who have not been sworn.

Swearing of Witnesses

Don Keats

Sharon Lehr

George Butt

Debbie Molloy

Reece Bearnes

Carmel Turpin

CHAIR:

Did anybody have any questions before we begin?

First of all, the heading that we are looking at today is from the Auditor

General of the Province of Newfoundland and Labrador, the annual report,

Part

3.1.

I will begin with Mr. Osborne.

MR. OSBORNE:

Thank you.

MR. KEATS:

(Inaudible) opening statement?

CHAIR:

For sure.

MR. KEATS:

Good morning, Mr. Chair, and members of the Public Accounts Committee, Mr.

Paddon, and representatives of the Office of the Auditor General.

I thank you for the opportunity for Eastern Health to appear before the Public

Accounts Committee. As you know,

Eastern Health receives a significant portion of the annual budget of the

Government of Newfoundland and Labrador on an annual basis and we certainly

welcome the interest of the Public Accounts Committee into how we manage that

budget.

I do want to take a moment to provide you with a brief description of Eastern

Health. Formed in 2005 as a result

of the amalgamation of seven health boards, Eastern Health is the largest

regional health authority in Newfoundland and Labrador and one of the largest in

Atlantic Canada.

Eastern Health has a budget of approximately $1.3 billion, nearly 13,000

employees, and over 700 members on the medical staff.

From a regional perspective, it serves a population of just over 306,000

and provides a full continuum of health and community services including public

health, long-term care, hospital care, community-based services, and medical

clinics.

In addition to its regional responsibilities, Eastern Health is responsible for

provincial tertiary levels of health services through its academic health

science facilities and provincial programs such as the Neonatal Transport Team

and genetics.

Geographically, Eastern Health includes the Island portion of the Province east

of and including Port Blandford.

The area encompasses the entire Burin, Bonavista and Avalon Peninsulas, as well

as Bell Island.

In March of this year, Eastern Health received Accreditation Canada's

designation of Accreditation with Commendation.

In its letter, Accreditation Canada stated: This achievement demonstrates

your organization's determination and commitment to ongoing quality improvement.

We applaud your leadership, staff, and accreditation team members for

their efforts and dedication to the provision of safe, quality health services.

At Eastern Health we are very proud of this designation, and it is truly a

reflection of the commitment and dedication of all our employees and physicians.

On July 2, 2014, Eastern Health publicly released its strategic plan for the

years 2014-2017. This builds on our

strategic plan of 2011-2014, and carries forward the focus on our four strategic

priorities of quality and safety, access, sustainability, and population health.

Over the next three years we have set new goals, objectives, and

indicators to work towards, with a number of performance measures which will be

used to monitor our progress, and on which we will publicly report on an annual

basis through our annual performance reports.

Each and every day within our organization, our employees remain focused on

providing safe and quality care to our residents, patients, and clients.

As the series of experience of care surveys that we have completed

indicated, the people we serve express high satisfaction with the care they have

received.

Yet we do face challenges, not the least of which has been our financial

performance. While in 2007-2008

Eastern Health recorded a balanced budget, we have experienced significant

deficits in subsequent years that required stabilization funding from the

provincial government. Based on

that experience, Eastern Health realized that they have to take action to find a

way to meet its accountability to achieve balanced budgets.

We embarked on a benchmarking process and hired an expert in the field, Health

Care Management Group. Through that

process, we compared our operations to those of similar organizations across the

country. What we discovered is that

we were not operating efficiently.

In fact, we were among the worst performers in the country.

Working diligently with all of our front-line managers, we developed a series of

initiatives to improve our performance with two very important guidelines: no

permanent employee would be laid off; and no program or service would be

reduced.

As you know, in May of 2012 we publicly released our operational improvement

initiatives that would assist the organization achieve savings of $43 million

and reduce the number of full-time equivalents by 550.

In terms of our progress to date, we have achieved nearly $30 million in

savings and have reduced the number of full-time equivalent positions by 350,

without any layoffs. This was

achieved through attrition and various other initiatives such as reduced work

hours for overtime and constant care.

Our efforts will continue throughout this fiscal year to achieve the

remainder of the savings.

Through our focus on our spending, we were able to reduce our deficit from a

high of $27.6 million to $8.3 million in 2012-2013.

Yet we again see our deficits increasing.

Eastern Health, similar to other boards across the country, is challenged

to meet escalating costs in the provision of services.

There are a variety of factors that contribute to the financial position

of any health authority such as increased utilization of services, inflation,

negotiated labour costs, and the introduction of new technologies and services.

In addition to our operational improvement initiatives, Eastern Health is also

reducing the number of management positions through attrition.

In an effort to save $6.8 million, Eastern Health is working to reduce

about seventy positions. To this

end, by the end of June, we have been able to eliminate forty manager positions,

resulting in a savings of $4.1 million.

We are building lean capacity at all levels of the organization through

coaching, mentoring, and team building to enable change management and the

creation of an organizational culture of continuous quality improvement.

Although the general perception of lean is that it is focused on

improving efficiency, successful implementation of lean-based process

improvements inevitably result in improvements in other domains of quality

including patient safety, timeliness, patient-centeredness, equity, and clinical

effectiveness and efficiency.

Compared to other systems that have spent enormous amounts of money on external

lean consultants, Eastern Health has adopted the long-term plan of developing

capacity and self-renewal. To date,

approximately 450 employees of Eastern Health have received a three-day lean

training and hundreds more have received short-focused training.

Lean initiatives are currently ongoing in the following areas: in-patient

nursing units, laboratories, pharmacy, physiotherapy, occupational therapy,

emergency departments, ambulatory clinics, rehabilitation medicine, community

services, and long-term care. These

initiatives have directly improved patient flow, patient safety, and cost

efficiency.

Earlier this year, Eastern Health completed a clinical utilization review to

ensure we use its resources appropriately, effectively, and efficiently to meet

the health needs of the people we serve.

Complementing the operational improvement process, the clinical

utilization review compared Eastern Health's clinical utilization to

organizations across the country.

The review focused on six key acute care areas: emergency, cardiac and critical

care, medicine, surgery, women's and children's health, and mental health.

With initiatives targeting a number of patients admitted, the length of time a

patient stays in hospital and reducing the number of procedures we perform while

continuing to offer a high level of care, we have the potential to reduce

operating costs by $4.6 million and reduce by the equivalent of fifty-eight

full-time positions through attrition.

We have developed tools and increased the flow of information for our

front-line managers to assist in them meeting their budgets.

It is a constant and continuous effort on the part of many throughout our

organization. We acknowledge how

important it is for us to be good stewards of the taxpayers' money, we take this

responsibility quite seriously, and we do not leave any stone unturned in our

efforts to reduce our costs and operate efficiently.

Considering that about 75 per cent of our budget is spent on direct care

and about 66 per cent of the budget is compensation, it is not easily

accomplished; however, we will remain every vigilant.

We welcome the findings and the recommendations of the Auditor General to assist

us in doing a better job of fiscal management.

We have been working to resolve the issues identified and look forward to

discussing with you over the next two days the progress we have made.

Thank you very much, Mr. Chair.

CHAIR:

Thank you, Mr. Keats.

I am going to ask you if you could table that so it could become a part of our

official record. If you do not have

an extra copy, we can have one made, whatever is easier.

MR. KEATS:

Yes.

CHAIR:

I will begin with Mr. Osborne.

MR. OSBORNE:

Thank you, Mr. Chair.

Thank you, Mr. Keats, for your presentation.

I know that some of the questions that we will have today will overlap on

some of the information but to help facilitate some discussion.

I know you are acting CEO right now, so some of these questions may be more

difficult. You may put them off to

staff or whatever. Can you outline

some of the measures that Eastern Health is taking to address the deficit issues

that you experience?

MR. KEATS:

I guess Eastern Health started the process back four or five years ago looking

at its deficit position and for the last several years, it has been running the

deficit of $20 million, $26 million.

Two years ago, it was down to $8.3 million.

It is a lot of money, but you have to look at it in relative terms; $8.3

million is about point six of 1 per cent of our budget.

The deficit over the last five years is about 1.5 per cent of our budget over

the past five years, it has been about $5.57 billion.

It is a tremendous amount of money.

We will not be happy at Eastern Health until we have no deficit on an

ongoing basis and that we live within our funding envelope.

In 2010 thereabouts, Eastern Health started on the operational improvement

initiatives, looking at all areas of the organization.

There were meetings with all managers throughout the organization.

A number of initiatives were put in place.

Anything that was of the discretionary

nature starting in 2011, education, any of those sorts of things that had no

direct impact on patient care, those things were eliminated, reduced or

primarily eliminated.

We also, at the time, said there is a potential for us to eliminate or save

about $43 million and to achieve savings equivalent to 550 full-time

equivalents. To date, $30 million

has been achieved and there are about 350 equivalent full-time positions that

have been eliminated.

Now, it is important that you understand that it is not people.

I will give you an example.

There has been a significant reduction in the overtime usage in the organization

in the last four years, and each year it has gone down.

Through the major savings in overtime in the last four years, we have

saved the equivalent of forty-two full-time equivalent positions.

Forty-two full-time people were not laid off, but you saved that.

Through efficiencies in the provision of constant care services, there have been

a number of equivalent full-time positions eliminated.

So, measures bring you up to the 350 range.

We have had changes in the numbers of managers at Eastern Health.

There has been a reduction of forty so far; their target is seventy.

That has resulted in about a $4 million savings.

There have been efficiency efforts looked at through all usage areas, such as

vehicle travel, callback, any of those relief areas.

Through the lean process, we have had some really good success with

improving patient flow or operational efficiencies throughout the organization.

The benefit of the lean process is that it is the front-line employees and staff

who participate, come up with the recommendations, and follow through with the

implementation of the recommendations.

In many areas like laboratory if any of you have gone to Major's Path,

I would hope that you have noticed a significant reduction in the wait times and

the service times at Major's Path.

Through a lean process, the staff made recommendations and made changes to

staffing schedules. When people

come to work, staffing schedules are co-ordinated with when people are there for

the services obviously. That has

led to improvements in patient flow and cost and so on.

I am going to ask Sharon Lehr, our VP of Performance, to give you some more

examples of some of the things that we have done in the lean areas and other

initiatives that we have undertaken to save money.

MS LEHR:

Thank you.

The initiatives in particular for the lean is we are putting a lot of effort

into ensuring that we are pulling patients from the emergency department to the

in-patient units. So there is a lot

of work being done on discharge planning, on improving processes to eliminate

the steps in processes that we currently undertake, we look at what the ideal

state would like and then we coach with the front line and they become the

problem solvers.

So that is the work we are doing in lean.

We are working in ambulatory clinics to reduce wait times.

We are working in pharmacy to improve chemotherapy wait times for

patients who are accessing that care.

The benefit for the patient clearly is that they are waiting less, but it is

also a benefit for the organization because it allows us to staff more

appropriately. It puts the staff in

at the right time so that we are not using overtime and extra workload to

address the demand for service.

So that is a lot of initiative that we are doing at Eastern Health right now,

primarily focused at the Health Sciences Centre, putting a tremendous amount of

effort in improving service delivery there.

