Public Accounts Committee

1993-08-11

Newfoundland and Labrador — Committees

August 11, 1993

The Committee met at 2:00 p.m. in St. Anthony.

MR. CHAIRMAN (Windsor): Order, please!

I would like to welcome everybody. First of all,

just a few procedural notes to mention, particularly to those who have not been

here before - the witnesses from the Health Services Board and members of the

general public.

This is basically an extension of the House of

Assembly. We are a standing committee, it's a committee of the House of

Assembly. We are here basically to gather evidence, not to pass judgement. This

is not a trial or anything of that nature. It's simply a matter of investigating

the management of the Regional Health Services Board, particularly and

specifically as it relates to some of the comments the Auditor General's

department has made in the annual report of 1991-1992.

Although we are a committee of the House, an

extension of the House, we like to operate somewhat informally. As you will see,

I've removed my jacket. Please feel free to do so. I would not be entitled to do

so in the House of Assembly. But then, we have air conditioning as well, so....

First of all I would like to introduce the members

of the Public Accounts Committee and say how we're pleased to be here. This is

the first time that the Committee has met on the Great Northern Peninsula. In

fact, I think it was only two years ago that we started to meet outside of St.

John's at all. The Committee felt that it was important to take the House of

Assembly to the people and this was an opportunity to do so, and an opportunity

for the Committee as members and representatives of the House to have a look

first-hand at some of the facilities, problems and situations in various parts

of Newfoundland so that we had a better understanding and could better report to

the House of Assembly.

At Mr. Dumaresque's invitation - Danny Dumaresque

being the Member for Eagle River, a neighbouring district just across the

Straits where some of us are heading tomorrow to participate in the great

bakeapple festival - Mr. Dumaresque specifically asked that we have a meeting up

in this area. This being an issue that was on the report we took the opportunity

to seize on that and come to this area to investigate particularly the issues

relating to the Grenfell Regional Health Services Board.

To my immediate right, Mr. Danny Dumaresque, the

Member for Eagle River, the Vice-Chairman; next to him, Mr. Oliver Langdon, the

Member for Fortune - Hermitage; Mr. John Crane, the Member for Harbour Grace; to

my immediate left, Mr. Melvin Penney, the Member for Lewisporte; and Mr. Glenn

Tobin, the Member for Burin - Placentia West.

Next to Glenn is Mr. Mark Noseworthy, who's a

research officer assigned to the Committee. Next to him is Ms. Elizabeth Murphy,

who is the Clerk of the Committee. Our technical gentleman at the far end, Mr.

John Oates, who works with Hansard and who records everything that takes place

in the House of Assembly, and in committees, and transcribes it all into

Hansard. I should say now, particularly to the witnesses if you would, we need

you to identify yourself. There is a host of ladies back in Confederation

Building who will have the job of transcribing all of this. They don't know your

voices as much as they would know ours, having listened to us as much as they do

they know us when we speak. I will normally identify the person when I'm

recognizing you, but if I fail to do so, please help me by identifying yourself

before you speak, for the benefit of Hansard, and please speak carefully into

the microphones if you could so that it's easier for them to transcribe

accurately what takes place today.

Perhaps now I'll ask Dr. Peter Roberts, the

Executive Director of the Grenfell Regional Health Services Board, if he would,

to introduce people.

DR. ROBERTS: Mr. Bruce Patey to my left is the

Chairman of the Board of Directors of Grenfell Regional Health Services. To my

right is Mr. Alwyn Sansford, the Controller of Grenfell Regional Health

Services, and on the extreme right is Mr. Wayne Noel, Director of Purchasing

with Grenfell Regional Health Services.

MR. CHAIRMAN: Thank you. We also have of course

Ms. Elizabeth Marshall, the Auditor General. Perhaps if you would introduce

people who you have with you today.

MS. MARSHALL: To my right is Mr. Bill Drover,

Audit Principal with the office, and to my left is Mr. Clive Janes, Audit

Manager with our office.

MR. CHAIRMAN: Thank you. Before we proceed any

further I have to ask the Clerk of the House to swear in the witnesses who are

here for the first time. As I say, you are giving information, or giving

evidence, under oath, so we have to swear in all the witnesses. Ms. Murphy, if

you would swear in the people who are with us today, please.

SWEARING OF WITNESSES

Mr. Noel

Mr. Sansford

Dr. Roberts

Mr. Patey

MR. CHAIRMAN: Thank you very much. Perhaps now I

will ask the Auditor General if she has some opening comments but before I do

that, I want to recognize the officials from the Department of Health. Chris

Hart is the Deputy Minister here, would you like to introduce the other people

with you?

MR. HART: Sure. We have Dave Saunders, who is

director of institutional financial services and Roy Manuel who is the director

of hospital services.

MR. CHAIRMAN: Thank you, I did not identify you

earlier because I knew that you did not have to be sworn in and if an issue

arises where we need your assistance, then we will swear you in at that time.

Generally, the officials of the department are here for backup purposes and can

be consulted if desired. Now, I will move to the Auditor General and ask if she

would like to make an opening statement to introduce some of the topics that are

before us today.

MS. MARSHALL: Thank you, Mr. Chairman. The audit

of the Grenfell Regional Health Services Board was carried out by my office in

August and September of last year. The audit was directed primarily to those

systems and transactions relating to financial management, fixed assets and

purchasing. Audit procedures included testing for compliance with the various

authorities under which the board operates. Our review had several objectives;

one, whether the financial management system was adequate to provide information

to management and the board for decision making and control of the boards

revenues and expenditures; two, whether transactions of the board were in

compliance with the Hospitals Act and other related legislation, regulations and

by-laws; three, whether the policies and procedures were adequate relating to

the control and use of fixed assets and four, whether the purchasing system was

adequate to ensure monitoring and control of the purchase function and

compliance with statutory requirements including the Public Tender Act.

As part of this review we did not perform a detailed

review of the system of control over inventory. However, as a result of our

review we became aware of deficiencies in the system of physical control over

inventory. As a result we intend to perform a more detailed review of the

complete system of control over inventory during this fiscal year. As a result

of the audit concluded last year, we concluded the following; first, several

aspects of the financial management system require improvement, including the

areas of budgeting, financial monitoring and reporting. Also, the boards

accumulated deficit of $5.6 million as of the 31st of March, 1992, is of

concern. Second, policies and procedures related to the acquisition and disposal

of fixed assets are inadequate to ensure the safeguarding of all assets under

the control of the board. In addition, the policies and procedures relating to

the accounting and recording of fixed asset transactions result in a valuation

of fixed assets in the financial statements that does not represent the actual

cost of fixed assets being used by they board. The third conclusion was that

there were significant deficiencies with the boards purchasing practices. We are

concerned whether the board's purchases are adequately controlled and are in

compliance with the required legislation. The many cases of non-compliance with

the Public Tender Act which we noted are of particular concern. Thank you, Mr.

Chairman.

MR. CHAIRMAN: Thank you very much. Dr. Roberts

would you or one of your delegation proceed.

MR. PATEY: If I may, Sir? First I would like to

welcome you and your members of the Public Accounts Committee to the Grenfell

Regional Health Services, along with the members of the Auditor General's

Department, the Department of Health and to the members of the press here and to

any visitors that might be here. We come today to speak specifically to the

recommendations of the report paragraph and the Auditor General's Report. These

recommendations concentrate on the financial management, fixed asset management,

and purchasing policies and procedures.

Within GRHS, the board of directors and management

have addressed and are addressing each recommendation contained in the report

paragraph, and GRHS continues to comply with these recommendations. As a result

of these recommendations and our response I believe that GRHS is now better able

to serve the people of northern Newfoundland and Labrador, and I would like to

thank the Auditor General and her staff for their generous assistance in this

process.

I now call upon Dr. Peter Roberts, the Executive

Director of GRHS, to speak clearly on each of the recommendations.

Thank you very much.

MR. CHAIRMAN: Thank you. Dr. Roberts?

By the way, if any of the committee members address a

question to either one of you, feel free to refer to anybody else. It is a very

informal procedure.

Dr. Roberts?

DR. ROBERTS: Mr. Chairman and members of the

committee, Auditor General and staff, the Department of Health and staff, and

members of the general public, I join the Chair in welcoming you to St. Anthony

Grenfell Regional Health Services and the hospital. I hope your visit will be

both productive and enjoyable.

GRHS is an integrated regional health service

providing health services for the people of this area. We function under the

authority of the Hospitals Act and with the guidance and assistance of the

minister and the staff of the Department of Health.

As a provincial agency, a public service organization,

we face all the demands facing every public service in this Province today.

Perhaps we are a little different in that we function in more locations than

most hospitals do, and we have some unusual and varied activities. We also have

an unusual history.

Like every hospital, we strive to balance the demand

for service on one hand with the demand for fiscal accountability on the other.

We have not always succeeded, but I am confident that our work is sound and that

GRHS is a responsible public agency providing a valuable service at a reasonable

cost to the people of Newfoundland.

I would be pleased, and my colleagues would be

pleased, to address any specific issue as presented in the paragraph as you

wish.

Thank you.

MR. CHAIRMAN: Thank you very much, Dr. Roberts. We

can proceed.

I think I neglected to mention - I do not know if

there are any news media present, but they are certainly welcome to be present;

these are public hearings - we operate under the same rules as in the House of

Assembly in that voice clips can be taken. If you would like an opportunity to

take photographs, I will give that to you, or silent footage for television.

Those are the rules followed in the House of Assembly, and the committee

operates under the same rules, but you are certainly welcome to be here and we

are glad to see you here.

Perhaps we will open the questioning now. I will move

to perhaps Mr. Tobin first, he being one of our veterans. Most of our committee

members, Mr. Langdon, Mr. Crane, and Mr. Penney are new members. Since the great

democratic exercise held in May the Committee has been reconstituted and we have

a new committee. This is the first time the Committee has met in public

hearings. We have had several internal administrative meetings to organize the

work of the committee, but these are actually the first meetings we have held

since - we normally do not meet when the House of Assembly is in session.

Members have other duties to attend to, so we try to meet when the House of

Assembly is not in session, and this is the first meeting we have held since, so

I want to welcome these members to the committee. I might say, the seventh

member, Mr. Alvin Hewlett, the Member for Green Bay, is on the mainland today

and was unable to be with us.

I will start out by referring questions to Mr. Tobin.

For the benefit again of the witnesses, normally I go around to all the

committee members and give them an opportunity to ask questions and receive

answers. I have asked them to be fairly brief and concise. I would ask witnesses

to do so, but by all means take whatever time you feel is necessary to

adequately explain the issue.

Mr. Tobin?

MR. TOBIN: Thank you, Mr. Chairman.

I would like, if I may, to begin with the public

tendering, the purchasing aspect. We do have some material put in book form for

us to discuss. There are various issues there but, as the Chairman said, we have

to be as quick as we possibly can so I do not intend to ask all the questions in

that area, but there is one area that I would like to ask the first question on

and that is regarding the air ambulance, the twin otter contract. It is my

understanding from the information I have that this contract expired on November

30, 1990 but was extended until the 31 of August of '92 for a twenty-one month

period, and during that time there was $1,153,510 spent, or an average of

$96,000 a month without public tendering and I am wondering, why did that

happen?

DR. ROBERTS: The information is substantially

correct. The first contract was negotiated in November 1985, for a five-year

period. That contract was negotiated after an extensive consultation with

government at that time and a revamping of the transportation service, the air

ambulance service provided for the people of northern Newfoundland and Labrador.

That contract was for a five-year period for a twin otter based in Happy Valley

- Goose Bay and providing services for the people of northern Newfoundland and

Labrador.

Since that time, from the period 1985 to 1990,

extensive changes took place in the commercial scheduled service in the area.

There were changes in government's thinking on how government wished to approach

its relationship with Labrador Airways, and government does have a relationship

with Labrador Airways as I suspect you all know. At that time, when the contract

was coming close to its termination, we advised government of this and we sought

direction from government on how to approach this issue. Government asked us to

extend the contract on an interim basis while government worked through its

relationship with Labrador Airways.

