The committee met at 2:00 p.m.

MR. CHAIRMAN (Dumaresque): Order, please!

My name is Danny Dumaresque. I'm the Member for Eagle River and the vice-chair of the Committee. Until our chairman arrives I will be the chair. I don't see any media here as of yet. If they do come we will give them their instructions at that time.

I would like at this point to introduce the other members of the Committee. To my far right is Melvin Penney, the Member for Lewisporte. Next to him is Oliver Langdon, the Member for Fortune - Hermitage. To my immediate left is Glenn Tobin, the Member for Burin - Placentia West, and the Member for Harbour Grace, John Crane. We are accompanied today by Mark Noseworthy and Elizabeth Murphy from the Speaker's Office - they are here to assist us in the proceedings - and our recorder over there, Mr. Oates.

At this point I would ask the witnesses to introduce themselves, starting with the Auditor General.

MS. MARSHALL: My name is Elizabeth Marshall and to my immediate right is Mr. Bill Drover (inaudible), and to my immediate left is Mr. George White, an audit manager with the office who is responsible for the audit of the hospital.

MR. CHAIRMAN: Maybe from the other side.

MR. HERRIDGE: My name is Carl Herridge, acting administrator of the hospital. To my left is Carl Hillier, Purchasing Agent, and Marvin Ralph, Chairman of the Board.

MR. CHAIRMAN: Probably not for the Auditor General but for you people, it is probably one of your first times to be before a committee of the Legislature. From the outset I want to tell you you have nothing to fear. This is merely an opportunity for the members of the Committee to seek information. We are not here to judge, we are not here to pass any kind of critical assessment of what you've been doing, but we want to gather information in light of some of the observations that the Auditor General has made in her report to the Public Accounts Committee. You will be asked to be sworn in and at this point I would like to call on Ms. Murphy to carry out that exercise.

SWEARING OF WITNESSES

Marvin Ralph

Carl Hillier

Carl Herridge

MR. CHAIRMAN: Thank you.

As I was saying, we are here to seek information. As you know, in February the Public Accounts Committee asked the Auditor General to perform an examination of the management practices at the hospital and investigate any other matters considered relevant. We have the information here today. There are a number of things in that I'm sure members would want to get further clarification on. I would say to the chairman or the administration that if you do not have the information feel free to indicate that. We would be quite happy to receive follow up information if it is not there. We don't expect all the time to have all the facts and figures sometimes that might be demanded at your fingertips. If you don't have it then feel free to indicate that to us.

When you speak into the microphones I would ask you to identify yourselves for the purposes of Hansard. This will all be recorded and you will all get a copy of the official Hansard in a few weeks or so from now.

I will now call upon the Auditor General, and after that any of the witnesses who have any statements they might want to make.

The Auditor General, Elizabeth Marshall.

MS. MARSHALL: Thank you, Mr. Chairman.

On February 9, 1994 the Public Accounts Committee of the House of Assembly passed a resolution in accordance with the Auditor General Act requesting the Auditor General to audit the Notre Dame Bay Memorial Hospital. The resolution requested the Auditor General to perform an examination of management practices at the hospital and investigate any other matters considered relevant.

My office commenced a review of the Notre Dame Bay Memorial Hospital on February 16, 1994. Our audit was directed primarily to those systems and processes relating to board governance, management practices, capital assets, inventory, and purchasing. Our review was performed in accordance with generally accepted auditing standards and included such tests and other procedures as we considered necessary. Our review was designed to assess whether adequate control systems were in place and were operating.

One area we looked at was the area of board governance or the review of the role of the board as it relates to the hospital. In that area we determined that there were several areas such as strategic planning, public relations, and management direction where the board did not provide an adequate leadership role.

In the area of management practices we found most aspects of the management practices of the board could be improved. In particular the planning and reporting processes could be improved with the development, approval, and monitoring of strategic and operational plans.

In the area of capital assets we determined that capital assets are not adequately controlled. Policies and procedures over the control and use of capital assets should be properly developed, approved, and communicated to staff.

In the area of inventory, policies and procedures over inventories need to be properly documented and approved.

In the area of purchasing we found several instances of non compliance with the Public Tender Act.

Thank you, Mr. Chairman.

MR. CHAIRMAN: Thank you.

Is there a statement that either one of you would like to make?

MR. RALPH: I am Marvin Ralph, Chairperson of the board.

MR. CHAIRMAN: Our Chairman has now arrived, Mr. Neil Windsor.

I have run through the procedure and got everybody sworn in for you. The hard work is done, so I will now turn it over to you. We are just receiving a statement now from the board member and you can carry on from there.

MR. WINDSOR: Okay.

MR. RALPH: I am Marvin Ralph, Chairman of the board.

Basically my preliminary response is to express appreciation for the opportunity we have had to dialogue with the Auditor General's department of following their study of the hospital assessment. The observations being made are reasonably fair. We can talk to some of these issues as the evening proceeds but first of all just to say thank you for the opportunity to collaborate and to have this opportunity to meet with the Auditor General's department and now with you folk following.

MR. CHAIRMAN (Windsor): Thank you, very much.

Has the Auditor General made her opening comments yet? You have. You have gone through all the preambles with the news media and all that kind of stuff?

MR. DUMARESQUE: There are no media here.

MR. CHAIRMAN: No media here?

MR. DUMARESQUE: There are a couple of people from the Department of Health, and a few other people. You might want to have them identify themselves for the record.

MR. CHAIRMAN: First of all let me apologize. I went over to the Anchor Inn. Nobody told me that we had changed venues. I had my wife drop me over there and found myself stranded so I just finished hitchhiking from the Anchor Inn to here.

MR. DUMARESQUE: We did not know it either until we got here.

MR. CHAIRMAN: I have a habit of doing that. I went to Labrador one time, to the Bakeapple Festival, when I was Minister of Tourism and we could not get our car on the ferry going across to L'Anse-Amour so I ended up hitchhiking in the back of a Parks Canada pickup. I arrived at the hotel in L'Anse-au-Meadow with a great delegation from the community, the councillors and the head of the Bakeapple Festival to meet me and I arrived in the back of a Parks Canada pickup because the cab was full, in a pair of blue jeans and a t-shirt and a pair of sneakers, and very quickly got into the swing of the Bakeapple Festival. Made a hit with them. I do apologize for being late but that is what happened to me.

I don't know Danny if you went through, explained to the people who are here that we are here simply to gather information, to hear your point of view, to hear points from the Auditor General, and obviously to give members of the Committee an opportunity to ask some questions. Our role is to report back to the House of Assembly, of course. We are a select committee or a standing committee of the House of Assembly. Our mandate is basically to look into matters dealing with financial administration and accountability. As I've said many times before we are basically I guess the last step in the accountability process. You go through your various internal auditing processes, and the Auditor General and her staff come in and examine carefully. You may have individual external auditors of your own that do your audits in some cases. Finally I guess it is the House of Assembly and we are the arm of the House of Assembly that reaches out.

It has been a pleasure for this Committee to travel around the Province, basically take the Public Accounts Committee to the people of the Province, and particularly the boards and agencies which have not previously had an opportunity to discuss or to meet directly with the Committee to understand how the Committee functions and to have an opportunity, I guess, before the Committee, perhaps even to question some of the points of view with the Auditor General and her staff. Maybe you disagreed with some of the things that have been said, and that has happened before. It is always very healthy to have an opportunity to get both sides of the story. Of course our mandate is to report back to the House of Assembly.

I want to welcome all of the witnesses who are here and the Auditor General. I guess Mr. Dumaresque has already done it. I will do it again. Perhaps now there is nothing else to be done. We will move on with questioning.

MR. DUMARESQUE: (Inaudible) might identify themselves for the record probably.

MR. CHAIRMAN: I know Mr. Hart of course. Who...?

MR. HART: Dave Saunders, who is the Director of Institutional Finance.

MR. CHAIRMAN: We've met him many times before. I apologize for not remembering the name, Mr. Saunders.

MR. DUMARESQUE: There are other people in the audience (inaudible).

MR. CHAIRMAN: Are these visitors or are they (inaudible)?

AN HON. MEMBER: They are representatives of the hospital staff and the board. This is Linda Facey, our Director of Patient Services; Jennifer Vincent, our Director of Payroll/Personnel; Gerald Peddle, a board member; and Brian Guy, another board member.

MR. CHAIRMAN: Thank you very much. We certainly welcome your participation.

We look forward to this discussion. Who would like to begin today? Mr. Penney?

MR. PENNEY: Sure.

MR. CHAIRMAN: Mr. Penney, please.

