The Committee met at 10:00 a.m. in the Town Hall, Stephenville.

MR. CHAIRMAN (Windsor): Order, please!

I would like to say, if there are any media present, the rules of the Committee are the same as the rules in the House of Assembly. You are entitled to use the audio portion; video with sound on tape is not permissible. If you want to take some snapshots or silent footage, you may do so now before we begin.

I would like, first of all, to introduce the members of the Committee: to my immediate right, Mr. Tom Murphy, MHA for St. John's South, who is the Vice-Chair; Mr. Garfield Warren, MHA for Torngat Mountains; Mr. Bill Ramsay, MHA for LaPoile and Mr. Danny Dumaresque, MHA for Eagle River. To my immediate left is Miss Elizabeth Murphy, the Clerk of the Committee.

I would now like to ask the witnesses to identify themselves. First, perhaps, we will start with the Auditor General and she would introduce herself and her staff.

MS. MARSHALL: My name is Elizabeth Marshall, the Auditor General for the Province. To my left is Mr. Claude Janes, the Audit Manager responsible for the audit of the Sir Thomas Roddick Hospital, and on my right is Mr. Bill Drover, the Audit Principal, responsible for the audit.

MR. CHAIRMAN: Thank you very much. Perhaps we could ask, Mr. Kinden, who is the leader, I assume, of the group from the hospital, if he would introduce the people who are with him.

MR. KINDEN: My name is Cal Kinden and I am the Chief Executive Officer of the Sir Thomas Roddick Hospital; to my left is Kevin Hayter, Director of Finance and to my right is Brian Hamlyn, Materials Manager.

MR. CHAIRMAN: Thank you very much.

Perhaps, by way of introduction to the Committee and for the benefit of the witnesses who are here for the first time, these hearings are designed to gather information, we hold them fairly informally although you will, in a moment, be asked to take an oath; the information is given under oath.

It is the role of the Committee to gather information and report to the House of Assembly. We are not here to judge who may be right and who may be wrong in these instances. The Committee hears matters referred to it, generally through the Auditor General's reports, but also matters referred by the House of Assembly or any other matter that comes before the Committee that it feels is worthy of consideration by the Committee.

In this particular case, we are here to consider comments from the Auditor General's Report relating to the Sir Thomas Roddick Hospital, particularly as it relates to purchasing practices, financial administration and compliance with The Public Tender Act. So our role today is basically to gather information, to listen to the Auditor General and her staff and any comments they may make, and to officials of the Department of Health, if there are any here, and as well, of course, the witnesses from the board.

I ask all witnesses to speak clearly into the microphones. As you can see, everything is being recorded here as it is in the House of Assembly to be transcribed by the Hansard people, and it is important for the people who are back in the Hansard Office at Confederation Building, that we identify ourselves, unless I identify you. I may fail on a couple of occasions but I will try on every occasion, as I recognize somebody, to identify that person and that is primarily for the benefit of Hansard. But if I fail to do so, please identify yourself before you begin to speak so that the people transcribing will know who is talking and we will have a more accurate record.

Now, I ask the Auditor General if she would like, by way of introducing this topic, to make any kind of an opening statement. Ms. Marshall.

MS. MARSHALL: Thank you, Mr. Chairman.

This is our first time appearing before The Public Accounts Committee to discuss the results of the audit of a Crown agency, of which we are not the attest auditors. These are our first detailed comments relating to the audit of a specific hospital. In the 1991 Annual Report of the Auditor General, we also comment on the detailed audits of one other hospital and also two school boards. As part of our responsibilities under The Auditor General Act, we plan to perform the audits of other hospitals and school boards on a cyclical basis.

The Sir Thomas Roddick Hospital is a 70-bed acute care district hospital with expenditures exceeding $11 million for the year ended 31 March 1991.

The purpose of our audit was to review the areas of Financial Management, Fixed Assets and Purchasing at the hospital. The review was designed specifically to assess whether, firstly, the financial management system was adequate to provide information to management and the board for decision-making and control of the hospital's revenues and expenditures, and also to ensure that the hospital was in compliance with the Hospitals Act And Related Regulations; secondly, that the policies and procedures relating to fixed assets were adequate to ensure their control and proper use; and thirdly, that the purchasing system was adequate to ensure monitoring and control of the purchasing function and compliance with statutory requirements.

As a result of our audit, we reported, in the Auditor General's Annual Report to the House of Assembly, the following:

Financial Management. We found that most aspects of financial management at the hospital were adequate; however, certain areas need to be reviewed. Equipment purchases beyond approved levels, increasing inventory values, employee loans, and operating deficits have all had an impact on the financial position of the hospital.

Fixed Assets. We found that controls over fixed assets require improvement. Many of the standard controls, such as reconciling inventory accounts to records, or the tagging of physical assets are not in effect.

Purchasing System. Our concerns with that system related primarily to a failure to comply with procedures as required under The Public Tender Act. Policies and procedures relating to purchasing should be documented and enforced through a process of regular review and audit.

Thank you, Mr. Chairman.

MR. CHAIRMAN: Thank you very much.

Before we ask the witnesses from the hospital if they would like to give statements, I would like to ask our Clerk if she would administer the oath to these people who have not been sworn. The staff from the Auditor General's office have already been sworn previously and are deemed to be continuing under oath.

Brian Hamlyn

Calvin Kinden

Kevin Hayter

MR. CHAIRMAN: Thank you very much.

Again, before I forget, could we ask the Committee members if they have had an opportunity to glance over the minutes of the meetings of September 11?

On motion, minutes adopted as circulated.

MR. CHAIRMAN: Perhaps now we will move on into questioning.

Mr. Murphy would you, as Vice-Chair, care to open questioning this morning?

MR. MURPHY: Yes, thank you very much, Mr. Chairman.

Good morning, gentlemen and ladies.

I would assume that you have the same document we have, and I say 'assume' because I will reference some pages and paragraphs that have been distributed among the public accounts. It will be a little difficult if we do not.

AN HON. MEMBER: (Inaudible) Mr. Murphy, some of the correspondence.

MR. MURPHY: If you could look at that document, and I reference page 11 under the heading Financial Management.

AN HON. MEMBER: I am sorry, Mr. Chairman, I don't have that.

MR. MURPHY: I think we will all find it much easier if we work from this document rather than to be shooting around to the Auditor General's Report and what have you.

If you look at page 11, the lead paragraph under the heading Financial Management, it says, 'We found most aspects' - and this is the Auditor General, of course - 'We found most aspects of financial management at the hospital adequate,' and that wonderful word 'however' is there then; 'However, the policies and procedures dealing with cash management need to be improved.'

Perhaps you would supply me with the information as to what you have done to improve that particular area of question by the Auditor General dealing with cash management.

I refer you to your response on page 16 of the same book, and it is very general. The sixth paragraph down says: 'Cash management policies and procedures are currently being developed by the finance department of the hospital to address all aspects of cash management.'

Perhaps you can go into a little more detail for us.

MR. KINDEN: Are you asking me the question: What have we done since that time to eliminate the cash flow -

MR. MURPHY: Yes, I -

MR. KINDEN: - or what created that overdraft to -

MR. MURPHY: Well, I think what I am saying to you really, Mr. Kinden, is the Auditor General has questioned the financial management. You have responded in a broad sense, saying that the cash management policies and procedures are currently being developed. Now, when I see one, the Auditor General's Department identifying an area where they have concern, and you responding with the general statement, then what I would like to ask of you is: Where are you now - and, in a more definitive way, from a cash management point of view?

MR. KINDEN: This year, at the end of our present fiscal year we won't have a deficit position. Our cash management is up to par. We had some outstanding settlements with the Department of Health that were creating some problems there. Discussions have been held with the Department of Health settlements finalized. Basically, that was creating a major part of the overdraft with the bank at the end of the year. Through these efforts and with the accounts receivables, these things will now be in place and at the end of this fiscal year there won't be an overdraft. We will have our cash management back on stream.

MR. MURPHY: Okay, so that is the end result, but you have alluded to the policies and procedures here in your response to the Auditor General. Perhaps you would tell us what policies and procedures are now in place to -

MR. KINDEN: I will let Mr. Hayter answer that.

MR. HAYTER: Yes. Over the past year we have been in a position to try to identify the areas of greater concern. We are now in a position to establish policies and procedures as they relate primarily to collection of old outstanding accounts receivables, for example. We are unable to have a proper collection procedure in place prior to that for various reasons, however we are now trying to accomplish this by developing policies and certain procedures.

We are able to establish periods of time for making payments to vendors. There was a time when we were a little rapid, I suppose, in paying these. We found that we were comfortable with paying the bills almost as soon as they got in. Our system that we have now developed gives us a thirty-day turnaround in a time frame which helps us to maintain a more stable balance in our bank without depleting the funds all at one particular time. These are two areas.