This was obviously a prolonged period and ultimately

the contract was extended for up to almost a year and nine months I think, and

when government concluded its negotiations with Labrador Airways and established

the basis of its subsidy, we then went ahead in concert with government's

direction to call tenders and to award a contract to Labrador Airways again.

That was done on April 1, 1993 for a three-year period this time.

MR. TOBIN: So this was done with the approval of

government, is what you are saying. Which department approved that for such a

prolonged period?

DR. ROBERTS: The discussions that we had with

government at that time were taking place with both the Department of Health and

the Department of Works, Services and Transportation but principally with the

Department of Health.

MR. TOBIN: So it was approved by them?

DR. ROBERTS: There was never any formal approval

in the sense of: we formally approve this extension contract, but certainly

government was aware that we were undertaking this and on several occasions we

advised government of our concern that the contract had terminated and we were

extending on a month to month basis.

MR. TOBIN: How much was the contract, prior to the

new one being renegotiated, and how much is this one now?

DR. ROBERTS: I cannot give you the precise figure

at the moment. It is approximately a million dollars a year and it varies with

the amount of services offered in accordance with the contract. The new tender

which we have awarded now on April 1, 1993 - we had two bids on that tender; the

bids themselves were within 10 per cent of each other and we awarded it to the

lower bidder and the cost of the contract now is, if I remember correctly, about

6 per cent approximately more than the last contract.

MR. TOBIN: 6 per cent?

DR. ROBERTS: I think that is correct, it is in

that range.

MR. TOBIN: The average monthly expenditures of

$96,000, what would that entail?

DR. ROBERTS: For that contract, it would be the

basic contract for the service and for the use of that plane, the twin otter,

for anywhere, depending on the service demand, anywhere between seventy-five and

125 hours per month.

MR. TOBIN: Who would have access to the twin

otter?

DR. ROBERTS: To the plane? Gerry just calls upon

Labrador Airways upon demand for the use of the plane so we would control the

people using the service.

MR. TOBIN: What functions would it be used for?

DR. ROBERTS: We have used it principally for the

transportation of patients from the north Labrador Coast to Happy Valley - Goose

Bay, the local hospital or to St. Anthony. In addition, we would transport staff

on business and people such as board members on (inaudible).

MR. TOBIN: Are there logs available for people who

used the plane and for what purpose?

DR. ROBERTS: We do keep logs. We have not

published them but they are presumably available as is any public information.

MR. TOBIN: Could they be made available to the

Public Accounts Committee?

D R. ROBERTS: They could be, yes.

MR. TOBIN: Thank you, very much.

MR. CHAIRMAN: Thank you Mr. Tobin.

Mr. Penney would you like to start out?

MR. PENNEY: I have a few questions I would like to

ask relating to inventory and some discrepancies I see in the Auditor General's

Report dealing with prices. As a businessman myself I can appreciate the

importance of a year-end inventory count but as a pharmacist I am somewhat

disturbed by some of the discrepancies I see printed on Page 60. I understand

everybody has a copy of the report. If I may I would like to ask a few

preliminary questions first so I can get a feel for what is happening here. I

see it is listed here as drugs for St. Anthony, drugs for Goose Bay, and drugs

for Churchill Falls. First of all would that be three separate purchasing

accounts? Would there be three separate lots of purchasing for those three

locations?

MR. WAYNE NOEL: No, it would not.

MR. PENNEY: So this would all be central

purchasing? These three stores would receive their drugs distributed from some

central warehouse?

MR. WAYNE NOEL: No, they would be distributed

directly from the supplier.

MR. PENNEY: Under a single invoice?

MR. WAYNE NOEL: No, separate invoices.

MR. PENNEY: Single purchases but three separate

invoices.

MR. WAYNE NOEL: It would not necessarily be a

single purchase.

MR. PENNEY: So, each store would be responsible

for purchasing its own requirements of pharmaceuticals?

MR. WAYNE NOEL: They would requisition their

request through the purchasing department.

MR. PENNEY: And who would be responsible for the

ordering and record keeping in each individual store?

MR. WAYNE NOEL: In the case of drugs it would be

the pharmacist who would be responsible for requisitioning the goods and he

would be responsible for the control of inventory.

MR. PENNEY: How many pharmacists would you have to

look after those three locations, St. Anthony, Goose Bay and Churchill Falls?

MR. WAYNE NOEL: Two.

MR. PENNEY: And the pharmaceuticals would be kept

in a recognized, secured dispensary?

MR. WAYNE NOEL: That is right.

MR. PENNEY: So when I see the figures here,

general ledger and physical count, in the case of St. Anthony, $277,000, that

would include narcotics and controlled drugs?

MR. WAYNE NOEL: Yes, it would.

MR. PENNEY: A notation is made here that large

differences exist between the inventory actually counted at year-end. Could you

explain to me the basic procedure that would be used in the physical counting of

the inventory? Obviously each individual capsule and tablet would not be

counted. Would it be estimated? What sort of general procedure would have been

followed?

MR. WAYNE NOEL: Every single tablet would be

counted. The procedure is done annually and it is done by the pharmacist in

conjunction with the drug clerk and the purchasing director. There would be a

separate count sheet made up, the count would be recorded on that sheet and then

it would be sent to the comptroller's office to be consolidated with the general

ledger.

MR. PENNEY: So the pharmaceuticals that would be

recorded on your year-end inventory count would then be compared against your

purchases minus the drugs that had been dispensed?

MR. WAYNE NOEL: Yes.

MR. PENNEY: How then do you account for the major

discrepancy that is recorded here for Churchill Falls? The general ledger shows

$32,802 worth and the physical count only $23,249 worth. That's a discrepancy of

about 40 per cent.

MR. SANSFORD: Some of this can be attributed to

obsolete items that were not taken out at the time when they were discovered. It

went on for two or three years. Other reasons would be the pricing involved in

the count, the difference between the count and the general ledger.

MR. PENNEY: If they were obsolete items that were

not taken out that would make your count higher than what your ledger would

show, would it not?

MR. SANSFORD: Yes.

MR. PENNEY: In the case of Churchill Falls, your

actual physical count was 40 per cent lower than what your record showed.

MR. SANSFORD: I'm sorry, I don't have the details

of the findings of those with me, so....

MR. CHAIRMAN: Would you be able to get that for

us? I should have said this earlier. If questions are asked that you don't have

the information on, it's quite acceptable to provide it to the Committee at a

later date.

AN HON. MEMBER: Yes.

MR. CHAIRMAN: Perhaps you could get the answer to

that and provide it to the Committee.

MR. PENNEY: Do you know whether in those

discrepancies there were any narcotics or controlled drugs involved? Obviously

your stores would have contained codeine, morphine, Demerol, those sorts of

things. The discrepancies that would have been listed here by your accountant,

Ernst and Young, would that have included any discrepancies in narcotics?

MR. SANSFORD: I wouldn't know that - the type of

drugs that would be included in the discrepancies.

DR. ROBERTS: To the best of my knowledge it would

not include specifically any deficiencies in the controlled drugs. We manage the

control of drugs in accordance with the law. They are checked regularly by the

pharmacists and by the external agencies involved in managing those. Were there

a discrepancy, the actual loss of a drug, or a drug missing, account not

reconciling, we would bring into play the normal management system for managing

that controlled drug and for investigating and pursuing to a conclusion the

discrepancy.

MR. PENNEY: Has either one of those locations -

St. Anthony, Goose Bay or Churchill Falls - been audited by the narcotic

inspector?

DR. ROBERTS: I cannot say specifically, but

generally I would answer that to my knowledge the narcotic auditing people were

here. They're certainly here once a year at least, if not more frequently. I

can't say for certain in Churchill Falls. Most probably they are in Goose Bay at

least once a year.

MR. PENNEY: Thank you, Mr. Chairman.

DR. ROBERTS: If I may add one point as well.

Recognizing problems in inventory control, and the discrepancies between the

counts and the evaluations, we've instituted a practice of counting inventory

quarterly and reconciling differences at that time.

MR. PENNEY: If I may, Mr. Chairman.

MR. CHAIRMAN: Mr. Penney.

MR. PENNEY: How have you found your records to

compare since you've started this new procedure to what we see here in this

report?

MR. SANSFORD: Discrepancies are very much reduced.

This year, for the first time in several years, our external auditors have

attended the count. The discrepancies are much less than they were. There are

some small amounts, but they've been investigated and reasons for discrepancies

have been found. Like pricing or change in invoices not being there, or the

goods not being there when the invoice was there.

MR. PENNEY: I see. That's basically at your

year-end cut off.

MR. SANSFORD: We do it quarterly now.

MR. PENNEY: Yes.

MR. SANSFORD: We make the reconciliation quarterly

now instead of year-end.

MR. PENNEY: But back in the figures that we're

looking at here some of your discrepancies could have been with the day of your

cut-off or your year-end.

MR. SANSFORD: That's right.

MR. PENNEY: Thank you, Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Penney. We'll go to

Mr. Crane at the far end. Mr. Crane.

MR. CRANE: Through some of the notes I have here I

was fascinated with some of the remarks of the Auditor General. For instance, I

note one note here which shows that the Public Tendering Act and purchasing was

somewhat out of whack to what it was. For instance, a clerk purchasing under her

name in the amount of $25,000, how would that get through without somebody

nabbing it or checking on it? Somebody has to be supervising somebody. Somebody

would catch that, would they not?

MR. NOEL: That particular

section which refers to

the $25,000 purchase specifically states the purchase order was signed by the

clerk. In actual fact, all of the work leading up to the actual approval of the

requisition was done by the purchasing director. It was just the physical

purchase order itself.

Under our new computerized system, if the purchasing

director does not sign the purchase order, it will automatically come off the

system which is entered into by the clerk, so the approval is the actual

requisition which leads up to that.

MR. CRANE: Looking at the deficit figures, I am

sure this hospital is no different than any other hospital. Every other hospital

is finding it very difficult and they have all been asked to cut costs over the

last couple of years. I know a hospital in my area has gone through a rough time

trying to keep the deficit down.

I was reading a note here that says: Ending March,

1992, the board's accumulated deficit for the revenue fund had increased to

$2.56 million from $2.47 million the year ended March 31, 1989.

What have you done to curtail it, or have you done

anything, or what are you proposing to do to reduce the deficit?

DR. ROBERTS: We have done many things to curtail

the deficit. I presume it would go without saying that we are as concerned about

the deficit as anybody else. No public service organization can function beyond

it's means continually, and we have been aware of this problem and wrestling

with it for a considerable time - long, extensive discussions with the

Department of Health taking place over a period of time.

We have taken several actions. Looking at the bottom,

right-hand corner figure, if you will, the ultimate of ultimates as I understand

the accounting system, would be our combined fund deficit, or if it were

positive our net worth. If we were to close shop today and cease business, we

would have an obligation today - or at least at the time of the Auditor

General's Report - of $3.43 million. In the past year we have succeeded in

reducing that by 13 per cent and now, at the completion of this year, 1992-'93,

the combined fund deficit is under $3 million. It is, in fact, $2.984 million,

which is a reduction in our combined debt of 13 per cent over that time.

Referring back, the combined fund accumulated deficit,

or combined funds, consists, of course, of the revenue fund, which is the

principle fund of activity. It consists also of our grant program fund and our

special purpose fund. Our revenue fund has not yet declined, although our bottom

right-hand corner, the ultimate figure, if you will, has improved, we have not

yet succeeded in totally eradicating our yearly deficit on the revenue fund. We

have made substantial improvements, and we believe that we are in place to look

forward to a - given all being equal, and no fee changes, if you will, in the

coming year in the levels of government funding, we will be in a position to

record a surplus on all fund activity in the coming year.

I think, speaking specifically to the question of the

things we have done to challenge the deficit issues, we have obviously made

operational changes throughout. We have tightened many activities. We have

reduced services in some instances. We have reduced staff.

Overall we have exercised a much tighter degree of

financial control than we had previously.

The last comment I think directly to this point is I

think we must ask the question of how it is that this deficit has - what's

brought this deficit, where has it come from. It is important to note that there

is a substantial accounting change embodied in that which is noted in the

report, and that we now in our deficit have accumulated $2.9 million liability

for severance pay, which is a substantial part of our deficit. That is

substantial. We have also accumulated and stated in our statements today upwards

of $800,000 of vacation pay, liability, if we were to close shop today, which we

would be liable to pay.