From the operational improvement process, we identified every manager of every

functional centre, every department, went through their own data compared to

their peers in the country to see if they were as efficient as they could be.

If we were not at median or one of the top performers, we looked at were

there things that we could reasonably do.

So, if it was an in-patient unit, as an example, and we were delivering our

hours of care to deliver service to an in-patient medicine department was eight

or nine work hours per patient day, but our peers in the country could do it for

seven, then we looked to see if we could reasonably compete or compare with that

as well. Where we could, the

managers put initiatives on the table and they are implementing those.

We did the same for housekeeping, dietary, all the different areas of the

organization, and each manager has a list of initiatives that they are

implementing, and we are working our way through that.

To date, $30 million, as Mr. Keats indicated, has been achieved; so we have $13

million left that we are working very hard this year to implement, without

service reduction and without laying off any staff.

MR. OSBORNE:

Okay.

I know Eastern Health is a big, big, big machine, and so many wheels, let alone

cogs on the wheels, and it is difficult to focus on that.

Just out of curiosity, is there a position within Eastern Health

specifically dedicated to finding efficiencies, or is that task added on to

somebody else's responsibilities?

MR. KEATS:

We do have a number of positions throughout the organization that is focused on

for example, we have people who work in clinical efficiency.

All of our managers and directors and staff will endeavour to make sure

they provide the most efficient, effective, safe, quality level of services that

they can provide. So, it is spread

throughout the organization.

MR. OSBORNE:

Okay.

The position control number system: Can you give some greater detail, explain

how that is implemented, the benefits of that system?

MR. KEATS:

Yes, I will just start by telling you that we are implementing another position

control system. We anticipate that

it will be in place by April of next year, by the end of this fiscal year.

I will ask our VP of HR to provide some comments on how that system will

work.

MS MOLLOY:

The position control system will allow us to track budgeted positions within the

organization and the people that hold those positions.

That is it at its most basic level.

What it will also do, though, is allow us to know because we do have

internal movement within our system, and it will allow us to track people as

they move throughout the system and knowing that when we do add a position to

complete work, that we have the budget that is necessary to fund that position.

Right now because we focus on full-time equivalents, we do not always equate

that to people, and this is an addition to our system to allow us to take that

system and translate it back in to people.

MR. OSBORNE:

Okay.

As part of that system, I know the Auditor General found that there were 130

individuals double dipping and two individuals triple dipping; will that help

identify, through that process, the individuals who are receiving multiple

incomes from either government or Eastern Health?

MR. KEATS:

There are a number of processes that are in place for that, and maybe I can

speak about some of these. In

pensions, for example, currently I think we have 119 people who work at Eastern

Health who also receive a pension.

We have four people who receive survivor pensions and some who receive medical

pensions, and one who receives a deceased spouse pension and so on.

I think we even have one who receives a teacher's pension.

Out of that 119, there is 105 who receive pensions but they work only on a

casual or a temporary basis. By the

way, I am one of them; I receive a pension.

I am back on a temporary basis while Eastern Health pursues another

president and CEO. That is a

short-term process. We are

following government guidelines on that.

We are getting whatever approvals we need from that.

Out of the 105, about 55 per cent of them are nurses.

None of them are in full-time permanent or part-time permanent positions.

It is basically casual, on-call relief, or it is a temporary position

that they are in.

We do have a mechanism now whereby because it was tough in the past to find out

unless people self-declared that they were receiving some kind of a pension,

we would not know that they might be.

Right now, you have to self-declare before you go into the organization.

Also, anybody who is hired, who is on a pension, it requires the approval of two

of our vice-presidents. They also

have to demonstrate before they are hired that there has been a search or a

search is underway and that this is a short-term solution for the organization.

Health care is a very complex environment.

So, I will you an example of one of the individuals who worked two jobs

while on a pension. The individual

was actually a plumber. The plumber

was employed on an hourly rate to provide services in two organizations, two

facilities. One was St. Pat's.

St. Pat's is part of the faith-based homes.

They manage some of their own affairs, so that was a different control

number. The other was employed at

St. Clare's hospital.

That was the two jobs this individual had.

They were an hourly rate job that this individual was employed.

As you can appreciate, we cannot just go and take a private plumber off

the street and say we want you to go in and fix the problems at St. Clare's.

That is a very complex organization.

From a plumbing perspective, you have to know what is going on in there.

So, if somebody is off on leave, sick leave, annual leave or whatever

type of leave and you need somebody to do some work in there, sometimes the very

best, most effective, efficient way to do that is to get somebody who

understands the building and the system and can come back and provide that

relief on an hourly basis.

The same thing with nursing; nurses are very difficult to get in certain areas

and in certain rural areas of the Province.

We have retired nurses who are available to provide relief services,

cover off on sick leave, annual leave relief or whatever, we do that.

The objective overall, Mr. Osborne, is to make sure that we do not have

people who are pensioned and are working in full-time jobs and part-time jobs;

that does not take place.

MR. OSBORNE:

Okay.

Delays in classification resulted in 123 employees being paid overtime.

Have you addressed or how are you addressing the delay in

classifications?

MR. KEATS:

Admittedly, it took us a longer time at Eastern Health to have the

classifications done than we would have liked.

Usually with some of those things, when the organization starts I have

been involved with organizations that have reduced the number of boards.

In the first two of the three years, you are inundated with all kinds of

transitional issues and union issues and personnel issues.

Classifications take a little bit of time.

We had that issue at Eastern Health and then, shortly afterwards, some things

like ER-PR kind of delayed some of those things, but we do admit that it took

quite some time. Usually what

happens with these classifications in a regional health authority over the

years I have been involved with them, for example the regional health

authority will set a number of benchmarks and then they will internally classify

people and put them in what they think is the rational or realistic number

within the classification system.

Then those things are sent off to government who will make a final decision on

those.

What we now have at Eastern Health is a validation committee.

The validation committee meets twice a year.

The VPs are responsible for ensuring that anybody who requires a

classification goes through that validation committee.

There should be nobody who requires a classification that does not get

that performed and sent off to be done through the appropriate government

department within a six-month time frame.

Out of the people who were classified lower than the actual classification, the

expectation, when they were done, was that that was an appropriate level.

When your classifications came back lower they could have easily have

come back higher, so Eastern Health did not think that many people would come

back out of classification.

I would also tell you that out of the people who have been classified on the

management pay scales, there is about 252 of them who are now seeking appeals

for that classification. We do not

know what level of them will be successful in doing that.

We do acknowledge that it is an incredibly long time to get some

classifications worked through the system.

Hopefully the new validation process will ensure that the classifications

are done in a timely manner in the future.

CHAIR:

Mr. Parsons.

MR. K. PARSONS:

Good morning.

Thank you guys for coming here today.

I am first going to start off with a little statement that I would like

to make. I really do appreciate the

work that Eastern Health does. Over

the last couple of years, I had a couple of parents who had to avail of your

services. I have to say that I was

more than pleased with the level of care and also with the amount of concern

from nurses, from the cleaning staff right on through.

They showed professionalism in what they do.

I was really pleased with what happened with my family and I really want

to say to you guys that there is a great staff over there and there is a lot of

good people who work in your organization.

I am sure that you hear it every day, but there are a lot of times when you deal

with organizations like yourselves it is the negative things that get reported

and not the positive things that get reported.

I just wanted to let you know that the majority of people who deal with

your organization, I am sure, come out on the positive.

While there are probably a couple of negative things that get reported

most times, I can assure you that most of the dealings I have had with Eastern

Health have been very, very positive.

I wanted to let you know that right off the bat.

I understand that Eastern Health is so large.

All you have to do is walk into one of your hospitals and just see the

flow of people. The Health Sciences is

absolutely crazy over there sometimes.

If you are going for an appointment, trying to get a parking spot over in

the thing, driving around for about ten minutes or whatever.

In saying that, we still are dealing with a $1.3 billion budget.

I think, going through the Auditor General's report, that there are a lot

of areas where we can improve things.

I think a lot of it has to do with the proper controls in place.

I think that we should be looking at making sure that these controls are

in place.

I have a general question first. I

know Mr. Osborne asked the same basic question.

What controls are you putting in place?

We are looking at monies that are getting spent; for example, overtime is

22 per cent higher. I understand

that the health care system is generally over anyway, but there has to be some

controls put in place to control this stuff.

MR. KEATS:

Thank you very much.

I would just like to address your first comment and the compliment to the staff.

As you say, Eastern Health is a big organization.

There are 13,000 employees.

On a daily basis, employees throughout our organization provide tens of

thousands of services every day of the year around the region.

By and large, the vast majority of those are extremely good, quality,

safe services that our clients and residents receive.

We are very proud of the fact that our staff does that.

In terms of controls, we agree that we need to make sure we have the proper

controls in place. One of the

things we have done through the finance committee of the board is approved we

have retained the services of Ernst & Young who are external auditors to do a

review of our control areas, many of the control areas that have been identified

by the Auditor General's staff, to make sure we have the proper control

procedures in place and that we follow best practices around the country.

That study or that report with that information should be completed for us by

the end of September of this year.

That is one of the major general things that we have done as a result of the

AG's report. We have also taken

internal actions to make sure, where possible, we do the monitoring and the

auditing that need to be done and that we comply with provincial legislation,

regulations, or whatever is necessary.

MR. K. PARSONS:

Okay.

I just want to go to the piece where the Auditor General has major concerns

about compensation and recruitment in your department, like with recruiting

people and compensating. In

compliance with government, it seemed like Eastern Health was on their own and

did it the way they do it rather than follow the rules that should be put in

place. What changes have you made

there with any of the compensation programs that you have done there?

MR. KEATS:

Generally the compensation obviously is made through a government classification

process. People get paid on the

appropriate scales. Earlier this

year, effective April 1 of this year, the educational differentials, the

overtime in lieu of, and the management supervisory benefits that people got if

they were not a nurse, supervising nurses, those were all eliminated effective

April 1 of this year.

MR. K. PARSONS:

Okay.

I think a lot of the Auditor General's concern was with the lack of

documentation. What improvements

have you done to improve your documentation, for employees, anything that was

done with compensation? It here

seemed there was no documentation in place.

What document controls have you put in place?

MR. KEATS:

There has been a reiteration to our staff and our managers and so on of the

importance of making sure there is documentation either before or after the

fact. Let us face it; if you work

in a health care environment, it is not always easy to get prior approval for

overtime. That happens on a

Saturday night somewhere when somebody needs to get called in somewhere.

Reaching your supervisor to get approval for overtime is not always easy,

nor do they say when they have some emergency situations I have to take the time

to get somebody in for overtime.

Afterwards though, the prior approval needs to be made sure that it is given.

There are general parameters around which people will be available or

through which overtime is being used wherever possible.

Again, every day at Eastern Health there are tens of thousands of

transactions that take place.

Things that are documented, overseen, and so on.

Occasionally, some of those are missed.

We want to make sure that we have the best system we can put in place so

we do not miss those. There are

some misses but, by and large, the vast majority of what we do receives

documentation.