Since that time also we have implemented major policies and procedures and a fairly advanced computerized materials management system which helps us to control our inventories with regard to medical and surgical supplies, drugs. We have not gone totally. We are still in the development stage. But the policies and procedures are coming on stream as each segment of the systems progress.

These are three areas that we are looking at, and we are also looking at a day to day computerized cash management system, which we currently don't have, that will monitor receipts of payments of accounts. We have also established a more accurate, up-to-date accounts receivable program that has found that we are able to capture a lot of income that under an old prioritized system, escaped the finance office. These statistics are available, and our current financial reporting does establish these findings.

MR. MURPHY: So you are satisfied now that your policies and your procedures associated with your cash management are adequate to address the discrepancies that were mentioned in the Auditor General's report?

MR. HAYTER: Yes, currently and hopefully, they will continue to increase.

MR. MURPHY: I have just one more question before we move on. I often wonder about this and I have seen it over the years: employee loans.

MR. HAYTER: Mr. Murphy, that may be a little bit misleading to say employee loans. The board, itself, like other boards in this Province, and hospitals, have what they refer to as bursaries, which they give to a GP who goes away to do a specialty and comes back and works in this area. An example of that would be our present psychiatrist, who is here. That person is given a bursary. Now, he can consider it a loan or a bursary. I suppose, if the person doesn't come back and work his commitment, then he is to pay it back with interest. If he does come back, he is to pay it off with service. This is the nature of things now. The hospital does have an employee systems program in place for their employees. It is a formalized program. You will find it throughout the hospitals, and it is done through the (inaudible) department. While it does get into financial sometimes, the majority of it isn't. It is done so that you just don't throw a good employee away and he comes back as a patient of yours. You keep him as a good employee.

MR. MURPHY: Are you saying that your EAP, your Employee Assistance Program, or funding associated with that, is not taken from your current account? If the employee had to go to Downsview with a problem, is that funding loaned to the employers or is it paid for by the hospital?

MR. KINDEN: It could be a bit of both, Mr. Murphy.

MR. MURPHY: It could be a bit of both.

MR. KINDEN: A bit of both, yes. It depends on the judgement of what we feel at the time; it depends on what the nature of it is. I will give you an example: We had an employee who was a good nurse. Her son came down with a terminal illness and had to be transported away. She herself didn't have all the money to pay for it, so we gave her a loan to do that. We just wouldn't give her the money (inaudible).

MR. MURPHY: Yes, okay.

MR. KINDEN: So these are the kinds of things that money is used for.

MR. MURPHY: That was kind of an indirect involvement with her son, as such. If you had direct involvement with an employee who had another EAP problem - and I will use an hypothetical one such as alcohol or drugs or whatever - and you had to send that person off to Downsview, one area that comes to mind, would the hospital support that totally or would you...?

MR. KINDEN: I have never run into that problem, Mr. Murphy. I don't know if - we don't have a lot of alcoholics around, but I have never run into it.

MR. MURPHY: No, I am not saying that. But let's face it, today we all accept that particular problem as a sickness.

MR. KINDEN: I am certain that the board would consider doing something with their own funding for that, if that were to be the case, yes.

MR. MURPHY: It would seem to me, from what you are saying, that you don't have a very definitive and/or solid EAP program defined as to where and how you would respond to a situation.

MR. KINDEN: That is true, because it depends on the merits of it.

MR. MURPHY: I see. Now, the other part, let me go back to the first part. It says here that loans at 31 March 1991, totalling, if you look at $72,034, and that is the integrated, and then you are telling me the endowment fund is $81,000 that is a total of $150,000. Is that a large amount when you are talking about a bursary associated with one or two doctors?

MR. KINDEN: Not really, to get a bursary for one of these specialists to go could be up to $40,000 or $50,000 a year for these people to get into the school. You have to understand that in order for them to get in to do their speciality they have to have a formalized salary. They just can't go in there. They have to live.

So really, it is in keeping with basically government guidelines for, like school in Memorial, where they have set salaries for people who are doing internships and residencies. So it could be up to $40,000 or $50,000 per year per person.

MR. MURPHY: So, if that particular physician went away to specialize somewhere and he was given this money, is there any way for the hospital or the board, if the doctor didn't come back, went on somewhere else, to have some kind of guarantee that that loan would be repaid?

MR. KINDEN: Well, we do have a legal contract, and that did happen. When he was threatened with, 'Well, we will go down to the courthouse and see who is going to settle this,' he paid. So we have never run into a problem where they didn't pay.

MR. MURPHY: Okay.

Thank you, Mr. Chairman, for the time being.

MR. CHAIRMAN: Mr. Warren, would you like to take up from there?

MR. WARREN: Thank you very much, Mr. Chairman.

Mr. Kinden, I refer to page 13, in respect of The Public Tender Act. I understand that you failed to follow The Public Tender Act as outlined, and I am just wondering, when you call tenders, and there is no indication there were any witnesses when the tenders were opened, can you tell me if this has been rectified? What improvements have been made? - or are you now following The Public Tender Act?

MR. KINDEN: We are now following The Public Tender Act. I agree, there were some deficiencies there, and I am glad we found these weaknesses. I welcome this. I think you will find confusion right through the whole system, with The Public Tender Act. I take full responsibility that our employees didn't follow that. It may have - it certainly was on my shoulders to make sure that they did. It isn't a weakness on their part, it is a weakness in the system, although I take somewhat of an issue with whether the two items before you, Mr. Warren, were, in fact, called or not called.

One particular item here was done through what is known as the group purchasing, that is in the Newfoundland Hospital and Nursing Home Association. That is done for all hospitals in the Province, for x-ray film, which means that this hospital is a part of that. So when we go to buy, we automatically assume that they naturally had gone to tender for all the hospitals in the Province and that we wouldn't necessarily have to go to tender again. So we just went and bought from the buyer who was awarded the contract at the provincial level, and this is one that was picked up.

Another, the second one there, and there are only two, if you notice, is the - we have Data General hardware. In order to get a maintenance contract on that, the only maintenance contract you can get is from the Data General Hardware Company. So we assumed that you wouldn't have to go to tender, because there is nobody else who can tender on that. So we just took that tender. I guess where we failed at that particular point in time was to forward a form into Works, Services and Transportation to inform them of what was going on. We are doing that, and we have been doing it.

I should also say, though, that we are doing it, but Works, Services and Transportation is very slow in getting these forms back. It could take up to ten or twelve months to get these forms back, Mr. Warren.

MR. WARREN: To go back to your earlier statement, you said there was confusion. Are you saying there was a little bit of confusion with The Public Tender Act itself? Or was there confusion with your staff? Do you find The Public Tender -

MR. KINDEN: I am saying, not a little bit, there is a whole lot of confusion with The Public Tender Act throughout the Province.

MR. WARREN: Okay.

MR. KINDEN: I realize now the Department of Health is taking this in hand and is going to have seminars for their agencies to clear up any misgivings people have about the Act, itself.

MR. WARREN: Thank you.

MR. CHAIRMAN: Thank you, Mr. Warren.

Mr. Ramsay, would you like to continue?

MR. RAMSAY: Mr. Chairman, I have a few questions. With reference to The Public Tender Act, I want to ask the Auditor General about that. When this was pointed out in the Auditor General's report - I note on page 5, Non-compliance with The Public Tender Regulations, it says, Section 3(2) of The Public Tender regulations states: "A call for tender shall include the following:... (f) the time and place of the opening of the tenders." That is one point. The other thing refers to the publication of The Public Tender as an exception, the exceptions which are tabled in the House of Assembly.

Now I can understand, based on what Mr. Kinden and the people are saying here, about the non-compliance - it being confusing and whatnot, with the various levels of what is or what is not required. For it to be mentioned there, is it an in-depth analysis of what is required, or is it very black-and-white according to the Auditor General as to what is required? As far as the Act goes.

MS. MARSHALL: I see it as being very black-and-white. The Act does provide for instances where there is a sole supplier. The Act doesn't say you have to tender when there is a sole supplier, which is one of the examples that you had. But the Act is very clear in saying that when you buy from a sole supplier, you have to notify the Minister of Works, Services and Transportation so that he can table this information in the House of Assembly. Because, basically, The Public Tender Act was passed by the House of Assembly, and the House of Assembly has basically said, 'We need certain information after you do certain things.' When certain exceptions are made, the House wants to be aware of this, and in this case they weren't made aware of it. So I see it as very black-and-white.

MR. RAMSAY: Because I notice sole supplier information in there - almost all times when they are tabled, it comes up, and the rationale provided in the documents is very simply: This is the sole supplier for this material, product or service.

MS. MARSHALL: Yes.

MR. RAMSAY: Therefore, no public tender was called.

MS. MARSHALL: That's right.