I know there's debate about the accounting policies,

and the Province doesn't do it the same, and there's some discussion amongst

hospitals on how this is shown. These are substantial amounts which materially

influence the deficit which shows. I think I should also say obviously that in

our operations our costs, in previous years, have exceeded the revenue which was

available to us.

MR. CRANE: Purchases over $5,000. I notice there's

many sole suppliers, one supplier. Is it possible there's that many things and

there's only one supplier for them? I can understand certain things where there

can only be one supplier. I know if you buy a certain colour range, a certain

type range, you're going to buy it from one supplier. But there are certain

things that may not have the same name but still you could tender to different

suppliers, right?

DR. ROBERTS: Yes.

MR. NOEL: If I could address just a couple of the

points there. The first one, which is purchase order 12799 which is equipment

repair. This is a piece of medical equipment, a gastroscope, which has to be

repaired by the manufacturer. No one else can carry out that kind of

sophisticated repairs of fibre optics. So it was returned to the manufacturer.

An estimate was provided to us, and of course we approve or disapprove of the

repairs. It isn't the case where you can go to tender, where anybody's shop can

sort of repair internal fibre optics.

MR. CRANE: You wouldn't say that all those come

under that same situation. You know, all those listed there certainly wouldn't

be specific... you know, pieces of medical equipment that couldn't be serviced.

MR. NOEL: It's not all medical equipment. The next

one, which is purchase order 11847, is a service agreement. This is a service

agreement on a piece of equipment that must be serviced by the manufacturer.

MR. CRANE: Okay. That's the same as the previous

one.

MR. NOEL: Yes, it's the sole source. The next one,

13661, was an actual surgical system. This is a sole source piece of equipment.

This is the only company on the market that could provide us with a no burn

guarantee. There are some electrical surgical units out there, but we wouldn't

purchase a piece of electrical surgical unit that couldn't guarantee no burn,

because of liability.

MR. CRANE: I notice you have the next one marked

as to nature of the purchase if necessary to tender.

MR. NOEL: This one's a little bit different. This

is carpeting. Instead of going to the public tender for $12,000 worth of carpet

we invited tenders from the local area. In this case we went with the low bid.

MR. CRANE: Thank you, Mr. Chairman.

MR. CHAIRMAN: Mr. Langdon.

MR. LANGDON: I would like to follow up a little

bit more on what Mr. Crane was saying, on the sole supplier of different

commodities or medical equipment or what have you. I'm wondering, say when

certain people come on staff, after they have been trained in a certain hospital

and have become accustomed to a certain piece of equipment, then, when that

particular piece of equipment is ordered, is it primarily of personal preference

that they would be with this particular company rather than widespread tendering

across the board? Does that ever happen to account for some of the expenditures

of about $5,000 that you would tender?

MR. WAYNE NOEL: That often occurs but we

discourage it whenever possible.

MR. LANGDON: But it has occurred, is that other -

MR. WAYNE NOEL: No it is not one of the reasonings

in any of the other reported purchase orders mentioned here.

MR. CHAIRMAN: Dr. Roberts, you wanted to add

something?

DR. ROBERTS: Well, to add to that point, I would

say also that one of the difficulties we have had occasionally with staff, is

that we have refused to allow staff to enter arrangements with providers of

specialized equipment which could be construed to be of unfair advantage to the

provider of the equipment.

For instance, speaking generally, providers of certain

types of equipment will say: we will give you the equipment if we can sell you

the consumables that go with that, and some of our staff feel that we have

taken, if you will, an unduly prudish attitude to that and said that we are

spiting ourselves by doing that. We refuse to do that; it just does not work and

invariably those kinds of arrangements work to the providers' benefit and we

have refused to do this.

MR. LANGDON: Okay, that clears up that point.

There are so many other things. For years I was a member of a town council and I

knew the regulations and so on that we had, if we did not go to tender for

things under $5,000 we would get quotes from at least, I think it was three

people. That was specified in the manual and I saw here on one page - I cannot

identify the page right now -where, I think it was $3,000 or $4,000, which is

not a large sum of money, but it is a matter of principle as far as I am

concerned and I think the quote was from here, I am not sure - somebody might be

able to give me the page later on - that we did not think it was necessary to go

Province-wide or across the Province to tender. If that was the attitude, that

we did not have to go Province-wide, we could save a thousand here and a

thousand there and before we know it we could have a million saved. I wonder, is

that still the practise or have you probably moved away from that?

MR.WAYNE NOEL: I am not aware that is the practise

first of all and secondly, for any purchase under $5,000 we usually invite bids

or obtain prices from at least three reputable vendors.

MR. LANGDON: Okay, there are other examples which

I could go with, but just to branch off to another topic, how many people do you

have employed in the hospital, the total people here?

DR. ROBERTS: 800.

MR. LANGDON: 800?

AN HON. MEMBER: Yes.

MR. LANGDON: I found it somewhat strange in a

sense when I looked at the group insurance and I think one of the points being

made by the Auditor General was that they were still paying premiums for people

who were no longer with the hospital. I am not sure again what page but it was

there somewhere.

AN HON. MEMBER: Page 48.

MR. LANGDON: Page 48, it says: During our audit of

the group insurance payable it became apparent that you have been paying

premiums based on a number of employees greater than that enrolled in the plan.

This should be reviewed by the personnel department and if appropriate, brought

to the attention of the insurance company and a refund of excess premiums

requested.

MR. SANSFORD: That has been corrected and we have

adjusted that discrepancy.

MR. LANGDON: Okay, I will pass. There are others

but I will not monopolize and will come back again.

MR. CHAIRMAN: Thank you, Mr. Langdon. Mr.

Dumaresque.

MR. DUMARESQUE: Thank you, Mr. Chairman.

Page 39, item 7 on Special Purpose Funds: We recommend

that GRHS continue its review of the use of Special Purpose Funds, and GRHS said

that they would develop terms of reference for each Special Purpose Fund. On

page 317 of the accountants report, Ernst & Young, the last paragraph says: in

reference to the Special Purpose Funds this information has not been subject to

the auditing process applied in the examination of the basic financial

statements and accordingly we do not express an opinion on the fair presentation

of the information referred to above. Would you mind reviewing the purpose of

the Comptroller's Consolidated Funds, and the Executive Director's Discretionary

Funds, and the overall purpose of these Special Purpose Funds?

DR. ROBERTS: The Special Purpose Funds are funds

which have accumulated and which are used for special purposes. They are

acquired in many different ways. We do not have written descriptions for all

those funds and how they are used. Many of them have stipulations on them

depending on the manner in which the fund was acquired or accumulated. We have,

generally speaking, established working practices, if you will, for the use of

special funds and for the control of those Special Purpose Funds, and that has

been the guide. We are working on written guidelines for each of the funds but

we have not yet completed those. We are at work on those.

The Executive Director's Discretionary fund was a fund

which existed prior to my becoming executive direction and which was established

by donations to that fund by individuals, and I am not sure how else in the

beginning, and was to be used by the executive director at his discretion for

purposes obviously within the work of Grenfell Regional Health Services. Through

the years we have used it for various projects and various activities at the

discretion of the executive director and with the agreement of the comptroller.

The second one you mentioned, the Comptroller's

Consolidated Fund, is a fund where we have accumulated unusual funds which have

come to us, almost as if to say, funds which did not have another place. The

interest on accounts is in there and at certain times other funds which we did

not know what to do with we put there.

MR. DUMARESQUE: Would they be actual board funds?

DR. ROBERTS: We have no funds which are not shown

in these statements. In other words everything is shown in these statements.

There are no independent GRHS funds. There is no separate board fund which you

have not seen. It is all here. These funds are all the responsibility of GRHS

obviously and as executive director I would be responsible for the management of

those funds and it would be a matter for me to ensure that the board is properly

consulted and had the opportunity to participate in the dispensing, as would be

our standard practice.

MR. DUMARESQUE: Is it fair to say that these

funds, the Special Purpose Funds, including the Comptroller's Consolidated Fund

and the Executive Director's Funds, could be used for other operating expenses

or deficit reduction?

DR. ROBERTS: If I may ask the intent of your

question? Do you mean to say that they have been used that way or that they

would be available in future to be used that way?

MR. DUMARESQUE: If the board were to decide that

these funds did not exist, is there any problem with these monies being taken

and used for other operating costs of the board or addressing the deficit?

DR. ROBERTS: Not in a legal sense that I am aware

of, however, there is a very real and practical sense in that these funds are in

fact used as the working capital of the organization, so we have in fact

increased those funds as best we could to ensure that we have the working

capital and to resolve some of the cash flow difficulties we had at one time.

MR. DUMARESQUE: On Page 321 in particular we look

at items like the New England Library - for March 31, 1992, $101,000.

DR. ROBERTS: All of those funds that are there

refer to funds which are not within the discretion of GRHS and, Mr. Chairman, if

I may, it takes a moment of explanation.

The International Grenfell Association is a private,

separately incorporated entity which has its own endowment and its own income.

For various tax purposes, particularly the requirements of the International

Revenue Service in the United States, Grenfell Regional Health Services has

agreed to serve, if you will, as a conduit for the funds from the International

Grenfell Association to avoid tax liabilities in the United States and in

Canada, so we have funds coming through Grenfell Regional Health Services which

are not at our discretion - funds which the International Grenfell Association

would make decisions about and we, upon the instruction of the board of

directors of the International Grenfell Association, would carry out the precise

Act.

For example, the New England Library Fund is an amount

of money that the IGA determines each year. I think presently it is $10 per

year, per student. Presently, the International Grenfell Association is

providing $10 per student to every school board in this area to supplement their

library and resource materials, and that is what that amount is.

MR. DUMARESQUE: Okay, just to get it clear, the

IGA receives funds from donations, from anybody in the world, and they request

that you, Grenfell Health Services Board, pay out these monies in accordance

with a list that they submit. So you are saying you are a rubber stamp for that

particular department, at least.

DR. ROBERTS: We are not even a rubber stamp, if I

may. We make no decision. We provide an accounting service and we provide a

business service to them to allow the IGA to carry out their business in

accordance with the requirements of the IRS.

MR. DUMARESQUE: On occasions where we have seen

the supporting agencies like the New England Library for $90,000 and then the

actual expenditure is $101,000, there would be a deficit of $11,000 there. Also,

in other areas there are deficits. Would these expenditures above what would be

noted be borne by the board?

DR. ROBERTS: By the board of GRHS?

MR. DUMARESQUE: Yes.

DR. ROBERTS: No, absolutely not. The International

Grenfell Association would make up the differences, and conversely, if they have

forwarded more funds than we have used, that is clearly recognized as an IGA

fund.

Obviously, this statement is at a particular point in

time and there may be transactions in progress one way or the other which do not

exactly balance out at the point in time that this statement was done.

MR. DUMARESQUE: You say the terms of reference for

these Special Purpose Funds have not been finalized. Have terms of reference for

any of the Special Purpose Funds been finalized?

DR. ROBERTS: No, we have not presented any to the

board, and the description of those terms of reference is for all of those funds

which really have to be subject to the board's approval.

MR. DUMARESQUE: So, in respect of expenditures,

again, like the Lions Club for $25,000, and the St. Anthony Recreation

Committee, the IGA International Board would say: `We would like for you to

spend these'?

DR. ROBERTS: I don't have it right in my eye, but

I presume you are referring to the fact that the IGA made a grant of $25,000 to

the Lions Club to assist in the construction of a recreation centre. The IGA

gave us $25,000 and said: `Disperse that to the Lions Club,' which we did.

MR. DUMARESQUE: Do you, at any time, make

representations to the IGA Board for any of these monies - this part of this

budget - to be used for anything other than -

DR. ROBERTS: Yes we do. The International Grenfell

Association has established a grant application process. The International

Grenfell Association exists, in the most simple terms, for the well-being of the

people of Northern Newfoundland and Labrador, and that is its constitution,

summarized, obviously, two pages in one sentence.

We, as a public service agency in the area, applied to

the International Grenfell Association for specific grants from time to time,

and the IGA does award some specific grants, from time to time, to Grenfell

Regional Health Services. Obviously, there is a strong continuity of interest

between the International Grenfell Association and the work of Grenfell Regional

Health Services.