MR. K. PARSONS:

The Auditor General found that there were areas where there was recruitment and

said there was missing screening documents and lack of documents to show how you

recruited certain people and individuals.

Have you done anything to improve these circumstances?

MS MOLLOY:

We did feel that we had fairly good documentation in most cases; however, we

took it in the spirit that it was given, that we did not always have the same

documentation or the process that the Public Service Commission has.

We have undertaken a review within the Human Resources department and that is

just coming to a conclusion. We

plan on piloting a new program which does mirror a lot more closely that of the

Public Service Commission. We will

be starting that in September or October of this year.

MR. K. PARSONS:

Okay.

I want to go to the leave and overtime bit.

I am not saying it is an abuse or anything like that, but I understand in

an organization, especially in health care, it is not like you can say that

fellow is not coming in tonight, that is okay, we will get by without him;

because you are dealing obviously with people's health and stuff like that.

Again, it seems like there is a lack of oversight and people being prepared.

It seems like it is done on a whim type thing.

What processes do you have in place for overtime, for example, for people

being called in? You know it is

going to happen but it seems like I know you talk a lot to different people in

the health care system and the one thing they will always say is we do not have

enough staff; so-and-so is sick, blah, blah, blah; and that is the reason why it

is slow here tonight or we are not getting this done or that done.

I am just wondering what the process is.

Obviously it is a very important part; it is something that you have to

be ready for because it is not like a job where if there is no one there, then

it is okay. I just want to know the

whole procedure of what you do with your overtime.

MR. KEATS:

I will make a general comment.

Eastern Health has worked over the last couple of years to reduce its overtime

and have made significant reductions in the number of worked hours for overtime.

As I indicated earlier, it is the equivalent of forty-two full-time

people on a yearly basis. We

basically have freed up, in overtime, forty-two full-time equivalent positions.

We have a policy that generally says overtime is to be pre-approved.

As you have indicated, this is not possible in all circumstances, but

there are general guidelines. For

example, if somebody calls in sick, you do not necessarily say right away we are

going to replace that person on sick leave.

You make a determination: Can you work the area without the person being

replaced?

There are many areas throughout the organization where we have minimum staffing

requirements; for example, in neonatology, if we have six babies then we are

required to have six nurses there.

If somebody calls in sick or if somebody gets sick and has to leave and so on,

you make whatever arrangements you can to get the relief staff in.

The same thing with people who go on paid leave or annual leave, you try

to replace them.

Sometimes you cannot give people for example, you will hear a lot of times

people say I cannot get a day off.

Wherever possible, we endeavour to give our staff time off.

It is important that they get the time off.

Through the collective agreements and so on, there are certain times that

they are supposed to be off and certain amounts of leave you can carry forward.

It is not always possible. I talked

to a nurse the other day, for example, who could not get a day off.

She could not get a day off because there were four other people in her

area who were off that day.

Sometimes when people are off we have incidents where one sick leave call can

create five paydays for an individual, which may be in overtime.

It does not take long for the overtime in those areas to build up.

We monitor those and we try to make sure that people are required for the shifts

or for the weeks or whatever that they come in.

We have a couple of hundred nurses every summer who are hired to provide

relief, where we can get them. We

have situations now in our organizations where relief staff is not available, so

if somebody calls in sick or if somebody is off for whatever reason, it

generally will incur overtime. We

are kind of in a situation where we have to go with the overtime in those areas.

There are certain things as well, a

section in the report that talks about

unworked overtime. As you may know,

through collective agreements in an area like lab and X-ray, there is an

agreement that says somebody goes on callback and it is not feasible in all

programs or in all areas of the region to have an area staffed around the clock.

In a smaller rural area, St. Lawrence or Grand Bank, for example, we may

have a lab and X-ray person who works an 8:00 o'clock to 4:00 o'clock shift.

If the doctor decides there is an X-ray needed or a blood test needed at

6:00 o'clock, the person on call comes back in, performs the test, it may take

five minutes, gets paid three hours.

Compensation is in lieu of scheduling somebody or giving notice to

somebody that they are going to get called in.

You can get pyramiding based on that.

If that individual leaves their place of work and by the way, there was

an arbitration case several case that I was involved with that determines place

of work. Your place of work under

that circumstance would be where you sit in this House.

If you got up and walked to the floor there, you are determined to be a

way from your normal place of work, even if you are still in the lab or in the

diagnostic (inaudible) part.

If you get another call and the doctor determines who is going to get called,

you go back to work, you get another three hours pay.

If that happens again in the first hour, you get another three hours pay.

You can accumulate nine hours pay for three calls that may take place in

an hour or two hours.

There are circumstances where people get paid overtime or callback at the end of

a shift or just before the beginning of a shift.

Better management is required to make sure those things do not happen.

Sometimes it is not always possible because if a physician says I need

this test done, I need it done, stat, we are really not in a position to argue

with them about that at the time; but we will have discussions with them about

making sure they understand the consequences of their actions on the cost for

the organization and what it might mean for the individual who is on callback.

Those are some areas we have to work on.

We think we are doing a satisfactory job with our overtime and our

callback and so on. Are we happy

with that? No, we are not.

We know we need to make improvements, and we will continually try to make

improvements in those areas.

MR. K. PARSONS:

Okay

An example you just gave that time, I have heard the example before that a

person was in the parking lot, just got called in, and then in the parking lot

gets called back in again, and again another three hours within a half hour

period of time, another six hours overtime given for it.

I only have one more question here.

The Auditor General found that there was 712 employees had taken paid annual

leave, but they were not entitled to it.

That number seems to be a lot for me. What are you doing to address that?

I know when people take leave often then we are into the same thing you

are doing with calling in for overtime and stuff like this, but when you have

712 that are taking beyond what they were supposed to take, there must be some

way to be monitoring this and seeing that this does not happen.

MR. KEATS:

The leave generally might be taken on an anticipated basis, so somebody might

overrun their leave bank. There are

no large amounts of time. If you

look at the financial amount and the numbers of people who have done that, it is

usually a day or so that people will overtake their leave.

It is done on an anticipated basis; this is what you are entitled to.

It is picked up again immediately the very next year.

If you have gone over and I have always found this a little bit

strange. The first time I started

work in health care, they told me I am entitled to twenty-four days and I can

take them in advance. If I am

entitled to ten days leave, I have ten leaves on the books and I take eleven

days, then I pick it up, the organization picks it up the very next year.

Instead of having X number of days the next year, you get X minus the time you

picked up. The only problem with it

you might say from a cash flow perspective it created a major problem, which

it does from that is it incurred in one year versus the other year.

MR. K. PARSONS:

It also must encourage for overtime because if that person is not there, someone

there has to replace them. It is a

cost not only for the leave cost, it is a cost for someone to come in and

replace that employee. If they have

ten days off and they take eleven, obviously on the eleventh day there is

someone either going to be called in on overtime or someone has to fill that

position for that day. I can see it

as a major concern when I see numbers like that.

MS MOLLOY:

Part of anticipation though is so if I take a holiday in April, by the end of

the year in December I would have earned back that time.

It is not taking over what you are entitled to having, it is just taking

it earlier than you earn it every pay period.

There is, though, a small amount.

When you take an audit at any time, we may have people who are on an unpaid

leave, for example, a maternity leave.

That person may have anticipated and had their holiday in April and then

they had a child in June or July.

They show that they are in deficit when you actually run them, but as soon as

they come back from their maternity leave then that gets reconciled.

It is not really a case of people are taking more than they earn, they are just

taking it before they have earned it.

That is something within the collective agreements and policies that are

mandated for us.

MR. K. PARSONS:

Okay.

CHAIR:

Mr. Murphy.

MR. MURPHY:

Thank you very much, Mr. Chair.

Thank you very much for coming in today and making yourselves available for a

few questions. Mr. Keats, I just

have a couple of questions.

In your opening statement, if I can come back to that before I get on with

regular questions, you said a line that kind of rang with me.

You said that you had to live within your funding envelope.

I have a father who is also in the system and I see pressures that are

there within the system. He is now

in long-term care down at the DVA.

He has been transferred, but for two months he was at the Health Sciences and I

got exposed to a lot of things there.

I saw that the staff were working hand over fist to get the job done and, in

some cases, there were not enough resources there.

I learned an awful lot and heard an awful lot too from the loved ones of

loved ones who are within the system.

I am a bit curious about the line that you said when you said you were

living within our funding envelope.

Do you have enough money?

MR. KEATS:

Mr. Murphy, I am sure if we ask individuals who receive care through Eastern

Health or are concerned about maybe some of the staffing levels or whatever they

may see, that they might say we do not have enough money and we do not have

enough staff. From an overall

perspective, I think Eastern Health has enough money.

We need to make sure we spend that money better.

If you look at Newfoundland and Labrador versus other provinces, we spend more

per capita than any other province on health care.

We spend $1,000 more per capita than, say, Nova Scotia, and $1,200 more

than Quebec. There is absolutely no

evidence that says we are healthier.

In fact, it is the reverse.

If you look at our general population, we have the worst hypertension rates.

We have the worst cancer rates.

We have the worst diabetic rates.

We have the lowest level of physical activity.

We have the lowest consumption of fruits and vegetables and healthy

foods. We have the highest smoking

rates. We have the second highest

drinking rates and so on. We are

spending the most money and we still have all of these major problems.

I think we have enough money in health care.

Are we spending it the most effective way possible?

I do not think so. We have

to find different models of care, other than the models we now have.

I heard a phrase a while back that says in Newfoundland, we are acutely

addicted to the provision of acute care.

That happens a lot. We have

tremendous resources that are tied up in our hospitals and in our institutions.

We do not have near enough resources that we need to provide other

services in the community.

If you were to ask me in my short time back at Eastern Health what would I say

is one of the greatest priorities, it would be a shift in the way services are

provided from an institutional setting.

Granted, there are a lot of people who have these problems and they are

going to require the acute care in the institutional setting, but we have to do

a better job in other models of care.

If we have an elderly person who is in one of our acute care beds that is not

available to somebody who has an acute care problem, is the best way for taking

care of that patient in the short term in that acute care bed?

Or is it better to have some system that allows that individual to stay

at home with the appropriate supports until the appropriate long-term care

becomes available?

I think we do have enough money. I

do not think we spend the money as effectively as we need to do.

That is why at Eastern Health we are looking at and talking and working

with the government about other models of care, improving our primary health

care programs and services and other such things.

MR. MURPHY:

Okay. Thank you very much for that.

I just had to ask the question because I hear an awful lot.

I had to come back to it.

I will get into the questions that the Auditor General was asking.

I am interested in Eastern Regional Health Authority's relationship with

the Department of Health and Community Services.

I think it is kind of important.

I was wondering if the authority is getting the support it needs from the

department, which is part of the reason why I am asking the question.

I am looking forward to getting more details on some of these issues that

we will be talking about in the next couple of days.

I want to come to the monitoring of the financial position that you are in.

Under your budget deficit the April 30 response to a question posed by

the Committee on March 25 noted that Eastern Health will have a balanced

financial position at the end of March 31, 2014 as a result of one-time

stabilization funding. Can I ask

what the prognosis is for this fiscal year?

