June 28, 1994

PUBLIC ACCOUNTS

COMMITTEE

The committee met at 2:00 p.m.

MR. CHAIRMAN (Windsor): Order, please!

Seeing no news media, I don't need to deal with

that. I would just simply like to say to those who are present perhaps for the

first time that these meetings are public meetings. The news media are welcome

to be here. In fact, several had indicated to me they would be here, so they may

show up.

Everything that takes place in these committee

hearings is basically in line with the rules and regulations in place in the

House of Assembly. We follow much the same procedures, but let me say for the

benefit of the witnesses that we are neither judge nor jury; we are here simply

to collect evidence and report back to the House of Assembly, and to have a

discussion on particularly the items commented on in the Auditor General's

Report on the Central Newfoundland Health Care Board.

For the benefit of those who are here for the first

time, I will introduce the committee members. To my far right is Mr. John Crane,

MHA for Harbour Grace; Mr. Alvin Hewlett, MHA for Green Bay; Mr. Oliver Langdon,

MHA for Fortune - Hermitage. To my far left is Mr. Glenn Tobin, MHA for Burin -

Placentia West; Mr. Melvin Penney, MHA for Lewisporte, and my Vice-Chair, Mr.

Danny Dumaresque, MHA for Eagle River. I am Neil Windsor, MHA for Mount Pearl

and Chairman of the Public Accounts Committee.

I would ask the witnesses to identify themselves.

First of all we have the Auditor General, Mrs. Marshall, and perhaps you would

like to introduce the people who are with you.

MS. MARSHALL: To my immediate right is Mr. Bill

Drover, and to my immediate left is Mr. George White.

MR. CHAIRMAN: Thank you very much.

We also have two representatives from the

Department of Health, Mr. Chris Hart, the Assistant Deputy Minister of Finance,

I believe.

MR. HART: That is right, yes, you've got it,

and Dave Saunders, the Director of Institutional Financial Services is with me

today as well.

MR. CHAIRMAN: Thank you very much.

From the Central Newfoundland Health Board we have

the chairman, Mr. Clayton Locke.

AN HON. MEMBER: (Inaudible).

MR. CHAIRMAN: Executive director.

We had two other names listed as perhaps being

here. I understand that they are probably not coming. I have explained to the

chairman prior to the meeting beginning that he is certainly welcome to have

whoever he or the executive director would like to have here by way of backup.

They have indicated that they are happy as they are. If they need further

advice, I can make a quick phone call and we can get other people here as well.

I am not aware that there is any particular reason,

Mark, that we needed other people for any specific purpose in this particular

hearing.

Having said that, I am going to ask the clerk now,

if she would, to swear in the two witnesses who have not formally been sworn in,

and that would be Mr. Locke and Mr. Ludlow.

SWEARING OF WITNESSES

Clayton Locke

Neil Ludlow

MR. CHAIRMAN: Thank you very much.

I should have introduced the clerk of the House, or

the deputy clerk of the House, clerk of the committee, Ms. Elizabeth Murphy, and

Mr. Mark Noseworthy, who is the research assistant to the Public Accounts

Committee, and Mr. Jack Oates from the Hansard office, who does all of the

recording.

I might say again to the witnesses, as in the House of

Assembly, everything that is said here is recorded and transcribed verbatim, so

if you want any record of anything that was said here by any of us, it certainly

is available to you. These meetings are transcribed. It takes a little bit of

time for us to get them; we take second priority to the House of Assembly

proceedings, but we do get them eventually and they are public information and

available to you.

The item on the agenda today is particularly the

Auditor General's Report dealing with the Central Newfoundland Health Care

Board. The role of the Public Accounts Committee is, I guess, the final step in

the accountability process. We are the arm of the House of Assembly, the

Standing Committee of the House of Assembly, with a mandate and responsibility

to examine and inquire into the public accounts of the Province any government

boards and government funded bodies and agencies, and to report back to the

House of Assembly.

Generally speaking, most of the items that we deal

with arise from comments in the Auditor General's Report to the House of

Assembly. Matters of concern that are brought to the attention of the House are

referred to the Committee. We in turn then select on various bases those items

that we wish to consider in more detail.

We've made it a practice over the past three years in

particular to try to make one or two visits outside of St. John's to meet with

various boards and agencies on their home turf and in some cases to actually

look at the facilities, and give people in the communities an opportunity also

to know what the Public Accounts Committee is doing, and to let the boards and

agencies know that they are accountable to the House of Assembly, through the

House of Assembly to the taxpayers of the Province, the taxpayers' money. We are

the arm of government I guess that is mandated with a responsibility to do that

and to let board and agency members know that they are responsible under the

Financial Administration Act, Public Tender Act and so forth, and that there is

an accountability process here.

I'm going to ask you to speak into the microphones

again because of Hansard. It is important that you be identified for the benefit

of the ladies and gentlemen back in Confederation Building who have to take

those tapes and try to find out who is saying what. Generally they will know the

Committee members who speak because they, unfortunately for them, have to listen

to us all day long every day so they probably get to recognize us, but

particularly for the witnesses it is important, if I fail to do so, that you

identify yourself each time before you speak.

I'm going to give an opportunity for opening

statements. First of all, Ms. Marshall if you would like to make an opening

statement to introduce this topic.

MS. MARSHALL: Thank you, Mr. Chairman. My office

commenced an audit of the Central Newfoundland Health Care Board in April 1993.

The audit was directed primarily to those systems relating to management

practices, human resource management, capital assets, inventory and purchasing.

Our audit procedures included testing for compliance with the various

authorities under which the Board operates. Our review was performed in

accordance with generally accepted auditing standards and included such tests

and other procedures as we considered necessary in the circumstances. Our review

was designed to assess whether adequate control systems were in place and were

operating.

In the five areas which we looked at, first was

management practices. We found most aspects of management practices of the Board

to be adequate; however, we note that there are a number of areas that could be

improved. For example, improvements could be made in the areas of strategic and

operational planning and reporting.

In the area of human resource management we noted that

there were some weaknesses. There was no evidence of a direct relationship

between the Board's goals and objectives and the human resource department's

goals and objectives.

In the area of capital assets, capital assets are not

adequately controlled. Policies and procedures over the control and use of

capital assets are not documented.

With regard to inventory we found that the Board has

adequate physical accounting controls over inventories.

In the area of purchasing we found that policies and

procedures to ensure compliance with the Public Tender Act are not documented

for the information of staff. Several instances of non-compliance with the

Public Tender Act were also noted.

Thank you, Mr. Chairman.

MR. CHAIRMAN: Thank you very much, Ms. Marshall.

Mr. Locke, would you like to make any kind of opening statement on behalf of the

Board?

MR. LOCKE: The only thing I have to say, Mr.

Chairman - thank you for the opportunity - is that we are here on your behalf to

provide any information that we can to the Committee to hopefully help you

people in your endeavours. If we can be helpful we will do so. We had a

preliminary meeting with Ms. Marshall and her staff people with regard to the

document in front of us. We've discussed this, and we've discussed it at the

Board level. Some of the recommendations have been put in place and some more

are being put in place. Thank you, Mr. Chairman.

MR. CHAIRMAN: Thank you very much. By way of an

opening comment here I might say that in reading through the Auditor General's

report there are a number of areas where the comment has been favourable in

fact, where it comes to your budgeting procedures, the general organization of

the hospital. As was just mentioned there, the inventory control. I might say

that it is refreshing to hear those types of comments. For your benefit we don't

hear a lot of that coming from the Auditor General. That's nothing personal, but

that is the role of the office. So it certainly speaks well for the hospital and

for the board and I congratulate you that those areas seem to be in very good

shape. There are areas for reason of concern, as mentioned and no doubt we'll

get into those.

I'll now start off, perhaps down to my far left today

with Mr. Tobin. Would you like to open the question?

MR. TOBIN: Sure, I just have a few questions on

this based on what the Auditor General just said. She noted that the board

doesn't have a strategic plan for the people directly involved. Have you taken

the initiative on that yet?

MR. LOCKE: Maybe I could answer that Mr. Tobin.

MR. CHAIRMAN: Mr. Locke.

MR. LOCKE: The reason that we don't have a

strategic plan in place is because of the announcement that was made earlier -

well I guess a year-and-a-half or so ago by the Minister of Health - with regard

to restructuring the health care system and the proposed regional boards coming

in place. We did have a committee in place on strategic planning which was

chaired by Ron Mercer of Badger at the time but due to the announcement from the

Department of Health we felt that at the time we would delay it because a

strategic plan would involve a lot more then the scope of this current board in

the future so that's the reason the strategic plan was on hold.

MR. TOBIN: So has the minister dealt with that

plan? Has that been dealt with in the central region by the minister already?

AN HON. MEMBER: There is a new board in place.

MR. LOCKE: There is a new board in place but the

board hasn't officially taken over yet. The board is put in place by name and is

operating. We've had a number of meetings but there is no strategic plan in

place per se and -

MR. TOBIN: Is it your intention to put it in

place?

MR. LOCKE: Oh, definitely. Our intention is to

have a strategic plan once we get our CEO on and once we formulate the

committees and so on there will be a strategic plan put in place. There would

have been in the old board had we had the time to do so in a reasonable time

frame but because of the fact that the health care system was restructuring we

felt that it was very difficult to put a strategic plan in place.

MR. TOBIN: It's also noted on page 9, that the

general audit noted that there was no formal monitoring and reporting system in

place. Does the board recognize the importance of that and are you getting at

that?

MR. LOCKE: Maybe the CEO might like to speak on

that with regard to monitoring.

MR. LUDLOW: Yes, thank you, Mr. Chairman.

Could I direct you to the response that we supplied to

the Auditor General where we addressed that point and if you will permit me to

shuffle a few pages here I'll find it myself.

AN HON. MEMBER: I believe it's on page 10, Mr.

Ludlow.

MR. LUDLOW: Essentially that reply deals with what

the expectations were that the Minister of Health held for us. We received no

expression of concern or complaint from the minister and did supply him with

whatever financial and statistical information he required on any one of them

during their terms of office and as a consequence didn't feel we were in breach

of anything. Now subsequent to - if I have my sequence of events right -

subsequent to the visit from the Auditor General we received a message from the

Department of Health. In fact, Mr. Hart wrote it saying that they wanted to

amend the style of reporting that had previously been in place which, as I say,

had caused no concern, as we understood, from the minister and he outlined then

some matter of detail that he wanted us to supply henceforth. We did reply in

response to that request and indicated that we would do so henceforth.