MR. DUMARESQUE: Okay - that is the line of

questioning I wanted to pursue on that part of it but if I could, Mr. Chairman,

I would like to look at another area, which is the relationship between the

Province of Quebec and the Province of Newfoundland and Labrador. I note in your

Budgets of 1990-91, 1991-92, that there is some non-residents income of

$800-and-some-odd thousand dollars. Would that be largely from the Province of

Quebec?

DR. ROBERTS: Principally, it would be from

patients coming to this hospital from the lower North Shore to here, to the

current hospital, yes.

MR. DUMARESQUE: Do you have any idea of the cost

of patients going from Newfoundland to Quebec, particularly, Forteau? Is there

somewhere that that accounting is done?

DR. ROBERTS: I don't have it. That would be a

transaction between the Government of Newfoundland and the Government of Quebec.

Presumedly, and I stand to be corrected, but presumedly, the Department of

Health would have that record.

MR. DUMARESQUE: So that is not something that you

would, as GRHS, incur as a part of your budgeting?

DR. ROBERTS: We have no direct financial

relationship with the Government of Quebec. They do not make payments to us.

They make payments to the Government of Newfoundland in respect to services

rendered by GRHS.

MR. DUMARESQUE: And the government gives it back

to you as an item?

DR. ROBERTS: That is correct.

MR. DUMARESQUE: So, is it fair to say then, that

it doesn't concern you to what degree there is a usage by Labrador Straits

residents of the hospital in Long Point, because it doesn't reflect upon your

budget?

DR. ROBERTS: I do not think that the premise and

the conclusion are related. If I may, I do not think it is fair to say that we

are not concerned - we are concerned. Equally and separately we are concerned

with our budget, but the fact that patients going from Labrador to Quebec does

not affect our budget, does not mean that we are not concerned - of course, we

are concerned.

MR. DUMARESQUE: What area would you be concerned

about?

DR. ROBERTS: We are a provider of health services

to the people of Northern Newfoundland and Labrador including the people of

Southern Labrador, and we strive and aspire to provide the best possible service

that we can for those people. We like to believe that we can provide a better

service in Newfoundland and Labrador than is available in the Province of

Quebec. It disturbs us that patients from the Province of Newfoundland feel that

they must go to the Province of Quebec for services. Equally, I am sure the

Government of Quebec, by corollary, is concerned that patients in Fermont,

extensive numbers of them, would feel it necessary to come to Labrador City. It

is the argument in reverse there.

MR. DUMARESQUE: Right. Has there been any type of

analysis or any type of communication with the people of the Labrador Straits

and more particularly, I guess, any kind of follow-up with the people that do

frequent the hospital in Quebec, as to why they are going there? Do you feel

that it has reached the point where maybe your facilities, in Forteau are not

being fully utilized?

DR. ROBERTS: I do not know of any specific study

asking the question of individuals: Why have you gone to Quebec? We have, to

date, not felt that that would be a productive or worthwhile exercise. Yes, we

certainly are aware that people go and we know, generally speaking, why some

people go.

I missed the second part of your question, I am sorry.

MR. DUMARESQUE: Well, just whether it has now or

at any time in the past reached a level where you were - as you said earlier,

you are really concerned about the fact that it is happening, but has it reached

a level where you would see fit to take some steps to try to prohibit its

happening?

DR. ROBERTS: We have, yes.

MR. DUMARESQUE: Or the complete utilization, as

you see it, from your service.

DR. ROBERTS: We have a constant discussion about

that, and generally speaking, on why people go to Quebec. There are some general

reasons. Some people, purely for their personal preference, with no professional

reason known, will choose to go that way. Some people will choose to go that way

at particular times because they feel they can get a service in Quebec at a

particular time which is not available to them in Forteau, in Labrador.

There is a certain amount of that and there always has

been. It depends on people; it also depends on practitioners. Sometimes a

certain doctor in Forteau, for argument's sake, might attract many people who

otherwise used to go to Quebec, or vice versa. We have had a bit of coming and

going on that. To my knowledge, the level of - migration isn't the right word -

of treatments outside the Province has not changed dramatically, that I know of.

My suspicion, and I recognize clearly, it is a suspicion, is I doubt that we can

- I am not sure what we can do to materially change that number.

MR. DUMARESQUE: Just a final question relating to

my district and also the Forteau Chronic Care. Recently, I think, maybe a month

ago, there was a public statement made to the effect that you plan to open a

chronic care facility in Forteau in January, I believe.

DR. ROBERTS: That is correct.

MR. DUMARESQUE: Is that still on target, and is

there any concern that January is when the ferry terminates, or anywhere from

the twentieth to the first, and if furniture doesn't get in, and so on, that it

may not open?

DR. ROBERTS: I have no concern of that nature. We

have established with government the funding mechanisms and have government's

approval to proceed to open that service. We are looking forward to it, we

recognize the need for it and are somewhat anxious to get it going. It doesn't

make us very happy to have a building built which is plumb empty and not of any

public use. I don't know any reason why we won't get that service going on

January 1, and as far as I am concerned, we will. As I say that, I have to say

that we have not received the levels of funding that we have requested, but we

have negotiated a suitable level to allow us to provide the service. I think it

would go without saying that every public service would like to have more

funding than they sometimes have awarded to them.

MR. DUMARESQUE: Thank you.

MR. CHAIRMAN: Thank you, Mr. Dumaresque.

I will move, first of all, into a few general

questions. I want to revisit the issue of the overall deficit situation.

Something like $5.5 million, I think, last year was an overall deficit. Perhaps

you could tell us: How did the board develop such a deficit? You had a budget,

the budget was approved. There were comments from the Auditor General relating

to the apparent lack of participation of departmental heads. Your response

indicates the departmental heads certainly are involved and submit their

budgets, and therefore, they have a budget that they are responsible for and

should be managing. Why would a deficit grow seemingly so quickly last year? Was

it unusual things, or was it something -

DR. ROBERTS: Yes, it is a mixture of all - if I

may, it might be a little bit rambling in the response, but if you bear with me.

I think, as I have said - well, first, to put it in context.

Up until 1988 Grenfell Regional Health Services had a

positive fund, a positive variance on the revenue fund, and we were certainly

positive in our combined fund balance. At that time, our situation started to

deteriorate, if you will, financially. We were aware of that. There were many

changes taking place in the environment within which we function. Obviously,

this was the time when the strain on all public services was just coming in - I

am sure you know more about that than I do - and it took some time to work

through. So there was that very general difference in the environment and the

costs of providing services, which came on heavy at that time.

There was a substantial change in the accounting

policies, as I mentioned, and we were required to show, or to book, or whatever,

the -

MR. CHAIRMAN: Have you moved into an accrual

accounting system, or partly into that now? Is that where you are?

DR. ROBERTS: Well, we have always been in an

accrual accounting system.

MR. CHAIRMAN: Not totally, though?

DR. ROBERTS: Not totally. We did not show

severance pay and we did not show vacation pay, both of which we are required to

show now by the industrial standard - the Canadian Hospital (inaudible) Society

or whatever, both of which we are required to show, and both of which are

substantial amounts.

It also came at this time that the amounts of those

things have increased dramatically. The limits were removed, for instance, from

severance pay. Instead of having the twenty-year limit, it increased. There is

no limit now, so - excuse me, I am saying that improperly. Instead of having a

$12,000 limit, we now have a twenty-year - in other words, twenty-week, and

there is a huge difference there. Also, salaries increased dramatically during

that period of time, and that works through with great differences in pensions

and with severance.

MR. CHAIRMAN: Was none of that included in your

budget preparation, though?

DR. ROBERTS: At that time, those things were not

accounted in hospitals anywhere, to my knowledge, and I suppose it is proper to

say this is why the industrial standard changed. People recognized what a

liability that was out there for severance pay and vacation pay.

MR. CHAIRMAN: I can appreciate that, but salary

increases - surely there must have been allowance in your budgeting initially

for projected salary increases.

DR. ROBERTS: There was allowance for salary

increases, of course, in the day-to-day, but not for the liability that would

come in years hence in severance pay -

MR. CHAIRMAN: I can appreciate that.

DR. ROBERTS: - which is a big difference. Salaries

have doubled since that time, with the limit going up at the same time, so

instead of having a limit of $12,000, we now have a limit of twenty weeks which,

in some instances, means that some of the more highly paid employees are now

entitled to $30,000 or $40,000 worth of severance pay, which is a huge

difference.

The other factors, if I may, or some other factors -

we, during that period of time, undertook substantial capital improvements

throughout the area, all of which were not funded. We have, as noted by the

Auditor General, a policy of expensing capital improvements at the time they are

completed so that they show on our books as an asset of $1,

whereas something

that we may have spent $1 million for, or whatever amount, now shows on the

books for $1. This is an issue which has been raised and which again is an

accounting debate, if that is the right term.

We have had substantial capital improvements over the

time, and that has partly contributed to the deficit, as well. We have incurred

consistent - perhaps I shouldn't say consistent, but we have incurred

substantial overexpenditures in the provision of transportation services over

the time.

MR. CHAIRMAN: Can you tell us why?

DR. ROBERTS: Simply because we spent more money

than we had coming in. When we discussed this problem - and it was a known

problem, it was not a secret; it was something we discussed constantly with

government - and we would present government with the option of either reducing

the service or maintaining the service and incurring the deficit, we never did

get a direction from government. And it is a government policy, or it has to be

in accordance with government, and we never did get a direction to reduce those

services.

MR. CHAIRMAN: You are talking ambulance services,

air services -

DR. ROBERTS: Air ambulance services.

MR. CHAIRMAN: Primarily air ambulance.

DR. ROBERTS: Primarily air ambulance.

MR. CHAIRMAN: What would cause the - you budgeted

a certain amount, but (inaudible) required.

DR. ROBERTS: Utilization.

MR. CHAIRMAN: Why would utilization increase so

much?

DR. ROBERTS: That is a good question. I wish I

could answer it, but I can't. Since 1985, we increased the capacity on the North

Coast of Labrador especially, and since that time, the utilization of our

service has - I don't have it in front of me precisely, but I would say it has

doubled in the numbers of people coming from the North Coast communities to

Happy Valley - Goose Bay for particular services.

What drives that, I don't know, or let me say it this

way, I can't say anything any different from: Why do we have increased

utilization of hospital and health services everywhere? It is the same

phenomenon. What happened is, if you will, we removed one of the gates.

Transportation used to be a gate. You couldn't get a seat on a plane. There

wasn't a space so you didn't get transported. When you removed the gate and made

more capacity available, well, the capacity was used. We have, in the past year,

worked, and are working now, to reduce the utilization of transportation

services. We are at present holding it steady, but believe me, it is a mighty

battle.

If I can put it into very practical terms by

illustration, you are faced with the dilemma - a nurse or a doctor in a North

Coast community who sees a patient, for the example's sake, a woman and a man

bringing their child: those parents feel that that child should have an X-ray,

which is not available; the doctor, or nurse, feels that it is not necessary,

and that doctor or nurse is then left with the question, how do you negotiate

that conclusion to that patient visit?

Now, it's fine to say, you should say no. We do that,

and we try to do that, but the reality is that sooner or later, in the system

that we have established, and which we presently maintain, most patients get

what they want. And that comes at great cost, great difficulty. It is the same

problem, really, as MCP. If you go to a doctor in St. John's and you don't get

what you want, you go down the road to Mount Pearl and you don't get it, then

you go out to Torbay and you do get it - and we have paid for it all around.

MR. CHAIRMAN: The comments the Auditor General

made in the report were dealing with a budget monitoring system. How accurate

and how beneficial is that?

DR. ROBERTS: How accurate is the system?

MR. CHAIRMAN: The budget monitoring -

DR. ROBERTS: The system.

MR. CHAIRMAN: Yes. How efficient is it? How

effective is it?

DR. ROBERTS: At the time of the Auditor General's

audit, we were then establishing a variance reporting system. It was new. We

have now had a one-year experience with it. It is greatly improved from what it

was but I can't say that it is absolutely perfect - it is not. We are working

with staff to train and educate and help them in developing this variance

reporting system to the point that it is of practical use to us and them in

making management systems. I think we have made dramatic improvements. But it is

a struggle. We operate in many different locations. We have all the problems of

transmitting information back and forth, and people learning this aspect of

their management responsibilities.