MR. PENNEY: Thank you, Mr. Chairman. There are a number of areas here that I have some questions on but I am going to - I'm assuming everybody has a copy of the report that we have - leave the Auditor General's report for a moment and I'm going to go into your financial statements. If I could have you turn to the financial statement for the year ending March 31, 1993.

AN HON. MEMBER: Page 70? Which page?

MR. PENNEY: Yes, it begins on page 70 but let's go to page 77. My questions are simply for clarification. The in-patient income from the provincial plan dropped in 1993 from $4.8 million to $4.6 million. In 1991 it was $5.2 million, in 1992 it went up to $4.8 million, in 1993 it dropped to $4.6 million. Why is that? My question is not addressed to anybody in particular.

MR. HERRIDGE: You will also notice that the provincial plan income is broken down into three categories. It is in-patient income, out-patient income and other services. I'm not sure of the total of each year but you will notice on the same page the out-patient income increased significantly for that same year. The total amount that is allocated to us each year by the Department of Health is broken down into these three categories and the amount that is allocated to out-patient is based on the total services assigned to out-patient such as lab, out-patient visits, physiotherapy, x-ray units, so on and so forth. In other words the more we allocate to outpatients the less for inpatients.

MR. PENNEY: In 1991 you had forty-six beds, fifteen long-term care and thirty-one acute care, and in 1993 you had forty-nine beds with 83 per cent occupancy, so why would there have been such a dramatic drop in the income from inpatients from $5.3 million to $4.6 million?

MR. HERRIDGE: We did not receive any additional funding from government for the additional beds. That was part of the proposed program that was submitted to the Department of Health but we did not receive additional funding because of the increase in beds.

MR. PENNEY: I would just like to walk you through the financial statement for a couple of minutes. Further down the page, recovery for doubtful accounts. In 1991 you recovered $1600, 1992, $822, but in 1993 you made provision for almost $4000 that you could not collect, or did not collect. Why was that?

MR. HERRIDGE: There is no particular reason except for the fact that we do have a number of - under the inpatient's income you will see medically discharged - unnecessary care income, $126,000 in 1993. That $3700 is representative of that amount, I guess, probably a deceased patient who we were not able to collect for.

MR. PENNEY: Would that not have applied in 1991 and 1992?

MR. HERRIDGE: Not necessarily. It varies from year to year.

MR. PENNEY: So there is nothing unusual about that?

MR. HERRIDGE: There is nothing unusual. Actually, it is very small considering the amount of income.

MR. PENNEY: I was not suggesting the number was excessive.

On the next page, Page 78, offset income under rentals, 28 Wood Street. What is that?

MR. HERRIDGE: That is a residence that was purchased for housing our medical staff.

MR. PENNEY: How many people does it house?

MR. HERRIDGE: Just one family. One medical doctor and his family.

MR. PENNEY: I notice the rental from that was $5,838 but your expenses in maintaining it were over $4000, and the expenses in maintaining it the previous year was over $9000.

MR. HERRIDGE: As with any of our rental properties, and because of our transient medical staff, there are times when these properties are vacant and when they are vacant, of course, we still have to maintain the heat, light and so on. Back in 1992 I recall that we did a fair amount of renovations and repairs on that particular property which would justify the expenditure amount for that particular year.

MR. PENNEY: Even though you did $9000 worth of repairs in 1992 in 1993 there was still another $4500 required again?

MR. HERRIDGE: Yes. Not necessarily repairs. It could be routine maintenance. It does not say repairs. It says expenses.

MR. PENNEY: Now, what other property does the board own? Further down the page it says rentals and then in brackets, residential, and then board owned facilities. You have an income of $15,340 compared to $11,000 in 1992. What is that for? How many facilities are we talking about?

MR. HERRIDGE: The board owns a house in Summerford, and all these properties we have are for the housing of our medical staff, medical residents and students who come here from time to time. The majority of them are (inaudible) regular full-time medical staff. We have one additional property here in Twillingate for our medical staff and another property for the housing of our administrator.

MR. PENNEY: What is the next category, other facilities, what is that?

MR. HERRIDGE: Other facilities would be apartments that the board feels necessary to rent out in the community from time to time, for residents or the medical students who might come in periodically.

MR. PENNEY: How long have you maintained those facilities?

MR. HERRIDGE: They vary from year to year depending on the demand. At the present time for instance we have one other facility that we are renting out in the community.

MR. PENNEY: The reason I say that, I notice that your expenses in the last two years have been somewhere in the area of $26,000. Your total income has been somewhere in the area of $7,000.

MR. HERRIDGE: Again, the reason for it is it is a board policy that we not charge rent to residents and medical students who come into the area. Although we have to pay the rent on these apartments we don't collect anything as income.

MR. PENNEY: Is that consistent with other hospital boards or is it because of your geographic location?

MR. HERRIDGE: I think it is consistent with what is happening throughout the Province.

MR. PENNEY: The next page. Mr. Chairman, if you wish you can pass the questioning on to another member.

MR. CHAIRMAN: Go on for another few minutes.

MR. PENNEY: Okay. Up on the top of the page. General salaries and wages of administration is $174,000 and supplements $9,500. Who were those supplements paid to?

MR. HERRIDGE: The supplements were paid to the previous administrator, Mr. Max Saint, in the amount of $7,000 and to myself in the amount of $2,500. I think that information is contained in one of the notes in the....

MR. PENNEY: Is this the amount that is covered off in the letter from the minister suggesting that it not be done any more?

MR. HERRIDGE: Yes, I guess it is.

MR. PENNEY: Was the practice discontinued upon receipt of the letter from the minister?

MR. HERRIDGE: No it wasn't.

MR. PENNEY: Could you give us some explanation as to why the recommendation - I'm sorry, it wasn't a recommendation. When the minister told you that it was not to happen any more and you continued on with the practice, could you give us some justification for that? Ignoring the letter?

MR. HERRIDGE: Mr. Ralph, would you care to answer about that?

MR. RALPH: Yes. Basically what had happened, we received the letter but in the same time the NHNHA had gone to bat for the various institutions across the Province to have this changed. We held that in abeyance or tabled it until we received further notice. There was none so we did not act upon it. It was not brought to our attention just before the - during the Auditor General's statement to us, or meeting with us. It wasn't a deliberate attempt to ignore what the minister had said but at the same time negotiations were ongoing, like I said, with the NHNHA on behalf of the institutions, and we received no further direction beyond that point.

MR. PENNEY: What is happening today?

MR. RALPH: What is happening today, we are still waiting to hear the result of this hearing, I guess, and what the Auditor General, what you people say to us. Presently we are carrying on with the practice.

MR. PENNEY: I'm not absolutely sure I understand. The minister directed you to discontinue the practice. The Auditor General has reported it in this report. You are waiting to get something from who?

MR. RALPH: Basically we haven't received a report in the sense that it is a direction to us. When those hearings are over and done with - and I'm assuming as well, or we are assuming, that you are going to give us some direction, at which time we will take action. That is the only reason why there has not been any further action.

MR. PENNEY: May I direct a question to the Auditor General? Did you interpret the letter from the minister as being a directive, as an order?

MS. MARSHALL: Yes, I did.

MR. PENNEY: So the board has already gotten its directive then?

MS. MARSHALL: Yes. When I met with the board I recommended that they cease the payments as of the date I met with them.

MR. CHAIRMAN: Maybe Mr. Hart would like to give his comment as to government's position to the minister's letter.

MR. HART: I just want to say that it was subsequent to my arrival at the Department of Health that I became aware of this letter that had been issued under Mr. Decker who was the Minister of Health at the time. I understand there was some concern about salaries being supplemented in the various hospital boards. I guess the only comment I can make on looking at this, and I do not know the precise details of this particular institution, but one thing it mentions there is that salary supplements were to be discontinued. In situations where somebody resigned a position they would not be continued then for the successor. It also stated that where there was a contractual obligation, or an arrangement between the board and the particular individuals, that those particular supplements would not be tampered with.

Now, I guess it is being construed here that we are talking about a written contract. In law you can have an old contract - and I am not sure of the details, whether these particular supplements were agreed with the board at the time so there was an obligation to continue on with those. I am not sure what the terms were. Maybe the gentleman across the way can add to that, but I just throw that out, that a contract does not have to be a written contract.

There should be a few lawyers around the table, I am sure there is, but I just throw that out for consideration right now. At the same time I should say that the Department of Health is looking at board funds in general and we are going to try and bring this rather complicated issue to some sense. We are going to try to develop some guidelines as to what would be an appropriate use of board funds and also what would be appropriate to bring in as income and include them as board funds, because there are a number of things that they are composed of.