Will Eastern Health be on budget this year?

MR. KEATS:

This fiscal year we are projecting a deficit of about $16 million on $1.3

billion. To put that into

perspective, that is a little over 1 per cent and it is about three days

operation. A change in operation

for just three days could impact on that.

We are projecting a deficit of $16 million.

Part of that is because it has taken a bit longer to do some of the

operational improvement initiatives we thought that we would have in place by

now. Because we are doing things

through attritions and so on, that takes a little bit longer.

The $16 million deficit is what we are projecting for this year.

MR. MURPHY:

Okay. I presume now at the same

time you would have an operational plan in place, of course, that would be

covering off most of the things that the Auditor General would be addressing?

MR. KEATS:

Yes, we do.

MR. MURPHY:

Okay.

The authority has been running deficits despite the budgeting process with the

department. As the minister noted

in a letter dated May 13, 2011, hiring people without formally approved funding

is a significant decision for a regional health authority to make.

The AG recommended that this no longer happen and Eastern Health has

replied that they are working to stop the process.

Have you been successful in stopping that process?

MR. KEATS:

Through the position control system and through other monitoring, I think we may

not have stopped the process fully.

I do not think we are hiring people now in unfunded positions.

There were 630 unfunded positions at one time; we are now down to

seventy-five unfunded positions throughout the organization.

Moving into the future with the monitoring system we put in place, unless

there is funding for a position, then there will not be a competition for that

position.

MR. MURPHY:

Okay. I know that there are

probably reasons why you would have to hire somebody without having the funding

in place. That is probably

understandable on some scenarios.

Would you be able to give us an example where somebody would have been hired to

do a particular job before the funding was in place?

MS MOLLOY:

An example might be I think people knew in 2010 we had a lot of difficulty

attracting nurses to the Province and we had a nursing shortage.

In some cases, we did hire nurses on a full-time permanent basis to work

in what we called float positions.

Those were funded through our relief budgets, not through a formal position.

That would be an example of where we did know we were doing that.

We certainly hoped that we would be able to use those people although

they were in permanent positions on a relief basis.

That would have contributed in some way to the budget.

If that decision were to happen today, it would have to go to the executive

level. That is part of what the

position control number will help us to identify is when someone is asking for a

position that we have not secured funding for.

That will go then to the executive level.

As we are in the process of putting that in and we have not put it in

place yet, we did put in a process where human resources, if they do recognize

that there is not funding, they do check with budgeting now on a manual basis.

We are trying to do that more automatic with the position control system.

MR. MURPHY:

Okay. Thank you very much for that.

I think it is a valid explanation.

Can we get some details on the implementation of the Position Control Number

system that you put in place? Why

have they not implemented that system before now?

MS MOLLOY:

What we are trying to do is embed the system within our human resources

information system. In order to do

that we are working with the vendor to determine it is a little bit technical,

but there are a number of screens that need to be linked.

To maintain a system outside the human resources information system would

require additional resourcing that we feel we can do that within the system

itself, it will just take a little bit more time.

The first thing we are doing is having to do an inventory of all of our

positions, and then compare that to budgeting and the FTs within budgeting.

Once we match those up then we can assign positions.

That is about 75 per cent complete.

The second piece of that though is because we do have temporary positions

as well that are in place. We then

need to match the temporary positions or the temporary replacement to permanent

positions.

We are on track to start actually implementing it on a small scale in the fall

and then we will be implementing it full scale throughout Eastern Health.

We are still on track to do that by the end of the year.

MR. MURPHY:

You anticipate some savings from that?

MS MOLLOY:

We anticipate being able to do it within the current resourcing that we have.

What it will do is then provide us with the information to ensure that if

there is a position that is being requested which is outside of those that have

been funded, that we know that and it is an informed decision that is happening.

MR. MURPHY:

Okay. We will look for that in early

fall.

MS MOLLOY:

Yes.

MR. MURPHY:

All right.

I want to come over to compensation and recruitment under job competitions.

The Auditor General found a number of problems with the authority's human

resources client services division recruitment files not being in line with

provincial government policy and procedures.

From my reading of this, it appears the managers and other HR people were

cutting corners. It sounds like it

to me. Maybe you can explain that.

Was this in effect of not having enough people to do the job?

Is this a problem with training managers?

Maybe somebody can answer that one.

MS MOLLOY:

The system that we had in place for recruitment we did feel was an adequate

system, but it did not match the system that is used in the Public Service

Commission. What we have done since

we have received the comments from the Auditor General is that we did take a

very close look at what is happening within the Public Service Commission.

We have a plan in place to implement a system which is similar to that.

What we also were not doing was auditing our recruitment files, which the

Auditor General did. Part of our

new system will include regular auditing to make sure that the documentation is

on file.

We do think that people and our managers all did get the correct approvals; it

was not always documented. We

recognize that we do need to improve that.

That will happen within the new system.

MR. MURPHY:

Okay, so while we are on the topic of auditing on page 9 of the Auditor

General's report, number 28, he says that, There was no functioning Internal

Audit Department during the period of our review.

I take it that was for the internal controls that he was talking about.

An effective internal audit function can help ensure that preventative

and detective controls are implemented and functioning properly.

I am just wondering about the auditing system that Eastern Health would have in

place now. In general, for example,

how many auditors do you have within the system now and how many audits in the

run of a year?

MR. BUTT:

We do not have an internal audit function within Eastern Health.

When the six legacy boards came together, none of them had that function.

It is a function we agree with.

We think it is valuable.

It is difficult sometimes in health care to garner resources for things that are

not direct client care, but it is something that we would support and it is

something that we have to look into.

Our board is, I think, looking at a process to look at risk to the

organization. I think they are

looking at the internal audit function as a part of that process.

It is certainly something that is lacking and it is something that we

would support and we need.

MR. MURPHY:

It surprises me actually with a budget of $1.3 billion.

It begs the question how many other audits within say, for example,

Western Regional Health and everything you are probably going to need funding

to do something like this, but you are talking $1.3 billion of taxpayers' money

that is not being audited here. I

think that is probably a pretty important point here.

While the Auditor General looked in this report, do you just depend on the

Auditor General to look at that?

There are no internal control mechanisms like an audit or anything that Eastern

Health carries out?

MR. BUTT:

I am sorry; I might respond.

We also have our own external auditors.

MR. MURPHY:

Okay.

MR. BUTT:

Every year our financial statements are audited by a chartered accounting firm.

The current incumbent is Ernst & Young.

So we go through the whole process of that external audit and all the

testing and procedures that go with that.

We do not have a robust internal audit function, and I think that is

where we are lacking.

MR. MURPHY:

Okay. So, do you anticipate putting

one in place?

MR. BUTT:

I would think so.

MR. KEATS:

As Mr. Butt has indicated, there has been discussion with the board right now,

we have a finance committee of the board.

We are looking at changing the committee structure of the board and

expanding some of the duties. So

the finance committee will essentially become a finance, audit, risk-management

committee; and the internal audit will become a function that will report

through the appropriate VP to the board.

There are risk in an organization in a lot of areas, and the board's intent was

not to say we are going to have a risk-management process for operational and a

risk-management process for financial, because you get silos, but to have

something that is called an enterprise risk-management system in place that

makes sure through one area, going into the board, all of our risks are assessed

and controlled and there is some synergy in that process.

So, we are looking at that, and that is one of the priorities of the finance

committee of the board, to make sure we have these risk procedures in place.

MR. MURPHY:

How often does Ernst & Young come in, or an outside auditor come in?

WITNESS:

(Inaudible).

MR. MURPHY:

Every year?

WITNESS:

(Inaudible).

MR. MURPHY:

Okay. Is there any particular

aspect, for example, that they looked at the last time where they actually

picked up some of these things that the Auditor General reported on?

MR. BUTT:

They come in January and meet with our finance committee with an audit plan, and

at that time they would ask is there any particular areas of emphasis that we

would like for them to look at, and we might say payroll processing or payments

processing, these kinds of things.

So, they bring an audit plan, we approve the audit plan, and they carry out the

audit in accordance with the plan.

It is not the same function as an internal audit function, not at all

MR. MURPHY:

No.

MR. BUTT:

and I would not want to make you believe that it was, because it is not.

An internal audit function is much more internal, much more

process-oriented. I, for five

years, managed the Province's internal audit function, so I am well familiar

with it. The strength, I think, of

a proper internal audit function is the reporting relationship within the

organization so that we have the autonomy within the organization to do these

audits and report up to the board.

It is a function that is lacking and it is a function that we will pursue.

MR. MURPHY:

Okay.

CHAIR:

We should move on to Mr. Peach now.

MR. MURPHY:

Sure.

MR. PEACH:

Thank you, Mr. Chair.

Before I get into questions I have a couples of questions and a couple of

clarifications I want to ask I do want to comment on Eastern Health and to let

you know that I echo Mr. Parsons' comments earlier with regard to Eastern Health

and the great work that they do.

We hear a lot of negativity out there, but it is until somebody is directly

involved with the care that they are given that you realize the type of care

that we have. I say that through my

own family. My brothers and sisters

in the past couple of months have gone through some ordeals with regard to the

care at the hospitals, especially the Health Sciences.

I have had several e-mails from the hospital in Clarenville where some

constituents had been there and they sent e-mails to me.

I forwarded some of these on to Vickie Kaminski when she was there and

also to the minister. There is a

lot of praise out there for health, but then again there is still some

negativity. I think the care that

we are given certainly waives the negativity that is there.

You have to be really involved, not somebody visiting, but somebody who

is in the hospital to really see the care that you get over time.

I just wanted to ask a couple of questions with regard to the application of

relocation policy; the Auditor General identified some areas there where there

was some overspending by physicians.

I am just wondering what has been done to correct that?

Is there anything being done to correct that?

There was identified there where they overspent on accommodations, some

were on furniture and some on travel.

MR. KEATS:

Yes, I will make a general comment.

We do have at Eastern Health a new relocation policy that has been recently put

in place. That really closely

aligns with government's relocation policy.

So, we should not have those examples.

I will say that, as you know, the health care world is not black and white.

Sometimes we have to make some what I would call a logical, rational

exception to a general policy in order to ensure that we provide and have

services available in various areas of our region.

Otherwise if you do not let me give you an example.

There is an example in the Auditor General's report and the Auditor

General has a job to do, and I understand that.

They have to say this is a violation or this is outside of a policy and

so on. We are concerned about that,

and we generally will follow up on those.

So there is a comment in there about an individual who was paid mileage

for going to and from work from his residence, and that is accurate.

In Bonavista, as an example, we had one person who did lab X-ray.

That person has to have some time off throughout the year.

You beat the bushes and try to find somebody to replace that person, and

you cannot go out and do a job ad for somebody for a short term, and you

generally cannot find people who are interested in coming in and working on a

job. So, sometimes you have to make

do with what you can find.

We found a guy who had worked in Bonavista, who was familiar with the area, who

was prepared to do relief and coverage for that one individual when that one

individual may not have been available on the basis that we would say we are

going to pay your mileage from your residence to Bonavista and back when you do

that. We do not like when we have

to do that, but sometimes we have to do that; because if that person were not

available for the lab and X-ray area, it would have meant that we would have to

close down the emergency department and say to Bonavista: You are no long

classified to provide emergency services because you do not have the appropriate

backup.