MR. CHAIRMAN: Apparently you do not have a

financial management manual in place, which is a pretty basic tool. You are

doing that now. Why only now?

DR. ROBERTS: We do have a financial management -

the paper, the document in place, the book of words. As for myself, I can't -

Mr. Sansford can offer - I can't offer you any specific reason why we didn't do

that, and I do not offer it as an excuse, except to say that in my experience,

most hospitals would not have the kinds of policy manuals that we have since

developed.

MR. SANSFORD: There were different manuals for

different policies by different sections of the accounting, and they weren't

assembled into one policy and procedure manual, as such. Now we have done it and

put it into one place so that we can continue on.

MR. CHAIRMAN: Perhaps I could ask the Auditor

General: Have you seen this new policy manual since you have done your audit?

MS. MARSHALL: No, Mr. Chairman.

MR. CHAIRMAN: You have no idea whether it is

acceptable or not.

DR. ROBERTS: It is available, obviously, and as

you wish.

MR. CHAIRMAN: A problem we have found with many

agencies that we have investigated is that their management policies and

procedures have not been adequately documented and there has been no control to

ensure that policies made by boards have been followed up. One of the real

weaknesses we find every time we sit down with this type of information is that

procedures might be there but they are just not followed, and the question is,

why are they not being followed?

DR. ROBERTS: I wouldn't pretend to argue the

point.

MR. CHAIRMAN: The 1990-91 fiscal year annual

report was not prepared and submitted to the minister. Can you tell us why that

was not done?

MR. WAYNE NOEL: We submit to the Department of

Health, or to the minister, obviously, our financial statements for the year,

our statistical and financial information, and the working documentation which

is called the HS-1s and HS-2s. They are submitted regularly. There is some

question whether or not that constitutes an annual report. I am not sure of the

answer to that, but we have regularly submitted those without any question.

In previous years, I, as the executive director of

GRHS, in addition, submitted a written report, which would have been fifty or

sixty pages of commentary on the work of Grenfell Regional Health Services. At

one stage - I guess there is no other way to say it - one year I didn't even get

an acknowledgement that I had submitted this. I checked with various other

hospitals and I learned that many hospitals, in fact, most hospitals, to my

knowledge, were not submitting a commentary such as I had prepared. So, we

ceased the practice. It seemed not to be productive and not to be appreciated

and not a worthwhile exercise. The first comment to the contrary, obviously, is

the Auditor General's comment and we now have determined that we will submit a

written/verbal annual report, in addition to the statistical and financial

information.

MR. CHAIRMAN: Thank you.

Let us have a look again at some of the tendering

procedures. There is evidence that tender documents have not, in the past, been

deposited in a locked tender box, opened in public, and so forth. That has been

corrected, I am told. Would you like to refer to that, Mr. Noel?

MR. WAYNE NOEL: Yes, it has.

MR. CHAIRMAN: It is also disclosed in our

documentation on Page 11 that tender evaluations are not adequately documented.

Was there any evidence in the past that tenders were not properly awarded and

that there was any tampering by anyone? I am not pointing fingers at anybody

here, but did you, prior to putting in place these proper procedures, have any

reason to believe that there may have been any discrepancies in the way tenders

were awarded?

MR. WAYNE NOEL: No reason whatsoever.

MR. CHAIRMAN: There was one tender awarded in

December 1991 for a Mobile Infant Radiant Warmer. Refer to Page 15 of the book

there. The closing time and date of the tender was January 15, 1992 at 3:00 p.m.

Only one tender was submitted in the amount of $18,903 prior to closing time.

The second tender was submitted on January 21, six days later, a lower tender,

and the board subsequently awarded the second bidder. A: Why was the second one

even accepted after the closing date? And, B: Why was it awarded to, really, a

bid that was not a valid bid because it was not in on time?

MR. WAYNE NOEL: The first bid that was received

did not meet the specs and we asked for a quotation from another company that

could provide the equipment we were looking for. The first warmer did not meet

the specs; it was not computer controlled, which was part of our requirement.

MR. CHAIRMAN: Then it wasn't a valid tender. You

said it didn't meet the specifications - it was not a valid tender at all.

MR. WAYNE NOEL: Exactly. There are only two

manufacturers of infant warmers. The first one didn't meet the specs, so we

obviously went out and asked for a quotation from the second one, and the second

one was a lower bid.

MR. CHAIRMAN: But you did not go for new tenders,

you did not recall tenders?

MR. WAYNE NOEL: We didn't, because it became the

sole source.

MR. CHAIRMAN: It wasn't explained as that, I

guess, in the documentation we have here.

DR. ROBERTS: I think, if I may, to make a general

comment, the business of a sole supplier is obviously a difficult one for a

place such as a hospital dealing in specialized equipment. And my conclusion is

that we may only have one supplier but, like it or not, we more often will have

to go through a tender process knowing that there is only one supplier.

MR. CHAIRMAN: The tender Act is not designed to

frustrate the work of government or any government agencies and if there is only

one source, then there is provision in the Act that allows you to go to that one

source and report that. In this case, I assume you didn't know prior to calling

tenders that the other - you say there is that much difference in the two pieces

equipment?

MR. WAYNE NOEL: Well, one piece is old technology,

it is an old, manual system and the newer piece of equipment is

microprocessor-controlled, it is state of the art.

AN HON. MEMBER: But it is still cheaper.

MR. WAYNE NOEL: But it is still cheaper, yes, as

is in many of the electronics in this day and age, it is much, much cheaper. We

knew full well, when we tendered, that those two tenders were out there, but

this particular vendor didn't bid; that is, we probably neglected to send him a

copy of the specs. It is obviously required under the Public Tender Act, to

advertise in a newspaper that is in general circulation in the Province, which

makes that The Evening Telegram only, and, of course, in any other printed media

that is deemed appropriate. But we only advertised in The Evening Telegram for

that particular tender and that is why they didn't bid, and we obviously

couldn't accept the one who did.

MR. CHAIRMAN: We are getting close to 3:30 p.m.,

and time for coffee break, as I understand we normally do.

We will go back to Mr. Penney, now. Maybe he would

like to carry on.

MR. PENNEY: Thank you, Mr. Chairman.

I have a few follow-up questions to some of the

questions that have been asked and at least partially answered already. I will

not direct the questions to anybody specifically, but I would just like to pick

up where we left off on some of them.

I believe it was Mr. Crane who was asking questions -

I am not absolutely certain about that either - concerning the notation that was

made there on a number of occasions that there was only one vendor who could

supply a particular piece of equipment, and the answer started to refer to the

purchase order number at the beginning of the page. It was equipment repair, and

obviously that could only be done by the company which supplied the piece of

equipment. But I would like to go a little bit further down that sheet - we are

on page 31, if you would like to check. Let's go down to number 13603 -

`Enhanced Video Camera'. We were informed that only one vendor could supply this

camera. Certainly, that can't be true, that in these days of electronic

technology, this particular camera is so different that there is only one

supplier?

MR. WAYNE NOEL: This is an enhanced video camera

used in the OR for orthopaedic surgery. The camera had to fit on to existing

Synthes equipment and I am informed it is the only one that will work.

MR. CHAIRMAN: So we are talking compatibility

rather than it's old.

MR. WAYNE NOEL: Yes.

MR. PENNEY: So, if you were replacing the entire

system it would have been totally different?

MR. WAYNE NOEL: Yes.

MR. PENNEY: This was the only camera that you

could purchase that would fit with the other equipment you already had.

MR. WAYNE NOEL: Yes, existing equipment.

MR. PENNEY: What about the second one down from

that, 15286 - `Brochures' - only one could provide brochures for $10,000?

DR. ROBERTS: Which number is that again, Sir?

MR. PENNEY: Number 15286, serviced by the same

vendor, but brochures - and it says we are not aware of the reason on that one.

DR. ROBERTS: Those brochures were prepared for the

Grenfell Centennial which was funded by the International Grenfell Association,

in conjunction with some funding that was provided by government, and

arrangement was made in conjunction with government to purchase those from one

provider.

MR. PENNEY: On the following page, number 13558 -

we are talking about orthopaedic equipment. Does the same thing apply? Is there

only one vendor who could supply this equipment as well?

MR. WAYNE NOEL: Yes, that is correct.

MR. PENNEY: When we say one supplier, are we

talking about one supplier available in the Province of Newfoundland and

Labrador, one vendor in Canada, or -

MR. WAYNE NOEL: This would be in Canada. My

understanding is, this is highly sophisticated orthopaedic equipment used to

provide special procedures and that is the only company that can provide that

piece of equipment.

DR. ROBERTS: It would be a type of equipment used,

for instance, for joint replacements and for fracture repairs. It involves

hardware which is used internally and special equipment to insert that

equipment.

MR. PENNEY: As Mr. Windsor stated at the outset,

my questions are not designed to be interrogation, they are simply questions

looking for information. I hope you can appreciate that.

Page 48: Mr. Langdon asked about the group insurance

premiums. It became apparent that you have been paying premiums based on a

number of employees greater than that enrolled in the plan. The answer was that

that has been corrected. My question is: How long did this exist before it was

corrected? Did this situation apply for one year or was it three or four years,

or had it been going on for a long time?

MR. WAYNE NOEL: I don't have the details on it,

but my understanding is, it was just for a few months, and when it was

discovered, the correction was made.

MR. PENNEY: Could you give us some idea how many

dollars were spent in excess of what should have been?

MR. WAYNE NOEL: I cannot.

MR. PENNEY: Approximately, what was the saving

when it was corrected?

MR. WAYNE NOEL: I can't answer that. I can get the

information, but I don't have it with me.

MR. PENNEY: Okay. If I may continue, Mr. Chairman.

MR. CHAIRMAN: Mr. Penney.

MR. PENNEY: Again, I am referring to the Auditor

General's Report here, for convenience. I ask this question to give you a chance

to correct any misstatement if, in fact, there is one, or to give you at least

an opportunity to defend yourself against a statement that is made by the

Auditor General.

In the middle of page 23, it refers to an $800,000

overdraft. The Auditor General reminds the reader that

Section 26(1)(

g) of the

Hospitals Act states that approval of the Minister of Health shall be required,

or is required, in order for there to be such an overdraft. The statement is

made: "We could find no documentation that these overdrafts were approved by the

Minister." Is that, in fact, correct?

DR. ROBERTS: That is correct. We were not aware

that we were required to have that approval. We are aware of the Hospitals Act,

of course. To my knowledge, the Hospitals Act - I can't cite the precise

article

- allowed us to carry on the day-to-day business as necessary and authorized us

to do that. It was our understanding, not through a formal opinion ever

rendered, that I know of, but generally understood to my knowledge through other

hospital administrators, that overdrafts or lines of credit in the day-to-day

operating, and particularly at the end of the year when there is this hitch, if

you will, in the transfer of funds from the Province to the agency, that

overdrafts were common practice.

We understood that that provision was intended to

address the situation where an agency would seek a loan for some specific

project, such as constructing a building or whatever, above and beyond the

ordinary day-to-day activities of the agencies. The Auditor General has made the

comment, and is quite correct, that we did not have that approval. Being

obviously concerned with such comment, we have sought such approval now and the

minister has granted that approval.

MR. CHAIRMAN: Mr. Penney.

MR. PENNEY: Thank you. I would like to just deal

with a few more specifics. Mr. Windsor, when he was questioning - you dealt with

the overall general report, the general finances and the accounting procedures.

I would like to deal with a couple of more specifics. On page 49 of the report,

it says under Receiving Reports: "When goods are received there is no written

report prepared to indicate receipt of goods."

Now, my understanding of that, again, from a business

background, is when an invoice is submitted to your office to whoever would be

responsible for making out the cheque, unless there is some kind of

documentation, some kind of a packing slip, carrier's receipt or something to

show that you had, in fact, taken possession of a piece of equipment or

supplies, conceivably, the board could be paying for merchandise or equipment

that you did not receive. Is this, in fact, the procedure that had been

followed? Secondly, has it been changed and do you anticipate that maybe money

was expended for merchandise or equipment that was not, in fact, received?