I am sure we have talked about this many times. For example, I think the biggest segment of board funds in most hospital boards would be the interest earned on advances from the provincial government. In my opinion those funds are directly related to government advances and therefore should be controllable by the direction of the Department of Health. There are other funds that are in board funds that would be private donations, that, I think, we really have no direction as to how they are spent. That would be determined on the basis under which they were received from the various private contributors or whoever may have contributed.

In terms of salary supplements our position is that unless there are previous contractual arrangements in place they should be discontinued obviously in accordance with this letter. Looking at this letter it appears to be fairly straightforward and clear that they are to stop at a certain point in time, yet it goes on to say that unless there is a specific agreement in place. The other thing it mentions, too, that sort of throws a little monkey wrench into it, is that the authority of boards to commit or expend discretionary funds is still mentioned, so it is conceivable, I suppose, that some of the funds received from other than public funds may be capable of being used to in fact supplement salaries where it is deemed necessary. Sometimes in a lot of institutions - we've heard time and again that it is very difficult to recruit in some rural hospitals, and get the quality of people that you want. It is always that sort of thing that gets you to get involved in these sorts of arrangements.

I will leave it at that and I will let Mr. Drover take his seat back again, if he wants it.

MR. CHAIRMAN: Mr. Hart, can you tell us has this direction gone out to other boards as well? Are there other boards in the Province -

MR. HART: This direction was circulated as I understand it to all boards.

MR. CHAIRMAN: It is a general direction.

MR. HART: It wasn't just this particular institution.

MR. CHAIRMAN: Can you tell us what number of boards have complied with this or are there other boards which are similarly questioning the direction and waiting for further direction?

MR. HART: I'm not - I couldn't tell you - I could I guess tell you that I can check and find out for you and then table a document with you to show you where there is any other supplement. I'm not aware of any right now off the top of my head. That's one of the things we were looking into to see where these supplements were being paid and what the arrangements were to direct those payments.

MR. CHAIRMAN: Thank you very much.

Mr. Penney, are you finished with that line of questioning (inaudible)?

MR. PENNEY: Well, I will allow somebody else to go. I would want to get back to this later on but that's fine.

MR. CHAIRMAN: Perhaps we will move on. I guess on that issue, obviously it is not within the Committee's mandate to give any direction other than to point out that there is a direction from the minister. Mr. Hart now obviously is aware that the direction has not been followed and no doubt will report back to his minister in that regard, and the Committee will report of course what we found as well. Is there any other comment on this topic before we move on?

MR. TOBIN: Just one brief comment on it if I could, Mr. Chairman.

MR. CHAIRMAN: Mr. Tobin.

MR. TOBIN: I'm just wondering. Do you have a legal contract with the people who are receiving these supplements?

MR. HERRIDGE: No, except as documented in the minutes, the actual terms of the agreement. But there is no written contract as such.

MR. TOBIN: Before or after the person was hired?

MR. HERRIDGE: After - sorry, what did you mean?

MR. TOBIN: You said it is written in the minutes. Was that before or after the person was hired?

MR. HERRIDGE: I'm referring specifically to the bonus or the supplement, and that was after the gentleman was hired.

MR. TOBIN: So it was not part of the initial agreement.

MR. HERRIDGE: No it was not.

MR. TOBIN: Mr. Chairman, I have another question (inaudible).

MR. CHAIRMAN: Mr. Tobin.

MR. TOBIN: On page 82 I notice on the top of the page for salary and wages. The expense for the nursing administration went from $79,968 in 1992 to $331,614 in 1993, an increase of 315 per cent. Yet at the same time salaries for nursing units went down $172,000, or 11 per cent, along with the salaries of operating room nurses going down 20 per cent. What is the explanation for this?

MR. HERRIDGE: The explanation for it is that up to 1992 the salaries of the nursing supervisors for the various departments were being charged off to the various units. Medical surgical unit, long-term care and so on and so forth. In 1993 we changed our accounting practice and all the nursing supervisor salaries were being charged to nursing administration. That is the only reason for it. For consistency's sake, really.

MR. TOBIN: Mr. Chairman, there is another situation on page 18 if I may just get back to that, and that is in terms of the public tendering regulations. There is a significant amount of purchasing that has taken place that did not comply with the Public Tender Act. I would like to ask why the Public Tender Act has not been followed.

MR. HERRIDGE: With regard to the purchases - you are referring to the items that -

MR. TOBIN: Yes, I'm referring to the items that contravene the Public Tender Act.

MR. HERRIDGE: With regard to the first one there for $8514, the energy management system. That was a payment for a long-term contract for our energy management and that contract was awarded prior to the implementation of the Public Tender Act. That $8514 represents one monthly payment only, and not a total contract.

MR. CHAIRMAN: Excuse me. Did you say prior to the implementation of the Public Tender Act?

MR. HERRIDGE: Yes, to my knowledge.

MR. CHAIRMAN: This was done in 1987?

MR. HERRIDGE: Yes.

MR. CHAIRMAN: The Public Tender Act was in, surely, long before 1987.

MR. HERRIDGE: Not long before it, not to my knowledge.

MR. CHAIRMAN: The Public Tender Act was introduced in the early 70s.

MS. MARSHALL: I think the new act came in sometime in 1987.

HERRIDGE: I think the limits were changed somewhere, but the act itself was in existence, as you said, back in the 70s, I would think.

MR. CHAIRMAN: The original Public Tender Act came into place in 1971 or 1972. There must have been some clarification as it relates to boards and agencies.

MR. HERRIDGE: There were some major changes during 1987.

MR. TOBIN: (inaudible) before the new act being implemented or would the Auditor General point it out.

MS. MARSHALL: My recollection is that it was enacted sometime in 1987. That is my recollection.

MR. CHAIRMAN: At any rate, this payment was made - Mr. Tobin, if I might?

MR. TOBIN: Go ahead.

MR. CHAIRMAN: This is from last year's accounts, I assume?

MR. HERRIDGE: Yes.

MR. CHAIRMAN: So the payment was made under a contract signed in 1987. What is the term of that contract? How long is that contract?

MR. HERRIDGE: The term of the contract would have been seven years.

MR. CHAIRMAN: A seven year contract.

The energy management system, what does that entail?

MR. HERRIDGE: The energy management system was the replacement and installation of all the boilers, the steam boilers in the heating plant in the hospital. The equipment that was there before consisted of two large steam boilers which were very inefficient and under contract with Honeywell. By the way the contract itself was done through consultants on an invited bid basis rather than a tender, and although I was not in this position at that time it was my understanding that was acceptable policy, so like I said that $8500 represents one payment. Out total yearly commitment on that energy management system is about $120,000 per year.

MR. PENNEY: Mr. Chairman, before you leave that energy management may I ask a question?

MR. CHAIRMAN: Sure.

MR. PENNEY: The 1993 financial statement has a comment in there, Honeywell has guaranteed that energy savings over the period of the contract will amount to at least $944,265 and in the event that this saving is not met they will pay the difference in cash. Has that saving been met?

MR. HERRIDGE: Yes it has.

MR. PENNEY: How much did you say it is costing?

MR. HERRIDGE: It is costing about $120,000 a year approximately.

MR. PENNEY: And you're saving $944,000?

MR. HERRIDGE: Over the time of the contract.

MR. PENNEY: Over seven years?

MR. HERRIDGE: Yes.

MR. PENNEY: Thank you.

MR. CHAIRMAN: Mr. Tobin.

MR. TOBIN: Just back to Page 19, the end, the second paragraph there. It says, one purchase was awarded to a bidder who was not the preferred bidder. Prior authority was not obtained from the Cabinet and the forms not completed and forwarded to the minister. If there are procedures to be followed and in place why was that not done?

MR. HERRIDGE: Mr. Hillier would you care to take that one?

MR. HILLIER: I feel that in this particular case they picked up only the equipment that was on the contract but there are two other items there as well, one being service and the other being consumables. If you take the total contract then we did go with the preferred bidder. On the equipment alone, no we did not, but in the other two instances we did. We combined the contract (inaudible).

MR. TOBIN: So you believe that you did go with the preferred bidder.

MR. HILLIER: Yes, I do believe that, yes.

MR. TOBIN: Has the board now implemented any policies as it relates to the Auditor General's recommendations on public tendering?

MR. HERRIDGE: Yes we did. We've implemented the policy that we will follow the guidelines of the public tendering act.

MR. TOBIN: Okay, Mr. Chairman.

MR. CHAIRMAN: Mr. Langdon.

MR. LANGDON: I would like to go back to page 3 and look at the Findings and Recommendations of the governance management. It appears from the Auditor General's report that the hospital board of directors which should be in control of the hospital, whose ultimate authority it is to run the thing, that that has not been the case. That the executive director and people involved within the hospital itself have had authority and have pretty much run the institution the way that they see it. That the board of trustees, the hospital board, management board, has not been in on the decision making when it should have been. That is the impression I get from reading this. I would like for you to comment on that.