MR. TOBIN: So you're pretty comfortable with the

system that you have in place?

MR. LUDLOW: Insofar as there was no expression of

concern from anybody who would ordinarily have been concerned had there been

reason.

MR. TOBIN: So you have some objection to what the

Auditor General states?

MR. LUDLOW: I'm sorry?

MR. TOBIN: You have some objection to what the

Auditor General states in the report? Which is your right by the way. You don't

necessarily have to agree with the Auditor General.

MR. CHAIRMAN: We don't always agree with the

Auditor General.

MR. TOBIN: We don't always agree with the Auditor

General.

MR. LUDLOW: With all due respect to the Auditor

General, no I didn't agree entirely with everything as observed because there

was another point of view to express.

MR. TOBIN: I'm not sure the Auditor General always

agreed with everything the former Auditor General used to say either.

MS. MARSHALL: No, most of what's in the report is

a matter of opinion but the point that I was getting at was that the House of

Assembly votes hundreds of millions of dollars every year for health care

services -

AN HON. MEMBER: (Inaudible).

MS. MARSHALL: - and I think that the House of

Assembly should receive a report from the Minister of Health indicating what the

objectives were of his department and the various hospitals and whether those

objectives have been met. In order to present that report on a provincial basis

the Minister of Health needs to have reports from the various institutions. I

think that is the true basis of a framework of accountability.

MR. LUDLOW: Yes. Mr. Chairman, I certainly agree

with the point that the Auditor General is making. In fact, that came up in some

of our earlier discussions. It certainly turns on the first point that was made,

that the issue is one to take up with the Minister of Health and his department

I think, because of the accountability to the House that is necessary. Once that

is established then obviously the right kind of information will be requested

from organizations such as ours and then it would be supplied.

MR. TOBIN: I think the Auditor General

(inaudible).

MS. MARSHALL: Yes, I did make that comment to the

Department of Health in my last annual report to the House of Assembly and

indicated that there should be a provincial accountability document presented to

the House of Assembly, and of course the reports from the various institutions

would feed into that provincial report.

MR. TOBIN: I pass.

MR. CHAIRMAN: You pass? Mr. Penney, do you want to

take it from there?

MR. PENNEY: Thank you, Mr. Chairman. I would like

to go to the topic on page 17. It says: "In 2 instances of the 11 we tested a

public tender was not called..." The Auditor General refers to

section 10 of the

Public Tender Act. I would like to point out that as long as I've been a member

of this Committee normally when the Auditor General says: Of the eleven or

twelve we selected ten of them didn't comply or eleven of them didn't comply or

nine didn't comply - this is a very impressive percentage, that only two out of

the eleven didn't comply.

Nevertheless, the medical instruments - you say that

there is only one supplier. That is an anesthesia machine. The machine that was

in the hospital at the time it was being replaced was an Omeda. Is that

particular brand still available? Does Omeda still supply that equipment?

MR. LUDLOW: I believe they may. There have been a

number of changes in company names due to takeovers. There was a (inaudible)

brand, an Ohio brand, an Omeda brand and I think they were probably all at one

point or another the same company. Honestly, I don't know exactly at this moment

whether Omeda still puts out a machine or not. I don't think that was the point

at issue necessarily, though. Again I'm shuffling papers, Mr. Chairman, if you

would permit me, but I have some information on the particular purchase of the

anaesthetic machines if that is where you would like to concentrate.

MR. CHAIRMAN: Yes, I think the question is -

MR. PENNEY: The point is that -

MR. CHAIRMAN: - is there only one supplier?

AN HON. MEMBER: (Inaudible).

MR. PENNEY: The Board states that the supplier

from which you purchased that, it was done without a public tender because there

was only one supplier. You've purchased a product from Siemens, it is a Siemens

anesthetic machine, and you are replacing an Omeda, and the Omeda had been used

up until this point. My question is: Was the Omeda available to replace it?

MR. LUDLOW: I've got different information.

Although that does indicate sole supplier and that may have been the single

reason that is expressed. If I could quote to you, Mr. Chairman, from a

memorandum I had in 1992, July 17, from the then-Director of Materials

Management with regard to purchase of anesthesia machine, tender number GF-174.

Which indicates there that in fact there was a tender. It is indicated: "On

August 30th, 1991, we went to Public Tender on an Anesthesia Machine. The lowest

qualified bidder was Colonial Scientific Limited on the Siemens equipment at a

cost of $43,711.80. A decision was made at that time that whatever equipment was

selected we would standardize on same.

There is a particular value and benefit to having

standardized equipment in an operating room suite where surgeons move around

from one unit to the other as they perform their various surgeries, and more

than the surgeons, of course, in this case the anaesthetist. There is a certain

readiness obtained by having the same equipment room to room so that there is

not a constant adjustment and therefore less risk to the patient who is going to

undergo surgery, so standardization was a point at issue in the process of

acquiring the anesthetic machines.

This memorandum goes further and says: On June 12,

1992, we were offered a purchase of three Siemens 710 anesthesia machines -

these items were demonstration equipment, with from 50-100 hours of use at a

normal cost of $58,127.

We were notified by the Omeda representative that the

old anesthesia machine we have at present would have to come out of service this

year, 1992, so Omeda at that time were functioning as a supplier company but the

machinery we had under their brand name was not useable any longer.

MR. PENNEY: Mr. Ludlow, if I may interrupt you

there?

MR. LUDLOW: Yes.

MR. PENNEY: You placed the order for the three of

them at $58,000. If you could turn to Page 90 of the booklet you have there.

That is the same letter from which you are quoting.

MR. LUDLOW: Quite so.

MR. PENNEY: Now, if you would turn to the next

page, Page 91, you will see that instead of paying the $58,000 which you were

quoting you paid $60,000. Now, I know the difference is not a lot but the

difference plus the GST, plus the PST is $2132. Why the difference?

MR. LUDLOW: I cannot explain to you the

difference, but I can tell you this, that we bought these three demonstrators at

evidently $20,000 even and usually they cost more like $60,000, so we saved

$40,000 per machine for the taxpayers.

MR. PENNEY: I was not questioning that, Mr.

Ludlow, but the thing is you were quoted one price and paid another. Were you

aware of the difference?

MR. LUDLOW: No, not until I saw these documents.

MR. CHAIRMAN: Mr. Hart.

MR. HART: I had the same problem when I was

reading through those documents. As a matter of fact I was talking to Mr. Ludlow

about it just before we started, but having just heard what Mr. Ludlow said I

think it is clear to me now what has gone on there. The $58,000 mentioned in

that letter deals with what the normal cost of acquiring one of those machines

would be,

whereas in actual fact they got all three for close to the same price.

I do not think that $58,000 was meant to be a quotation as to what they could

pick up these three machines for.

MR. CHAIRMAN: It is hard to say from the reading

there.

MR. HART: I could not pick it up from the reading.

MR. LUDLOW: Mr. Hart has my point, that a new one

of those, not a demo -

MR. HART: On my first reading I had the same

concern that you did but I am just hearing what Mr. Ludlow said.

MR. PENNEY: So your understanding is that $58,000

plus is the price for one new.

MR. LUDLOW: That was my understanding.

MR. PENNEY: And you got the three used for

$60,000.

MR. LUDLOW: For $60,000 and tax.

MR. PENNEY: That is fine. I have no problem with

that, but that is not the way it reads there as you can appreciate.

MR. CHAIRMAN: If I may interrupt, if you read the

first paragraph the low bidder bid at $43,000 so they cannot be $58,000 each. It

does not wash.

MR. HART: Initially the tender in August is when

they bought the initial machine and then the replacement, to get the same brand

name, I think, was a year later.

MR. LUDLOW: I do not know. If you read that as

though a discrepancy I cannot explain the discrepancy to you. I do know that we

saved money on buying three anesthestic machines that way.

MR. CHAIRMAN: I think overall there is no

question. Sixty thousand dollars seems to be a very good price for something

that would have cost $43,700 each on an individual basis. There is just that

discrepancy there, Mr. Penney, (inaudible).

MR. PENNEY: Yes, and again I commend you for the

fact about the eleven purchases that the Auditor General selected. Only two of

them seem to be in contravention of the Public Tender Act, but the other one,

medical instruments, I look down through the list of the instruments, and they

are itemized on page 92, looking at various types of forceps, various designs,

straight, and sizes, medium, et cetera. Is that really the only supplier that

those types of equipment can be obtained from? I am looking at $25,000 and I am

wondering if there aren't other suppliers in Canada that you could have possibly

gotten tenders out to.

AN HON. MEMBER: (Inaudible) the States.

MR. PENNEY: Yes, that is an American company; that

is right.

MR. LUDLOW: Most of our suppliers of higher tech

equipment are Americans. This is not unusual - not just ours, but anybody's.

MR. CHAIRMAN: Could you please speak up just a

little bit?

MR. LUDLOW: There isn't much by way of Canadian

manufacture in terms of high technology, medical (inaudible).

MR. CHAIRMAN: (Inaudible) German company one time

had the opportunity to visit the home of the Siemens family (inaudible).

MR. PENNEY: You are on a different one now, Mr.

Chairman.

MR. CHAIRMAN: Yes, I realize that.

MR. LUDLOW: Nagashima certainly is Japanese, as

you could probably tell.

MR. PENNEY: So you are not aware of any other

possible suppliers?

MR. LUDLOW: No, I haven't answered your question

yet.

Yes, there was one more, I am told, a company called

(inaudible), and I don't know whether they are a manufacturer or whether they

are somewhere in the middle of the process, but there was one other company.

This equipment shouldn't be seen as piecemeal

purchases, but rather it all was part of a system. Again, I am a little out of

my depth, Mr. Chairman, because this relates to equipment that is used in a

clinical setting and I am not a clinician, but it pertains to endoscopic sinus

surgery equipment and, as I understand it, it had to be bought as a set, the

main piece of which was the camera and the camera control unit and the endoscope

finder and so on, the beam splitter, all of which please don't ask me to explain

to you; I don't know.