MR. WAYNE NOEL: Not that we know. No, I am not

aware that we paid for any equipment that we never received. Yes, that was the

procedure prior to January 1 of this year. Since then we changed from a manual

system to a computerized system, whereby the computer generates a receiving

report which has to be completed, and then, the data entered into the computer

before the invoice can be paid.

MR. PENNEY: Is there a possibility that something

may have slipped by - something substantial? How would the person making the

payment know whether or not the merchandise was received?

MR. WAYNE NOEL: He wouldn't know; previously, he

wouldn't know, he would now.

MR. PENNEY: Yes, prior to this change.

MR. WAYNE NOEL: Prior to this, he wouldn't know,

but the invoices would have been sent to the using department, they would

consolidate their invoices with their purchases and anything that got paid for

would obviously be picked up on that end.

MR. PENNEY: In other words, if the check were made

out for $10,000 worth of pharmaceuticals that were never received, that would

account for some of the discrepancies that I asked about in my first line of

questioning, would it not?

MR. WAYNE NOEL: No, it wouldn't, because when the

invoice went back to the pharmacist, he would pick that up.

MR. PENNEY: Okay, I accept that.

If I could direct you to page 52, in the middle of the

page under Inventory, there is a comment there by the accountant, Ernst and

Young: `Several inventory pricing errors were found when conducting our audit

work.' And, on page 45 - this is August of 1990 - `Several inventory pricing

errors were found when conducting our audit work.' Page 52, we are looking at

July 1991: `Several inventory pricing errors were found when conducting our

audit work'; page 59, we are now into July of 1992 and find practically the same

comment again, three years in a row. Could somebody explain to me how that could

happen, that your accountants, your auditors could make the same comments to you

three years in a row and it would not have been corrected?

DR. ROBERTS: I can explain how - I am not sure it

justifies. The answer would be that counting an inventory manually demands

substantial effort from staff, and, in spite of - we discussed this many times

but people felt that we were not sufficiently staffed to count that inventory as

was suggested.

MR. PENNEY: When I asked the question first I

believe I was told that you had two pharmacists on staff for three locations.

Which is the location that does not have the pharmacist?

DR. ROBERTS: Churchill Falls doesn't have a

pharmacist.

MR. PENNEY: Churchill Falls.

DR. ROBERTS: And two pharmacists is grossly

understaffed for an organization of this size.

MR. PENNEY: I can appreciate that.

DR. ROBERTS: We have a pharmacist here who does,

by our estimate, the work of three pharmacists. That is a substantial problem

and concern for us which we have not been able to correct.

MR. CHAIRMAN: Because you can't get personnel?

DR. ROBERTS: Funding of the position -

MR. CHAIRMAN: Funding.

DR. ROBERTS: - of an additional position, and,

secondly, the difficulty of attracting a person to come and work in the

community. We are not able to offer salaries which are competitive with private

enterprise. And, until very recently, pharmacists were in great demand, as I am

sure you know.

MR. PENNEY: And they all want to stay in St.

John's.

DR. ROBERTS: And we know they all want to stay in

St. John's.

MR. PENNEY: Why, then, would the comment be there

that these errors, the pricing errors, were most prevalent in Goose Bay?

DR. ROBERTS: I have no specific answer. I don't

know. I think I could say generally - and again, if I may ask that you

appreciate the difficulties of a regional system, where we have to weigh the

balance of trying to operate a system of shared services, at the same time

allowing sufficient autonomy to people working in the periphery to make the

decisions reasonably that they need to carry on their work, that we have a swing

back and forth.

Many of us believe that we should have only one

material management system throughout the organization. We have not succeeded in

achieving that yet. We have improved our material management system by the

addition of a module to our computerized business systems, and we are now

actively, at this moment, investigating extending that to Happy Valley - Goose

Bay through a communication link, either through satellite or telephone, to be

decided. But, in the absence of that single system, we have had to live with

this difficulty of managing at a distance and allowing people autonomy, and

sometimes things happen which are not as we would like them to be.

MR. PENNEY: One more very quick question, Mr.

Chairman - we have another minute before it reaches 3:30 p.m. If I could direct

your attention to page 95. Now, I know there is obviously a very simple answer

to the question I am going to ask. I just can't seem to come up with one on my

own. It shows the 1990-1991 budget for the Paradise River Nursing Clinic to be

$18,725. Between 60 and 65 per cent of that is for housekeeping, $10,979. First

of all, could you tell me what that involves? Because it doesn't include linen

or laundry. What does housekeeping mean in this case and why would it represent

almost 65 per cent of the total budget for that clinic? Because I have looked at

the others, and I see housekeeping for Port Hope Simpson Nursing Station to be

$1,650 - that's on the next page - out of $276,000.

MR. SANSFORD: In Paradise River the nurse would

visit from Cartwright - it would be the nurse from Cartwright, so it doesn't

show any nursing visits salary there.

AN HON. MEMBER: That's right.

MR. SANSFORD: So that would not show in the

Paradise River budget.

DR. ROBERTS: So the part-time aid in Paradise

River would be shown under housekeeping. At that time when we operated that

clinic we had a person in Paradise River working part-time with us and that is

where the salary was shown.

MR. PENNEY: So the salary expense is actually

shown here in the budget sheet under housekeeping?

DR. ROBERTS: Paradise River was an unusual

situation and not a typical station. We had a part-time arrangement there. It is

a small community, as you know, of seventy people, and this was, if you will, a

makeshift arrangement that we made to provide services in that community. The

nurse from Cartwright would provide the service. We have since discontinued that

service, pretending to run a clinic in Paradise River.

MR. PENNEY: Yes, I note that there is a figure for

nursing units in all of the other nursing stations but not that one.

Thank you very much.

MR. CHAIRMAN: Still, the housekeeping expenses are

much higher.

It being 3:30 p.m., we will take a ten-minute break. A

cup of coffee is coming somewhere, I think - compliments of the Board.

DR. ROBERTS: Coffee is in the room next door if

you would like some.

Recess

MR. CHAIRMAN: Order, please!

If everybody is ready we will call the meeting back to

order. Mr. Penny has indicated that he is finished for now. What about Mr.

Crane, at the far end, now? Mr. Crane, would you like to put a question?

MR. CRANE: Thank you, Mr. Chairman. I have one

question for Mr. Patey. I am very closely connected with a hospital board, Mr.

Patey, and I know some of the problems you are going through. First of all, I

would like to congratulate people like you who work so hard for boards for no

remuneration. Sometimes you get a good kick in the pants for doing the work

you're doing.

Do you have any problem with just the administration

when you question them as to certain deficiencies that are noted in this report?

Say, if you questioned any of the officials of the hospital, do you have any

problem in getting answers?

MR. PATEY: Not really. I would just like to say, I

have been Chair since February of 1991 and had no prior experience with hospital

boards, etc. At that time, we became very concerned over the fact that there was

no active finance committee within the board. We were concerned over the quality

of the information that we were getting from the comptroller's office. It was no

reflection on the comptroller, I think it was primarily because of the system

that was being used. It was information that I did not understand and I am sure

that the board members did not understand either. Since that time we have had a

consultant in the person of Mr. Butt, who was with the Carbonear system there, I

think, Mr. Don Butt, and since that time I must say that the information has

improved dramatically to the point where we do get monthly reports, statements

from the comptroller's office. We have also introduced variance reporting from

our staff people, the department heads, and that also is improving. The question

as to whether we get answers - I have had no problem. I have had no reason to

doubt -

AN HON. MEMBER: That you were getting the correct

answer.

MR. PATEY: Yes. This process here today has opened

up for me, at least, some areas of concern and I do appreciate that.

MR. CHAIRMAN: Mr. Crane.

MR. CRANE: That is fine, because I know in some

areas sometimes management and the board more often clash than they co-operate,

causing some headaches and some difficulties.

Now, I think I will pass it on to Oliver.

MR. CHAIRMAN: Thank you, Mr. Crane.

Mr. Langdon.

MR. LANGDON: On the Native Blue Cross, at the

bottom of page 53, it says, at present there is only one account for the Native

Blue Cross dental revenues which were given in 1991. 'Moreover, only revenue is

recorded for Native Blue Cross

whereas all other locations with dental services

record both revenue and expenditure.' What is the reason for not including

expenditure?

DR. ROBERTS: We provide services to native peoples

and we receive reimbursement from the native people's support organizations via

Blue Cross, who function as the administrator of their funds. Specifically in

dental services we would provide dental treatment to a patient and we would then

bill the Blue Cross plan for that service so, in that sense, there is a straight

revenue and we don't identify a specific expense. Other than seeking the revenue

we do not identify specific expenditure to that actual treatment.

MR. LANGDON: On the next page - page 54 - under

`Vacation Pay'; I find that a little bit strange. In fact, it says, `Through our

discussions with management, we have observed that a number of employees had

vacation pay accrued in excess of that allowed by personnel policies. In effect,

employees are carrying forward vacation days during one period and being paid

for them at a higher wage rating during a later period.' How long has that been

a practice, just one year, or what?

DR. ROBERTS: That has been a practice since my

time, and there are some good reasons for that, even though it presents

problems. For instance, when you have a sole provider of a particular service

and work is such that he or she is not able to take a vacation, we have had to

recognize that that person - we can't disentitle him or her to their vacation so

we have allowed them to carry that over.

I think we could say fairly that in the past we

resorted to that expediency far too often and we have greatly reduced the

numbers of people whom we allow to carry over vacation time. In fact, to some

people's unhappiness, we have forced people to take their vacations or to

forfeit them. So we have greatly reduced the number of people who have

accumulated vacation for which we have the liability. But it is a difficulty. If

you have one doctor in one location and life is such that it is not possible to

say to that doctor: Take a holiday, and either go without a replacement, or have

a replacement in place, then we have had little choice in some instances other

than to allow them to accumulate.

MR. LANGDON: I also note in the report that there

are a few instances, although only minor, and the number of personnel involved

is minor as well, where several people went on vacation without the personnel

and management people in the hospital knowing about it. I am sure it must have

been difficult for an executive director like you, and the personnel, but what

about the patients?

DR. ROBERTS: Yes, it is difficult, of course it

is, and it is a management issue on which we, I hope, have a good handle. I

don't know of any instances ever where we would have deprived or lessened the

service that we provide to a patient because of such an occurrence.

MR. LANGDON: But the person who obviously did

that, documented from the Auditor General's Report, would that person's contract

be terminated because of that, or would there be some extenuating circumstance

to allow him back?

DR. ROBERTS: It would be unusual. We would discuss

the occurrence with the staff person and given that there was reasonable intent

or, if you will, no untoward intent, we would accommodate that person with

instructions and the expectation that he would not repeat that.

MR. CHAIRMAN: Mr. Dumaresque.

MR. DUMARESQUE: Thank you, Mr. Chairman.

Page 39 indicates that there is no strategic plan in

place for Grenfell. Has any progress been made on strategic planning for

Grenfell, and if so, when do you expect to conclude?

DR. ROBERTS: We do not have a strategic plan in

place at this time in the sense that we do not have a document which says that

this is what we are trying to do. Given the realities of the environment within

which we work, and the changes which have occurred in the past, let's say, five

years, and the possibility of future changes in the organization of health

services, the range of health services, and the manner of providing them, one

does have to ask the question: What is the utility of a strategic plan at this

time?

We have seen a lot of strategic plans go up in smoke

very quickly after very prolonged efforts in producing them. It is a difficult

issue. Having said that we don't have a written document which is a strategic

plan, we do have a good concept of our business, of the work which we do, of the

range of services that we provide. We have a constant discussion with government

through the minister and the Department of Health. The Board is actively

involved in discussions of what range of services we will provide. So we are

proceeding in a generally accepted direction, recognizing the uncertainties

within which we work.

MR. DUMARESQUE: I was wondering earlier when you

said you were trying to adjust the transportation cost, or trying to economize,

if that is an appropriate word - I think particularly about my area, and say,

the Mary's Harbour to Charlottetown area, Norman Bay area, whether some thought

has been given, as far as strategic planning is concerned, to upgrading, say,

the Port Hope Simpson facility and having local transportation provided, like

through the same airline as you do now for Medivac, and so forth, that something

along those lines would be looked at in the future.