MR. RALPH: We certainly don't feel that way at all as a board and our feeling as well that our management people don't think that to be so. As chairperson for the last ten, eleven years I've been very cognizant of basically everything that is going on at the hospital of major concern, and certainly from a policy decision making. (Inaudible) the board (inaudible) various committees involved and the executive committee as well. We've been very well informed, both the present CEO and the acting CEO presently. We certainly don't feel that is a correct observation. I understand you can get it from the reading but certainly not in experience. That is not my perception. If I felt that way I would certainly be dealing with it. That is certainly not our experience.

MR. LANGDON: So in other words then the board of directors, the governance, have been setting the policy for the hospital and these people have been carrying out the wishes of the board.

MR. RALPH: Indeed, yes.

MR. LANGDON: Alright. That didn't seem to be the way it was written and I just wanted to follow up on that.

The other question I would like to follow up on is on page 4, I guess. I haven't got my glasses so I can't see very well, I think it is page 4. In a time of constraint and rationalizing the health services and what have you it appears to me that you people have a large expense at the clinic at Summerford. The fact that it is only twenty miles from the hospital here in Twillingate and you are spending almost $200,000 to keep that particular clinic in operation.

Ideally I guess it is good to have that but with the dollars being as they are I understand the last statement that is being made, it says that: "Officials at the Hospital and at the Department of Health suggested any decision to close the clinic at this time would meet with strong public resistance." Again, the board of directors, the board of trustees who have been given the authority to run the hospital and governance of it, you have to make decisions that are going to be tough fiscally speaking. Do you still feel the same way or do you see an opportunity or possibility of this clinic being closed and the administration being incorporated within the hospital to save a number of dollars, or can these dollars not be saved if the clinic was assumed under the administration of the hospital itself?

MR. RALPH: A couple of observations, and Mr. Herridge can probably make an observation as well. This area as you may know is rather traditional as some rural areas in this Province are and we've been given some strong direction. Despite the fact that we may encounter some public opposition I do not think it is going to be as strong as what is suggested here in the report.

What is happening on New World Island is a bit of an evolutionary process. We are now bringing on for the first time a fee for service doctor and suspect that when the present doctor who has been there for twenty-five years, Dr. John Sheldon, once he moves out it will probably go total fee for service at which time it will become an asset to the hospital rather than a liability. We do have a report that makes some indication in that regard and gives some direction as how that can be done.

In this area we have had long-term doctors like Dr. John Sheldon, Dr. J. Mullins, and presently Dr. Chalker. We feel as a board to change the process right now would incur some difficulty for the present doctor, Dr. Sheldon, but when he leaves in the next year or two, due to retirement, we feel it will be an opportune time.

At present we have gone half way with that move in that Dr. Furlong who just took up practice in June, this month, is now fee for service, and we visualize, I think, two fee for service doctors who will be again an asset from a monetary point of view to the hospital rather than an expense. We recognize that it is a major expense but it did occur on the island when there was no linkage by road but just a ferry service.

If you look at our stats from the hospital you will discover that we are serving a large number of people in outpatients and this kind of thing, so it does reduce the demand on the hospital. Your point is well taken and we do have that in hand and are looking for the opportune time to make the move.

MR. TOBIN: If I could just interject for a moment?

MR. CHAIRMAN: Go ahead.

MR. TOBIN: That is the mandate of the hospital board, to make the decision as to what to do. That has nothing to do with the Auditor General's department or with the Public Accounts Committee. As I understand it, it is your mandate and policy and you carry it out as such.

MR. RALPH: Yes.

MR. LANGDON: I have one more question.

MR. CHAIRMAN: Mr. Langdon.

MR. LANGDON: It seems also from the report we have in front of us that there is some criticism, probably insinuated mildly rather than very harshly, that when the hospital itself probably went from major emphasis on acute care to chronic care there was a bit of disgruntlement among the community, and when I say community I mean communities that you serve.

It was suggested again in the report by the Auditor General that you people had not done an adequate public relations job to give the information to the public to suggest what you were doing, and if that had been done then there would probably have been less controversy. Hindsight is 20/20, or whatever the case may be, but I am just wondering what is the board doing, or has done recently, to inform the populous, the people that you serve, what the hospital is doing to improve health care within the community?

MR. RALPH: There is a bit of a long history in acute chronic care here so if I could just backtrack a little. It started some years ago, as some of you people will remember, with a bed study and a recommendation for the hospital at that time to have twenty beds, that would be long-term. When the hospital was first instituted we had an fifteen or eighteen bed chronic care as opposed to forty-nine acute care.

The bed study made a recommendation relevant to chronic care in this area. The hospital board of the day refuted that and said it was not sufficient and as a result the government of the day bought into our argument and commissioned another study, Kellogg or some long name. I cannot remember all the names, but anyway their study came back and recommended that there be an expansion to the hospital which is presently being done through a functional plan.

In the interim there was a local committee started at Summerford on New World Island to look at a freestanding institution. Prior to this in Mr. Smallwood's day there was a freestanding institution promised to the Twillingate district but that did not materialize so in the process of the Kellogg report, and prior to that, the bed study, there was a committee set up on New World Island to look at a freestanding institution. That did a very thorough investigation and made a presentation to government and it looked quite promising.

The Department of Health again asked for another look at the needs of this area and Irene Baird of the day was asked to come look and her findings supported the Kellogg Report as opposed to the freestanding institution at which time the government asked the board to take on the responsibility of chronic care. The board accepted that mandate and we proceeded with talking to the government. They gave us funding for a functional study and to date that functional plan has been done. We are coming close to - a master plan has been done, a functional plan and we are now pushing for actual development of blueprinting and I think, Mr. Herridge that's in the process. There is some blueprinting being done. So that's where we are relevant to that.

Your observation on (inaudible) to the public, there is an element of truth to that. A citizen's committee was formed, as you'll read in the report, but what had happened I think to complicate matters, it wasn't just a chronic acute care situation, we had a layoff of nurses which put some pressure on the community because of loss of jobs. In the meantime our anaesthetist, ran into some problems relevant to continuing his practice because of the possibility of liable. The surgeon of course couldn't operate without him so he tendered his resignation. With the tendering of his resignation last year, some time in 1993, Dr. (Inaudible), our present surgeon, had no choice but to discontinue. So these factors all came together at a very critical time together with the downsizing or the cutbacks in our budget. The restraints had created some difficult times for us.

The board did hire a gentleman, Mr. Hicks, from St. John's who had done some work with the Waterford. He came by and gave us some direction relevant to public information and since then we've been - we had been doing some things prior to this with our people but we've done some very good public relations following his observations. So it's a long story and it would take maybe an hour or two for us to go through the whole process with you but the observations and the report of course are truth except the fact that you need a fair amount of background to understand why it came to that particular point.

MR. LANGDON: I would like to ask more but I don't want to monopolize.

MR. CHAIRMAN: Go ahead one more if you like.

MR. LANGDON: No go to someone else but I'll come back to that.

MR. CHAIRMAN: Mr. Crane.

MR. CRANE: Thank you, Mr. Windsor, I'm having a terrible time myself.

There was one thing - you were talking about New World clinic and I don't understand what you're saying. You're saying that a new doctor could come in there now and we'll be charged a fee for services?

MR. RALPH: Yes.

MR. CRANE: Well, you know that's a new one on me. I didn't think - I thought doctors were paid automatically under the Medicare Plan and there was no fee for services in the Province.

MR. RALPH: Basically, Mr. Crane, some of our doctors are salary physicians. We presently have three doctors who are `fee for service.' That means they operate their own practice. It is my observation - we haven't discussed this thoroughly as a board but it is our observation that in the short run as soon as the present long-term - Dr. Sheldon has been there for twenty-five years, as I previously stated. When his practice discontinues, because of retirement, the belief is that we will be going fee for service at which time the clinic itself - hopefully if the doctors desire to use it, it will be rented to them. If not it will be disposed of hopefully through the proper procedures. So that's what's meant by, `fee for service.'

MR. CRANE: Yes, okay, thank you.

One question on page 5, you're talking about the laying-off of nurses causing some problem with the committee - one statement made there in the report, "The February 1993 external review of the Nursing Department concluded with the comment "Nursing staff may well be anxious as to the contents of this report and if you agree I would be pleased to know that it was indeed shared with the nursing supervisors who in turn might discuss it with their staff." Nursing supervisors were directed not to discuss this report, which lead to the elimination of nine full-time jobs.