MR. PENNEY: No, that is fine. This is for a

specialized surgical procedure?

MR. LUDLOW: Yes, it is, in ENT, in fact - ear,

nose and throat surgery.

MR. PENNEY: Page 19, there was one instance where

a tender was advertised in a local newspaper which was not in general

circulation in the Province. The time and place of the tender opening was not

disclosed in the advertisement. We note that a bid of $102,000 for site

development was the only bid received and was awarded upon the advice of the

board consultants. What newspaper was it advertised in?

MR. LUDLOW: I understand that it was advertised in

the Robinson-Blackmore newspaper locally, which would have been The

Advertiser . Whether it was also placed in other Robinson-Blackmore editions

around the central area, I can't say.

MR. PENNEY: That is what I was wondering, because

Robinson-Blackmore is all across the Province. Robinson-Blackmore prints only

once a week, though.

MR. LUDLOW: It's twice a week here.

MR. PENNEY: Twice a week?

MR. LUDLOW: Twice a week here.

MR. PENNEY: Okay, but the public tender

regulations state that the government funded body shall publish a call for

tenders in at least one daily newspaper published and in general circulation in

the Province. I suppose at this time the only one that would be would be The

Evening Telegram .

MR. CHAIRMAN: There is only one daily newspaper,

isn't there?

MR. PENNEY: Yes.

MR. LUDLOW: In the meanwhile, that one doesn't go

to the West Coast, I understand. The Evening Telegram doesn't go into the

western part of the Province.

MR. PENNEY: I was intrigued with the reply from

the Board. It says on page 24: "...[U]sing a daily paper in general circulation,

when there was only one of that description in the province, means there is a

virtual monopoly on our tendering advertising funds. Such advertising could also

be done in other newspapers, but that would constitute a duplication of cost,

hence a waste of public money." How much money was spent on tender advertising

during the year 1993?

MR. LUDLOW: I would have to get you a calculation,

Mr. Penney, I don't have that amount.

MR. PENNEY: Let me refer you to page 79 in the

booklet, right up on the top, General administration, and then it says

advertising. Budgeted $20,000, actual expenditure $11,700. Would that be the

figure?

MR. LUDLOW: It would be included in there. That is

not the only type of advertising we do though.

MR. PENNEY: Could you give me some idea of the

approximate percentage of this that would be for tender advertising?

MR. LUDLOW: I really couldn't, I've never done the

calculation.

MR. PENNEY: What other type of advertising would

that include?

MR. LUDLOW: Recruitment, mostly.

MR. PENNEY: Recruitment advertising as well. That

is all for now, Mr. Chairman.

MR. CHAIRMAN: Mr. Crane, would you like to start

now?

MR. CRANE: Yes. Pages 12 and 13. The goals and

objectives of each department should stem from the Board's goals and objectives

to allow parties involved in moving towards the same end. Does the Board review

on an annual basis its goals and objectives?

MR. LOCKE: Yes we do.

MR. CRANE: Along with approving the department's

goals and objectives.

MR. LOCKE: The Board does review the goals and

objectives usually at the beginning of each fiscal year. I can't say that we

review the departmental ones. I pass it on to Mr. Ludlow.

MR. LUDLOW: We asked the opinion of the Auditor

General and her staff with regard to a method or a mechanism for accomplishing

that because it didn't seem practical in the instance to have all the

facilities, their departments and functions, all with policies and procedures to

be reviewed, to have them all go to the Board. Part of the response suggested

that perhaps if the Board's responsibility were delegated formally then that

might suffice in having the departmental level operations manuals approved.

So saying, the Board passed a resolution in February

of this year to give the chief executive officer the approval authority over

departmental level operations manuals and policy procedure manuals. There has

been some of that. It was intended that would be done following a cycle and

throughout - well, forever after. Some of them have been done that way.

MR. CRANE: If the Board doesn't review the goals

or the objectives how do you know that they are ever reaching any? How does the

Board ever know if they are reaching their goals or what is being done

throughout the system? Because it is the Board's responsibility as far as I'm

concerned to oversee all the facets of hospital work. If they can't get and

check what is being done and the goals and the objectives and see if they are

being met, how in the world do they know how things are going? I mean, if you

know as chief executive officer what is going on in the hospital, right, you

know the expenditures in each department, you know what is being done, but the

Board doesn't know.

MR. LUDLOW: No. If I might, Mr. Crane. We have a

couple of conversations going at the right time, or at least a couple of subject

areas. I may have misled you a little bit, because I did jump right into

procedures manuals and operations manuals, apart from the goals. Now you've just

introduced the matter of expenditures in the department, which is a different

subject yet again.

MR. CRANE: If you're reporting your expenditures

to the board and you come up with a reason for the expenditures then the board

got to know if you're meeting the goals or the objectives, right?

MR. LUDLOW: Yes, to the extent of financial goals.

MR. CRANE: Yes. Well that's a very important

factor with the board. I'm sure in these times when there is not a lot of money

to throw around I'm sure that capital is one big reason why the board has to be

stringent.

MR. CHAIRMAN: Mr. Ludlow.

MR. LUDLOW: No question. If I could respond then

on that point Mr. Crane. The finance and audit committee of the board meets

routinely -

MR. CRANE: Yes.

MR. LUDLOW: - reviews the financial statements

from the previous period, asks questions and receives responses with regard to

variances in expenditure, variances throughout the budget and then reports that

to the board at its next meeting. Meetings of the board are held roughly every

month.

MR. CRANE: Okay. As long as we're into the board

and management, I'll ask the Chairman of the board and you yourself, how do you

feel that the board and the management committee in this facility here get

along? From the boards point of view, do you have any problem obtaining

information from the committee and vice-versa I suppose?

MR. LOCKE: No, I think if we ask any question from

the Chief Executive Officer requiring any information it's brought forward.

MR. CRANE: So you feel that you get along very

well?

MR. LOCKE: Yes.

MR. CRANE: Okay. Money, since we're on money, you

usually get all kinds of money you fellows.

AN HON. MEMBER: (Inaudible).

MR. CRANE: Temporary investments, page 29, the

temporary investments went from zero dollars in 1990 to $3 million in 1991 and

along with that went bank indebtedness from zero dollars in 1990 to $2.1 million

in 1991. What was the short term financing for and where did the board get $3

million to invest if they recorded a loss of $246,000 in 1990? Page 30 is the

loss. You invested $3 million but you still show a loss of $246,000. Where did

you get the $3 million to start with? That sounds like a fair amount of money.

MR. LOCKE: I'm not sure where you're reading from,

Mr. Crane.

MR. CRANE: Page 29.

MR. LOCKE: Temporary investments (inaudible) $3

million.

MR. CRANE: Yes and in 1991 - it was zero in 1990,

right. Your bank indebtedness went from zero to $2.1 million and yet your board

shows a recorded loss of $246,000 in 1990. So the question is, where did you get

the $3 million to invest?

MR. CHAIRMAN: Actually, Mr. Crane, the loss of

$246,000 was in 1990. In 1991 there was a profit of $709,000 in addition to the

$3 million invested. Where did all of that come from?

MR. CRANE: Yes.

MR. CHAIRMAN: And is that possible, could it be

just that?

MR. CRANE: Or was somebody very generously -

MR. CHAIRMAN: Mrs. Marshall do you have some -

MS. MARSHALL: Perhaps I can just make a comment.

They might have $3 million in temporary investments but if you look down at the

current liabilities they owe the bank $2.1 million and they owe other people

$1.9 million. So this is just a picture at a point in time and the next day that

$3 million could have been used to pay the bank and the payables, right?

MR. CHAIRMAN: Yes.

MR. LOCKE: I guess my question was, could it

possibly have been a transfer payment in from the Department of Health at the

time?

MR. CHAIRMAN: It's possible.

MR. LUDLOW: Most likely it would have been because

of course of the nature of the funding. The nature of the funding is such that

we're funded in advance in order to meet the obligations of the day, payroll

particularly, and that money resides in a bank account until it's used and I

thank Ms. Marshall for that type of (inaudible) because it is quite valid. On

the year ended March 31, the snapshot of that day's activity reflects this way,

and the next day could well have been a payday, in which case this all changes

about.

MR. CHAIRMAN: Thank you. Mr. Crane?

MR. CRANE: One other question, then, about

finances, and then I will turn it over to somebody else.

General administration, on page 59, board members'

travel, $11,359; car fare and local travel, $13,912; other travel, $32,409;

recruitment travel, regional travel. Can the board explain what kinds of things

are included in the travel amounts? Would local and regional travel be the same

things, and these other travel just for staff, or...?

MR. LOCKE: I am not sure what the accounting

practice is, but from a board point of view I can tell you that the expenditures

that we would incur would be attending educational seminars or, in some of the

cases, would be rotating the board throughout the region that we represent, for

instance, Harbour Breton or Botwood, or whatever the case is. That would

basically be the expense that would be incurred by board people.

MR. CHAIRMAN: Are you finished, Mr. Crane?

MR. CRANE: Yes, go ahead.

MR. CHAIRMAN: Mr. Hewlett, would you like to...?

MR. HEWLETT: Thank you, Mr. Chairman.

Page 29 makes reference to receivables. It has

increased from $500,000 or so in 1990 to $1.2 million in 1991, a significant

increase. What sort of receivables are we talking about here? Are these payments

from individuals, insurance companies? What kind of money does a hospital or

hospital board receive?

MR. LUDLOW: If I could refer you to note 2, page

32 of that same document, about the middle of the page, it indicates there the

categories of receivables.

MR. CHAIRMAN: Some of the accounts there, $403,000

seems a little high. Could you tell us what the South and Central Health

Foundation is?

MR. HEWLETT: Yes, that was the other one I had. Is

this an arm's length foundation from the health foundation? How does that

operate with regard to your hospital board? Is there any direct connection in

terms of (inaudible) foundation? They are mentioned as having receivables as

well. Is this from some sort of fund-raising projects, that sort of thing?