MR. RAMSAY: But it is published and documented and placed in the documents in the House. Again, on that, you mentioned that the policies and procedures have now been developed or are being furthered and developed and honed into place. I wanted to understand what were the policies and procedures before, and now what have you implemented insofar as - basically, how did you do it in the past as far as public tenders went and how do you do it now as far as the opening of the tenders and this sort of thing is concerned? Is it just a simple stamp with notification on it similar to the way councils operate or, how, specifically is it done?

MR. KINDEN: Mr. Ramsay, I will let Mr. Hamlyn, of our Materials Management answer because that is his area of expertise.

MR. HAMLYN: In the past, I think the problem was not the fact that we were not following Public Tender exactly, I think the problem was that we didn't have the policies and procedures in place, therefore, there was nothing documented to say we were doing anything correctly. Right now, the current situation in what we have is, we have policies and procedures in place regarding public tendering. We review The Public Tender Act and every time we have a public tender, when we advertise in the paper, for instance, the time and place of opening, when we actually open the tender, even if there are no people coming in, vendors or whomever, we still invite witnesses, have a public opening, we document everything and sign, whomever is there, we write down, we announce the vendors who are present or the vendors who have bids and the amounts they have bid, so I think what we are doing now is more or less formalizing what we did in the past.

In the past, we were going to tender in most cases, from what I have seen. We were going to tender, the problem is we just didn't have the policy and procedure in place, and the documentation to provide to the Auditor General to say that we were doing everything correctly.

MR. RAMSAY: So it was, basically, a management policy problem that was -

MR. HAMLYN: Exactly.

MR. RAMSAY: It was just an oversight, I suppose, as Mr. Kinden said. It basically goes to, I suppose, the responsibility for it, and that is a matter of oversight. And now you have corrected that and it should be sufficient.

MR. HAMLYN: Yes, since April 1992, I am going to say, every public tender we have gone to, and I guess we have gone to about twelve to fifteen public tenders, all documentation is there in the hospital, on file for each one, and follows the exact format as we had set out in our policies and procedures. So we are sure that we are doing everything correctly now.

MR. RAMSAY: Insofar as the support provided to you as an institution from the Department of Health is concerned, with regard to this, and the bulk of your monies on which you operate for a year, do they have any suggested policies and procedures that institutions should follow, or are you left to your own management and designs in developing this?

MR. KINDEN: No. We refer to the Department of Health quite often in consultation with departments to see what their guidelines are, what they prefer hospitals to do and, in some cases, they could very well be involved in the tendering process themselves, (inaudible) at all, especially if it is a large piece of equipment. I can recall one where this hospital was just purchasing an x-ray machine and a consultant from the Department of Health was very much involved with that, so we use them.

MR. RAMSAY: Okay, but what I am getting at is, if you look at the responsibility - and as you say, you have put it on your shoulders right now, but I wonder if the money we are using here to pay for some of this equipment and so on, is coming from the Department of Health, initially. They don't sign off full responsibility for the expenditure of that funding once they have passed it over to you, I wouldn't think. So what I am wondering is, in assisting you with a given tender call in the past, did they specify, Here is how we want you to do it, or did they approve of what you had done if, in fact, what you had done was not following the tender procedures correctly at that time?

MR. KINDEN: I don't know if they get into the detail of how we did it. Certainly, PPFs would have to be completed and forwarded to the Department of Health for their approval. I can't recall ever being told by the Department of Health how to do these things. I think it is more the staff with the agency under the Hospitals Act.

MR. RAMSAY: So there is an assumption that you are responsible.

MR. KINDEN: Yes. I don't think we can hold the Department of Health liable for any responsibility here. It is strictly through the hospital, itself if there are any weaknesses.

MR. RAMSAY: Okay.

The deficits in this situation - you are currently operating in a

balanced position financially. I note in the summary of the minutes of your meetings that in the past there were deficits and that was highlighted in the Auditor General's report.

I note also, back on page twelve of the document in the Financial Management report to your board, I guess, at the top of the page it says "in both 1987 and 1989 expenditure on capital exceeded contributions by approximately $75,000 and $100,000 respectively." Secondly the hospitals employee loans are there, which we have already discussed.

Those two capital contributions excess, I just want you to explain what specifically they refer to and what rationale was used in order to justify those excess capital expenditures.

MR. KINDEN: I am not going to be able to give you all the answers to that, Mr. Ramsay. To starting with, this was a 1991 audit, and somewhere along the line, 1987 got kicked in. You don't see where there is a 1991 problem. How they went back and did that - if they go back far enough they will find more than that or whatever.

Personally, I wasn't in the organization in 1987. I can only assume that the powers that be spent money out of their cash flow to buy equipment without having a formalized approval from government for capital expenditure. This I did find, and in 1990 we quickly corrected that situation with our (inaudible) coming up from government. So that didn't appear after 1990. That was something in the past, and how it just crept into a 1991 audit, I don't know, Mr. Chairman.

MR. RAMSAY: Okay, I won't dwell on that. I have one further area that I want to explore, which is the inventory management. I know there was a very substantial increase in inventory. I think it was pointed out from $214,000 up to $400,000-and-some-odd - page 11, at the bottom, the inventory increase from 1987 to 1991. Now, that brings to light a few questions. One concern is that their inventory wasn't being kept properly in the past or, in fact, you are housing more inventoried goods. I will get you the answer, but with respect to that I wonder, the inventory - and it is something I have found with hospitals and possibly more with the one in my own district in Port aux Basques, that oftentimes there is an indiscriminate use of some materials. I was only in there with respect to the birth of my own children, but I found there was very little accounting for the use of the kinds of materials that are used in nurseries and that sort of thing. I wonder about your inventory management and how it applied to that kind of - you know, is there an accounting kept of what each patient would use with respect to materials, so that the inventory is kept, or is it just on a broad base monthly or daily? How exactly is that kind of thing done, firstly, with reference to the variation, and secondly, with your procedures and policies as far as keeping track of your inventory is concerned?

MR. KINDEN: I will speak to the first part, Mr. Ramsay, and then, maybe Mr. Hamlyn could speak to the second part.

MR. RAMSAY: Okay.

MR. KINDEN: In the first part - some of this is going to be a little bit dear to your heart, because you did speak of Dr. Charles LeGrow. In the past three years, this hospital has grown; we have brought on internal medicine, we have brought on obstetrics gynaecology, and we have increased our general surgery. Of course, when you bring in specialists, naturally, you have to have more supplies for these people to work with. Also, we have increased our drug dispensing in this particular area and we all know what drugs are costing. The Drug Patents Act is creating some of our problems here.

Since 1987, and certainly since I came here, we are now carrying the inventory for Dr. Charles LeGrow and for the Bay St. George Senior Citizens Home, as a sharing of services. So that naturally would account for an increase as well.

With regard to the expenditure and how it goes on the wards, no, we do have a management information system but it is not into as fine a detail as hospitals in Canada would like to see, where every patient is awarded the cost for each band-aid and things like that. Mr. Hamlyn can certainly speak to what he is doing with his materials management, and we now have purchased a new system which will give us greater controls on our inventories.

MR. CHAIRMAN: Mr. Hamlyn.

MR. HAMLYN: With regard to the materials management system we currently have in place, we talk about controls and how much is charged to, say, for instance, obstetrics and those areas. We have everything that is received into the hospital. First of all, the way the system works is that our purchase orders are generated through the computer system. So everything that is ordered, we have to know the price of things as they are ordered. When they come in they are received and matched to make sure that the price matches what we ordered, to make sure the vendor is not charging us too much, or whatever.

Then, once it is put into inventory, of course, that adjusts our inventory upwards, and we then charge out our expenses to departments at the given rates. It is a very controlled inventory system that we have right now. When you are talking about, like, there seems to be no control at Charles LeGrow, you mentioned with regard to -

MR. RAMSAY: No, I just say, with reference to visually being there, that there is probably a general - control the item there (inaudible).

MR. HAMLYN: The thing about it, though, is our items are charged out to a department once they are sent to a department. So once it is on the unit floor, the materials management system, as such, has no control, because it then becomes charged to that department and owned by that department, I guess, and then dispensed by that department. So the dispensing of the item actually starts off in inventory, itself. At that point it is expensive.

But we have full control as to our inventory. We can tell you every item that we have, our days on hand, the average usage per month. Everything is charged out and balanced with the general ledger at the end of the month. It is a very good system and I don't think you will find a much better one.

MR. RAMSAY: Just to hone in on that, because I think that is probably the crux of a lot of the excess cost in our health care system, if there is any kind of wastage in materials that are used in excess and so on. I just wonder what you feel it would take. Would it be an overly expensive endeavour to attempt to come up with a per patient costing? With computer systems these days, it seems that information is so available, and it would take very little to have, say, a single person responsible for that kind of documentation of, you know, What did this nurse or doctor use when they were doing this or that procedure? All of a sudden, you have it down, fine-lined to a cost, and then you are better able to analyze exactly where you can implement some savings. So I just wonder what you opinion is on that kind of thing, and if that is something that should be stressed, possibly by us, with reference to this kind of thing.