DR. ROBERTS: Two comments in response to that.

When I first became involved in administrative work in GRHS in 1975 - in fact, I

was the travelling doctor in that area - I had the great idea that I was going

to get all the patients to go from Mary's Harbour to Port Hope Simpson. After

about two clinics in that area I quickly realized that my great ideas weren't

well-founded and that the reality on the ground, and people's wishes, and the

infrastructure in the communities weren't going to allow that.

We have not a specific plan to upgrade one of the

stations on the South Labrador Coast, or the Southeast Labrador Coast, in that

Charlottetown - Port Hope Simpson - Mary's Harbour area. They all function

pretty much as equals in terms of what they can do. Port Hope Simpson does have

the largest population. I should add Fox Harbour - St. Lewis as well. They all

function pretty much as equal. Up until this summer, there has been the

additional problem, especially in Port Hope Simpson, that the great majority of

the people from the community have gone out to the summer fishing settlements.

This summer is different. The majority of people have stayed in Port Hope

Simpson, and that may, in fact, lead to some reconsideration of the way we

provide services in that area.

The second comment is with regard to transportation,

which, as you know, is as important as health services in this area. It is

crucial to all activities, especially to health, when you are talking about a

small number of people dispersed throughout a large area. We set up a

transportation service in 1985 with a thorough discussion with government, with

consultation from outside experts retained by government, with a long process,

and we established the transportation service we have now - with one exception.

The plan was that we would keep the turbo Beaver, which we had at that time, and

that we would operate that, because that was most important in providing

transportation for people from the South and the Southeast Labrador. In fact, in

our view, it was essential. Unfortunately, when we went to implement the plan,

the private contractor who owned that aircraft demanded what we considered to be

too great a price for the aircraft, and, in conjunction with government, we made

the decision not to purchase that aircraft.

I think, in retrospect, it is the one element of our

transportation system which has not worked as well as we would have liked.

Consequently, we have subsequently, since 1985, monitored our transportation

system. We continue to monitor, and we continue to discuss the possibilities of

changing the transportation system with the idea of improving it, particularly

for the people of the South and Southeast Labrador.

MR. DUMARESQUE: Page 43 - No Conflict of Interest

Guidelines. Since every member of the House now is coming under extreme scrutiny

on conflict of interest, I just wondered if there has been any thought given to

putting guidelines in place.

DR. ROBERTS: We will develop conflict of interest

guidelines, obviously, if that is a recommendation and we are required to do it,

and in good, prudent business practice, without any hesitation we will do that.

Having said that, in my time and in my involvement, I am not aware of a conflict

of interest situation which has ever arisen, which we have not adequately and

properly surfaced, put up on the table and dealt with as it should be dealt

with. I have not seen an activity, again to my knowledge, and obviously, I may

have missed or could be mistaken, I have not seen any activity taken by GRHS

with a conflict of interest component to it.

MR. DUMARESQUE: The International Grenfell

Association board membership - what participation does Grenfell have on that

board?

DR. ROBERTS: The Board of GRHS?

MR. DUMARESQUE: Yes, do you sit on the IGA Board?

DR. ROBERTS: GRHS does not have any representation

officially on the Board of the International Grenfell Association. The IGA is a

private corporation which is entitled to select its own board members and does.

As a matter of courtesy, the Board of the IGA has adopted the practice of

inviting the Chairman of the Board of GRHS to attend meetings, and through a

business arrangement, I, as the Executive Director of GRHS and formerly of the

International Grenfell Association, have attended board meetings and acted,

through an agency agreement which we have with the IGA, in their interest.

MR. DUMARESQUE: One final area, Mr. Chairman, is

that, in the Labrador Straits and particularly in Forteau, in the health care

facility, many people have mentioned to me about the make-up of the staff at the

hospitals. In particular, about 80 per cent of the staff are of one religion and

they make up probably 5 per cent of the population in that area. I am not saying

that these people are not being hired with all the credentials that the position

calls for; however, a general perception is that there is something different

about how that process has worked in the past. I know that you would probably be

bringing on some more staff in the not-too-distant future, and I am wondering if

there has been any thought given to that process to ensure that certainly that

perception is not a valid one.

DR. ROBERTS: We are aware of perceptions and we

are aware that many perceptions are incorrect. I grew up in St. John's at a time

when I thought CBC stood for Catholic Boys Club! It is incorrect to say that

there is any bias or discrimination on any grounds in hiring practices within

GRHS. We have well-established policies and procedures which we employ when we

employ people of any sort; there are policies which apply to all levels of staff

whom we employ and appoint.

In this instance, in the Forteau area, and you are

referring in the future, of course, to the addition of staff for the long-term

care component of our work there, we will go through the standard employment

practices which will involve our staff person who is responsible for the

administration of that facility, in conjunction with our human resources office.

MR. DUMARESQUE: One final question for the Auditor

General.

In light of what you have heard today and what you

have gotten back from the administration board of the hospital, how do you feel

about compliance with respect to the deficiencies that were noted in the audit

of last year?

MS. MARSHALL: Based on both the written response

and the hearings here today, I feel that the board will be addressing the

issues.

There was one response there which I did not feel was

satisfactory. That was with regard to the annual report, where I believe the

commitment was made to submit the audited financial statements to the minister

and a verbal report on the activities of the board, and I felt that a written

report should be submitted.

MR. DUMARESQUE: Okay, well -

MR. CHAIRMAN: I think, by verbal, he meant a

written report versus an oral report. Is that right?

DR. ROBERTS: Yes.

MR. CHAIRMAN: I made the wrong assumption earlier,

but I corrected myself when he spoke to it.

DR. ROBERTS: A written report in addition to the

audited statements and the statistical -

MS. MARSHALL: Information.

DR. ROBERTS: Information, yes.

MS. MARSHALL: We will be doing a follow-up audit

usually around two or three years after we have made the initial

recommendations, to follow up.

MR. DUMARESQUE: Okay. Maybe, if you wouldn't mind

giving me an opinion on that aspect of Page 317 that I noted earlier - that the

information in the Special Purpose Funds `has not been subjected to the auditing

procedures applied in the examination of the basic financial statements and

accordingly we do not express an opinion on the fair presentation of the

information referred to above.'

Is that the general procedure that would be adopted by

an accountant?

MS. MARSHALL: Yes, but that would depend upon what

the board wanted the auditors to do, so that if the board wanted an audited

statement I am sure that could also be arranged through the auditors.

MR. DUMARESQUE: But just the fact that these funds

are going through the budget, or the budgeting process of GRHS, would that not

automatically tell these people that they should come under some kind of an

audit and general auditing procedures?

MS. MARSHALL: Yes. As an auditor, I would lean

towards having audited statements as opposed to unaudited statements, but again

that is at the discretion of the board.

MR. DUMARESQUE: At the discretion of the board?

Okay. Thank you.

MR. CHAIRMAN: Are you finished, Mr. Dumaresque?

MR. DUMARESQUE: Yes, Mr. Chairman, I am.

MR. CHAIRMAN: Thank you very much.

There are a few things I would like to get back into.

Fixed assets - it was brought to our attention here earlier that there has

appeared to be some weakness in recording when purchases are made and what is

received and what is paid for. At least until recently - I don't know if you

have changed - there was no system of identifying fixed assets, equipment,

capital purchases. Have you now, in accordance with the recommendation of the

Auditor General, put in place a system in which a tag is attached to any piece

of equipment?

DR. ROBERTS: We are in the process of doing that.

Referring to fixed assets in the sense of equipment and furnishings and that

sort of thing, as opposed to buildings - major capital items - yes, we are

acquiring a module for the computerized business system dealing with the fixed

assets, and we are employing a volunteer to go through the process of putting

that system on. It involves a lot of work, as you know, I can imagine, and will

take a fair amount of time to do that. It will take a year, probably, to go

through that process. We have equipment in twenty different locations.

MR. CHAIRMAN: So I take it previously you had no

idea of where things were, or if they are still there, if anybody has taken

them, or -

DR. ROBERTS: If you will allow me to agree with

you slightly, yes, it has been a continuing problem and we have never had the

staff to deal with it. We have attempted in the past to tag and identify and

record equipment, but it has become an overwhelming job requirement and we

haven't had the people to do that.

MR. CHAIRMAN: Even more important when you are

dealing in twenty different locations.

DR. ROBERTS: Agreed, without any hesitation.

MR. CHAIRMAN: Housing - there is a reference here

to the board operating housing. Would you like to tell us, first of all, what

housing you do provide, in which areas, and what some of the policies are, as to

whom we provide housing? Is this an incentive to get professionals in, or is it

DR. ROBERTS: We have housing in many different

locations. To run through them, we have housing in St. Anthony, Happy Valley -

Goose Bay, Roddickton, Flower's Cove, Forteau, Nain, and I guess that's it - a

combination of facilities independent of the health facilities. Some of these

stations have accommodations as part of the station. The station includes a

clinic and an upstairs part which is the living quarters.

We have a substantial involvement in accommodation.

This developed in the first instance as a necessary part of doing business, to

attract the staff and to retain staff whom we require to do our services. There

is always great debate about housing. It costs money, without question. We have

a major involvement in terms of effort, and, if you will, tie-up of our assets

in accommodation. In St. Anthony we have four apartment buildings and I guess,

at the current count, twenty independent residences. They are, on the whole,

occupied by professional staff, but not exclusively so.

We have, at times when we have had vacant

accommodation, tended to try to fill that accommodation, perhaps, if necessary,

with a non-professional person, but in the interests of getting some revenue for

that vacant accommodation, we have filled it. We have, on an operational level,

a continued - and I suspect will for the future, whatever give and take on the

accommodation issue. We have to have accommodation available for certain people

to attract them to come to this area. From my experience, I would say that it is

simply pointless to expect a doctor to come to this community and to establish

himself in practice unless there is some accommodation available in the

community - not speaking about cost, just the availability of the accommodation

service.

I speak personally. I came to Roddickton in 1973 and

would not have dreamed of going to Roddickton if I had been expected to find and

provide the standard of accommodation which I felt I would need to allow me to

live and work properly in that community. We still provide accommodation there.

Similarly, in this community, we do.

In the past year, we have identified the costs

attributed to accommodation much more accurately than we had previously. They

tended to be combined with various operational costs and recognizing the

involvement of accommodation, recognizing the changing times, we identified

costs more accurately and attributed them where they should be attributed.

Having done that, we have adopted a new accommodation policy which will do two

things: number one, which will better recoup the cost of providing that

accommodation, and secondly, which will encourage people to be responsible for

their own accommodation. I assure you that if we didn't have to be involved in

accommodation services, we would be out of it instantly, but that is not a

prospect that we foresee in the near future.

MR. CHAIRMAN: How does the cost of your

accommodation compare with the private market in the various areas we are

talking about here? Is it comparable?

DR. ROBERTS: It is very difficult to determine

what the private market is. Let me give you an example - well, there are a

couple of examples - but one: We attempted to sell a house recently. We put it

on tender. It was a house that about eight or nine years ago we spent $30,000 to

acquire. We needed accommodation for our staff, since we were increasing and so

on. We have not done a tap of work on that house over the time and it has

deteriorated. No longer feeling we needed it, we put it on public tender. The

first response to the tender came back with the highest bid being $10,000 - two

tenders? three? - three tenders, the highest bid being $10,000. The property is

appraised by the municipality at $22,000. We refused the tender - we did not

accept it. We re-tendered it. We have no bid. So what do we do?

MR. CHAIRMAN: How about the cost, though? Can you

compare the cost of what it is costing the board to provide accommodation for

staff versus renting accommodation from the private sector?

DR. ROBERTS: That is hard to answer because there

isn't a sufficiently large market to gauge -

MR. CHAIRMAN: That is one of the areas I can

appreciate, but

here, (inaudible) and I think, for example, it must be

stopped.