MR. LOCKE: It is my understanding that the

receivables for the South and Central Health Foundation probably would be the

expenses incurred for the operation of the foundation throughout the year. At

the end of each year we send the foundation a bill (inaudible) the same type of

expenses. Is that correct, Mr. Ludlow? Do I understand that correctly?

MR. LUDLOW: There is a bit more to it than that.

The amount that the foundation raises in its public fund-raising efforts is

accumulated in the name of the South and Central Health Foundation. It is arm's

length, but they only have beneficiary, and that is the hospital board.

Therefore, the funds that they raise periodically are due to the board, to this

board, at a certain point.

Now the period in observation here was within the

first three years of that foundation having been set up, and I understand the

regulations that govern foundations do allow them a three year period in which

to accumulate without having to return a certain amount of the proceeds to the

beneficiary. After that, then, they must do it routinely, I think, at least once

each year, so that probably accounts for why that amount had grown so large up

to that time.

MR. HEWLETT: So they make contributions to your

board. Is it based on some sort of annual clearing out of the till, or is it

done on a project or equipment purchase kind of basis?

MR. LUDLOW: No, more the first way.

MR. HEWLETT: They forward you lump sums?

MR. LUDLOW: Yes. They raise money on their own

name in the community and then, as I say, periodically. I think now having gone

past the indoctrination period they are obliged to do it annually.

MR. HEWLETT: One other question, Mr. Chairman, and

that relates to something that came up here earlier at the very beginning of the

meeting about strategic planning. I believe the chairman pointed out that the

system in this neck of the woods is undergoing restructuring. Is there a basic

change in the role of this health facility here in Grand Falls - Windsor and its

relationship to the general region it serves under the new structure, or is it

merely putting in place of a regional board structure to more - how shall I say?

- democratically represent what is already in place? Could I have a comment on

that?

MR. LOCKE: Mr. Hewlett, no, I don't think the role

of this institution has changed. Whether it will in the future or not I can't

say at this time because that would be a decision that new board would have to

consider in determining the strategic plan: Where we operate, what things

change, what things don't change, and so on and so forth, as you can appreciate

it. Right now we are too new to say where we are.

MR. HEWLETT: Where do you stand now with regard to

the new board coming on stream versus the current board sort of thing?

MR. LOCKE: Very difficult question. I can tell you

that we are going from month to month. As a new board we've had several

meetings. I think we've had four board meetings. We are rotating them throughout

the district so that all new board members can get a look at the facilities that

are coming under our jurisdiction so at least they would know what we are

talking about when questions come on the table.

We've put in place a mission and philosophy committee

and we've also put in place a rules, regulations and by-laws committee. What

we've done there, we've actually requested copies of the mission and philosophy

statements from all institutions that are coming under the new board. We've done

the same thing with respect to rules and regulations and by-laws. We've

requested copies from all the institutions coming under the new board, put

together a committee, and we are looking for the common things that are in both

and trying to prepare a new structure.

As you can appreciate we just recently announced the

CEO for the new board and as the CEO gets in place and as we move along we will

put further committees in place and determine what management structure we will

put in place and so on.

MR. HEWLETT: So the timing of the coming into

effect of the new system per se, is that dictated by government as regards a

specific date, or is that something that the new board has to evolve and say

when it is ready to come on-stream and it is a management system?

MR. LOCKE: Again that is a good question. We have

not been informed by the Department of Health that there is any particular time

to take over, and we've not been informed that we can request any particular

time to take over. It is my own personal feeling, and I think of the board's,

that when we are ready, we feel comfortable that we are ready to assume the

responsibilities, we will approach the Department of Health and find that it is

feasible to take over. Hopefully it will be in the fall of the year. How soon I

couldn't tell you.

MR. HEWLETT: Thank you, Mr. Chairman.

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

MR. LANGDON: Yes. I would like to follow up on

what Alvin said but first of all I want to congratulate Mr. Ludlow on being the

finest CEO for the Central West Health Board.

MR. LUDLOW: That is the Central Community Health

Board.

MR. LANGDON: Central Community Health Board. I

think that was a good choice. I don't mean to be facetious when I say that.

After looking at the way that you operated here with the hospital board and the

report that is here in front of us, I think it speaks volumes for itself.

Probably I should have to address the question to

Clayton rather more so than to you but you can back him up or comment if you

like. As you know, the structure in Harbour Breton, the hospital is functioning.

It is employing I think it is forty-three people. At first glance, looking at

the hospital itself, it probably would look to be trim and proper. But I don't

have to tell you guys that the building has outlived its usefulness. It was

built in 1935. I met with the Minister of Health and I know that the Harbour

Breton hospital was a part of the government's five-year plan. It has probably

been slowed down a bit because of finances or whatever but nevertheless we are

there. That was confirmed to me by the Minister of Health recently and it was

also stated by the former Minister of Health, Mr. Decker, in Harbour Breton.

How much discussion have you people had on that

particular building, replacement of that facility, over the last number of

years? Where do you see it as a part of the long-range planning and goals that

the new board will have to put in place?

MR. LOCKE: I see it as a high priority with the

new board but again I can't speak for the board until we set down a structure as

to where we're going, as to what we feel are the priorities but I can tell you

based on past experience with the old board that building is really - in

truthfulness I agree wholeheartedly. I think that it needs to be replaced. You

guys come up with the money and we'll replace it tomorrow. That's the way I feel

about it.

MR. LANGDON: The other point I want to make about

it because you're the chairman of the central west institutional board of which

Mr. Keats, as you said, has just been announced as CEO. Mr. Ludlow and the

community board, health board and the institutional board meet together with

looking at the long range needs for the Harbour Breton area with not as many

acute but we need some chronic care units desperately in that part of the

province because there's none there.

You still get two boards working in unison or in

(inaudible) going in one direction?

MR. LOCKE: It's my understanding, in speaking with

the Minister of Health, that he would like to see the two boards working

together in unison and I would think they would have to because there's going to

be an overlap between the two boards on various occasions. So with regard to the

institution itself I would hope that the new board would have some input as to

deciding where the greater needs are for the area and would then pass the input

on to the department. Whether or not we'll be given the authority to make a

decision as to where it goes I wouldn't like to say at this time but we are

lobbying. We've had numerous meetings with the minister and we've been contacted

by you as well. We've had meetings with the committees from the south coast,

there were presentations made to the minister and we have letters on file

stating that it's been a high priority by both the past Minister of Health and

the present one. Again, like you've indicated, it has been delayed I think

basically because of financing and I really can't tell you much more than that

about it.

MR. LANGDON: The location itself, there's no doubt

about where it has to be, it's where the old structure is now and that's where

the infrastructure - I think the department recognized that and I want to go on

record as supporting that as well.

The other point that I want to bring up with the board

is the problem with the ambulance from the south coast. As you know, we are

three hours from Grand Falls and the ambulance does get used and we're

constantly finding ourselves in a struggle, financially, to keep the ambulance

on the road and what have you. They are not community based. If they're

community based rather then the individual proprietor - proprietorship, what can

we look forward to within the foreseeable future as to alleviating some of the

problems that we had with the ambulance? Are you addressing it or have you

addressed it to become a proprietorship rather than community based?

MR. LOCKE: Yes we have addressed it and we've

written the minister with our concerns. I'm going to pass this over to Neil as

well. We've written the minister with our concerns and it is my understanding,

the latest I've heard, is that the minister was requesting a provincial study to

be done on all ambulance services in the Province. I don't know if there's been

any follow up on that or not. Neil I don't know if you want to speak to that?

MR. LUDLOW: Some while ago we wrote, in the name

of the board, we wrote to the Department of Health and suggested to them that we

would look after ambulance services on the south coast if the resources were

made available. That offer wasn't taken up at the time and obviously the service

still continues as a community based function. In fact if I could deflect the

question over to Mr. Hart, it's in his area where these questions are to be

resolved and perhaps the answer might lie there. If I could Chris?

MR. CHAIRMAN: Mr. Hart.

MR. HART: Yes, I will speak to it. I don't know if

I'm going to make any resolutions some time today. It's a rather complicated

issue, the issue of road ambulances. Just for background information I should

say that the Province has three basic ambulance type services. We have what are

called hospital based, some of the hospitals have their ambulances; Central

Newfoundland is one of them, Gander, Western Memorial and others.

Apart from that we have the private ambulance

operators association, which is the bulk of the ambulance service in the

Province. They are private enterprises that provide a service to the residents

of Newfoundland.

The other aspect of it is what is referred to as

community based or community services or volunteer organizations, as they were

originally known. There are a number of problems. Each of the services are

somewhat unique. The community probably is wherein lies most of the difficulty

because for the large part they are not financially self-sufficient. If they

were self-sufficient there would probably be a private operator knocking on the

door to try to get in there and perform a service in that area.

We recognize that we do have to address the whole

issue of community services. There was a reference to a provincial study - I

should say there is no official provincial study going on, but when I started

working with the Department of Health one of the responsibilities that was

assigned to me, in addition to the normal finance administration, was the

responsibility for the road ambulance program. We are in the process of

reviewing that whole situation. I can tell you that we are trying to come to

grips with a lot of the issues there but they are complicated.

There is a lot of duplication in this system. There

are a lot of areas that need ambulance services that don't have them. There are

issues of standards that need to be developed for road ambulances so that all

services have to have equal - or an acceptable level of ambulance attendant and

that sort of thing. There is ambulance legislation that we are in the process of

drafting to deal with those issues and funding issues, like in terms of the

community or volunteer organizations such as we have got in the Baie Verte

Peninsula.

I guess the biggest issue there is funding. In terms

of what happened over the years is that they used to depend heavily on

volunteers. From what I understand now it is very difficult to attract people on

that basis. I guess they are going through the same problems that everybody else

is - financial - and they just don't have the time to spend and put into it like

they did in the past, even though it is different in different parts of the

Island. Some places still rely heavily on it and others not so much, so it is

not - each situation is unique in itself. In reference to community services one

of the things that we've been just starting to look at now is, is there a better

ways of funding those. Maybe we could provide a grant in an area that needs to

have a service, a lump sum grant based on what would be reasonable in terms of

them delivering the service, rather than trying to let them operate on the basis

of a private operator, basically, and just picking up revenue based on the

mileage that they actually travel and that sort of thing.