MR. KINDEN: I understand what you are saying, Mr. Ramsay. I am not sure if hospitals can ever get to a point where they know the exact cost for every patient. Because what you would have to do is, at the end of - when a nurse went in, whether she put on one bandage or five bandages, you would have to come down and right that down. I think that would be just too horrendous when you are looking at patients. You can probably say, if a diagnosis was for a certain patient, they would naturally assume that they are going to use ten bandages for certain things like that. You could probably do it in that manner, but not for every patient, for every direct cost.

I think that would be - we could never make it. You would almost have to have a clerk chasing each nurse around, in order to do that. Then, when you get into emergency situations, if you have somebody there who just goes out on you, all hell breaks loose and nobody knows what they use, as long as they get the patient back. So that's the way it is.

MR. RAMSAY: Alright. That is all I have, Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Ramsay.

Mr. Dumaresque.

MR. DUMARESQUE: Thank you, Mr, Chairman. I want to follow up on some of the questions on the public tendering process, and computer maintenance - one of the items that was outside of the Public Tender Act. Was that the only computer maintenance service available in the Province, or was it the area? From the note there it says the only one available.

MR. HAMLYN: I will speak to that one. The computer hardware and software that we have at the hospital is the same as at eleven hospitals on the Island. It is Data General hardware and Meditech software with which some of you may be familiar.

The reason that we went with Data General maintenance is because Data General hardware will only allow their own maintenance people to do the maintenance. They are the only people who actually have the parts that are needed, and the only people who have the expertise to actually carry out the maintenance; so that is why, I guess, we didn't go to tender. There is no question. Data General will not allow another company - it may be a bit of a monopoly but I guess there are a lot of companies. It is almost like having a GM car and having to use GM parts - that sort of way.

MR. DUMARESQUE: You say they won't allow somebody else to touch their equipment?

MR. HAMLYN: That is right. Under their warranties and under their purchasing agreement, Data General will not - I guess what I mean is that they will not warranty their equipment if anything happens to it later.

MR. CHAIRMAN: Mr. Kinden, you wanted to say something here?

MR. KINDEN: Yes. That is not only true for this, Mr. Dumaresque, it is for anything that you buy, such as when we buy expensive x-ray machines, the company supplying them will not allow technicians from other companies to do maintenance, especially when a warranty is in effect. It just makes a whole lot of sense.

MR. CHAIRMAN: Mr. Dumaresque.

MR. DUMARESQUE: Yes, I can appreciate that sense and logic, but I just understood from the information I had, the reason was, it was the only computer company doing maintenance in the area. That was one of the reasons. I thought that was the essential reason that was supplied to us. I don't know on what page that was, but -

MR. CHAIRMAN: Mr. Hamlyn.

MR. HAMLYN: The reason that it is - they are the only company that does maintenance on Data General equipment in the area, I think is probably more specific.

MR. DUMARESQUE: Maybe there is a difference between that and the fact that they won't allow anybody else to do it by virtue of their warranty and so forth, so I just wanted to get that clear, and certainly I have no problem with the fact that if you enter into a contract - I can understand warranties, and it works in other areas. We can understand that as a rationale for going outside of the Public Tendering Act as opposed to the only one in an area; and if, in fact, that area should happen to be just Western Newfoundland, as opposed to Island-wide and something else, that would be a little bit more hard to understand.

Another point on the public tendering process, I note on page 30, you say that the auditor - you were wondering whether or not you should go to tender for the auditors for 1990-91, but you say they were getting a very reasonable price right now; and I notice from the financial statements that in 1988 and 1989 the audit was costing $4,800. I was just wondering - I can't seem to find it for 1991 in the financial statements. What is the cost in 1990-1991? Do you know that?

MR. KINDEN: I don't have that information immediately available, Mr. Chairman.

MR. CHAIRMAN: That is fine. I neglected to say earlier that if there are questions asked that require details you don't have available, you are entirely free to forward that information to the Committee at a later date. That is not a problem.

MR. DUMARESQUE: I notice on page 51, the statement of revenue expenses, 1988-1989 had it itemized under Expenses - Audit, and then the same relevant information on page 43 for 1990-1991; you do not have it there under any area or any line item that I see; maybe it is there and I just haven't found it.

AN HON. MEMBER: It could be listed under a subhead.

MR. DUMARESQUE: Well, that is what I am wondering, if it is under the general subhead of administrative and supportive, but that raises the question, I suppose, of why there would be a change from 1988-1989 to 1990-1991, and if, indeed, that is over. You don't also know if that has gone to tender? It has not gone to tender since this?

MR. KINDEN: Yes, we did go to tender this year. We took the advice of the Auditor General, we went to tender and called tenders and followed procedure, and the tender was awarded again.

MR. DUMARESQUE: Okay - to the same firm?

MR. KINDEN: To the same firm.

MR. DUMARESQUE: Outside of the immediate information we have there - just a couple of questions that I have. I would like to just ask, as I do on a regular basis with school boards or hospital boards, about the sources of funding. Would you be able to tell me how much public and how much private funds come in to the hospital board? Do you have 95 per cent, 100 per cent?

MR. KINDEN: I am assuming that 95 per cent, maybe even a bit higher, would come directly from the Department of Health, or Treasury Board.

MR. RAMSAY: Approximately an $11 million budget?

MR. KINDEN: Yes, approximately $11 million. It is slightly higher than that if you go into the medical staff, because so much comes from MCP, as well, for the salaried physicians. There is very little coming in from foundations and things like that. You have to remember that we are in an area with 80 per cent unemployment and things of that nature. There aren't a whole lot of dollars out there, so we rely heavily on government for funding.

MR. DUMARESQUE: Yes, okay. Another question, too, for my information as a member from Labrador: We have had some difficulty recruiting staff for our areas. Are there any particular attractions provided, or whatever terminology you might use, to get staff in this particular area? I notice the board also serves some other areas, other hospitals -

MR. KINDEN: Outreach clinics.

MR. DUMARESQUE: Outreach clinics. Is there any difference in what is offered to try to attract a candidate to this area and other areas?

MR. KINDEN: No. We have basically followed the physician guide for all of this, except for our bursaries, as I mentioned to Mr. Murphy earlier, things like that, to get people to come back. Other than that, we are in competition with everybody else. There are ways and means of doing it. We don't have any rental subsidies or anything like that. It is a fair market value as it would be for anybody else, and things of that nature, a bit of sweet-talking.

MR. DUMARESQUE: I have listened to your member on a number of occasions, and I certainly know that you have lots of attractions and good things to make sure that your staff come here. That is not to make you believe we don't have them in Labrador as well.

MR. KINDEN: We just have a good member.

MR. DUMARESQUE: We certainly have to offer different things, and I just wanted to know that for my own personal information. Thank you very much.

MR. CHAIRMAN: Thank you, Mr. Dumaresque.

Perhaps just a couple of general questions on one or two points, to the Auditor General and her staff, first of all. Many of the issues we have dealt with here today seem to be weaknesses in management control, control of inventory and these matters. Have you looked at the situation since your audit? Do you have evidence to confirm that systems are now in place to deal with the weaknesses that you identified in your audit? Are you now satisfied that these matters have been addressed by the administration of the hospital?

Ms. Marshall.

MS. MARSHALL: We haven't carried out any follow-up audit procedures to determine what has been put in place by the board or by the hospital, but based on the information that has been provided here today, it seems they are on the right track. They are collecting their accounts receivable as soon as they can and they are delaying paying their payables for as long as they can.

With regard to our comment on inventories, what we wanted them to do was just to look at the inventories and make sure that they are at an acceptable level, that they don't have their cash tied up in inventories.

The other issue was, the overall financial position of the hospital shows that the accumulated surplus has been deteriorating over the past several years because the hospital has been incurring a deficit. From what you are saying, this year you have turned that around and you are either going to break even or have a surplus position. So that is basically the sorts of things that we would like to see implemented.

MR. CHAIRMAN: Just on the matter of inventories, I think, anybody who has ever gone to a hospital knows that particularly inherent in an emergency room, so many things have to be at hand for physicians and nurses to deal with problems quickly that it would be almost impossible to account for all of those things. You must have some mechanism, though, to I guess, monitor overall quantities. Are there systems in place that per month you would have so many bandages, so many syringes and so many tubes of certain types of medicines? Is there a system in place to monitor that from a general point of view?

MR. KINDEN: In drugs, there is a drug formulary that is used all the time. There are quota systems for the floors, for all the things they use on the floor, for emergency departments. So there are quota systems. There are systems in place, it is just that you can't get into final detail, as you just said. But hospitals - and certainly we are no different, we are keeping track of that as well as we can.