So you take whatever measures you need to take.

Some of those will carry on into the future, regardless of what policy

and procedure and monitoring we have in place.

Our objective is not to have to be faced with that, but sometimes we have

to do that.

When we look at things like overtime, people might say you are spending more on

overtime, or people are making as much on overtime as they make on their salary,

why do you not hire another staff member and provide coverage?

Well, if we are going to provide coverage, for example, let us take the

lab and X-ray situation. If you

want to provide coverage or nursing for an extra shift, it is not the matter of

getting one body, we need 4.2 bodies to cover an extra shift around the clock.

So those 4.2 bodies would cost us a lot more than we would be paying out

in overtime.

MR. PEACH:

Overtime callback I just have a question here.

It has identified Bonavista Home and Health Care Centre, 82 per cent;

Placentia Health Care Centre, 79 per cent; and the Newhook Clinic, 77 per cent.

Then it says that 48 per cent of the total dollars in 2013 and in 2012

I think it was 48 per cent in 2013 and 46 per cent related to callback for

overtime unworked. Why was that?

What is the reason behind that?

MR. KEATS:

Those would relate to the situation I talked about before, where we have a staff

member who works a day shift and is on call and then they will get called back

and they may work for five minutes but they get paid for three hours.

MR. PEACH:

Okay. That is a basic collective

agreement, is it?

MR. KEATS:

Yes, that is basically unworked overtime, but it is part of a collective

agreement and part of what we have to do.

MR. PEACH:

Does that overtime work the same thing for somebody who is on standby, like if

you had someone on standby for a weekend?

MR. KEATS:

Yes.

MR. PEACH:

It works the same way. Okay.

Being concerned with my district with regard to rural Newfoundland and doctors

who have been recently leaving clinics, I am just wondering what Eastern Health

is doing right now for the rural Newfoundland for doctors to fill those

positions. Can you give me anything

on that?

MR. KEATS:

I will make a general comment and then ask Reece Bearnes, our Director of

Medical Services, to make a comment.

Eastern Health generally has a really good robust recruitment program for

medicine. We generally do a fairly

good job in that area.

Primarily, I also need to differentiate, we have 700 or thereabouts physicians

on staff; 500 are fee-for-service and a little less than 200 are salaried.

We are responsible in the salaried area for recruiting those physicians,

so it would be 200 positions.

Generally in an area so if you picked Come By Chance, for example.

If Come By Chance has two fee-for-service physicians who work in the

community, when they are about to leave they are generally responsible for

finding their own replacements.

Eastern Health is prepared to help them.

We are doing that now on the Burin Peninsula where we are helping some

communities put fee-for-service physicians.

We will help those people recruit those fee-for-service physicians, but it is

not primarily our job, it is to recruit people who are salaried.

We have something like eight vacancies now throughout our entire region.

Some of them are GPs; Terrenceville, for example.

Some of them are specialists; it might be a neurologist, for example, at

the Health Sciences Centre. We have

a good working relationship obviously with the department, with the medical

school, with the clinical leaders throughout the organization.

We try to anticipate where we are going to be in three years' time or

five years' time with various physicians and others on staff and make sure we

can recruit, whether it is internally in Canada or somewhere globally.

We are in a global, international competition for physicians.

Fortunately or unfortunately, depending on how you look at it, Memorial has a

superb reputation so there is a tremendous amount of competition for Memorial

students. As you know, the med

school is expanding this year by an extra twenty physicians so that will make

more physicians available for Newfoundland.

That is generally where we are on recruitment.

MR. BEARNES:

Just to pick up on that, we have been having a great relationship with the

Department of Health and the Physician Services Division to roll out some

programs where we can incentivize our local graduates and Canadian graduates to

come and work at Eastern Health following their schooling.

Two of the programs that have been recently adopted in the Province have been a

signing bonus program and a bursary program.

Both of those programs are directed at Memorial graduates and Canadian

medical graduates. They are to

support physicians to be recruited to difficult-to-fill positions.

We are actively putting forward physicians who are interested in those

rural areas to be supported through those two programs as well.

MR. PEACH:

I just have a question for the Auditor General.

I think it probably would be for the Auditor General.

Under the Financial Assets there is one

article there that says sinking

fund investment. What would that

mean?

MR. PADDON:

A sinking fund investment would relate to, if I am not mistaken, probably your

long-term debt that was incurred when the new Janeway was built.

Eastern Health or the board at the time were authorized to borrow to

construct the addition to the Health Sciences that now houses the Janeway.

As part of the debt covenant, they are required to contribute funds into a

sinking fund. It is designed to be

there to retire the debt when it comes due.

It is essentially like a debt repayment.

The Province has similar sinking funds on its own debenture debt.

MR. PEACH:

They are not sinking.

MR. PADDON:

What?

MR. PEACH:

So they are not sinking?

MR. PADDON:

No.

MR. PEACH:

Yes, I have no further questions at this time, Mr. Chair.

CHAIR:

Okay. Thank you.

I would like to do as much as we can unless somebody really urgently needs a

break, I would like to get to Mr. Hedderson to ask some, so every member

participates. Mr. Osborne is next

and then Mr. Hedderson. If it seems

like I am pressing a little bit, it is because we booked more time for this

review than we have simply based on the sheer volume and the size; however, if

we are able to do more than we thought we could do more quickly, then we should

try to do that because that would give the possibility of finishing today.

I will not hold that out. We should

assume we are coming back tomorrow.

If we could do that, I would rather not have five and ten minutes as a way where

we lose an hour or so in the course of a day if we have to come back and pick up

the next day. So, if I am pressing

a little bit, then that is why. It

is for everybody's interest.

Mr. Osborne.

MR. OSBORNE:

Thank you.

First of all, I will say I appreciate the answers.

You have been very detailed in your answers and willing to provide

information.

In my previous questions, I guess part of the drawback of this type of Committee

is everybody is allotted so much time, so you are going in a direction and then

it is somebody else's turn to ask questions.

One of the questions that I had asked was whether or not there was an

individual or a group of individuals responsible for looking for cost savings.

I guess more pointed towards that and I think George had talked a

little bit about an internal audit division would an internal audit division

pay for itself in finding efficiencies and savings within the organization?

MR. BUTT:

It might; it is hard to say. The

first function of an internal audit division is to ensure compliance with

policy; that is what an internal audit division is about.

So the board hands down policy, executive interprets it to operational

policy, and then an internal auditor would make sure that the controls and the

application of the policy is appropriate and is followed.

To the extent that not following policy might cause some funds to be not spent

as wisely as they could, it is conceivable that that would add value.

I think the first function, though, of an internal audit division is to

ensure compliance with controls and policy standards.

As I said, that might prevent some things that happened that we would not

know are happening. I think the

first function of the internal audit division would not be to assess efficiency,

I think that is better left to others in the organization.

MR. OSBORNE:

There are two areas here I would like to explore more and one is compliance with

policy. You look at paid annual

leave, sick time, purchasing, there are policies there where the organization is

so large it is often difficult and I recognize that to stay completely

within the policies. An internal

audit or an internal audit division would help with those areas.

MR. BUTT:

Absolutely.

MR. OSBORNE:

The Auditor General has pointed out inefficiencies with purchasing,

inefficiencies with sick time, with mileage, and so on and so on.

On the other side of that is the position that I talked about earlier,

either a position or a couple of employees, would they pay for themselves,

somebody specifically dedicated?

I know, Don, you had talked about managers looking for efficiencies, but it is

often difficult for managers to find those efficiencies because they are

competing to find efficiencies with competing to provide the services and so on.

If you had somebody dedicated and looking to finding financial

efficiencies within the organization, would that position pay for itself?

MS LEHR:

That is the function that the performance office and I take responsibility for

the chief performance officer to look through the organization to find

efficiencies. In that portfolio, we

have done the operational improvement initiative to work with the management

teams to find efficiencies, to do clinical efficiency reviews, and to see if we

are using our clinical resources as efficiently and effectively as we could.

We are building very good analytical tools using Cognos, a business intelligence

tool, to provide reports to our management team but to work with them.

Not to just throw information at them, but to then do the analytics with

them to help them see that the way we are delivering our services is not quite

as efficient as it could be, and then to help them identify initiatives that we

can put in place: detailed budget monitoring, variance reports, labour

distribution reports, utilization reports, lots of statistical analysis,

scorecards for the services and the programs that we deliver.

So, we are using all of our tools and our budgeting decision support,

clinical efficiency, management engineers, lean team, to provide that function.

We have dedicated resources in the organization to help the organization

be as efficient as it can be, and we are really focused on that right now and we

are putting a tremendous amount of effort into getting the organization back to

a balanced budget.

MR. OSBORNE:

Reece had mentioned two incentives to try to recruit physicians throughout the

Province: the signing bonuses and bursaries.

I know in the response Vickie had provided, number 8 of her response,

said that there were no commitments for signing bonuses made by Eastern Health

since the directive of the department, July of 2011.

So I am just wondering how that has affected or the two incentives that

you had talked about earlier, the bonuses and the bursaries?

MR. BEARNES:

None of our physicians have been committed signing bonuses from Eastern Health

since the July 2011 directive. Any

of our signing bonuses that have been paid out since then were committed to

those physicians verbally or in writing prior to the directive.

What was rolled out this year was a provincial signing bonus program by the

Department of Health and Community Services.

Any physician that we are try to incent to fill a difficult-to-fill

position is now brought through that formalized program and again, we work

very closely with the Physician Services Division around that program.

From a go-forward perspective, when the organization would like to

support a physician in a signing bonus, it would be directed through that

program.

MR. OSBORNE:

Okay.

Just so that I have a better understanding, I know when I was in the department,

Don, recruiting physicians is always a challenge, especially in certain areas,

and I know that all of the health authorities had used the signing bonus in that

effort. Putting that arm's-length

now well, I guess initially eliminating the signing bonus, how did that affect

the recruitment of physicians?

MR. KEATS:

Recruitment over the years has always been a bit of a difficult problem.

I think as time went on we got much better at recruitment and much better

at selling our organizations. We,

at one time, would pay a physician some moving expenses, for example, over and

above, depending on where the physician was moving from.

We basically stopped doing all of those because we wanted some

standardization and some controls on that around the Province.

I do not think that kind of thing has had any negative impact.

It has been offset by the fact that we now have, for example, a physician

recruiter who spends full time doing that.

The individual doing this is located in the medical school.

They have close contact with the medical students and so on.

The other RHAs have physician recruiters in addition to the medical

directors.

I know in my previous job as the CEO, every year we seem to get a little better

at doing physician recruitment and making sure there were things for retention.

Just as an example, you go from recruiting a physician to recruiting a

family. It is no good to say I am

going to bring in a physician if you do not take into account the physician's

family. Sometimes the family needs

assistance in getting work.

I remember, just as an aside, trying to recruit a specialist in ENT in Central

Newfoundland. We had this physician

come in; we did all the things we needed to do with the physician and the

physician's spouse saying here are the things in the community.