There is a whole lot of issues there and it is going

to take some time to really resolve it all. There have been many thoughts thrown

out. All I can tell you now is that we've got a number of committees formed to

look at a number of these issues and we will be dealing with them over the next

year. A lot of these issues will be coming to the floor.

MR. LANGDON: As a follow up too much of that but

your biggest problem with community based versus individual proprietorship is

your funding, your two-tiered funding. If the community base was getting the

same (inaudible).

MR. HART: Well, that's not true. If you want me to

explain the funding formula -

MR. LANGDON: (Inaudible).

MR. HART: I mean, we could be here for a long

time.

MR. LANGDON: For a long time, that is right. I

just want -

MR. HART: I should say Mr. Langdon, too, in

reference to that, that one of the things I'm attempting to do now is to I guess

make consistent a number of the elements of the funding formula right now

between private and community. They wouldn't all fit but it is being looked at

and there are aspects that will be overlapping now and would be the same in

terms of what they get back in terms of mileage and the attendants they have on

board and that sort of thing.

MR. CHAIRMAN: Mr. Langdon.

MR. LANGDON: Just one more question to Mr. Ludlow,

because you are still in place with the old board yet, I understand. Have you

gone to work with your new employer yet?

MR. LUDLOW: For the time being I am still with the

Central Newfoundland Health Care Board.

MR. LANGDON: One of the acute problems we have, as

you know, is the doctors in the rural area, getting them to stay and so on. In

my area over on the Connaigre Peninsula it is probably no different than

anywhere else, but I was wondering if the central board has been able to

sponsor, through scholarship or what have you, any of the Newfoundland students

at MUN to take up practice on the Connaigre Peninsula when they graduate?

MR. LUDLOW: We took advantage of one opportunity,

Mr. Langdon, to offer, through our sponsorship, bursary support to a young

doctor in training - I believe he was probably from the Marystown or Grand Bank

area but had family connections in your area - who did accept the offer. I am

not certain whether he has started work there yet. I believe he has not.

AN HON. MEMBER: (Inaudible).

MR. LUDLOW: He is the only one. The sponsorship

program that has been provided through the Department of Health, offering

$12,500 per year for the students who accept that, has not been oversubscribed,

to be plain about it. For whatever reason it has seen preferable, to some of the

medical students at Memorial University's medical school, to look to other ways

to find their funding. They borrow and then seek other opportunities, sometimes

outside the Province, even outside the country, to pay off those debts. The

$12,500 per annum doesn't seem to be attracting a lot of them, and that is

regrettable because I think it is quite a beneficial thing to have that much

money offered to you, and -

AN HON. MEMBER: (Inaudible).

MR. LUDLOW: Yes, the obligation is a return in

service, not a return of the money. That is just an out in case they don't

choose to stay around and return to service, but there are a number of other

things that should be on offer, in my view, and this is a personal opinion.

Frankly, I don't think that we are offering our

doctors enough by way of their remuneration, and others may contest this idea,

but I don't think the fees for physicians are high enough in this Province to

attract or retain them. I don't think the salaries, where we pay salaries, are

sufficient. I think there are other deficiencies in that whole area of physician

remuneration; for instance, at the moment there still is an amount reduced from

payment for certain physicians who come from outside the country who have

certain qualifications but because of the country they come from, or more

particularly the school in which they have trained, having been categorized,

they suffer a penalty for that, a financial penalty.

There are a few other things, in fact, that could well

be put in place. Since we do rely on foreign medical graduates so heavily as we

do, and we will for a long while in this Province, then I think it might be very

useful if we could convince and prevail upon somebody like the pensions division

of government to seek change, and this obviously would be something to be done

through political means, but to seek change in the pension regulations so as to

allow them the opportunity not to contribute to the pension fund if we know - if

everybody involved clearly knows - that we are only going to have those people

for a year, or two years, or a very short time as a work period, then it might

be more attractive in getting them in the first place, and settling them in and

making them more content in more rural and more remote areas if they didn't have

some of these obligations.

I think we could probably do more, as well, in areas

of consideration with regard to what we provide them as living accommodations,

what we provide them as working accommodations, that sort of assistance.

I could go on for the rest of the afternoon on that

subject, but I don't believe the Province is doing enough.

MR. CHAIRMAN: Can they not contribute to a money

purchase pension plan now? Isn't that another option available to them?

MR. LUDLOW: Whether it is the public service

pension plan or the money purchase plan -

MR. CHAIRMAN: Those are two different options,

aren't they?

MR. LUDLOW: Yes, exactly, but in any case it is

obligatory that they contribute to one or the other, whichever one it is; just a

small point, but that is worth somebody's consideration, I think.

MR. TOBIN: Mr. Chairman, if I could just make a

comment on that.

MR. CHAIRMAN: Mr. Tobin.

MR. TOBIN: If I could just make a comment on that,

regarding (inaudible), I think it was the vice-chairman who raised it yesterday

in Twillingate, the programs put in place to try to attract Newfoundlanders to

practice in Newfoundland. One of the problems that I found with it, particularly

in dealing with constituents - and probably all boards in this Province,

including yours, should certainly talk to the Ministers of Health and Education,

and Memorial University - is that I believe there is a balance in this Province

that favours the sons and daughters of medical personnel in the St. John's area

in terms of getting admittance to the medical school at Memorial University. If

we get people from rural Newfoundland, whether they are from the Burin

Peninsula, the Connaigre Peninsula, or Eagle River, or somewhere like that, they

have to go out of their way to try to prove themselves to get in there.

I have raised it with the Minister of Health, who has

investigated it and, I think, made his position known to Memorial University

regarding that, but I think that boards have a responsibility too. I think that

somebody should catalogue the number of students from rural Newfoundland,

outside the overpass, who apply for admission to the medical school at Memorial

University, who have a strong academic background in some other universities - I

have one in my district who, for five years, held over a 90 per cent average,

who had a university and science degree program, and was told that she should

work in a hospital, and she did that, volunteer and otherwise, for a year and

still couldn't get admittance to the medical school in this Province. Now I

would suspect that if she was the son or daughter of a doctor in St. John's she

would be almost graduated now.

I think, you and all the boards in this Province have

the responsibility to really try to do something for the people in rural

Newfoundland, outside the overpass, who are trying to get admittance to the

school. Then it would be easier to attract medical people to the Burin

Peninsula, the Connaigre Peninsula, to Central Newfoundland or the Northeast

Coast or Labrador, wherever the case may be. I just wanted to say that in

passing, Mr. Chairman.

MR. CHAIRMAN: I am allowed a great deal of freedom

here today on many of these items.

It is probably a very appropriate time for us to have

a cup of coffee. We will break for ten minutes and then get right back after.

Recess

MR. CHAIRMAN: Order, please!

We will carry on now, and I will pass it on our

vice-chair, Mr. Dumaresque.

MR. DUMARESQUE: Thank you, Mr. Chairman.

I have a number of questions, for information

purposes, I guess, and clarification, under general administration. I noticed,

in looking at the recruitment travel budget, right on to 1993, that except for a

brief downturn in 1992, the travel budget every year for recruitment is $32,000;

$25,000; $28,000 respectively for 1991-1993, and I know you have had significant

changes in your administration, and I haven't heard of this board encountering

as much turnover in some of the specialties and so forth as some others have. I

am just wondering what, exactly, that travel entails, who goes where and what,

and how it is accounted for. I think last year it was $28,000.

MR. LUDLOW: The recruitment travel that is

referred to there has less to do with anybody going anywhere to recruit and more

to do with the travel costs of those recruited. Bringing them in to see the

area. Sometimes if you are talking about medical specialists particularly, and

that is a large part of what we are dealing with, and sometimes in other

specialties that are difficult to recruit for that aren't necessarily medical,

then we have at times brought people into the area. Sometimes we've brought them

and their spouse in, because that is an important part of satisfactory

recruitment as well. The relocation cost once we've successfully recruited may

be part of that as well at times. It has become a substantial part of the budget

in the amounts. Like you say, it is some $28,000 in 1993 actual.

I suppose there is an argument to be made that it

could well be more, considering that the end-game here is to provide services to

the public. We've had to go some distance, not in recent years but in times

past. I'm actually speaking of times either early when I came here or even

before I got here. I know there were some recruitment trips taken by some

individuals here, medical staff, to recruit other medical staff, and on one

occasion I'm told they went as far as South Africa.

MR. DUMARESQUE: So you are seeing pretty well the

same turnover in staff then every year? Because obviously the budget reflects

that. It was $32,000 in 1990 and $25,000 in 1991 and $28,000 in 1993. It was

down to $13,000 in 1992. On average it is around $25,000 a year. Are you still

seeing that kind of turnover (inaudible)?

MR. LUDLOW: There is that constancy to it, yes.

One feature that we've noticed is that when we do recruit from outside the

country physicians come until they've got the requisite time in so that they can

get their landed immigrant status and/or their Canadian qualifications. We've

supported quite a few physicians to do that too, and that support would have

come from board funds. I say "would have" because we've pretty well exhausted

that source now. After the requisite return in service, if training has been

involved, or after I think two years of service when landed immigrant status can

be applied, for, then the physicians move on. Some of them are almost to the

minute. As soon as all the details are complete then they will move on to some

other place in Canada.

MR. DUMARESQUE: Also under General administration

I noticed from the budgets again, statements from 1990 to 1993 for conferences.

The budget went from $37,000, $45,000, $32,000, $34,000. There doesn't seem to

be very much change at all in the funding for conferences over those four years.

On average about $38,000, $36,000 a year. Who attends those conferences, and has

the Board looked at whether all these conferences and all of that travel is

absolutely necessary?

MR. LOCKE: From the Board point of view the basic

educational conferences that we attend are - there are really two general, two

annual ones, and the Canadian Hospital Association and the Newfoundland Hospital

and Nursing Home Association annual meeting. Where you would have another

(inaudible) -

MR. DUMARESQUE: (Inaudible) $34,000, now that is a

fair bit of travel. I know a minister in the government, except for Chuck Furey,

and his predecessor Hal Barrett, I bet you they don't rack up $10,000 in travel

to conferences and other things. So there is a fair bit of money. Just who goes

to those? Obviously you said two conferences. That would not account for the

$34,000.