MR. CHAIRMAN: Are there any steps taken to guard against pilferage, either by staff or by people entering the hospital? I don't know if you - if you are brought into an emergency room, you are sometimes left there for ten or fifteen minutes, sometimes an hour or two, patients will say. Nevertheless, it is possible to pilfer things. I am talking about small items now. Are there any systems in place to try to guard against those sorts of things?

MR. KINDEN: The most we can put in place is our security going around from time to time, locked doors and cabinets, and so on, especially when it comes to drugs, narcotics and things like that. Those are always under lock and key. But hospitals are always going to be open to some pilferage.

MR. CHAIRMAN: By their nature I think that is true.

MR. KINDEN: Yes.

MR. CHAIRMAN: As it relates to the Public Tender Act, just a very general question. Because the Committee has found - particularly this Committee's hearings over the past number of months - that we are dealing with a lot of Crown corporations and agencies and government-funded bodies which basically appear to be unaware that they are governed by the Public Tender Act, that they are bound to follow it. Is there any misunderstanding by the board or by administration that this hospital and others come fully under the ambit of the Public Tender Act and that they are required to comply with it? Is there any question there?

MR. KINDEN: Absolutely not. We understand fully that we are governed by the Public Tender Act.

MR. CHAIRMAN: So what we are seeing here basically was not a total awareness of all of the issues in the Act and not total compliance with the Act as a result of -

MR. KINDEN: Totally, and I think you will find that throughout the whole system in hospitals, not just this hospital, I would say.

MR. CHAIRMAN: One of the roles of this Committee, I guess, is to make organizations aware, you are very much covered by the Act. If we can stress that, we have accomplished something at least.

Seeing it is 10:55 - we normally try to take a brief break just to give people an opportunity to gather their thoughts and prepare themselves. So perhaps we will take a five-minute break now for coffee and then we will come back and continue with another round of questioning. There is coffee available, I think, here in the back room, and you are all free to indulge in that.

By the way, during the hearings, as you saw me do and other members of the Committee, we arrived for coffee. These are informal hearings. If you are too warm, take off your jacket and relax. We will adjourn for five minutes.

MR. CHAIRMAN: We will call the meeting to order now, please! Thank you.

Before we carry on with questioning, could I ask everybody to speak a little more loudly? - those who are not as clear as some of us are. Particularly people in the back of the room, I think, are having trouble hearing, and one of my ears is not as good as it used to be twenty-five years ago. It doesn't work as well either. So, we would all appreciate it if everybody would try to enunciate clearly and speak a little more loudly.

Mr. Murphy, would you like to continue the questioning?

MR. MURPHY: Yes, thank you, Mr. Chairman. Perhaps if I can refer you to page 39 of the document provided, the balance sheet. I have some questions. Perhaps you wouldn't have the direct answers here to deal with every discrepancy - not discrepancy, but difference; but you might want to just make a short comment as to why it is difficult here, as you look at the balance sheet, to pick it off. I refer you to page 39.

It shows, in Liabilities, under the Integrated Fund, in the Current, that there is quite a difference in Accounts payable and accruals from 1990 to 1991, some half-a-million dollars. Perhaps you would like to comment on that, Mr. Kinden.

MR. KINDEN: Mr. Chairman, I am at a loss for words. I don't know if our financial -

MR. HAYTER: No, Mr. Murphy, not at this time. I don't have the answer right in front of me to tell you what makes up that difference; however, I am sure it can be provided.

MR. MURPHY: Yes, okay, fine - you know, because it is substantial, it kind of sends a light on and off, and if you move on to the next page, maybe we are going to find the same thing here, that you may not be able to answer. But I would like to ask these questions and perhaps, as the Chair has already mentioned, you might provide us with that information.

If you look at the integrated fund again on page 40, in your area of revenue, I see that the workers' compensation situation is gone now and I would imagine that is funding that Workers' Compensation pays back, that you have a top-up with your staff, don't you?

MR. HAYTER: In this particular case here, Workers' Compensation Board revenue is revenue derived from inpatients who were paid under the Workers' Compensation program and/or outpatients also who may have been paid there. Of course, it would vary from year to year as to the number that would -

MR. MURPHY: Okay, if we look at non-residents - I don't know how you might want to define that - just a couple of columns down it shows in 1991, $90,000 and in 1990, $176,000.

MR. CHAIRMAN: Tourism must have been good in 1990.

MR. HAYTER: Yes, that is exactly true. It is very hard to predict. In the summertime in this area you could certainly end up with a lot of non-resident income.

MR. MURPHY: So those would be revenues coming in from other medical plans through the country where you provided service to people from Ontario, Quebec, or wherever?

MR. HAYTER: The rest of Canada, as well as outside of Canada.

MR. MURPHY: Alright; and the other one, of course - well, it totals down. No, it is MCP - and this is the one that obviously beckons an answer; it is Recoveries. It shows cafeteria dispensing and MCP, and MCP is showing $1,388,000 in 1991 versus $35,000 in 1990.

MR. KINDEN: We all know what happened there, Mr. Murphy, where government changed its policy, and MCP paid the revenue for salary positions rather than their coming out of the Department of Health regular operating budget.

MR. MURPHY: Okay, so that beckons another question. Do you find that more effective?

MR. KINDEN: No, we don't. Government probably does but we don't, because we don't get to keep any money for which we don't have physicians in place.

MR. MURPHY: So what you are saying is that government has actually put their hand in the can on you?

MR. KINDEN: Yes.

MR. MURPHY: Okay; but, I mean, it is there.

Again in expenses - just a couple of quick questions again here. It shows nursing four million eight in 1991 and four million three in 1990. You are looking at $550,000 differential. Is that salary?

MR. KINDEN: It could be salary. For the most part, when we say nursing like that it again must have been used on the floors with regard to all different things for the patients that goes on.

MR. RAMSAY: Wasn't there a salary increase in 1991 over 1990?

MR. KINDEN: It has been so long since there have been salary increases, Mr. Ramsay.

MR. RAMSAY: But I just think there was one there somewhere that had to be accounted for. I don't know what it was in 1989.

MR. MURPHY: The nurses received an increase, I think, in January, 1991, in their new collective agreement. The freeze picked up in July, I think, or something. That might be -

MR. DUMARESQUE: Step progressions, maybe?

MR. KINDEN: Step progressions, yes.

MR. MURPHY: Yes.

Okay, just to go across and pick up some other - again the recovery is MCP. I see the revenue and you have already answered that on page 41 in Revenue. In 1990 it shows $410,000 and, of course, it is reduced to $29,000 in 1991, so obviously, you have supplied the answer.

Casualty officers in Expenses - Casualty officers and specialists: it shows in 1991, $8,000 and in 1990, $456,000.

MR. KINDEN: I will let Mr. Hayter speak in a moment, but I assume this is the same change that went about with the MCP, and there were some changes in that where the salaries were included in 1990 in that particular area and an analysis showing on MCP, so it would just be for certain areas of that in 1991.

MR. MURPHY: We are dealing basically with the same policy and procedure, that change from government, so it flops in here also. You might want to explain salary supplements to me. I see $36,000 in 1990 and $9,000 in 1991. What would that -

MR. KINDEN: Salary supplements go to - we were in a situation where we couldn't get funding from government for a speech pathologist, so the board, itself, subsidized the salaries to get a speech pathologist - areas of that nature.

MR. MURPHY: I see. Okay, fine. Thank you, Mr. Chairman. This is just dealing with some very obvious discrepancies here and I thank you for your explanations.

MR. CHAIRMAN: Thank you, Mr. Murphy.

Mr. Warren, have you any further questions?

MR. WARREN: I just have one short question, Mr. Chairman. I go back earlier to my colleague, Mr. Dumaresque, when he asked you a question about the audit. I notice in 1989-1990, it cost $4,800 and that was without going to tender. I understand that you went to tender last year. Do you know what it cost?

MR. KINDEN: I can't remember the exact cost but I can get it for you. I think it was slightly higher but not much.

MR. WARREN: So, maybe if you didn't go to tender you might have got stuck by -

MR. KINDEN: Actually, I just mentioned that to Mr. Drover there, that we were probably shooting ourselves in the foot by going to tender, because it gives everybody an open door to walk right in and (inaudible).

MR. WARREN: Thank you.

MR. CHAIRMAN: Thank you, Mr. Warren.

Mr. Ramsay.