We showed them around, showed them all the good things: the fishing, the

golfing, and all those things.

At the end of the day he said to me: There is one thing I did not see.

I said: What was that? He

said: a bowling alley. I said: We

have one. He said: Five pin or ten

pin? I said: five pin.

He said: I am coming. That

is the thing that we do as a family for an attraction.

We had that physician for about five years.

He is still there in the Province now, moved from Ontario.

I do not think there has been any negative impact as a result of reducing those

things. We just have a better

package and a better mechanism for recruiting physicians.

MR. OSBORNE:

What percentage of homegrown, medical students from Newfoundland and Labrador

what is the percentage now of retention of our own students?

MR. BEARNES:

We again actively recruit specifically for Memorial graduates in many ways

through the recruitment office and through the recruitment co-ordinator.

We also work with MUN to help build an educational experience whereby

medical graduates want to stay and work at Eastern Health.

The question around the number of retained graduates from the medical school, I

do not have that number. I can say

anecdotally that any of our medical graduates from Memorial who come and work at

Eastern Health, we have seen very little turnover.

In fact, all of our specialists who return as Memorial graduates to

Eastern Health have been retained.

So we have seen great retention of our local graduates, and I think it really

goes back to building that relationship with the Memorial students very early in

their career and working with them to understand where they see their career

journey. That is why we have a

dedicated resource that, as Mr. Keats said, works actually within the medical

school to help build that relationship and help open opportunities throughout

our region so that we can be sure that we are retaining those graduates.

MR. KEATS:

Just add one thing to that the medical school has changed the way its program

is provided now, they do it in streams, and there is a greater emphasis

throughout the medical school term that you are in medical school on rural

Newfoundland and getting physicians out to do their rotations in rural

Newfoundland.

I think that will add to the successes of recruiting Memorial-trained physicians

throughout the area. With the

twenty additional physicians through Memorial, it should lead to a greater

percentage in overall relative terms staying in Newfoundland.

I do know from experience once you start recruiting physicians and you

get physicians from Memorial to set up in your communities, they attract a

greater percentage of Memorial graduates, whether they are from Newfoundland or

from rural Newfoundland or from other provinces.

So the success breeds success in that particular case.

MR. OSBORNE:

Okay.

The Auditor General had found that were no return-in-service agreements for

physicians who were reimbursed relocation costs.

Can you elaborate on that?

MR. KEATS:

Yes.

We do now have a new return-in-service agreement that is essentially the

government's return-in-service agreement.

There was not one in place before then, but looking at it

retrospectively, there was no evidence that anybody who received a

return-in-service agreement actually left before their term was up.

MR. OSBORNE:

Okay.

Just to go back to an earlier comment - the signing bonuses - am I to understand

that the discontinuation of the signing bonuses has not had a negative impact on

the recruitment and retention of physicians?

CHAIR:

Mr. Bearnes, is it?

MR. BEARNES:

No, we have not seen any challenges due to that.

What we had was an overlap of time as well with the two programs.

Where we had not committed to any signing bonuses there were signing

bonuses that, as I said, were paid out following the directive, but those were

committed to prior to the directive.

With the new signing bonus program, we do have a mechanism now whereby those

folks who are interested in coming to our difficult-to-fill positions are

brought through that program. To

your question, we have not seen any negative impact in the time between the

rollout of the provincial program and the 2011 directive that negatively

impacted our ability to recruit physicians.

MR. OSBORNE:

Okay. Why was the new signing bonus

program implemented if there was no negative impact or if we saw no reduction in

the recruitment of physicians?

MR. BEARNES:

It was an initiative of the Department of Health and Community Services to roll

out a consistent approach across the Province around how each of the regions

offers signing bonuses to potential recruits.

The focus of course was on retaining medical graduates from Canada and

also from Memorial University.

There was an intentional shift in the program that we were to focus on

Canadian-trained graduates and also graduates within the Province.

The other piece of the program was to focus on those positions that are

difficult to fill. There is a

criterion now within the program that deems when a position is difficult to

fill. Now where there is

consistency across the Province, we are not now competing with the other RHAs in

relation to trying to recruit these physicians who are often very difficult to

fill into these positions.

My understanding is that through the rollout of the program, it is now creating

a consistent approach across the Province in terms of how we are incentivising

physicians to come and work in Newfoundland.

MR. OSBORNE:

I appreciate that, because I remember the different health authorities actually

competing

MR. BEARNES:

Yes.

MR. OSBORNE:

and upping the ante with signing bonuses, competing against each other, and

physicians playing one authority off against the other.

So, I agree with having a more centralized approach and a consistent

approach across the Province. The

disconnect that I am trying to understand is between the time that the signing

bonuses were discontinued and the new program initiated through the department,

if there was no negative impact on the recruitment of physicians, why would

there need to be a signing bonus program implemented through the department?

MR. KEATS:

It may be because of the overlap.

For example, we committed signing bonuses to people that were effective after

2011. We had some people who got

signing bonuses, I think, into 2013.

So a part of it may have been the overlap, the fact that people were

getting signing bonuses that were already prior commitments; but also, with the

signing bonuses, as Reece had said, they are more targeted.

The other factors are still in place, and sometimes a retention bonus helps with

your recruitment bonus. So we still

have these retention bonuses that are across the Province and they now apply not

only to salaried physicians, but they also apply to fee-for-service physicians.

So putting those in, people may have said I do not care, really, if I get

a signing bonus, but if I am getting a retention bonus every year they take the

place of signing bonuses. The

retention bonuses have been expanded right across the Province and they apply to

all physicians right now.

MR. OSBORNE:

Okay.

One final question on physicians, I think Mr. Hedderson is anxious to ask some

questions.

There was a physician who received $1.5 million in payments over an eleven-year

period when there was no additional workload.

Can you explain that?

MR. KEATS:

I will make a general comment on it; again, Reece may want to add to it.

There is a program in place so if let's say there are two physicians required

for an area, or 1.7 or 1.8 and if somebody is doing the work of two physicians

they get the double pay, or they get the part of the pay.

There is a formula for determining how much they get.

In this particular case in 2002, I believe it was under the Avalon institutions

board, two pathology positions the physician was given an option of do we try

to recruit, and it was extremely difficult to recruit physicians at the time.

If we do not, you get the double bonus if you want to work and if you are

able to provide the work. That is

what happened in that particular case.

The individual opted to say yes, if you cannot get somebody, I am quite

prepared to work for the extra pay.

I should note as well, and as you have indicated, this was over an eleven-year

period. A large part of the payment

the individual was a pathologist.

When the physician started out getting double pay, I think the pay for a

pathologist was under $100,000.

Since the ER-PR, pathology incomes went up significantly for comparisons with

the rest of the country and in line with what our oncologists were getting in

the Province, and a fair bit of that money related to the last few years of work

as opposed to the eleven years.

Nonetheless, the money was there.

This individual no longer gets that workload because the workload has been

redistributed to other areas of the region to pick up the pathology workload.

There are examples around the Province where individual physicians may

still get double pay it is not quite double pay for doing the work of extra.

Sometimes it is on a short-term basis for relief purposes.

You provide the work for your colleague for an extra month or two months

and you get paid for it. The idea

of providing for two people used to happen a fair amount in the past when we

could not recruit the specialists.

It is not a widespread initiative right now.

MR. OSBORNE:

If I could, Mr. Chair, just a very quick follow-up to that before we move on to

Mr. Hedderson. The $1.5 million

that was paid, am I to understand that the additional pay, even though there was

no workload, that payment was justified?

MR. BUTT:

The second position in Carbonear and I was CEO of Carbonear at the time

actually, so I have some history in this even though it is not my area now was

created based on a workload study that was done at the time.

I think it was sanctioned by the Department of Health and Community

Services. Based on an analysis of

the workload in 2002, the Department of Health actually approved a second

position for the service. So the

additional pay was predicated on a need for a second position.

The workload was there at the time to justify the second position,

obviously.

MR. OSBORNE:

Okay.

I beg your indulgence, Mr. Chair; I will ask the Auditor General: Can you add

any further insight into this?

MR. PADDON:

I guess the issue that we were raising one was the length of time that this

additional pay was paid, and it really related to the issue, as Mr. Butt just

indicated, that a second position was created and presumably then it was the

funding from that position that was used to augment the pay from the physician

who was in that position. Our issue

was that it did not appear that there was any posting to recruit into that

second position. So this really did

not appear to be a short-term measure to get over a hump.

It almost became part of the norm, as opposed to just a temporary thing.

CHAIR:

Maybe one of the Eastern Health witnesses would like to respond to that, because

I do not know the answer. Maybe it

is a legitimate response; maybe it is not.

MR. KEATS:

I can give you some other examples.

When I worked in Central Newfoundland we had approval, and the workload was

there for two urologists actually, when you looked at the units and so on it

was about 1.8 or 1.9 urologists.

Several times we tried to recruit a second urologist.

A couple of times we were successful in getting somebody who came for a

short period of time and left, and then they came and left.

That creates a problem because you are the guy who comes and you are Doctor X

and a bunch of patients will get an appointment with you as opposed to the

urologist who is already there, and then suddenly you leave again.

So you have to get your workload transferred to somebody else and go on

another schedule. People would look

at it and say, well, if I had stayed with the other guy in the first place I

would have been further up the wait-list, and now I am just getting added to

(inaudible).

For a variety of reasons, we said it is not efficient and effective for us to

recruit another urologist. They are

not there. We know they are not

there. We scoured the country.

It is no point advertising a job; we could not get anybody. So the

urologist who is there agreed that I will carry on, I will work the extra time,

I will do the extra call, I will do whatever is necessary if I get a portion of

the pay of that urologist in accordance with the formula that the government has

put in place.

So, it was not that the individual was getting double pay for not doing work;

the individual was getting double pay for doing the work of what normally would

be two specialists. We were in a

situation where we knew we could not recruit.

We just could not find urologists across the country.

Even big cities could not find urologists at the time.

CHAIR:

Mr. Keats, are you saying in that case it was selecting the lesser of the two

evils which then became the normal for the long term?

Is this is the same thing that happened here that the Auditor General's

Office picked up?

MR. KEATS:

Yes, and I think you would find several instances of that across the Province in

the last several years if you looked at that scenario.

Specialists were doing the work of two people and getting pay.

You may find that there may have been three specialists doing the work of

four people and they were dividing up the pay.

If you are a fee-for-service individual, you do not come across that because

presumably so again I will use the Central Newfoundland example because I know

that one. At one time we had four

general surgeons who were generating the work of four general surgeons and that

was the number that was deemed necessary at that time.

One of the general surgeons for family reasons left the region, so the

three other general surgeons said we will continue to do the work.

They did the work basically of four general surgeons.

Because they were paid on a fee-for-service basis their incomes all went

up by approximately one-third, but that does not show up through any mechanism.

They actually went down to two general surgeons.

These two young general surgeons said we are prepared to do the work

under the watchful eye of the Medical Advisory Committee to make sure that it

was safe work to be done before they were able to recruit the other two general

surgeons, all of whom were on a fee-for-service basis.