MR. LOCKE: Are you thinking it is just Board

members travel conferences only, is that the only thing (inaudible)?

MR. DUMARESQUE: No, no, the item there under

conferences, page 79, Other travel and conventions-staff, that's probably mainly

staff there. So you say you only authorized two as a board - for some board

members to go to. That would cover up - $16,000 that's still also a fair bit of

- just for two conferences for a board.

MR. LOCKE: Of course depending on where the

conferences are held each year.

MR. DUMARESQUE: Yes, okay that's $50,000 there for

travel and conventions. What about from a staff point of view, who would go

there and what kinds of conventions would you be attending?

MR. LUDLOW: Mostly they would be conferences of a

technical or clinical nature, certainly in the latter years. They may have been

more general in earlier years but where we've had to limit our expenditures -

and this is a category of expenditure that's generally known as discretionary

expenditure where you can go or not in some cases.

A lot of the convention or conference type travel has

been used by people in clinical settings from as close as coming right here to

the Mount Paton. Most recently there was the conference of operating room

nurses, provincial conference that was held here, two trips I suppose that would

take - we rarely have people go out of the country although I do know of one in

the area of rehabilitation services that took place last year in Chicago when we

permitted somebody to go. That wasn't full funding that was a shared funding. It

was about half and half if I remember correctly but our intention of late and

our stated intention has been not to have these attended if they're of no

particular direct applicability to patient care. So now when these conferences

occur they're learning opportunities and what is learned is not just general

education but particular clinical application or evolution in a particular

field.

I know we've had other people (inaudible) certain

things and here's one digression from what I've just said, we do value the

representation. We do have on provincial and national bodies various sorts of

them by people who are on our staff. They bring credit to the organization.

Therefore when anybody is chosen for such an office as that we want them to go

out and we support the cost of them going out, certainly to learn what they can,

advance the ideas, bring them back and apply them but also for the

representation that it shows for this organization. So there's some of that in

there as well. The staff travel in that category, you'll notice, is only

slightly under the budget.

MR. DUMARESQUE: Yes, I think it was over the

budget in some other years but has remained very constant from $37,000 in '90 to

$34,000 four years later. I understand the focus of the conventions may be

changing but it certainly - those two items of recruitment travel which you say

you haven't got much control over but conferences seems to be still maintaining

its same share of the general administration budget.

The Auditor General picked up, page 87, on the fact

that there's some accounts receivable from doctors, a couple of doctors in

particular. Do you have these accounts received now? What amounts would they be?

What kind of things - I never understood that type of thing. What way would that

work?

MR. LUDLOW: In some cases we provided funds for

doctors to set up practice or to receive some of the training that I referred to

and in so far as we weren't able to give straight out and out grants in the

training issue, to give out and out grants for them to get their Canadian

qualifications. For instance, in some cases they offered them part grant,

part

loan, in some cases it was just straight loan and we had to recover some of

that. That was the point of that issue with at least one of these two that was

referred to by the Auditor General.

In any case, in both matters all the money has been

either recovered now or contractual arrangements have been put in place to

recover it, complete with promissory notes and whatever other manner of detail

is necessary.

MR. DUMARESQUE: What kind of amounts generally

would you be talking about?

MR. LUDLOW: I think in the one case we were

talking about in the order of $30,000 or $33,000. The other may have been

roughly in that area as well.

MR. DUMARESQUE: Another item on page 87. The

Auditor General pointed towards an insurance cost regarding the Botwood Cottage

Hospital and she indicated that (inaudible) understanding that it was no longer

there, it no longer exists. Page 83. Is that the case? Is the insurance still

being carried, and how much should that be?

MR. LUDLOW: That was the management letter

provided by Doane Raymond, our external accountants. They did comment on that.

That was based on the review of the year previous. That would have been 1990. We

opened the Thomey Centre in Botwood in 1989 and shortly after that, within

months, or say within the year, the old Cottage Hospital was bulldozed, was

razed. When that was pointed out - and not when we received the letter, I

understand, but even earlier when the observation was first made - I understood

from the Director of Finances of the day that that matter had been addressed to

our insurers.

MR. CHAIRMAN: How could that have happened? I

mean, there was a period of time - a year or two? - that it was insured. The

building was no longer there.

MR. LUDLOW: There was a period of time too while

the - like you say, up to year - when the Cottage Hospital still stood.

Obviously since it was under our management and offered risk if anybody were to

get inside and injure themselves, (inaudible).

MR. CHAIRMAN: Was there a period of time from the

time it was demolished until it was cancelled?

MR. LUDLOW: Judging by the dates, Mr. Chairman, it

wasn't a long time. This management letter was dated in October but the audit

was completed for the end of March of 1991. The old structure wouldn't have been

knocked down much before that. It may have been a matter of say up to six

months. I'm estimating now from the date of the letter.

MR. DUMARESQUE: Yesterday we had a chance to talk

to the Notre Dame Hospital Board and the issue of salary supplements came up.

Mr. Locke, are any salary supplements being paid to the administration now? If

they are, how much and to whom?

MR. LOCKE: Mr. Dumaresque, I don't have the exact

figure of what is being paid but there are still some salary supplements in

place. Maybe Neil could follow up on this. There are some salary supplements

placed with various people in administration. When the letter came out from the

minister we discussed this with the minister. It was our understanding that

unless these people changed their positions, changed jobs, or accepted new

positions then the supplements would stay in place but there would be no more

given. There have not been any more given since the letter came out from the

minister. Neil, I don't now if you want to add anything to that.

MR. LUDLOW: We followed the dictate of the

then-minister Chris Decker in his letter to us of September 23 1991, which

prescribed doing away with salary supplements for one category of employee. To

that extent, if I dare say, it was a discriminatory type of a situation because

it didn't apply to anybody except those classified under the (inaudible) pay

plan. It indicated that any that were in place could stay in place but on any

job change, as Clayton says, or on any reclassification of a given position -

upward, presumably - then the salary supplement would be lessened and eliminated

entirely if the increase in pay would warrant it, would permit it.

We have been doing that regularly so that those people

who were covered by a salary supplement in the organization are fewer in number

now than they were then. In fact, I don't have the exact dollar value, but I

suppose there are probably no more than half a dozen people in the entire

organization whose salaries are augmented at all.

MR. DUMARESQUE: Would there be any number of

reclassifications since this directive came out?

MR. LUDLOW: Yes, reclassification is a regular,

rather routine affair, so there would have been a number of them over the course

of time, yes.

MR. DUMARESQUE: Okay; and is the Department of

Health - that is still the intention to carry through on that directive after

the contracts end and desist? What is your comment as to how this would be a

discriminatory directive as opposed to...

MR. LUDLOW: We certainly didn't deal with the

issue of whether it was discriminatory or nondiscriminatory. The directive that

was issued is just that; it is a directive, so it should be complied with. It is

not our role, I don't think, I think once government makes a decision to go in a

certain direction, we follow that regardless of what our personal feelings might

be, and that sort of thing but, as I said yesterday, the directive is a little

bit open to

interpretation in terms of what constitutes a contractual

arrangement. Does there have to be a written contract or could it, in fact, be

an oral contract between the board and those employees affected? So there are a

number of issues of that nature that really require further resolution.

I am not aware of the extent of these, and I didn't

know until just now that in fact there were supplements at Central Newfoundland

Hospital, but from what I gather they are in accordance with the terms of the

directive. There have been no new ones added, I presume, and they have been

reduced over that period of time.

MR. CHAIRMAN: Thank you, Mr. Hart. Mr. Dumaresque?

MR. DUMARESQUE: What kind of numbers are we

talking about here, a couple of thousand dollars or more, that would be added

(inaudible)?

MR. LUDLOW: There is none, to my knowledge, that

is greater than $2,400 per annum, and I suppose of the half a dozen or so that I

suggest would be remaining, most of them would be a good deal less than that per

annum.

MR. CHAIRMAN: Mr. Locke.

MR. LOCKE: Just a question to Mr. Ludlow,

actually. When he said there was none in excess of $2,400; I think for

clarification purposes I might mention the medical director. I was just

wondering if he is receiving (inaudible).

MR. LUDLOW: Yes, he is, but he is not influenced

by this policy that was brought out in 1991.

MR. LOCKE: Because it was my understanding, in

speaking with Department of Health officials, that supplement could stay in

place.

MR. DUMARESQUE: Yes, that one could stay in place,

and is the board's intention now that they would end with any new people being

hired for the same positions.

MR. LOCKE: Yes, we received a letter from the

minister just recently, actually, with a copy of the directive from the former

minister, Mr. Decker, which indicated that there will be no new salary

supplements in place with respect to new boards, and that any that can be

eliminated are to be eliminated.

MR. CHAIRMAN: Mr. Dumaresque.

MR. DUMARESQUE: The non-sharable expenses, just

for my information, what would that be? I noted $200,000 in actual expense in

1993, and $265,000 in 1992. What does that mean, non-shareable expenses? Page

MR. LUDLOW: This is a category of expenditure that

comes out of the Canadian hospital accounting manual which is an antiquated set

of designations now but essentially it refers to those expenditures that are not

shareable with government which is to say then government doesn't pick up the

cost of those. They're left - not to say they can't be incurred but if those

costs are incurred then it's left to the board to pick up from whatever other

resources, private funds, board funds, that it might have. I rather wish this

were sub-divided because then we could see more clearly and I'm not sure what

exact expenditures might be covered under that particular category.

MR. DUMARESQUE: Would you be able to follow up on

that with the committee and maybe send out some information to that effect of

what is covered?

MR. CHAIRMAN: Mr. Hart.

MR. HART: If I might just add there, I think

probably one of the expenditures that would be in there would be these salary

supplements because we wouldn't recognize those as being shareable and if the

board decided to pay them they would be doing that out of their own funding. I

think that's correct but, Mr. Chairman -

MR. CHAIRMAN: (Inaudible) small amount though?

AN HON. MEMBER: Yes, I wouldn't want the committee

to leave here thinking that we paid out $200,000 on salary supplements.

MR. HART: No that's just an example of the type of

thing that we're talking about (inaudible) amount.

MR. DUMARESQUE: Okay, well I'd appreciate it if

you could give us a breakdown of that figure as to what it was used for.