Being the board chairperson, chairman, how do you feel about laying off nine nurses sort of very secretively? What does that do to the nursing staff that is left? How do you feel that affected the nursing staff that was left by not coming out and very openly telling them in advance they would be laid off? Because according to that paragraph there it looks like things were done very secretly and quietly. All of a sudden somebody slapped on the nursing staff that we are going to lay nine of you off. Certainly if I was part of that staff it wouldn't make me feel very comfortable to work there in the future. Don't you feel it had some bad effect on the nursing staff to do that?

MR. HERRIDGE: From the administration point of review the report that is being referred to here was what we referred to as the Vardy report. It was the director of patient services at Western Memorial who was invited to come in and do an assessment of our nursing staff. Our occupancy, especially in our intensive care unit and our obstetrics unit, has been declining over the past number of years, although we were continuing to staff these two units on a full-time basis around the clock 365 days a year, which we thought was a very inefficient use of our resources.

Mrs. Vardy in her report recommended that because of the low occupancy in these two units that staffing be done on an as needed basis. In other words, when a patient was put into intensive care we would call in a qualified nurse to staff it. The same thing applied in the obstetrical department. That particular report was discussed to my knowledge probably not to great length, but certainly it was discussed with the nursing supervisors of the day, although it was not discussed I don't think with the nursing staff themselves. The report itself was held pending the announcement of the 1993-1994 budget from the Department of Health, and at that time that proposal was submitted to the board and subsequently to the Department of Health for the elimination of the full-time positions.

While this report indicates that nine full-time positions were laid off at that particular time that is true, but the equivalent of some six positions, the dollars for some six positions, were put back into the budget as either on a relief or to be used on an as needed basis.

MR. CRANE: Yes, I understand that, what you did, from reading the report. Still, if you are going to lay off in such a way, even the people who are left, don't you think they are somewhat disturbed by it? Because they don't know tomorrow if it is going to be their turn, right? If you are going to do it secretively this time are you going to do it the next time round? If they get that feeling they are not very comfortable in their job even though they are full-time staff, right? So I certainly wouldn't feel very comfortable if I was working in a position like that, although maybe I am and I don't know it, right?

On page 4 the Auditor General has some problem, that the board hasn't developed a vision, a mission statement. Have you developed such a statement yet since the report?

MR. RALPH: We do have a mission statement and it is being revised. In fact we have a committee, and it was discussed prior to the coming of the Auditor General's people. We do have a committee in place, and one of their mandates is to revise, review or revisit the mission statement of the hospital. Relevant to the fact that the focus of the hospital is changing. Certainly it has taken on a dual role as opposed to a singular role of acute. Now it is going to be acute chronic and there is a resource committee in place to address that. That is one of its mandates.

MR. CRANE: Does the board feel that with this mission statement can the public relations program convey that to the community and maybe ease the feelings of the community in general?

MR. RALPH: As it relates to the mission statement you mean?

MR. CRANE: Yes.

MR. RALPH: Yes.

MR. CRANE: Do you have some PR person, or persons, willing to go out and relay that to the community so as to help ease the tension as I understand is built around the hospital anyway?

MR. RALPH: Well, the committee I refer to is made up of community folk as well as hospital staff. It is a combination of both and they will report at appropriate times to the people. It is a new committee that has been functioning for the last three or four months. Mrs Facey is our chairperson who is also our director of nursing and if you wish to question her on it you may.

MR. CRANE: She looks like a person doing a good job.

MR. CHAIRMAN: Are you finished Mr. Crane?

MR. CRANE: Yes.

MR. CHAIRMAN: Thank you.

Mr. Dumaresque.

MR. DUMARESQUE: Thank you, Mr. Chairman.

I want to touch on the tendering aspect of the game, particularly on Page 3 where you see the list of the exceptions and I note one of them, 26867, is the automatic transfer switch. I want to ask a couple of questions on that.

First of all as you see from Page 143 there was an initial request for this automatic transfer switch on October 22, 1993, and then there was another letter shown here back in February 1994, just one page back, 142, where you indicate that the transfer switch has been installed. I am wondering why you would think it would be an emergency if you knew you needed this particular switch in October, and I do not know when it got installed, but supposedly it got installed sometime in January, why that could not go to public tender, and was there any attempt to find more than one quote for this particular item?

MR. RALPH: There were several quotes to my knowledge for this. The document you are referring to, of course, was the letter I initially wrote to the Department of Health requesting funding which was a follow-up to a telephone conversation that I had with the gentleman in the facility planning division. The date of February 17 that you referred to was the date that I actually submitted our request to the Department of Health for reimbursement. The actual installation of that piece of equipment was well in advance of that date, so there was an emergency for it because of the items that are outlined in our letter of November 1.

Our plant is under what we refer to as a guarded plant status and when our engineers go off duty at 4:00 o'clock in the afternoon then our plant is unguarded so if we have a power failure at any time from 4:00 in the afternoon until 8:00 the next morning with this switch not working then one of these engineers would have to be called to come in in order to transfer the power over to another generator.

MR. DUMARESQUE: I don't see any other invoices in the document, maybe there are other quotes but I only see one really. A couple from Harris and Roome, two or three pages relevant to that company, but I don't see any others, but I don't question what you say.

The other aspect of this that I just wanted to get some explanation on is that you wrote on November 1 but you called on October 22 and said that you wanted this particular item. You are saying that arrangements must be made "...to purchase the unit and have the problem rectified as quickly as possible... [W]e would appreciate your consideration in providing funding up to $17,000 this fiscal year..." The next letter on February 17, you say: "Although we have not received a reply in this regard we now enclose copies of the relative invoices for your consideration."

I'm just wondering about the process there. You ask for the approval and then you gave him the bill. Is that the way that you would ordinarily work with the government? Do you have to do that to get your money or...?

MR. HERRIDGE: You can try anything once.

MR. DUMARESQUE: I suppose.

MR. HERRIDGE: No, the gentleman, Mr. LaCour, in our telephone conversation indicated that he would try his best to obtain (inaudible) prior to year end. If not he indicated that he would try to provide funding in this fiscal year, 1994-1995. Obviously he couldn't come up with the funding during the last fiscal year so I'm confident that we will get it in this fiscal year.

Yes, normally we do get prior approval for these things but in this particular instance I guess we were - it was an emergency item anyway and as he indicated to me on the phone: Go ahead, and if we can't provide the funding we will - if not, it is something that you are going to have to get anyway.

MR. DUMARESQUE: The other aspects of the tendering process. You indicated earlier you intend to follow the public tendering act. I'm looking at the areas of whether there is a conflict of interest policy. I notice the Auditor General said there was none in place. Is there a conflict of interest policy in place now with respect to public tendering?

MR. HERRIDGE: There has not been a public conflict of interest policy developed to date, no.

MR. DUMARESQUE: Do you intend to develop one?

MR. HERRIDGE: Yes we do.

MR. DUMARESQUE: There are a couple of comments (inaudible) with respect of the process of accepting the bids and the opening of the bids and where they were not being witnessed, or at least the evidence didn't show that they were being witnessed and stamped appropriately. Have you had any tenders since the Auditor General's report?

MR. HERRIDGE: No we haven't. Mr. Hillier, would you like to comment on that one?

MR. HILLIER: Yes, I would like to comment on that particular thing. Unfortunately, as you say, the documentation wasn't kept but I can assure you that (inaudible) through the process. The envelopes were stamped. There were three people present on each day (inaudible) was public. I guess like most of us we have a tendency to discard envelopes, I think. At least I do. We apparently didn't keep the documentation.

MR. DUMARESQUE: Okay, so -

MR. HILLIER: We shall in the future.

MR. DUMARESQUE: I'm sure nobody doubts it. It is just that the perception. If you haven't got the evidence to show, I guess -

MR. HILLIER: Yes.

MR. DUMARESQUE: - the perception can be there.

MR. HILLIER: We really didn't give any thought towards keeping envelopes.

MR. DUMARESQUE: Right. You are not unique in it, I must tell you.

MR. CHAIRMAN: Doesn't make it right, though.

MR. DUMARESQUE: It doesn't make it right, no.

MR. CHAIRMAN: I might just say, if I can just (inaudible) for a second. One thing that this Committee has found over the past three years - because I think it has only been really three years that this Committee has had a mandate to deal with government agencies, Crown corporations and boards, any agency or body financed by government - that one of the real weaknesses found has been in the public tender area. A lot of it has been basically ignorance or not really recognizing the responsibility of various boards and agencies to comply with the Public Tender Act, and previously I guess probably nobody bringing it to the boards' attention. I think the Committee has played a role in that regard and generally speaking we've found boards and agencies have welcomed the opportunity of finding out exactly what their responsibilities are.

Mr. Dumaresque.