DR. ROBERTS: Well, it is difficult enough here in

town. The comparisons are the federal Department of Transport, which owns some

housing; the school board doesn't own housing anymore; we are by far the biggest

landlord. We are the biggest landlord north of Corner Brook, more even, and our

accommodations generally speaking, are probably a bit better than is available

in the private rental market in the community. There are two apartment buildings

that I can think of, one which was - I don't know the status of it, but it was

taken over by a receiver recently, and it would not be of a standard to which we

would aspire. But, having said all that, it is a constant problem and we have to

continue the effort to regain costs and to encourage people to be responsible

for their own accommodation, balancing the need for services.

MR. CHAIRMAN: Is this accommodation made available

at cost or free of charge, or is it part of the overall package?

DR. ROBERTS: No, it is not available at cost, by

the current policy, which is different from what was in existence when the

Auditor General did her review. Our rates vary, from approximately - at this

moment in time, I don't have the list in front of me, but they would vary from

approximately $800 a month for a six-bedroom house to about $300 or $400 a month

for a two-bedroom house, with heat and light included. We are not recovering the

cost of providing our accommodation.

MR. CHAIRMAN: So there is a subsidy?

DR. ROBERTS: There is definitely a subsidy. This

becomes an issue, especially with professional staff, in that many professional

staff consider housing to be a subsidized service for them and they feel that is

part of their terms of their employment and it becomes an issue of contention

that we have to bargain. And it is especially difficult at a time when salaries

in the Province have been frozen, when most professional people have noticed a

decrease in their take-home income because of taxes and so on.

MR. CHAIRMAN: There was a time, I recall, when

Newfoundland and Labrador Housing Corporation held a housing portfolio available

for nurses, teachers, and others, particularly in isolated communities. Were

they subsequently turned over to the board, some of them, or do you still

utilize some of their accommodation? The second part of the question is, Do you

see any advantage in turning your portfolio over to the Housing Corporation and

have them manage it for you?

DR. ROBERTS: We have never had Newfoundland and

Labrador Housing Corporation involvement here; we have discussed it with them in

the past and my memory was that they just weren't much interested in it and they

said, in effect, look, you are running the accommodation in St. Anthony - we

have no ability to do anything in accommodation in St. Anthony and it will only

get worse, and with respects, I think that would apply right now.

MR. CHAIRMAN: It is not true, they are not

interested, unless the Department of Health told them they weren't to be

interested; government made that decision, so -

DR. ROBERTS: I think -

MR. CHAIRMAN: Would you see that as being of

benefit to the board if you had a professional housing organization manage a

portfolio rather than - not that you are not professional, but you are

professional from the medical operational point of view. What staff do you have

managing that for you - or is it just something that is done in your spare time,

so to speak?

DR. ROBERTS: As you say with a smile, it is

something that is done in our spare time by other staff doing other things,

including myself, hospital administrative staff, maintenance staff and so on.

Would another agency do it better? I don't think so, personally. I think we do

it better making decisions on the spot with those who are most involved.

I think what has to happen - and this is an area of

contention between the board and staff - is that the board has to recognize that

it is a health board and not an accommodation board, and we have to do

everything possible to encourage people to be responsible for their own

accommodation, and for those who choose to rent accommodation for us, that they

carry as much of the cost as is possible. School board experience is perhaps

instructive on the Coast of Labrador. They took a different approach - they just

sold all their accommodation, period, got out of it. They stumbled and had

trouble for a year or two and then, gradually, the private market filled in. We

have considered that approach but have chosen not to do that because we feel it

would be too disruptive to our work at this time.

MR. TOBIN: How many units do you have here in St.

John's?

DR. ROBERTS: We have four apartment buildings and

twenty houses.

AN HON. MEMBER: A hundred and ninety-nine beds.

DR. ROBERTS: A hundred and ninety-nine bedrooms -

that is a lot.

MR. CHAIRMAN: In St. Anthony?

DR. ROBERTS: Yes.

MR. CHAIRMAN: How about overall, throughout the

Province?

DR. ROBERTS: I can't give you the exact number

overall, but that would be the vast majority. There would probably be 250 or 270

overall.

MR. CHAIRMAN: So that is available to professional

staff, doctors, nurses, laboratory staff and so on?

DR. ROBERTS: Yes. The need for that is not what it

was ten or fifteen years ago, but there still is a need.

MR. TOBIN: I would just like to follow that for a

second.

MR. CHAIRMAN: Go ahead, Mr. Tobin.

MR. TOBIN: Do you find that many of the

professional staff are now people who were originally residents of this area?

DR. ROBERTS: Do we find many of them? There are

some, and that is a particular wrinkle that is a concern, because you say to

yourself, why should we provide accommodation for a nurse, for example, whose

home is in this community? Yet, if that nurse will not come and work here unless

we provide him or her accommodation, then it is an operational issue for us.

Now, the nursing market has changed dramatically and we no longer have to say to

every nurse, we will provide you accommodation. We can say, we will provide you

a job, and you, like everybody else in this world, will be responsible for your

own accommodation.

MR. CHAIRMAN: Can you, on a related issue, tell

us, is there great difficulty in attracting professional staff to these areas of

the Province? I know you had some difficulties with doctors a couple of years

ago; it was quite a public issue up there.

DR. ROBERTS: The answer is, yes. I can talk for

half-an-hour, as you wish, but briefly (

a) we are in the market; (

b) we are not

always at the top of the market or the most advantaged part of the market, by

geography, by location, or by compensation. All of these things tend to mitigate

against us; (

c) there is great confusion elsewhere. There are so many factors

that come into this, licensing, opportunities elsewhere. There are so many other

opportunities and uncontrolled situations which mitigate against us. You would

have heard that MCP has now taken action which MCP hopes will make St. John's a

less attractive place for doctors to practice, and we hope that will encourage

people to move to communities such as this, or smaller communities, whether they

be Ramea or Nain.

MR. CHAIRMAN: They will probably move to Florida

then.

DR. ROBERTS: The suspicion is that nobody is very

certain this is going to work, because the experience has been, thus far

elsewhere, that professionals will stay in the major centres and accept less

income, dramatically less income, and I don't think this is going to solve the

problem of the distribution of professional services throughout the Province. I

think we will have to take other approaches.

MR. TOBIN: What specialists do you have here

working in this hospital?

DR. ROBERTS: We are a regional referral hospital

and we believe that we provide services here to look after probably 95 per cent

of the presentations that come to the door. We provide surgical services of all

sorts. We do not provide elective cardiac surgery or elective neurosurgery. We

will provide emergency cardiac or neurosurgery. We have pediatrics, internal

medicine, pathology, radiology, anaesthesia, ophthalmology, obstetrics, and

gynaecology. We cover all the major services. In effect, we are providing the

same major services which would be provided in any of the large hospitals in the

Province, and more services than are provided in some of the other regional

hospitals.

MR. CHAIRMAN: Can I go back to aircraft tender

again? I am not sure I am satisfied with the responses we received there and I

am not sure where the problem lies. You were telling us that the Department of

Health advised you to withhold calling tenders for a new service - re-examining,

I think, was the word - the means of operating aircraft services. Can you

enlarge on that for me?

DR. ROBERTS: Yes, that is what I said, and I don't

know how much I can enlarge on it. The way I would say it, is that the provision

of the general air service in Labrador has always been an issue of some concern

to government. There has always been a subsidy involved, as you know, and there

is the question of all these service aspects of it. There has been great debate

about that.

There has been a lot of discussion through the years

on how best to provide that service, whether it could be done differently,

whether or not our involvement in air transportation was mitigating against the

general

schedule service and whether or not, if our service were combined in

some way with the

schedule service, it could be improved. And we certainly were,

and are, prepared to discuss that. When our contract came up - our contract was

up in 1990, and prior to that we advised government, and the response was, `We

want to see if there is a way that we can get this together and come to grips

with this "problem" of the service in the North.' It is a very difficult and

complex issue which is not easily resolved. We went on for months and months

waiting and hoping that there would be some clarification of the more general

thing and it was only when the Labrador Airway Subsidy was renegotiated and

established that we were told to go ahead and make our own contract for the

provision of air ambulance services.

MR. CHAIRMAN: So you then called tenders?

DR. ROBERTS: And we then called tenders, yes.

MR. CHAIRMAN: I think the question was asked, and

I am not sure of the answer: How does the price compare with - it was 6 per

cent, was it?

DR. ROBERTS: The new contract, I think, if I have

it precisely, is about 6 per cent greater. It varies, of course, with the usage.

MR. CHAIRMAN: On an hourly rate.

DR. ROBERTS: On an hourly rate, yes.

MR. CHAIRMAN: Somewhere in the midst of these

monthly extensions, I saw the hourly rate increased substantially.

DR. ROBERTS: Those will be fuel escalations which

were built into the contract.

MR. CHAIRMAN: The numbers I was looking for are

not here.

DR. ROBERTS: The figures of $350 versus $536?

MR. CHAIRMAN: Something like that, yes.

DR. ROBERTS: Well, I think those numbers were that

the first fifty hours cost $536 and the additional hours cost $350. So, in other

words, the more it was used, the hourly rate went down, but it was still a cost,

of course, in that original contract. Now, that has changed - the manner in

which they bid on the contract. The rates are more equal now for each hours. In

fact, the contractor complained that by using the plane as often as we did, they

were having trouble meeting their requirements.

MR. CHAIRMAN: Can you answer the question: For

what purposes do you use the aircraft? Are there any occasions when people other

than hospital personnel get transport on those aircrafts?

DR. ROBERTS: There would be, occasionally, other

people travelling on the Twin Otter. There are a couple of current situations:

staff, not on business, would at times travel on the aircraft free of charge. A

flight would not be originated for that purpose, but where there is space and a

flight going, they would travel. Also, other people on public business in the

Province, court people and government officials of different sorts on public

business, would travel. Lastly, there would be occasional incidental passengers

travelling on our aircraft when there was no other means of travel available to

them and when there was cause for them to travel.

MR. CHAIRMAN: This would not incur any additional

cost for the board?

DR. ROBERTS: No.

MR. CHAIRMAN: None whatsoever?

DR. ROBERTS: No.

MR. CHAIRMAN: Who decides who goes on, and when?

If there is a seat available, do you fill it?

DR. ROBERTS: Not quite as simply as that - we have

dispatchers and we certainly say no. We have a guideline on who is eligible to

travel.

MR. CHAIRMAN: Who makes the decision?

DR. ROBERTS: Who makes the decision? The

dispatchers, or in this instance here, the manager of the air operation service,

or in Happy Valley - Goose Bay, the particular that you are referring to, it

would be the administrator of the hospital.

MR. CHAIRMAN: So you have a person here who is

responsible for your operation.

DR. ROBERTS: We have a person here who is

responsible for our air transportation services.

MR. CHAIRMAN: That is his sole responsibility.

DR. ROBERTS: Yes.

MR. CHAIRMAN: So there is not an occasion when

somebody could order a flight knowing that they had a family member who wanted

to get to Corner Brook (inaudible).

DR. ROBERTS: I don't think that happens.

MR. CHAIRMAN: Okay.

Mr. Penney, did you have some questions?

MR. PENNEY: Thank you, Mr. Chairman. I don't know

if it is a question as much as a comment. I want to get back to one area. I

would like to make a comment, though, that this is the first public hearing that

I have had the occasion to sit in on as a member of the Public Accounts

Committee. I believe this has been a most worthwhile exercise. I am absolutely

delighted that we decided to come to St. Anthony, as opposed to inviting the

witnesses to come to us in St. John's. I think, what we have done is demonstrate

to the Board, the staff, patients, that there is an accountability. I think this

process has done just that. I have heard some comments from the Chairman of the

Board. I think the comment was that he has certainly learned a few things by our

doing what we have done here today. If nothing else comes out of it, that

comment alone makes it worthwhile.

I am pleased with the responses we have gotten, even

though the answers haven't probably been as precise as we would like.

Information can be made available to us, documents can be obtained, but there is

one area in which I am not satisfied with the response. I guess it is the fact

that for a good number of years bef

Document details

Collection	Newfoundland and Labrador — Committees
Citation	1993-08-11
Type	committee
Volume / chapter	committees_standingcommittees_publicaccounts_ga42session1_1993-08-11_pac_.htm
Language	en
Format	html
Source	PROVINCIAL
Identifier	aae398c369d1004b0cd02c180a91932720bfabcb

Source file is stored in the law ingest library (html).