The final area of questions in seeking information is,

what amount of funding does the board have at its discretion, like I guess,

through donations or whatever? What kind of figure are you talking about and at

whose discretion is that spent? Is there a foundation (inaudible) attached to

the hospital? I know the International Grenfell Association provides a

substantial amount of money to the hospital. Is there anything of that nature in

place here and if so, what's the status of it?

MR. CHAIRMAN: Mr. Ludlow.

MR. LUDLOW: We don't have the philanthropic

organization such as the International Grenfell Association. We do have a

foundation, we referred to earlier, that raises money primarily - in fact to

this point solely for the purchase of high technology equipment. They do

contribute funds periodically as we talked about earlier. As to the balance of

board funds available, at the moment the value of assets is - and this is not

all cash necessarily but the value of assets is in the order of $1 million.

MR. DUMARESQUE: Okay, and what percentage of that

would be cash?

MR. LUDLOW: A fairly strong percentage of it. We

do have some real estate holdings, houses in fact, that we use also as

recruitment devices to attract doctors - when we can say we have a house

available. So there's a certain amount of money tied up in those but the

stronger proportion of it would be cash I think.

MR. DUMARESQUE: So, Mr. Locke, how would the board

approach that then, the spending of that discretionary funding? Do you have a

list of the appropriate headings or whatever that that type of thing could be

allocated under?

MR. LOCKE: The board funds that we have available

to us are spent at the boards discretion. So the board would have to vote on the

spending of any money that comes out of board funds. Again it would depend on

the priority needs at the time, whether it's to help in retention of doctors or

whether it's housing or whether it's a piece of equipment or whatever the case

is, it would be voted at the time. I would just like to point out further that I

think even though we may have possibly $1 million, do we not have some of those

funds committed to as well (inaudible)? I think realistically though the figure

may now be brought down to around $250,000 if we take it out of committed funds?

MR. LUDLOW: We have commitments for the most part,

again for medical training. We have a few other obligations of a much more minor

nature but as was indicated, we have committed a lot of money to the training of

physicians so that we can recruit into the future. So there isn't a lot of

unearmarked money available.

MR. DUMARESQUE: Okay and these would be the areas

where sometimes you have disagreements I guess with the Department of Health as

to what you should be putting through your board funding, your own board funding

as opposed to what you can receive back from government?

MR. LUDLOW: I don't know if I would categorize it

as an agreement with the Department of Health. We hardly disagree quite often on

the points but nonetheless they declare it none-shareable and we are stuck with

it.

MR. DUMARESQUE: So that is the non-shareable

expense. Okay. Very good. I appreciate your answer. Thank you, very much.

MR. CHAIRMAN: Mr. Tobin.

MR. TOBIN: Melvin has some questions he wants to

ask on the pharmacy (inaudible).

MR. CHAIRMAN: Okay. I pass them to our pharmacy

expert.

MR. PENNEY: That is not correct, at least not for

the moment. If I may I would like you to follow me through the financial

statement beginning on Page 66 and I ask you to please not misinterpret my

questions. I like to understand what is being said in financial statements and

it seems as if you look at about 100 of them they follow 100 different

procedures, and even if you compare a financial statement with two health care

centres they do not seem to follow the same pattern. Maybe it is because there

are different accounting firms being used. If you would just clarify a few

things for me, please.

On Page 66, the centre of the page, medical and

surgical supplies, I guess that is drugs? The next line says drugs, $1.9

million. Is that the total purchases for the board for the year in drugs and

medical supplies?

MR. LUDLOW: That particular one item of cost is

for the regional health centre here and not the entire cost to the board. We do

have other facilities.

MR. PENNEY: So that is just for the hospital here

in Grand Falls?

MR. LUDLOW: Now, understand that I have not looked

at these statements for a while but according to the heading that Doane Raymond

put on it, it is the one for the Central Newfoundland Regional Health Centre.

MR. PENNEY: Okay. Yes, that is the heading.

MR. CHAIRMAN: Well, what you are saying is that

all this annual report we have here, the financial statements, are all for this

centre? It is not other centres under the board?

MR. LUDLOW: I am presuming so. Doane Raymond has

supplied us with three separate statements, one each for the Regional Health

Centre, Twomey Centre, and Harbour Brenton Hospital.

MR. PENNEY: That is not a list of them here under

Central Newfoundland Regional Health Centre? Those are identified.

MR. CHAIRMAN: On Page 77 you will see that you

have Lewisporte, St. Alban's and others listed there.

MR. LUDDOW: Again, not all. If you would permit

me, Mr. Chairman? The way these accounts have been organized virtually for

thirty years is to have included the clinics at St. Alban's and Lewisporte but

to have separate statements for the time that we have had them under the board

for the Twomey Centre and the Harbour Breton Hospital.

I am a bit at a loss to say whether they are properly

titled so that it reflects only the main institution, the regional referral

centre, or whether they are improperly titled and in the case at hand the $1.9

million represents total expenditure for the board. I am frankly uncertain

because of the different ways that the statements have come to us.

MR. LOCKE: But if you look at the bottom figure

though, roughly a $28 million budget, would that not be just one centre, the

Regional Health Centre?

MR. LUDLOW: That would indicate that they are

properly titled and it is the Regional Health Centre because the total budget,

and this is the year ended 1993, the total budget for all facilities under the

board's operation is more in the order of $34 million.

MR. CHAIRMAN: Mr. Penney.

MR. PENNEY: If you come up toward the top of that

page now, under revenues, just looking at revenue and expenditure for a moment,

it says recoveries under pharmacy of $103,000. Again, I am assuming that is only

for the Regional Health Centre here in Grand Falls. Am I correct?

MR. LUDLOW: Yes.

MR. PENNEY: When would that be?

MR. LUDLOW: We service the pharmacies at North

Haven Manor and Carmelite House, who are both outside our realm of operations,

at least at present under a separate health care board; so we provide them

services and recover cost and administration fees for that service.

MR. PENNEY: Okay. If we assume that a portion of

this $103,000 would be for the recovery from the North Haven Manor, then also, a

portion of that $1.9 million would be for the proportionate cost of the drugs

that went to North Haven Manor?

MR. LUDLOW: Some of which eventually was supplied

to North Haven Manor.

MR. PENNEY: And that's included in the $1.9

million?

MR. LUDLOW: Yes, and the recovery value also

incorporates the value recovered from North Haven Manor; so too would the

salaries budget, because we have extra staff in pharmacy to be able to allow for

the work done (inaudible) North Haven Manor and Carmelite House.

MR. PENNEY: There is no breakdown in here to show

us the amount of drugs that went to North Haven Manor; could we have those

figures provided to the committee?

MR. LUDLOW: The amount of drugs in terms of the

dollar expense do you mean?

MR. PENNEY: Yes.

MR. LUDLOW: Sure.

MR. PENNEY: Are they supplied to North Haven Manor

at acquisition cost?

MR. LUDLOW: No. I mentioned an administration fee.

There is a surcharge added to allow for the service and the extra staff that we

have in order to make a comprehensive service (inaudible).

MR. PENNEY: Could you have those figures reflected

in that information for us as well?

MR. LUDLOW: Mr. Chairman, so that I am sure that I

have the question correct, I will provide you with the dollar expense of drugs

supplied to North Haven Manor including any surcharge or administration fee. Is

that correct?

MR. CHAIRMAN: Please.

MR. PENNEY: A few other questions that are totally

unrelated to each other. Page 78, we see that coming down under expenditures,

there was a budgeted figure for salaries for $23,761, under Linen but you only

expended $7,500. I mean, if you expected the cost to be $23,761 and you only

spent $7,500 that is commendable. How did you manage to do that?

MR. CHAIRMAN: How did you do it so we can do it

elsewhere?

MR. LUDLOW: Yes, we want to do more of it whatever

we did. You are quite right (inaudible).

MR. PENNEY: That's right, not just here, I noticed

it several places in the financial statements.

MR. LUDLOW: Yes. I would venture, and I will admit

to not knowing the answer exactly, but I would venture to say that the portion

of salaries that is captioned under the heading of Linen, probably does not

represent all the work that is done in our laundry and linen service area, and

that the bulk of the work is covered under Laundry salaries.

MR. CHAIRMAN: If you look at laundry, your

salaries exceeded your budget by $20,000 and in linen, you decreased it by

$20,000.

MR. LUDLOW: Yes, it is all one and the same

functional department. Again, I made reference earlier to how antiquated our

designations were and I don't know if Doane Raymond were any better in that

regard and to break these down is a bit artificial - laundry from linen.

MR. PENNEY: Page 79, under General Administration,

about three-quarters the way down the list, the professional fee refers to the

fee that they have charged you for their services.

MR. LUDLOW: That would be one sort, sir, yes.

MR. PENNEY: Okay, in 1991 you paid $83,000, 1992

$46,000, only about half, 1993 only $26,000. You're falling down dramatically,

$83,000, $46,000, $25,000, how are you doing this?

MR. LUDLOW: I'd like to tell you competition.

MR. PENNEY: Okay.

MR. LUDLOW: And then I suppose there's an element

of truth in that. Those fees include professional fees for accountancy services.

They also include legal fees and in some years we've incurred more legal fees

than others. So they're in there and there may be a few other sorts of fees.

Maybe on times - and I can't think of an example exactly but engineering fees or

anything of a professional nature that we've had to pay out for would be

captured under that heading. Going back to the beginning, when the amount was

higher, at the time - I'm trying to think whether we actually had a case - at

the time we were just coming out of the redevelopment phase that we were into

here for five years and possibly some of the costs surrounding that caused that

figure to go up. I know that in some years, and I can't tell you one year from

the other, but in some years our legal fees have been higher because we've had

more legal activity. The other thing about it though, and I mention competition

not entirely facetiously, we have made more efforts of late to find whether we

can get accountancy services, legal services and the like through competitive

means by asking for proposals from professional firms and companies.

MR. PENNEY: And Doane Raymond seems to be feeling

the heat of that competition, I guess?

MR. LUDLOW: Frankly, it did influence them, yes.

MR. PENNEY: That's marvellous.