MR. DUMARESQUE: I want to just touch on the other area that was brought up earlier by Mr. Penney. It is the area of income supplements. I understand, coming from Labrador, that we have a tremendous difficulty getting doctors, specialists, to come to rural Newfoundland and Labrador. I don't doubt that supplements and income supplements, housing allowances and everything else are essential. I guess you try to wrap up the package in all the best paper you can to try and attract doctors and specialists to areas like Twillingate. Do you think that supplements are necessary to attract the administration side of the equation? Or is that something that the board has considered? Do you intend to proceed with it? I guess you wouldn't if the minister calls everybody in I suppose and brings down the law in a strict sense. In the absence of that kind of direction have you thought about whether supplements should be still considered for administration, as a separate item for doctors and other specialists?

MR. RALPH: The acting CEO, Mr. Herridge, is receiving basically the same supplement, but that is because he is continuing in the office for a year while the present CEO is on sick leave. The last CEO, Mr. Saint, was at the hospital for some ten, eleven years. Prior to that the hospital went through CEOs like they were going out of style. Very difficult to keep a CEO here. That is my understanding, Mr. Herridge. We did provide a supplement from probably seven, eight years ago since the board made that decision. We haven't had an occasion to review it until this particular hearing.

I certainly feel there is a need to provide some incentive. Maybe not as much as it used to be because there are more people available to hospitals. We haven't had an occasion to advertise for a CEO because the present CEO has been here for ten, eleven years and is now off sick for a year or for a period of time. I'm not sure what would happen. I am involved in the Central East board and we just advertised and accepted a new CEO for that board, and there was no discussion relevant to (inaudible) - we had sufficient applicants. I suspect the need for it is becoming less and less. There is no doubt of that.

MR. DUMARESQUE: Yes, that was the point, I guess. I expect that the need for the administrator side of things, CEO side, would be more availability out in the marketplace these days than there would be for specialists, and therefore that might not be considered.

One of the budget items there I noticed for the communications section of the hospital operations, the salary budgets for communications, $96,000 and $97,000 respectively for 1990 and 1991, and then it increased to $106,00 and stayed the same for 1992 and 1993. There is an extra $10,000 or $9,000 there for communications. What would that be for in terms of salary? Would that have been in keeping with the guidelines as far as salary adjustments under the freeze period?

MR. HERRIDGE: Well I don't have the benefit of the information with me, I can only suspect that the difference is due to annual leave, sick relief or something of that nature. The number of personnel that's assigned to our communications area hasn't changed for the past number of years. So I can only assume that the difference is as a result of some sort of a relief which would be indicated in there.

AN HON. MEMBER: (Inaudible).

MR. DUMARESQUE: There's an increase of $9,000 between '91 and '92 so that may have been the year. So you had a nurse -

AN HON. MEMBER: We had a nursing assistant -(inaudible).

MR. DUMARESQUE: $2,000 a year more probably.

AN HON. MEMBER: Pardon me?

MR. DUMARESQUE: $2,000 a year more probably.

AN HON. MEMBER: Yes probably.

MR. CHAIRMAN: Could we have a microphone please. Would she like to come to a microphone? Are you finished what you were going to say?

AN HON. MEMBER: (Inaudible).

MR. CHAIRMAN: Because it's important that we get it in on the record and we can't pick you up when you're not on a microphone.

AN HON. MEMBER: I just wanted to repeat the fact that we (inaudible).

MR. HERRIDGE: Yes, just for the record, actually that was the year when we did have a number of layoffs in our nursing assistant area and they bumped into some of the other lower classifications and of course the difference between a nursing assistant and a switch board operator would be around $3,000 per year. So that certainly would justify the additional expense.

MR. DUMARESQUE: Okay, that's it for me thank you very much.

MR. CHAIRMAN: Mr. Penney, would you like to carry on with further questioning?

MR. PENNEY: Thank you, Mr. Chairman.

I'd like to go back to the 1993 financial statements, page 79, under travel. You've got travel listed in five categories, since the last category says, `board' we're assuming that the first four would be for travel other than for board members, am I correct? The cost of the board travelling was $6,800 for the year. Can you give me some idea what the other - this totals $54,000 for travel for the year - general; $19,000, recruitment; $19,800. Now recruitment I suppose is if we had travelled to try to get doctors or nurses to come to the area. Could you explain?

MR. HERRIDGE: The recruitment would be specifically for medical recruitment and that would be their expenditures in getting here. The majority of our doctors come from South Africa, and as you can appreciate is very expensive.

MR. PENNEY: And you pay their way over?

MR. HERRIDGE: The boards policy is that we pay a maximum of up to $5,000 per year per doctor providing they stay for the full year. It's obvious of course from that particular amount that there was a large number of doctors who came in here during that time.

With regard to the speech therapist travel that's there, we have an arrangement with Gander Hospital that a speech therapist comes out as a visiting therapist once a month, once every three weeks and that again is our travel expenditure.

MR. PENNEY: That still leaves $19,000 on the top just marked `general.' How do you explain that?

MR. HERRIDGE: The `general' would be local travel which would incorporate travel by administration, nursing supervisors and any other supervisors going away on hospital business, meetings, seminars and whatever.

MR. PENNEY: No, you've got conventions and seminars listed separately for $6,000.

MR. HERRIDGE: The conventions - actually it is not conventions and seminars, it should be conventions. Seminar is not part of that title actually. The seminar would be in the general travel.

MR. PENNEY: Seminars is up in the top category.

MR. HERRIDGE: Yes, it would be.

MR. PENNEY: So how many conventions would you have sent people to for $6,000? How many individuals would you have sent in a year?

MR. HERRIDGE: I'm sorry but I don't have that information.

MR. PENNEY: Generally.

MR. HERRIDGE: Six or seven, probably.

MR. PENNEY: Six or seven conventions?

MR. HERRIDGE: Yes.

MR. PENNEY: What type of conventions would they be?

MR. HERRIDGE: Well, it would be the engineering convention that we sent our plant maintenance engineer to in Toronto last year. It would be a number of conventions for various - like the x-ray radiologist convention, these types of things.

MR. PENNEY: Okay, so we've gotten conventions taken out of it. So now the $19,000 in the top marked general is mostly for staff travels for seminars, that sort of thing.

MR. HERRIDGE: For staff travel, for meetings, seminars.

MR. PENNEY: The questions that I had for page 82 have all been covered, so page 83. There is probably a very logical explanation for this but it just escapes me right now. Under Out-patients you've got drugs, $22,000 worth of drugs for out-patients. Can you explain that to me? Aren't out-patients given prescriptions where they go to the local pharmacy and get their prescriptions filled?

MR. HERRIDGE: Yes they are.

MS. FACEY: In our Out-patients department we have seen a trend over the last few years develop where antibiotics are given as an out-patient. Many patients will come and receive their antibiotics by what we call a heplok. It is just a little needle that goes here in their hand and the patients will come and have their antibiotic therapy, go home again, and come back in the evening. Of course, to give antibiotics is a very expensive method of treatment so I would say that is perhaps why. It would be through this trend.

The other thing is chemotherapy. It is extremely, extremely expensive. These are the cancer drugs that we give. They are extremely expensive.

MR. PENNEY: Aren't chemotherapy and specialty cancer drugs supplied from St. John's to the patient? Directly from St. John's, from central supply?

MS. FACEY: I'm sorry, I can't answer how we obtain that.

AN HON. MEMBER: I can answer: no they're not.

MR. PENNEY: Let's go back to the drugs. These $22,700 worth of drugs, is there any attempt to recover the costs from the patient? Like if the patient was being prescribed an antibiotic orally the patient would be given a prescription, take it to the pharmacy, and would have it covered off by either the Department of Social Services or by his medical insurance or out of cash. If you prescribe this particular type of an antibiotic then the hospital covers the cost? Is that what you are suggesting? The hospital is not reimbursed for the cost?

MS. FACEY: For an intravenous medication, yes, we do bear the cost of that. That is not charged to the patient.

MR. PENNEY: Even for outpatients?

MS. FACEY: No, not for outpatients. It has not been our practice.

MR. PENNEY: Do you know if that is similar to the practice of other hospitals across the Province?

MS. FACEY: I have not done any investigation into that, but as far as I know it is similar to other practice based on my knowledge today.

MR. PENNEY: The same thing would apply, the next line up from that, medical and surgical supplies. What kind of medical supplies would that be? I see you are providing surgical medical supplies and drugs to the tune of $42,000 to people who are not inpatients at the hospital and there seems to be no attempt to recover it from the patient.

MS. FACEY: You are correct, Sir, we are not asking for any monies for these items and the medical supplies there are bandages, and did we not mention the other day neck collars?

MR. PENNEY: I am sorry, I did not catch that.