That would never be picked up in a review by anybody in terms if somebody

is getting extra pay because they got paid on a fee basis.

If these surgeons decided they did not want to do the work, they would

not get the pay.

CHAIR:

We should go on to Mr. Hedderson, and then we will take a brief morning break.

We can revisit that subject if Mr. Osborne is not satisfied that the

answer is as complete or was what he was looking for.

MR. HEDDERSON:

Thank you, Mr. Chair.

A welcome to our people on the other side; I do not often welcome people on the

other side here.

WITNESS:

Play nice.

MR. HEDDERSON:

Okay. Get used to it.

As you know I am a fill-in this morning because unfortunately Eli could not be

with us. I have just been picking

up on some of the questions and going over the report.

The deficit is front and centre, but just a little bit of clarification:

the last five years was $80 million, so that is about $15 million or $16 million

a year on average. What percentage

again is that of the $1.4 billion?

MR. KEATS:

Over the five years, the budget for Eastern Health is somewhere around $5.57

billion, the approved budget, and the deficit was in the range of $80

million-something. That is less

than 1.5 per cent of the overall budget.

MR. HEDDERSON:

Don, you talked about benchmarking with other jurisdictions.

Is that really a terrible thing?

Comparative analysis across health boards in the Province or whatever,

where do we stand? Are we the worst

there? You know what I am looking

at.

MR. KEATS:

It varies at times when you look at organizations.

We have looked at organizations in Western Canada, in Alberta as an

example which has lots of money who have had significantly higher deficits over

a period of time. The objective all

the time is to make sure that this is your budget and you live within your

budget because if everybody did the same thing, we would be bankrupt pretty

quickly.

Because of the nature of regional health authorities and the nature of the

business of regional health authorities, it is really difficult to we do not

know how many people are going to show up in our emerge today or tonight and we

do not know what is going to happen out in some of the rural areas or whatever.

We do not know if we are going to get a sudden loss of staff and suddenly

we have to pay a bunch of overtime for other staff and so on.

We can control a lot of things; there are a lot of things we cannot

control.

As we said, there are two things we want to do.

We want to make sure right now that there are no permanent or part-time

people who are laid off and we want to make sure we do not have a reduction in

services. When you take out all the

factors that impact on that so if 75 per cent of our budget relates to

compensation and another 10 per cent or 12 per cent relate to fixed services, it

does not matter if you have X number of patients or X plus Y number of patients,

we are still going to have a lot of fixed services.

A lot of it relates to the consumables for those things, or the supplies

and the drugs and so on. We do not

have a lot of flexibility in what you would call discretionary expenses to make

the savings.

I think Eastern Health has done a tremendous job.

I have only been there for two months and a bit, and I think they have

done a tremendous job trying to get this budget down.

Last year we were down to $8 million, and that is half of 1 per cent of

your overall budget.

MR. HEDDERSON:

You know my point. My background is

education, and education is as flat as this, but I know you are like this if I

can just point out up, down, spikes, so on and so forth.

MR. KEATS:

Right.

MR. HEDDERSON:

So again it begs the question we are going for a balanced budget, but

obviously I am hearing from you that not at the expense of good quality care.

MR. KEATS:

The first priority of Eastern Health is to provide safe, quality care to the

people of Newfoundland and Labrador.

MR. HEDDERSON:

Absolutely.

With regard to accreditation, again, can you just go back over that for me

your accreditation designation or something, the latest one?

You made some reference

to it. Again, you also referenced

that you did a benchmarking exercise a number of years ago and we are the worst

in the country

MR. KEATS:

Yes.

MR. HEDDERSON:

but obviously there has been some

significant improvement since then where you now have accreditation and some

accommodation or whatever it was.

Just go back over that again for me.

MR. KEATS:

Accreditation Canada will do accreditation surveys of all health care

organizations across the country, and they have a series of rankings that they

will provide you based on their reviews, and they have a large number of

standards that you have to meet.

Eastern Health received I think it is the highest standard that you can get

Accredited with Commendation. They

were very positive about the level of services and the quality of the services

and so on that we provide.

There are some

areas, though, in doing that, in doing the standards, that patient flow may not

have been the best. So, can we move

more patients through the OR if we put in a lean process and figure out how to

do that? Can we move more patients

through our ambulatory clinics and those areas?

Those are the things that we are working on, and those are the things

where we are finding the money.

Because if we can put through patients quicker, in one way it makes us more

efficient; in another way, it might make you more costly.

If we can put more patients through the same number of beds, it might

mean more money for us, but it means better care and less wait times for our

patients.

MR. HEDDERSON:

So, having been tasked with the aspect

of having a deficit, and a consistent deficit, you had to take some measures,

and those measures were obviously looking at the HR and so on and so forth.

Despite that, you have raised the quality, obviously, through

accreditation and so on and so forth.

Obviously, you are doing something.

When

you talk about deficits, and trying to take care of deficits,

the first thing people think about is you are cutting services, you are cutting

this and you are cutting that, but in actual fact in your exercise, to have

control of that deficit, you have in fact increased the quality, as is evident

by this particular accreditation that you have gotten.

MR. KEATS:

Yes, I think that is a correct statement.

Sometimes the general public will think that if you want to resolve a

problem or if you want to get better quality care, you need to throw more money

at it. The two do not necessarily

go together.

Other times we will get this a lot if you reduce your budget, it means you

are reducing quality of care. That

is not necessarily true either. In

fact, if you have your staff on a quality, safety, risk-free philosophy, you

provide the services better. You do

not have to redo services. You do

not have to rework the things you are doing.

By increasing the quality and the throughput, you can actually reduce the

costs at the same time.

MR. HEDDERSON:

Mr. Chair, I am going to leave it at that point.

We have been sitting here for a long, and I just wanted to get that thing

in. So, with your approval, we will

take a well-earned break.

CHAIR:

I am going to ask people if we could take the shortest break as possible, say,

ten or twelve minutes and we will just keep on going.

I am quite impressed with the comprehensive nature of the answers.

Members have gone longer than usual, but I think we are covering a lot of

ground fairly comprehensively. If

we could get back here, say, 11:15 a.m. on that one, that would be good.

Recess

CHAIR:

Okay, thank you.

We are back in session and we will resume with Mr. Murphy.

MR. MURPHY:

Thank you, Mr. Chair.

I would like to thank the members of Eastern Health for their co-operation

again. Hopefully we will not keep

you too long before we get you out to the barbeque.

The weather is absolutely gorgeous out there today.

I want to come over just very briefly to the point that the Auditor General made

where he said that there was no functioning internal audit department during the

period of our review. A couple of

things jump out at me too when he says that point.

In numbers 26 and 27 on page 9 of the Auditor General's report in

number 26 he says, The purchasing function was being performed by individuals

outside of the Material Support Department.

There were 243 users that are able to create purchase orders, however,

there were only 140 employees in the Materials Support Department.

I take it that the Materials Support Department maybe the Auditor General can

answer this one, just as some background.

When you are talking about the 140 employees in the Materials Support

Department, were you referring to those people as being the only ones

responsible for filling out of purchase orders, or the only ones who would have

the authority to do it? (Inaudible)

mike over to Mr. Paddon.

MR. PADDON:

Yes, the Materials Support Division are the ones who would be responsible for

the purchasing function in the organization.

It would be those people who you would expect would have the authority

then to create purchase orders and those sorts of things.

What we found then, there was 140 I cannot remember how many now

MR. MURPHY:

Two hundred and forty-three users.

MR. PADDON:

Two hundred and forty-three users, but there was only 140 employees in that

division. So you had effectively

more people authorized to create the purchase orders than you had in the

division or the department responsible for purchasing.

MR. MURPHY:

Okay.

In your audit, did you uncover any reasons as to why these 103 people would have

had that authority?

MR. PADDON:

The 140 are not the problem; it is the additional ones (inaudible)

MR. MURPHY:

Yes, the 103 difference.

MR. PADDON: Maybe I will ask

Brad to comment on that.

MR. SULLIVAN:

I think at the time most of the reason may have been related to timing.

People left the department and moved on; however, their access was not

cut off. These people could have

moved to other divisions or departments within the authority.

They could have retired or have been terminated.

They were the main reasons provided to me at the time.

MR. MURPHY:

Okay.

I guess the

question then for Eastern Health, there is no internal audit department, so I am

wondering about the possibility there was a window here for the potential of

abuse, possibly, that could have happened with these 103 people.

Do you have the reasons why these 103 still would have had signing

authority? There is a lot of

turnover there, if it was just for people leaving.

MR. KEATS:

Brad is right. The main reason is

you work with Materials Support today and you leave and your authorization

stayed with you when you left, as opposed to it being so there were more

people with the authorization than were in the department, and I think a

retrospective review indicated that none of these people had been doing

purchasing after they had left.

We do agree that

our purchasing area needs some work needs a fair bit of work.

One of the things that is happening with Eastern Health and all RHAs

around the Province, all four RHAS, we are having discussions with the Health

Department, and have been having them for some time, regarding the possibilities

of consolidating a lot of back office services, such as purchasing, for example.

So, we changed the controls in the purchasing area, but we are not going

to make any

substantial investments in inventory or in purchasing areas until we figure out

if we are going to go with some shared service arrangement around the Province.

MR. MURPHY:

Okay.

section 27, Internal controls over cheque processing are inadequate.

As a result of improper segregation of duties and authorization

requirements, there is an increased risk of fraud and error occurring.

My only point in bringing up these two particular sections has to do with

the good case for Eastern Health to have more resources to dedicate to internal

auditing, have a separate department set up to look after the needs and the

taxpayers' money.

MR. KEATS:

Thank you for that, and we accept that.

There is no doubt that there is a great need for an internal audit

function; however it is performed or wherever it is, if it is a risk management

area or whatever, we need that internal audit to complement the external audit

that is being done.

MR. MURPHY:

Okay, thank you for that.

I wanted to come back again to some other sections that were touched on already.

As regards additional workload benefits, the education differentials that

were paid out, how is it that executive and management employees could be paid

educational bonuses for qualifications that they needed to hold the job in the

first place?

MR. KEATS:

I will make a general comment on that.

I guess that was one of the things in order to function well in a

complex environment like Eastern Health, you have to have certain expertise and

skills. The organization said we

would like our leadership team to have the best skills that they can have to

help us run this organization on a daily basis.

To do that, we were prepared to assist them.

Some of the programs, services were offered for educational support.

One of the key things in any health care organization is having the

proper skilled people in there, but, secondly, making sure that you have

professional development, continuous learning, and so on.

I guess I could also make the argument although it is probably a moot one, but

I will say it at any rate. When

managers are classified under the Hay classification system if you look at it,

there is nothing that talks about educational levels.

An individual can be given the job without any education as long as they

have the expertise and the skills, however acquired, is what the actual

description says. I could argue on

the one hand that having a master's degree has nothing to do with your

classification, but on the other hand you need a master's degree in order to do

the job that we expect you to do in today's environment.

MR. MURPHY:

No, and I can agree in some aspects of that where the department, for example,

might have to go ahead and develop its own skill set.