MR. RAMSAY: A few things from my own experience. I am just wondering about some of the things you provide to staff that you bring in, that you attract from other places. Housing is often a thing the hospitals seem to provide for doctors. I note there is a housing expense of roughly $97,600 in one year, page 41, and a housing expense of $108,946 in, I guess, 1990-1991, those two years - yes, that is the expense, and there is a revenue figure above that for $54,000 and $46,000 respectively, I guess, against those two housing figures, so the net then, you are talking approximately $50,000 a year in housing expenses, paid for by the hospital on someone's behalf. How is that established? I am just wondering, is it done as an expense that is chargeable to the Department of Health, first and foremost? Secondly, if, in fact, this is for doctors or specialists or whomever, is it the kind of thing that a doctor is then charged as a - what is the term that is used having to do with Revenue Canada? Is it considered to be income for that doctor? - and then just a brief explanation of it and what it is that you do in that respect.

MR. KINDEN: We don't really subsidize hospital housing for physicians. What has been happening here in Stephenville, is we have had a number of units that we sub-leased from Newfoundland and Labrador Housing Corporation, and while we have something like fourteen houses, at any given time when there are transient doctors you could have probably three or four or five of these vacant. So the board still has to pay its rent to Newfoundland and Labrador Housing Corporation and the board has been doing that out of its own board funds to maintain these houses so that when a doctor is recruited, this person has a place to go. Therefore, a lot of the expenses are coming from - as well, the hospital has been doing its own maintenance on these houses, while the revenue has been going to Newfoundland and Labrador Housing Corporation. We sort of kicked up a little bit of a racket about that through our MHA and a few others and we managed to get these houses for ourselves, so that now we can maintain the revenue, while we don't have to pay any rent for unoccupied houses. So that is what has created that -

MR. RAMSAY: So the revenue comes from these physicians who pay rent to the hospital for the facilities provided?

MR. KINDEN: Yes.

MR. RAMSAY: Is that rented at the fair market value?

MR. KINDEN: At the fair market value. Yes, there are no subsidies in that.

MR. RAMSAY: Okay, because I was under the impression that at times that is used as a tool to attract -

MR. KINDEN: It can be a tool; it isn't something that we are not looking at, and we may have to do that in rural Newfoundland, but up to now we have had such a problem with Newfoundland and Labrador Housing Corporation in just trying to pay these for unoccupied houses that we have not had any movement to do that.

MR. RAMSAY: The other thing is just a general area that I wanted to get into with you. And usually, with the Public Accounts Committee, it is very broad because I suppose we make recommendations to the House of Assembly on things that we come up with, and it is always in the interest of having the overall expenditures that government makes on behalf of the taxpayers who pay these taxes in the first place, to be as efficient as possible and to get the most bang for the buck, I suppose you could say.

In your estimation, what is the single most important thing that would help improve hospital operations from a financial management standpoint to make it more effective, to get more bang for your buck? Would it be the provision of new and better facilities? Would it be more assistance in certain areas where you find it very difficult to manage? Is there some specific thing you could suggest, that we could deliberate on?

MR. KINDEN: Certainly, in our particular case here, a new facility wouldn't hurt us. We could be much more efficient if we had a new facility. I say that positively.

MR. RAMSAY: Your hospital that you have now is what, thirty years old, or forty years old?

MR. KINDEN: It was built around 1950 by the Americans. And when the wind blows and the rain is on, it beats in on the place, let me tell you, so it is not very efficient that way.

If I were to tell you one single thing that could save dollars in health care, it would be the utilization of all the resources, both human and through beds - and when I say that, I mean not allowing excessive stays in hospitals, lengthy stays that are costly, and watching utilization in the diagnostic and indigent areas, and things of that nature. So utilization management would be the thing to zero in on if you are going to save dollars.

MR. RAMSAY: Just to build on that a little bit, do you have private physicians in this area who have hospital privileges?

MR. KINDEN: Yes.

MR. RAMSAY: You do?

MR. KINDEN: Yes.

MR. RAMSAY: Do these physicians have an allocation of acute care beds in your institution to which they have access? Do you have it split up in a per physician allocation?

MR. KINDEN: No, we do not have it per physician, and I am not sure if we want to get that far at this point in time. Remember, we are growing, in a lot of ways, with our specialists, but we do have it broken up into surgical, medical, obstetrics, gynaecology, and so on, which somewhat limits the accessibility of beds for fee-for-service physicians.

MR. RAMSAY: With respect to specialities and specialists, I just had a complaint recently. I will give you an example where a person was allocated a bed even though he was mobile and able to get up from the bed and leave the hospital daily, even though some diagnostic tests were being done. I saw it as a bit of a waste, in my estimation. It was only being done because that was the way the person could access testing more quickly - so, to use a term that we sometimes hear, blindfolding the devil in the dark. In order to access the testing, the policy stated that he had to be in a hospital; and even though he was mobile and should not have been taking up a bed, in order to get the testing more quickly, he was occupying a bed.

There is the fact, also, that a physician concerned then, as I understand it, has access to more billing because he has a patient in the hospital. If a physician does have a patient in a hospital, there is a charge whereby the physician, if he is a fee-for-service, is paid more; is that correct?

MR. KINDEN: Yes.

MR. RAMSAY: So, in that way, there is a disincentive for salaried physicians, as far as financial management goes, to get the patient out of the hospital. If we were to assume that there is any kind of ulterior motive - and I don't mean to imply that, I just say that oftentimes it comes up that by keeping a patient in a hospital, then the person can charge more for the services provided, through MCP.

MR. KINDEN: That is true. It decreases by the length of stay, but certainly, there is a charge there more than if seen on the outpatient basis, yes.

That is often done, though, Mr. Ramsay, and I will make a broad statement that it is going on less and less in hospitals in Newfoundland. Certainly, in this hospital it is going on less and less. Again, that goes back to what I was just saying about utilization. You can't have your beds filled by outpatients - that is where ambulatory care and continuing care comes in.

MR. RAMSAY: Yes. So that kind of thing does even go on in your institution, where someone would have to be in a hospital to access certain tests in order - or is it just patients you refer elsewhere maybe, where they have -

MR. KINDEN: That rarely happens in our hospital now.

MR. RAMSAY: An inpatient would have quicker access to certain procedures than an outpatient, is that correct?

MR. KINDEN: Yes, because that is the nature of the beast in the health care system in Canada.

MR. RAMSAY: Alright. Well, that's all. I just wanted to get into the general area there as far as that went with the Auditor General's assessment of financial management in our hospitals and so on. There are several others that I guess we will get to a little later on.

Something I have brought up in the past that I have harped on many times, and I wanted to get an opinion: We have a situation here, the first one where we have had a private auditor do the audit and then our people follow up from the Auditor General's Department. I just wonder, for the record, the idea of a compliance audit with legislation, versus the kind of audits that are normally performed by private auditors, where they are just auditing for financial position: Is there anything we could recommend, or the Auditor General would even consider recommending, I guess, to the House of Assembly that would make the audits that are done for financial position by private auditors to be more attuned to the compliance that is required with the Public Tender Act? Because this type of situation that we have here today - if their auditor had been, I suppose, apprised of the requirements of the Public Tender Act, etc., then that could have solved this problem quite a while ago, I suppose, from a long way back. So is there something that through us, as a committee, or say, through the Auditor General, could be implemented, suggested or recommended that might -

MS. MARSHALL: We haven't really thought along the lines of having the external auditor audit for compliance with government legislation. In the past and, of course, even now, there are external auditors who are requested to express opinions on compliance with federal-provincial agreements, things of that nature. So it is something that we could look at and determine whether it is an area that the external auditors can get into.

At this point in time we are sort of in the infancy stage of auditing for compliance with regard to these organizations. This was the first audit on which we have appeared before the Public Accounts Committee. We sort of just started out developing our auditing procedures. I think, as time evolves, we may be addressing that area. I think, at this point in time, it is still a little premature to decide.

MR. RAMSAY: So there is a lot more to be handled and done yet before we can probably come up with a solid recommendation as to how to proceed.

MS. MARSHALL: Oh, yes.

MR. RAMSAY: Mr. Drover has something?

MR. CHAIRMAN: Mr. Drover, you wanted to comment here?

MR. WILLIAM DROVER: I would like to add that just prior to Beth's arrival, because Beth is at the - we have for the past year or so, when we got into the new legislation, in dealing with the Department of Health in, I guess, a joint effort; in other words, we meet with them and tell them what our plans are, which hospitals we are going to do, so that we aren't bumping into each other. The Department of Health has - and Beth is not aware of this, I haven't had the chance to brief her on it this morning - she is probably going to kick me for it afterwards.

AN HON. MEMBER: She will get you later.

MR. DROVER: She will get me later, that's fine. The Department of Health has had some audit firms - you know, I believe, a couple of the hospitals in the Province - and then they have extended their internal auditors out to others. So really, behind the scenes, we have worked. While not reporting on it, we have tried to work in a joint effort with the Department of Health. I notice that the prime one we have been working with is sitting here in the gallery - Mr. Saunders. We have worked with his people and with Brian Lemon's people in the past. I think that testimony was given before this Committee probably -

MR. RAMSAY: A year-and-a-half ago?