MS. FACEY: Plaster of paris for application of casts which we do in our outpatients department as well.

MR. PENNEY: What other sorts of things?

MR. FACEY: Oh!

MR. PENNEY: I have been a pharmacist for some twenty-odd years and I see prescriptions being prescribed for those kind of things on a regular basis, and I also see people coming into the pharmacy telling me they are getting their cancer and chemotherapy drugs directly from central supply in St. John's, and we have had to bring in through the pharmacy enough to hold them over until they get their shipments. So, what other kind of things would be included in $20,000?

MR. TOBIN: You are a pharmacist and I am not, is that a lot of money $20,000 for drugs?

MR. PENNEY: I do not know because I do not know what it is for.

AN HON. MEMBER: Excuse me. Maybe we can help clarify it here. Mr. Saunders is the Director of Institutions.

MR. SAUNDERS: Under the Canada Health Act and under hospital insurance all drugs issued within the building on an inpatient or an outpatient basis are an insured service. I have often brought my child down to the Janeway, and received at maybe 12:00 or 1:00 o'clock in the morning, enough to tide me over for the night until I got to the drugstore the next day. This is a combination of all drugs that have been issued on outpatient basis and it is a standard practice right throughout the Province.

MR. PENNEY: Do those figures seem in line to you?

MR. SAUNDERS: For this size of a hospital that is probably very appropriate. If you get into some of our more regional centres those numbers are ten times those figures.

MR. PENNEY: Please do not misunderstand my questions. It was not meant as an interrogation.

MR. SAUNDERS: You were not looking for business or anything.

MR. PENNEY: No, I was trying to protect my pharmacy colleague here in Twillingate. I was just trying to see if you were taking his business from him.

Further down, under clinical laboratory, clinical laboratory expenses, I see medical and surgical supplies and drugs. What would the drugs be for the clinical lab, because it is not laboratory supplies? That is there separately. That is $65,000. What would the drugs be? It has gone from $45.00 to $629 in one year.

MR. TOBIN: $600?

MR. PENNEY: Yes, halfway down the list.

Okay, that is fine. Let us leave that one then. Let us go to the next one, diagnostic radiology. We have drugs for $7000. What would that be?

MR. CHAIRMAN: Mr. Hillier.

MR. HILLIER: There are some x-rays that are done that require certain drugs to be taken prior to. I'm not too familiar with this kind of procedure but I believe (inaudible).

MR. PENNEY: That's fine. Okay, then I'll turn to the next page under food services and tell me what the drugs are under food services, $1,000 worth of drugs under food services?

MR. CHAIRMAN: Food must be (inaudible).

MR. HILLIER: In our accounting system we have certain things like formulas under the drug category and I'm talking food supplements under the drug category not knowing really what else to do with them and that's why they're showing up there.

MR. PENNEY: Yes, okay that's fair enough.

If I may, Mr. Chairman, a couple or a few questions on page 87 and I'll stick to the same category. Page 87 under New World Island Clinic, back to drugs again you've got $3,000. Now are these drugs that are administered in basically the same kind of a system to outpatients through the clinic? Okay, if you come down to the bottom what's the income recovery of $2,600?

MR. HERRIDGE: The $2,600 would be basically medicals and things of that nature that the doctors perform at the clinic.

MR. PENNEY: But not for sale of drugs?

MR. HERRIDGE: Nor for sale of drugs, no.

MR. PENNEY: Now coming to the bottom line here, under Change Islands Clinic, I see drugs of $12,752. Is it the same thing that the people who live on Change Islands are not charged for their drugs either simply because the Change Islands Clinic is an extension of the Notre Dame Bay Memorial Hospital?

MR. HERRIDGE: It's been practise at the Change Islands Clinic for a number of years that the clinic out there would dispense drugs to the residents of Change Islands and charge them for that service.

MR. PENNEY: Oh they're charged for it?

MR. HERRIDGE: Yes they are. That's where the income is derived.

MR. PENNEY: So this is where the income recovery is shown there as $21,000?

MR. HERRIDGE: Yes, it is.

MR. PENNEY: Okay, so they actually make a profit then?

MR. HERRIDGE: On drugs I guess they do, yes.

MR. CHAIRMAN: (Inaudible).

MR. PENNEY: They're supplying them with $12,000 and that's where the $21,000 recovery is coming from the sale of drugs, okay.

MR. CHAIRMAN: Mr. Penney maybe about a year or so ago I was aware that the nurse that was on Change Islands left and there was nobody there capable or licenced to -

MR. HERRIDGE: Yes.

MR. CHAIRMAN: - dispense drugs. Has that been dealt with? Is there somebody there?

MR. HERRIDGE: The Change Islands Clinic now or the administration of the Change Islands Clinic has been transferred over to the Gander and District Continuing Care program. So we no longer administer the clinic on Change Islands.

MR. PENNEY: Yes but the same basic system applies doesn't it?

MR. HERRIDGE: I think it does yes. I'm pretty sure, nothing has changed.

MR. CHAIRMAN: But there is somebody there -

MR. HERRIDGE: There's a nurse there yes but that nurse has no authority to dispense medications.

MS. FACEY: Yes, there is a nurse there, Tony Richards is his name and I think that the people now have to pick up their medications in Lewisporte or Gander. I think that's the way -

AN HON. MEMBER: Yes, usually they're mailed out to them.

MS. FACEY: Yes.

MR. PENNEY: Severance pay, is that the severance paid to the retiring nurse Mrs. Chaffey?

MR. HERRIDGE: Yes it is.

MR. PENNEY: And her salary I would presume for the previous year was $48,833? Shown right there on the next line above that for 1992.

MR. HERRIDGE: Not necessarily. We did provide some relief down there at the time when she was off the island.

MR. PENNEY: Okay, so her salary was less then the $48,000?

MR. HERRIDGE: Her salary would have been less then $48,000.

MR. PENNEY: Is that a normal severance pay?

MR. HERRIDGE: Yes, that's in accordance with the nurses collective agreement.

MR. PENNEY: Okay, fine. No further questions.

MR. CHAIRMAN: Mr. Tobin.

MR. TOBIN: (Inaudible).

AN HON. MEMBER: Mr. Saunders has a question.

MR. CHAIRMAN: Mr. Saunders.

MR. SAUNDERS: I just wanted to add one comment. That with respect to pharmacy services in the communities - like Change Island or New World Island clinic - there has been a lot of pressure over the last five to ten years that when a pharmacy moves into the community usually the clinics or the hospitals get out of the business of providing the outpatient services. That has been a bone of contention over a number of years. Generally in communities where there are no pharmacies these clinics do provide the outpatient services. They may provide enough drugs for the person to get through the night but then they will charge for any supplies of them.

MR. PENNEY: Yes. I understand. I think the people, or at least some of those people, will remember the problem when the pharmacy moved into Twillingate a few years ago. It was a problem that lasted for several years I think before it was finally resolved.

I've no quarrel with that, but if a person is getting drugs on an outpatient basis for enough to last him over the night at the cost of government, that is one thing. But if the medication is being dispensed to out-patients and the patient comes back on a regular basis and continues to get the medication indefinitely, that is an entirely different matter.

MR. TOBIN: That is not the case here though.

MR. HERRIDGE: But it is when it comes to IV type antibiotics.

MS. FACEY: But I think that is normal practice. I do not know anywhere where people go and receive IV antibiotics. Usually they have to be hospitalized and in reality that is helping us with our bed situation, to be able to give them this form of treatment as an outpatient rather than having them as an inpatient because it costs more to keep them in a bed than have them come to the hospital whatever times are required in a twenty-four hour period.

MR. TOBIN: Would that be done as a cost-saving measure then?

MS. FACEY: We see it as being cost-saving.

MR. TOBIN: Is that why you practice it, because of the cost-saving measure in order to facilitate your budget?

MS. FACEY: Well, it certainly helps and it is what the people want as well. They prefer to do it this way.

MR. TOBIN: So it has something to do with cost cutting the budget and government cutbacks?

MS. FACEY: Yes.

MR. TOBIN: So as a result of government cutbacks you find yourself in a situation where this has to happen.

Thank you, very much.

MR. DUMARESQUE: If I might, Mr. Chairman. I just went through a couple of days with the Minister of Health actually, and is it not a policy objective to try and offer more care through the outpatient in-home community-based service as a result of changes in the way health care is being delivered and what people are demanding? Is that not also a factor?

MS. FACEY: You are correct, and that is our plan for the future, certainly to expand on our ambulatory care service, and it is what the public and the people want as we see it, and government as well.

MR. CHAIRMAN: Where were we? I am lost now.

Mr. Crane.