For example, they might want to get somebody who has been totally

inexperienced with it to break him into the system and train him under their own

guides, so to speak. I can

understand that. If that is what

that is, then I am good with it.

A basic management question then I would think that people being told that

they were getting a cut in pay, for whatever reason, they would not be happy

what was the average drop in reimbursement for people in this particular

category? Were there some people

who faced cuts?

MS MOLLOY:

There were two differentials that were changed as a result of the educational

differentials being changed. One is

for a baccalaureate degree and the second one is for a master's degree.

If you had both, it was around $200 to $300 annually.

WITNESS:

(Inaudible).

MS MOLLOY:

It was $2,300. Thank you.

Sorry.

MR. MURPHY:

Okay, so it was not too serious.

MS MOLLOY:

Yes.

MR. MURPHY:

Yes, okay.

CHAIR:

Ms Molloy, you were attempting to elaborate on the earlier answer from Mr.

Keats. If you wanted to go back and

do that, please feel free to do so if it was not complete.

MS MOLLOY :

Thank you.

The education

differentials came about quite some time ago, the Nurses' Union put in

differentials within their collective bargaining.

It is something that you get as a nurse if you go on to receive your

bachelor's and your master's degree.

Quite a long time ago that got extended through to nurse managers.

Eastern Health then further extended that to all of its management group

to encourage people, as Don had said, to pursue higher education.

We had not gone through the process, though, of asking or applying for a

market differential to do that, which is the policy within government that you

have to follow in order to give differentials like that.

Hence, the Auditor General was quite right that we had not gone through

that process. We did follow through

that process and unfortunately the market differential was not maintained.

MR. MURPHY:

Yes.

What was the reason for circumventing the process, though?

MS MOLLOY:

I just

think at the time perhaps people were not aware of it.

The expansion that happened, there was an original approval that went to

nurse managers, and then through internal discussions it was well, we believe in

education and we think people should be pursuing education and we would like to

even out the playing field for that.

So, I think it was just a lack of knowledge that it was something we

needed to do.

MR. MURPHY:

All right. So there have been

corrective measures

MR. KEATS:

I just want to add to that. As

indicated, going back to the late 1970s in the nurses' contract, this education

differential was there. If you had

a BN or an MN, you got a differential, if you were supervising nurses.

So you needed the two things; you needed the education degree and you

needed to be supervising nurses.

When that came in play for example, the Health Sciences Centre was a

traditional organization and generally it was nurses who supervised nurses.

The problem it creates when you have a large organization that operates

under program management is that we now have people in the organization who are

not nurses who have master's degrees who supervise the nurses, but they do not

get the differential.

MR. MURPHY:

Yes.

MR. KEATS:

So, there is a little bit of an inequity that exists there, and that was part of

the rationale with Eastern Health saying so, if Sharon is a nurse supervising

nurses and gets the differential, and for some reason there is an organizational

change and I become the person supervising nurses and I have a master's degree,

but it is in physiotherapy or something else, I do not get the differential.

So that was part of the rationale to try to create equity across the

organization, and unfortunately we still now have that inequity.

It is really tough to explain to people who are your front-line managers:

Sorry, you have to lose that, but your other colleague gets to keep it.

MR. MURPHY:

Yes.

Do you have any idea how many of your employees might have been affected by

that?

WITNESS:

We can get the exact number (inaudible).

MR. MURPHY:

Yes, I would not mine knowing, out of curiosity.

I want to come back to

CHAIR:

Mr. Murphy, they can supply that number; it can be part of our findings at some

point. If you are able to do that

(inaudible)

MR. MURPHY:

It would be great if we can get it, yes.

I want to come back to the reimbursement for personal vehicle usage, the

mileage; you touched on it earlier.

In an answer to a question on compliance with the mileage reimbursement policy,

the authority reported that audits would be completed to ensure compliance.

Have you done that?

MR. KEATS:

Generally, we have compliance with that.

Again, we have travel claims for 5 million or 6 six million miles of

travel every year. Most of them,

the vast majority of them, are all done in compliance.

Occasionally we miss some of them, but it is always picked up through one

system or another. So if it is not

on a travel claim, I think it is picked up through our payroll system.

Is that correct?

MR. BUTT:

I think two years ago we paid 5 million kilometres to our employees.

As a result of our austerity measures, we moved that down to 4 million.

Our kilometres are paid through our payroll system.

Basically, the employee submits a travel claim to the manager who signs

it and it goes to the payroll system for payment.

In the incident cited, the people entering payroll did not pick up on the fact

that the claim had not been signed.

The claim was fine, the director supported the claim and everything, but it had

not been signed. It comes back to

the broader question of internal controls.

I think the Auditor General rightly cited a concern about lack of

documentation to support what is actually entered into the payroll.

We are doing two things to address that and that should address this problem as

well. One is our payroll people are

working with our learning and development people to develop a re-education

program for managers and for time keepers so that their knowledge of this will

be refreshed. The other thing is as

a part of the EY, the scope of the EY studied that we have commissioned, payroll

tracking authorizations is one of the things that we are asking EY to look at

for us and give us some recommendations on how we go about improving that.

That is our two sort of responses to that concern.

MR. MURPHY:

Five million miles in the run of a year?

MR. BUTT:

Kilometres, yes.

It is a big organization. We have a

lot of public health nurses, people who just drive for a living, so we pay a lot

of mileage.

MR. MURPHY:

Would ambulance be included in that?

MR. BUTT:

No, that would not be included in that.

MR. MURPHY:

It would not be. Okay.

CHAIR:

We should move on to Mr. Parsons now.

MR. MURPHY:

Yes, sure.

MR. K. PARSONS:

It is difficult sometimes to line up your questions because usually there is

someone asking them beforehand, so I am going to be a little bit all over the

place for the next little while.

I want to go back to recruitment bit that you were talking about earlier.

In the general sense, I want to know where we are.

Because I know we have more doctors and nurses than ever before in our

health care system and obviously we are doing a good job in recruiting people.

With the additional twenty or so that were mentioned, new doctors that will be

coming out, where are we to in the future?

Are our needs right now where we need to be?

Do we need more doctors? Do

we need more nurses? Is that what

our focus is on? Every time you

hear in the news, one of the negative things that come out, especially in the

summertime and I know it happens a lot in the Central part of the Province.

There was a big discussion on it about the availability of nurses and

availability of doctors.

I just would like to know in the general terms where we are.

I am sure it is an issue because I recently was over in Nova Scotia and

basically I heard the same thing.

It was identical to what was happening in Central with nurses taking leave and

holidays. People were complaining

about how they have to be on standby for twenty-four hours.

It was almost identical, the same thing.

I just want to know in general where we are as a Province when it comes

to recruitment and what we are looking for in the future.

MR. KEATS:

I will talk about the nursing thing and Reece will talk about the physicians.

From an overall perspective, in Newfoundland and Labrador we have more

nurses per capita than any other province in the country.

Of course, we have a rural issue.

All the other provinces have rural issues but we have, I think, a

different type of rural issue. We

have a short summer, so everybody wants to take leave the same time this time of

the year. We try to find

replacement nurses to provide relief so people can get their leave.

It is noted in the AG's report in another recommendation, by the way, that we

allow people to carry over leave above and beyond the policy and the collective

bargaining agreement. The simple

reason for that is if we cannot give you your leave, we cannot take it from you

either. We allow you to carry it

over above the limits that we should and that creates ongoing accrual problems

for funding levels down the road when these people leave.

Generally, in terms of nurses, we have the best in the country.

I can remember a few years ago that every nurse who graduated from

Memorial pretty well had a job in the Province.

Now we have situations where nurses are leaving the Province because they

cannot find full-time or part-time, permanent jobs in the Province.

People will say: How come you do not give every nurse full-time, permanent jobs?

Newfoundland and Labrador also has the highest percentage of nurses with

permanent positions. I cannot

remember the exact numbers, but years ago around 80 per cent of all of our

nurses had permanent positions when the Canadian average was like 52 per cent.

That creates a real problem in a way in terms of efficiencies because

every time you hire a nurse in a permanent position which is what you would

like to do because that gives them benefits

whereas when they are casual, they

do not get benefits you have to give them a six-week schedule.

For the summertime period, it is kind of tough for us to give every

relief nurse a six-week

schedule because we do not know where the demand might

be two weeks down the road.

That creates kind of relief problems, particularly as I say when the vast

majority of people want to take their vacations in a short period of time.

From an RN-BN perspective, we have the most in the country.

From an LPN perspective, we have the most in the country.

We do have some problems now in the PCA category, Personal Care Attendant

category; we do not have as many of those in the Province as we would like to

have. You would think in a Province

like ours with our unemployment rate that you would have a lot of people who

would be anxious to take a thirty-week program to go out to pretty well a

guaranteed job it is not a full-time, permanent job at the start, but it

quickly becomes a full-time, permanent job.

The problem it creates, though, is they can get work with no education in some

of the trades in other areas.

Instead of getting $18 an hour, they might get $24 or $25 an hour.

From a nursing perspective, we are generally pretty good, but it does

create problems in the summer getting people for relief.

Reece physicians?

MR. BEARNES:

At a high level, we are in a very good position right now with regard to

physician recruitment. As was said

earlier, we are competing in a global market for physician talent.

Newfoundland has always been a wonderful drawing card for physicians who

are practicing outside of the Province to come to Newfoundland.

Again, because we educate and train our physicians so well in this

Province, they are sought after around the world.

So, developing recruitment plan that is consistent with what our

population needs are is the approach that we take.

Just some numbers currently Eastern Health has 196 approved salaried positions

for physicians across our region.

We also have about 500 fee-for-service or alternative payment plan physicians.

Of the 196 positions, as was said earlier, we only currently have about

fifteen vacancies, and half of those have already been actively recruited to.

At a high level, we are doing very well in terms of our physician recruitment

and retention. Part of the work

that we do, of course, is to support our physician recruitment in our rural

communities particularly, as was said earlier, family practice physicians.

Although Eastern Health does not have employment relationship with those

individuals, we do recognize that reduced access to family practitioners in

those areas has a direct impact on the citizens in those areas.

If there is not access to family practitioners in rural communities, then

we see an impact on our emergency departments and on our services.

We are actively working with communities and with the Division of Physician

Services to come up with strategies to recruit family medicine practitioners

into rural communities and I had mentioned the signing bonus program and the

bursary program as well. If we can

say where is the greatest need right now, I think, to your point, it is in rural

communities that are having challenges with community practitioners.

We are ever vigilant about how we recruit people to those positions,

particularly among graduates.

MR. K. PARSONS:

We could probably sell them on our weather and tell them that we are having the

same weather for twelve months of the year.

That would probably be the best way to do it.

I want to go back a little bit. I

talked a little bit earlier about sick leave.

Sick leave concerns me. I

know when I worked in private industry there was a little benefit that you would

have if you did not use your sick leave.

Is there anything like that in Eastern Health?

I am not sure, is there something there that they offer to employees say,

if you do not use your twenty sick days or your ten sick days, I am not sure how

many they get is there any kind of benefit to anybody?