One last question, page 85, under purchase orders, in

a number of cases the purchase orders attached to drug purchase invoices did not

have an authorized signature. Now when it says drug purchase I don't know

whether that's referring to OTCs, whether its prescription drugs or whether it's

controlled drugs, narcotics. How is it possible for purchase orders to be sent

out for any controlled substance, narcotic or

schedule (inaudible) drug without

the signature of the pharmacist?

MR. LUDLOW: I would hope that it's not possible. I

can't tell either whether it concerned control substances or whether it

concerned, as you call them OTCs, over the counter prescriptions but in any

case, obviously it was an incorrect procedure.

MR. PENNEY: I wonder could the Auditor General's

staff elaborate on what type of drug purchase invoices we're referring to?

MR. CHAIRMAN: Mrs. Marshall.

MS. MARSHALL: This was an item that was picked up

by the external auditors. When we did our testing we didn't come across items of

this nature but what we detected, during our review was that the purchase orders

(inaudible) signature on them that the amount that they (inaudible) for, the

dollar amount, wasn't included on the purchase order. So effectively the

external auditors found different problems then we found.

MR. PENNEY: Yes, you're referring more to

verification that you had received what you had ordered at the price?

MS. MARSHALL: Yes and in some cases the purchase

order didn't have the price on it so we couldn't determine whether they had

acquired the goods for the service for the amount that had been agreed upon.

That was the problem that we had found but the external auditors found a

different type of problem. Now the external auditors did their work in 1992 when

we did our work in 1993. So I guess by the time we came in the problem that the

external auditors had identified had been corrected but another type of problem

had surfaced by the time we arrived.

MR. LUDLOW: It's unclear as well, Mr. Chairman,

whether the reference to authorized signature is an authorized signature

(inaudible) officer or a pharmacist. I guess, as Mr. Penney points out, that

might change depending on the nature of what was being ordered. We can't

determine that from this.

MR. PENNEY: Who would do the drug purchasing

though? Would it be a pharmacist?

MR. LUDLOW: Not independent of the purchasing

system, although the pharmacist would be the one to indicate what would be

ordered in what quantities with what frequency and so on.

MR. PENNEY: Okay, so this might not necessarily

refer to controlled pharmaceuticals at all then.

MR. LUDLOW: Might not necessarily.

MR. PENNEY: Okay, fair enough.

MR. CHAIRMAN: Most purchases (inaudible)

purchasing (inaudible).

MR. LUDLOW: Yes.

MR. CHAIRMAN: Mr. Penney?

MR. PENNEY: That is all for now, Mr. Chairman.

MR. CHAIRMAN: Thank you. Mr. Crane?

MR. CRANE: Yes, just one question. The capital

assets of Central Health Care Board is $22 million (inaudible) listing capital

assets. The Auditor General says: Procedures are not adequate with respect to

these assets. No control measure, no tagging of equipment, no way of knowing

what you have. Have you made any movement to bring in a ledger system or a tag

system?

MR. LUDLOW: Yes, Mr. Chairman. We've made two

particular moves. One, we've engaged the services of a professional company in

the field of materials management, inventory management and so on. We made it

part of the task of that company to ensure that there is a fixed asset, capital

assets system in what they offered us. As well as that we've recently contracted

to automate the information handling in our organization from another company

that provides health care computer systems. Once again we made it requisite that

be part of what they have offered and it is in fact part of what we will soon be

setting up. In fact as we speak there is a demonstration of those systems from

the company called Meditech going on at the hospital now. Fixed assets is very

much a part of what we insisted on with that due to the observation that was

raised.

MR. CRANE: Very good. Okay then, Mr. Chairman.

MR. CHAIRMAN: Thank you Mr. Crane. Mr. Hewlett?

MR. HEWLETT: No, I pass, Mr. Chairman.

MR. CHAIRMAN: Mr. Dumaresque.

MR. DUMARESQUE: One question on severance pay just

for general information again. In 1993 I see $2.6 million for severance pay and

in 1992 it was $2.7 million. For the Auditor General: I don't see it in 1991 in

the financial statements there.

MS. MARSHALL: No. They changed the accounting

policy in 1993, I believe. Prior to that time a lot of the hospitals weren't

setting up the severance pay. There is a requirement under the generally

accepted accounting principles that this amount be now set up under the

financial statements. It was set up in 1993.

MR. DUMARESQUE: What do you expect your severance

pay to be in 1994? In the same area generally?

MR. LUDLOW: Actually, that one has caused us a

problem. It caused us a problem last year because of the uncertainty with regard

to the availability of severance pay. Just as it occurred in the education field

so it did in the health field. We incurred quite a considerable cost beyond any

previously estimated amount for severance pay. I think in our case it ran over

budget to the extent of - in the order of $200,000. Which we are in the process

of, or have already by now, notified the Department of Health about. We hope

that they can do something about it.

MR. DUMARESQUE: That is a really big item, isn't

it? I mean -

MR. LUDLOW: Yes. To answer your question more

directly, I can't predict for 1994. If the same uncertainty prevails then we may

find more people who want to claim severance pay upon change of circumstance.

MR. DUMARESQUE: So the $2.6 million you said, what

was it, $34 million overall, (inaudible) budget?

MR. LUDLOW: Yes.

MR. DUMARESQUE: So about 5 per cent of an overall

budget is -

MR. LUDLOW: That is a contingency amount based on

what you might ordinarily reasonably expect to have to pay out upon people

changing jobs, retiring, and so on.

MR. DUMARESQUE: Okay, (inaudible) out there to the

degree that it was costing you, and I thought maybe just because of the last

couple of years, but it seems to be a consistency (inaudible) over the last

number of years.

MR. LUDLOW: I would think that might even be a

greater concern as the new regional boards come up.

MR. DUMARESQUE: Yes.

Okay, thank you very much; no further questions.

MR. CHAIRMAN: Just one thing, the last four years

- three out of four years - the board has operated at a deficit, not a huge

deficit in comparison to the overall budget of the board, $67,000 in 1993 and

$234,000 in 1992, a surplus of $709,000 in 1991, and a loss of $246,000 in 1990.

Obviously you can't operate at a deficit position. Can you explain that? Is

there anything that can be done? What action has been taken to deal with that?

We are all having financial problems, but we all have to live within our budget.

MR. LUDLOW: I am perplexed. I believe the answer

to your question is that the statements that were prepared by Doane Raymond for

the year end might have been prior to the calculations done in final settlement

by the Department of Health, because our records now reflect that we did not end

those years in a deficit position. We didn't have a large surplus, but we

managed to stay slightly in the black.

Now if I have that wrong, and I will allow for the

possibility, then I wonder whether the Department of Health might be able to

help out on that question?

MR. CHAIRMAN: Mr. Saunders, do you want to respond

to that?

MR. D. SAUNDERS: Yes.

Page 66, you will notice, in the year 1993, on the

statement of revenue and expenditures, the statement shows an excess of

expenditures over revenues of $89,959; but included in the expenditure item up

above is depreciation, and government does not fund depreciation, so you have to

make those type of calculations when we do a settlement, and that would explain

why he is saying that they have operated in a slight surplus as compared to the

financial statements showing an actual deficit.

The same thing happens with the accrued vacation. The

government budgets only provide for severance and accrued vacation on a cash

basis. Any accruals of severance, or any accruals of vacation pay, is eliminated

during the settlements because we only fund them on a cash basis.

MR. CHAIRMAN: Thank you, Mr. Saunders.

MR. HART: Mr. Windsor, could I just add one small

item there?

MR. CHAIRMAN: Mr. Hart.

MR. HART: There seems to be accrual of severance

pay, the $2.6 million. I just want to make sure that everybody understands that

is a liability at a point in time. As at March 31, 1993 when these statements

were prepared that was the estimated severance pay liability that was due for

the entire number of years that the board was in operation. It is not a

reflection of what the annual costs would be. The annual costs wouldn't be

anywhere near that. I think there might have been some (inaudible).

AN HON. MEMBER: (Inaudible).

MR. HART: Yes.

MR. CHAIRMAN: You are after losing a lot of

people.

MR. HART: The actual cost, I think, if you look

for 1993, is on page 66 there. It shows that the provision for severance and

vacation pay accrual, the increase in it was just $21,000 for that year.

MR. CHAIRMAN: It sounds a little bit better. Thank

you, Mr. Hart, for that; I appreciate it.

Do any committee members have any additional

questions? Mr. Tobin, Mr. Penney? Does the Auditor General have any closing

comments? Nothing from the Auditor General. Mr. Ludlow, do you have any final

statements you wish to make?

MR. LUDLOW: No, just that it was an informative,

interesting, afternoon.

MR. CHAIRMAN: Thank you very much.

MR. LUDLOW: We hope that we supplied the

information necessary.

MR. CHAIRMAN: Thank you; we appreciate that you

could provide us with this.

On behalf of the committee I would like to thank Mr.

Locke for coming before us and for being frank and giving this information.

Again, there are several areas that you are to be complimented on in the

administration of health care in this region, and on behalf of the committee and

the House of Assembly we certainly do that.

On the other hand there are a couple of areas of

concern, particularly the Public Tender Act is one that we always find. As I

have said, maybe our Public Tender Act does not always give you the cheapest

solution. Certainly it is not always the easiest way to go, but it is very

important in the overall accountability process in ensuring that all suppliers

have an opportunity to participate and that we get good value for our money, and

that it can be clearly documented, which is quite often the problem that we

have. We really can't ascertain, or the auditors can't ascertain, whether or not

the Public Tender Act was really followed when the documentation is not kept,

and it is important that be the case. So that is an area that we often find

deficient.

Other areas that have been expressed of interest and

concern by Committee members, I think it is worthwhile that it be brought to

your attention and we have an opportunity to discuss with you, and give you an

opportunity as well to both our questions and to the comments in the auditor's

report.

I thank you very much for that and for your

participation today. I thank the Auditor General and her staff; Mr. Hart, Mr.

Saunders from the Department of Health staff; the Public Accounts Committee and

the House of Assembly and members of the Committee. Thank you for your diligence

today.

There being no further business the meeting stands

adjourned and will adjourn until we are back tomorrow at 9:30 a.m. with the

Pentecostal School Board.

The Committee adjourned.