MR. DROVER: - a year-and-a-half ago, of our intentions. In the current year we haven't gotten into it. As Beth says, this is our first and we are now starting to see the fruit of it. If Beth wishes, we can go through it, but I wanted to make sure that you drew the two things together.

MR. RAMSAY: The thing I am getting at more is a recommendation or something. Because, in our annual recommendation to the House, again, this is the kind of thing that I think could be very fundamental in getting a lot of these problems stopped as quickly as possible.

MR. CHAIRMAN: Ms. Marshall.

MS. MARSHALL: Perhaps I can just go on to say that when we developed the audit program for the hospitals and school boards, we looked at three individual areas, Financial Management, Fixed Assets and Purchasing. Of course, these are just three areas but there are a lot of other areas that we really need to take a look at. For example, you raised the issue of control over inventories on which we have not done any work to date, but which we are anticipating to do next year. We don't have it all wrapped up in one package yet, we are sort of just progressing and taking it in steps but, at some point in time, yes, we can go back and address that matter.

MR. RAMSAY: Thank you, Mr. Chairman, I have no further questions.

MR. CHAIRMAN: Thank you, Mr. Ramsay.

Perhaps this is a good time for me to recognize Ms. Bishop, Assistant Deputy Minister of the Department of Health, and Mr. Saunders, Director of Financial and Institutional Services. Do either of you wish to make any comments on this issue or on any that we have raised thus far?

MR. SAUNDERS: We want to get more mikes.

MR. CHAIRMAN: Well, we have another mike over here. If either of you wants to make a comment, we welcome you to come forward, we will have you sworn in, and you can make a comment, but I want to recognize that you are here and this is probably a good time to do it. Are there any comments you wish to make? No? Okay, fine, thank you.

Mr. Dumaresque, would you like to continue?

MR. DUMARESQUE: Thank you, Mr. Chairman. With all this heavy questioning and substantive issues being talked about, I wonder if I might ask a question, and it might even be interpreted as introducing some levity into the proceedings.

About a year ago, a member of the Legislature said there was an explosion of coyotes out in this area, that there was a real problem on the horizon for people, and issued a warning that they should keep their children indoors and things like that. I wonder if you might tell us if there has been any great increase in people being admitted for that kind of thing?

MR. KINDEN: Not to my knowledge.

MR. CHAIRMAN: Your preambles are accurate, at least. Mr. Dumaresque, have you any further questions?

MR. DUMARESQUE: No further questions.

MR. CHAIRMAN: Are there further questions from any other Committee members?

MR. MURPHY: Just one quick question, Mr. Chairman.

MR. CHAIRMAN: Mr. Murphy.

MR. MURPHY: It goes back and is very similar - Mr. Dumaresque's question really got me all -

MR. CHAIRMAN: Gone to the dogs, I would say.

MR. MURPHY: I am glad there wasn't an increase of bulls out here last year.

Central Pharmacy, I understand, have decreased their services throughout the Province and have passed on some of their services to hospitals - regional hospitals and what have you. Would that say something about the increase in inventory? Do you supply, say, seniors' homes with medications and things of that nature that you didn't do prior to the last couple of years? Is there a new role for it?

MR. KINDEN: There is a new role for it but we are not doing that right now, Mr. Murphy. The increased cost you are seeing is exactly that. There is an increase in cost to buy these drugs and, as I referred to earlier, the drug patent is just driving everything out of proportion, so a drug that would have cost ten dollars yesterday is probably twenty dollars today. But it certainly needs to be looked at. I agree with what you are saying.

MR. MURPHY: I sense that the taxpayers of this Province are getting short-changed in a lot of ways when it comes to the drug situation right now. I think you have sensed it and you have touched it and I want you to reconfirm - because you people are in the field and I am not - that the patent situation and what have you is costing the taxpayers of this Province a tremendous amount of money.

MR. KINDEN: Yes.

MR. MURPHY: You are confirming that again for us this morning and I am sure that as time goes on and we get into more hospital boards through the Auditor General, this is what we are going to find. I say that because this is a Committee of the House of Assembly and it may very well identify the need for some new legislation addressing that problem. It is not the time for us to be wasteful, obviously.

MR. KINDEN: Certainly not.

MR. MURPHY: Thank you, Mr. Chairman.

MR. CHAIRMAN: Mr. Warren.

MR. WARREN: Just one question for my information more than anything else, Mr. Kinden. Where are your five satellite clinics? What communities are they in? - for my information only.

MR. KINDEN: We have two on the Port au Port Peninsula. There is one in Lourdes, one in Cape St. George. We have one in Stephenville Crossing, which serves the Bay St. George Senior Citizens Home as well, one in St. George's and one in Jeffrey's.

MR. CHAIRMAN: This system is working well. It seems to make a lot of sense to have a central hospital sort of controlling these clinics. Is that working well, in your view?

MR. KINDEN: It is working really well, yes.

MR. CHAIRMAN: Mr. Ramsay, Mr. Dumaresque, do either of you have any further questions?

MR. RAMSAY: Nothing further at this time, Mr. Chairman. I would like to thank the members for their answers this morning. I know in the past sometimes when we have had witnesses called before Public Accounts it has been a very unnerving experience, just for the fact that the testimony is given under oath and this sort of thing. But, as you said, we are here to gather information. We all have the same aim and goal, I think, to improve the overall use of the taxpayers' dollars, and if someone is, indeed, accountable for an action that they have or haven't taken, to bring that forward and hope to improve the situation. So I thank them, and also the Auditor General's Department for their comments on this matter.

MR. CHAIRMAN: Mr. Dumaresque?

MR. DUMARESQUE: Just one final question. We have seen rationalization in the health care system in the last few years. We also know that it has affected this area as well as other areas. Can you indicate to the Committee what your impressions are of how the public is being served at this point in time with the dollars that we do have, and if, indeed, that rationalization has been an acceptable measure?

MR. CHAIRMAN: Mr. Kinden?

MR. KINDEN: I guess you are referring to regionalization, in that fashion.

MR. DUMARESQUE: The overall rationalization of the health care system that has happened, where we have seen regionalization and specialization and so forth.

MR. KINDEN: Mr. Dumaresque, there has to be more coming together. We can do a lot more of this and share a lot more services when we are together. It is working, not to its full potential, but it is serving the public better with the few dollars we do have. But it is a process that has to be put in place slowly. You can't jump into all of this tomorrow. There are areas that you have to deal with over a slow process. But regionalization/rationalization is working and we have to continue to make it work if we are going to get the best bang for our dollar.

MR. RAMSAY: We had a discussion a little earlier, Danny, about the services that are shared between Port aux Basques and here. There is (inaudible) there but, you know, you said there is a lot of room for -

MR. KINDEN: Improvement.

MR. RAMSAY: - for further improvement, and more effort in working together.

MR. DUMARESQUE: Just on that same thing. I know that in the number of acute care beds, there has been some difference over the last few years. Do you see a marked difference in the demand and the position of the hospital to meet that demand?

MR. KINDEN: You are speaking strictly to Sir Thomas?

MR. DUMARESQUE: Yes.

MR. KINDEN: We do our needs assessment regularly, as required by the Accreditation Council, and there are formulas for working these things out. It is not very well received sometimes in the community, but we have reduced our number of inpatient beds, because we are working towards ambulatory care and rehabilitation services, which is the direction of health care across Canada. That is the way health care is going. So we are working towards that, and we are down to what we certainly feel is a comfortable level for the beds for Sir Thomas Roddick Hospital, given this point in time.

All the needs assessments show lesser beds by the year 2,000, because we have an aging population with a declining population. So these things are done scientifically, although people will argue sometimes against these things. We feel that we have the right number of beds and that we are adequately serving the people. We want to serve the people better with our ambulatory care and our rehabilitation services. We don't feel that we have the proper mix of professionals in these areas so we are trying to work towards that. That is where this hospital is right now.

Mr. Chairman, I can also say that this hospital is a very well-received hospital, contrary to some of what our critics might say. We are a member of the Canadian Council and Hospital Accreditation, and we were just surveyed and did very well. We are hoping, with that survey, to get the highest award that hospitals can get in Canada, and I think we will. That just shows you where we are with our standards and procedures, and our needs assessments in meeting the needs of the patients.

MR. DUMARESQUE: Thank you very much.

MR. CHAIRMAN: Thank you, Mr. Dumaresque. Thank you, Mr. Kinden. We appreciate hearing that. It is nice to see that you have been recognized in that regard.

I just have one question, going back to the tendering act again. You said that you submitted forms to Works, Services and Transportation, and it has taken ten to twelve months to respond to that. I don't quite follow what the response is. My understanding of the act is that you simply notify the minister that you have not issued the tender call for a certain service or goods simply because there is a sole supplier. We have already discussed that. What takes ten to twelve months to respond, and what is the response meant to do, Mr. Kinden?

MR. KINDEN: Maybe there is a misunderstanding there again in that maybe we are not expected to have any response. Maybe they are not going to respond to it. We just assume, when you send a form in, that you would get a reply back even to acknowledge that they have received it. Nothing has happened in that respect.

We spoke with one of the members of the Committee just a minute ago - or Mr. Drover did - and learned we would not expect, I guess, to get a response back. Now, that is not known in hospitals. Hospitals are of the impression that they should get a response back, one way or the other.

MR. CHAIRMAN: Well, it is probably not unusual for you to expect to at least get an acknowledgement. I say to the officials of the Department of Health, maybe that is something that should be instituted so that at least people know that information is in the minister's office and didn't go astray in the mails, simply as a check to ensure that proper procedures are being followed and that the minister is aware of that situation so that he or she can report to the House of Assembly as required by the act; that there should be some simple acknowledgement saying that this information has been received.

It is important that the minister be notified and that he notify the House of Assembly, and I think it is important that the hospital know, in fulfilling their requirements, that it has been received. So perhaps it is something you could take under advisement.

I don't think there are any further questions. The Committee has done an extremely good job, I think, in dealing with all of the issues. I will give each of the witnesses an opportunity to give us a summation before we finish. Before doing so, we have a request from a private individual to address the Committee. Let me say that this is somewhat unusual. Hearings of this nature are established basically for the Committee to question witnesses who are called before the Committee; but we do have a private request from an individual who wanted to make a statement on these issues. Although it is unusual, and we don't want to open this up as public hearings for all members of the public to come forward, neither does the Committee wish to stifle any information that might be valuable to the Committee in these hearings; so we have agreed to let the gentleman come forward for a very brief statement. I have asked him to be fairly specific, to the point. If he tends to ramble or get into personal issues I will call him to order very quickly and we will terminate the statement.

I now call upon Mr. William Vincent, who wants to make a very brief statement, and I will give Mr. Kinden and everybody else an opportunity to respond to that as well.

Clerk, would you like to swear in Mr. Vincent?

MR. KINDEN: Mr. Chairman.

MR. CHAIRMAN: Mr. Kinden.

MR. KINDEN: Just to inform you, I haven't received any legal advice. I came here of the impression that I was to be questioned by the Public Accounts Committee only, and not by individuals, so beyond this point I will not be responding in any manner to any individual.

MR. CHAIRMAN: I don't have a problem with that. The individual will not be questioning you. The individual has asked to make a statement to the Committee. I will give you an opportunity to respond, if you choose to do so. If you choose not to do so, I don't have a problem.

I am not here to listen to personal beefs or anything of that nature. I have informed Mr. Vincent of that; but we don't wish to stifle any meaningful input into the work of the Committee.

If we got into a situation where a number of people were asking this on a regular basis, we would then get guidance from the House of Assembly, I guess, and set some policies.

I will ask the Clerk to swear in Mr. Vincent and we will see how it goes. I appreciate your point.

Mr. Ramsay.

MR. RAMSAY: Mr. Chairman, as a point of order, I think that maybe the gentlemen would like to provide their summation and be excused probably prior to this. I think they should be given that opportunity.

MR. CHAIRMAN: I don't have a problem with that. Mr. Kinden, would it be your preference to do that?

MR. KINDEN: Yes, Mr. Chairman. I want to thank the Public Accounts Committee, certainly, for allowing us to appear before them to express our views with regard to the Auditor General's report. I invited the Auditor General's report in; I thought it was a good report and it will certainly be a tool that I can use in the future and I certainly invite the Auditor General back again sometime in the future, to check and see if these things - because it is quite helpful to me, and again, I thank you for your help, Mr. Chairman.

MR. CHAIRMAN: Thank you. Perhaps we will ask the Auditor General to do the summation now and we will dispense with this before you leave, Mr. Kinden. Do you have any final comments you wish to make?

MS. MARSHALL: No, thank-you, Mr. Chairman, except to say that I was pleased with the response of the witnesses and it sounds as though they have taken actions on the recommendations, so I have no further comments at this time. Thank you.

MR. CHAIRMAN: Thank you very much. Let me say to Mr. Kinden and his associates, on behalf of the Committee, we appreciate, as Mr. Ramsay said, your forthrightness in coming forward with the answers. I think it has been a good exchange of views and information here today; that is the purpose of the Committee. As I said earlier, you are not on trial and we are not here to stand judge and jury, we are here to gather information and pass our opinions on to the House of Assembly. So we thank you for being present and look forward to seeing you again in the future. Thanks very much, indeed.

I will ask the Auditor General: if you wish to stay for this portion, do any of you wish to be excused?

MS. MARSHALL: That is fine.

MR. CHAIRMAN: Okay, thank you very much.

Miss Murphy, after a long delay, you could swear in the witness, please.

William Vincent

MR. CHAIRMAN: Mr. Vincent, have a seat. Again, I remind you, as I did the other witnesses, to speak clearly into the microphone and loudly enough that the Committee, and the members of the public, who were good enough to come along to attend these hearings today, can hear. Mr. Vincent, I will give you a few moments to make a statement.

MR. VINCENT: Thank you, Mr. Chairman.

My reason for requesting time here today was the concern expressed to me by some persons in the community, that the staff, the top staff at the hospital, is basically top-heavy. Figures given to me - of course, I can't verify them, I have no knowledge of the in-depth (inaudible) of the hospital - show that there are something like seven employees for every supervisor or staff head. I lived in Labrador City for a number of years and the hospital there, The Captain Jackman Memorial, is about the same size, and when I look at it, their staff requirement is quite less than we have down here. For example, there is one person who runs the lab and x-ray, a supervisor - I think there are two here. There is something like 50 per cent less office staff in Labrador City than here. The pharmacy is done by outside people. They don't have a pharmacist on staff. And, you know, with the recent layoffs, all these being at the bottom, there is some concern, basically, whether the hospital is not becoming top-heavy in management and supervisory in the medical issues, or medical costs are not getting enough attention.

MR. CHAIRMAN: Mr. Ramsay, do you have a question?

MR. RAMSAY: Do you mind if I ask a couple of questions?

MR. VINCENT: Okay.

MR. RAMSAY: As you can well understand, and I don't mean to in any way suggest that what you are saying may not be correct, but we base our recommendations to the House of Assembly, or anything that we do, on firm, documented information that is provided, like you are providing under oath, but something, I suppose, that would stand the test of having been investigated somewhat, or a provision of information that is other than second-hand commentary.

I just wonder - you were of the opinion that what you have been advised in this regard is, in fact, the case. Is there anything further about the background information that you are speaking of, or where the information came from that would, in fact, give weight to it, you know, something that we could look at probably even more closely?

My opinion, based on what you are saying, is that we would really have a difficult time going any further into that, other than to probably just do a comparative analysis or request a comparison in documentation from this institution to another. And that would just be a general thing, as has been done often in the past. I suggest to you, we did one on nursing homes throughout the Province, the variety of nursing homes and facilities, and there were a lot of variations because of the different types of setups that were in place. I think Mr. Drover probably recalls that one, where the figures and the cost and the staffing levels were very different in different institutions. The fact of the matter was that there were just reasons for each variation, and not necessarily that there were any set problems with anything.

So just a specific question to you, you know, as far as the information that you have is concerned. It may be based on, I would suggest, one side of the story, but if we could get some further information as to what you are saying as to the detail of it, then maybe it is something about which we could ask further questions.

MR. CHAIRMAN: Perhaps I could just interrupt here. This is not an issue, really, which comes under the ambit of the Financial Administration Act, of which it is primarily the role of this Committee, I guess, to review that. It is a management issue. It has been a good opportunity, I guess, for Mr. Vincent to make his statement in view of the presence of the officials from the Department of Health who, I guess, are ultimately responsible for ensuring that good management procedures are in place in various hospitals and institutions across the Province, and that proper organizational systems are there. And the internal audit people and the management people, and the senior people from the department will look at these issues. So it has been a good opportunity for you to make that presentation and I am sure that the officials from the department will take that under advisement.

Thank you for your statement, Sir, and for coming forward. We appreciate it very much.

MR. VINCENT: Thank you.

MR. CHAIRMAN: There being no further business, I want to thank the Auditor General and her staff for being here, the staff of the Committee for their time, and the members of the Committee for doing what I believe was an excellent job today in dealing with these issues. Again, I thank the people who were here as witnesses from the hospital board and the officials of the Department of Health and members of the general public who showed enough interest to come along. We welcome your participation and your presence here today as well. Mr. Vincent, thank-you, Sir, for making your views and concerns known to the Committee. With that I declare the meeting adjourned.