MR. CRANE: There are a couple of items here. On Page 79 under general administration there is an amount for entertainment for $4,450, initially an increase of 87 per cent over the previous year. Why would entertainment jump that much?

MR. HERRIDGE: I am sorry, I cannot offer any explanation as to the increase at this particular time.

MR. CRANE: In times like these when everything is so tight and we cannot find money for essential things some times. I do not know about anybody else but it really irks me to see how you can spend that much for entertainment when I am sure you do not have enough to pay people to keep your ledgers and count all your properties. You have not found enough in your budget for that, have you? You have about $2.08 million in capital assets and up until the time that the Auditor General went in you did not have a ledger, you did not have any account of your fixed assets, and you did not have any marking done. Have you done any of that yet?

MR. CHAIRMAN: Mr. Herridge.

MR. HERRIDGE: That is a major undertaking to go and record and take all of the capital assets of any institution when you look at the amount and the number of different types of equipment that's in the institution. They attempted it a few years ago I guess, under an annual operating system. It was a major task then and we didn't get very far with it. It's something that we certainly intend to do in the very near future. It is a major undertaking.

MR. CRANE: (Inaudible).

MR. HERRIDGE: Yes we are.

MR. CRANE: That's why I say when you can't find money for something as essential as that and yet they find money for having a party in the boardroom but when things are so tight I think you -

MR. TOBIN: But what's the purpose of that entertaining?

MR. HERRIDGE: It would be some kind of retirement party.

MR. CRANE: Yes, I would say that's what it was. That's what it usually is.

MR. HERRIDGE: In that particular year we did have a number of retirements, it didn't all happen at one time. I guess it was probably -

MR. TOBIN: When we're talking about retirement, Mr. Chairman, we're not talking about somebody who came and stayed for a year and then left. We're talking about someone who devoted their entire life to the health care of this area and a couple of people who retired they spent $1,000 on them (inaudible).

MR. HERRIDGE: Yes.

MR. CHAIRMAN: Mr. Langdon.

MR. LANGDON: Mr. Herridge, on the payment of all of your tangibles under the (inaudible) have you ever looked into this fact of getting a co-op student from an area university on a business term say for three months or whatever the case might be and to have him do all the work for you, to put it on computer rather than having somebody at the hospital do it? It could be done under a work term because these students are available and work all over the place. Basically they're dying to find some work, meaningful work and there you have an opportunity as a business student at MUN where they could place these people and it would be just given to you on a platter for a small sum of money, a one time deal.

MR. HERRIDGE: No, we haven't considered that.

MR. CHAIRMAN: It's rather difficult, nobody (inaudible).

MR. HERRIDGE: I take your suggestion under advisement.

MR. LANGDON: Yes, it's worth looking into. They could do it over a three month period and wouldn't involve the hospital staff in doing it.

MR. CHAIRMAN: Go ahead. Mr. Langdon.

MR. LANGDON: Yes, not very much. I want to congratulate and commend Marvin, Mr. Herridge, Mr. Hillier and the other people for coming in and being so open, candid and discussing your ideas up front with us and supplying us with the answers.

Just one more question, a line of questioning along the idea of morale within the institution. It was brought up earlier that when the full time nurses were actually laid off and then after they were laid off some of them were hired back on as needs be or whatever the case might be. The people who were directly involved were not consulted in any way. Since that time with the report done and the decisions have been dealt with, how is the morale at the institution now? Has it improved considerably and are people working totally together and giving the best possible health care to the people out there or is there lingering animosity or whatever toward the institutions? Is it a personal thing because I think if you're going to have a team that's going to be dedicated to providing the proper health care for a region then everybody has to work in unison one with the other in order to have this done, and obviously the best result is not given to the person who needs it most and that's the patient.

MR. HERRIDGE: I could answer that question directly but I think because the majority, I suppose, of the impact was in the nursing area, I would like for Linda Facey to comment on that directly.

MR. CHAIRMAN: Ms. Facey.

MS. FACEY: The morale at the hospital has improved tremendously within the last little while. I know what these nurses went through last year because I experienced something similar in 1991 when I lost my position in education, because we eliminated that. It was sort of a surprise to me, although I knew that they were going to make changes and education is always such an easy target when it comes to cutting money.

Last year when I knew that they were feeling the pain - when it was announced that they had lost their jobs I went immediately to the locker room to be with these nurses who were crying and very upset. Most of these women are either sole breadwinners in their family or they make the major contribution within the household, and they all have young families. However, time passes by and they did get some work over the past year, and sometimes more than what we could really handle, because we have been busy. This year at our annual association meeting one of the guest speakers addressed the issue of the stages of having to go through a major crisis. One of these nurses who was laid off last year, she turned around and said: This is what happened to us.

The bitterness, the anger, and everything that they felt towards us in administration and the hospital, they have come to a full realization of what has happened. Now I think they want to make a difference, not only in their personal lives but within their commitment to nursing and the health care in the area. This Wednesday we will have Mrs. Adey, who is the executive director of the nurses association in the Province, will be here in Twillingate to discuss the primary health care model. The hospital has so generously supported us in providing a luncheon so that we as nurses who are working and with families don't have to make our pot-luck and bring it in. That was really appreciated by the nursing staff.

We are communicating within the group, the union, everything that we are doing. All the changes that are being implemented are being discussed up front with the president of our union. We feel that we are on track for an improved and better future.

MR. LANGDON: I'm glad to hear that.

I think that goes back obviously to the work of Marvin Ralph and the board of the hospital management team, and it is to your credit that you are able to do that. That in itself you need to be commended on.

MR. CHAIRMAN: Mr. Tobin, you wanted to comment?

MR. TOBIN: Yes. I was just wondering, if these nurses were so important to the hospital and all of that, and you had to bring them back now, why did you lay them off in the first place?

MS. FACEY: Mr. Herridge had explained (inaudible) because of the Vardy report.

MR. TOBIN: Yes, I know the report.

MS. FACEY: That is true. But we didn't have - occupancy rate in our ICU and OB - in obstetrics, okay, the number of births per year has been decreasing. When I came to Twillingate in 1975 we had about 250 babies being born per year and now we are down to forty-seven per year. There has been a significant decrease in the number of births. Naturally, the number of staff that we need to look after that unit on a twenty-four hour basis decreased.

MR. TOBIN: The need is not there to have these nurses remain, is what you are saying.

MS. FACEY: Not on a full-time basis. They accepted that, they could understand that. I suppose in a way they knew when the Budget came out last year that there were going to be changes. We are all part of our world that we are living in. They almost predicted that there would be changes there with that, but when it came to the intensive care unit and almost doubled the number of people, that is where, you know, they felt the pain.

MR. TOBIN: What I was trying to determine - and I think you've said it - I mean, the Budget is one thing, and a consultant's report is another story altogether. The reason why these nurses were laid off is because you were overstaffed at that period in time.

MS. FACEY: Yes.

MR. TOBIN: They have accepted that.

MS. FACEY: Yes, now, yes.

MR. TOBIN: (Inaudible).

MR. LANGDON: Just one more question, Neil, if I could finish with that.

MR. CHAIRMAN: Mr. Langdon, yes, carry on.

MR. LANGDON: Twillingate Minor Hockey Moms, eighty dinners, on page 109. Being involved in minor hockey all my life I just wanted to know what the hospital was doing (inaudible).

AN HON. MEMBER: Eating dinner.

MR. LANGDON: To support them?

MR. HERRIDGE: No, seriously, the eighty dinners that were referred to, the Lions Club undertook a local telethon on the community channel which they were successful in raising $55,000 for equipment at the hospital. This was the board's way of showing appreciation.

MR. LANGDON: The minor hockey people (inaudible).

MR. HERRIDGE: They served the dinner, basically, to the Lions Club.

MR. LANGDON: Okay. Thanks for your answers.

MR. CHAIRMAN: Mr. Dumaresque.

MR. DUMARESQUE: Thank you, Mr. Chairman. I just had a couple of questions on the budget thing, particularly with the land improvement. I noticed in each of the schedule 11s attached to various financial statements that former staff house, on page 89 and in schedule 10 and 11 in the other respective statements, and we see a $50,000 expenditure every year. How long has that expenditure gone on for and how long will it go on for? What exactly is the land improvement that is taking place at the former site?

MR. HERRIDGE: Excuse me, that is not an annual expenditure of $50,374, that is an asset of the hospital. The expenditure itself took place some years ago and it is just being carried forward on the balance sheet from year to year.

MR. DUMARESQUE: That is the same thing for the pavement for the administrator's residence?

MR. HERRIDGE: That is correct.

MR. DUMARESQUE: Fifteen thousand dollars. That is just your asset.

MR. HERRIDGE: Yes, that is correct.

MR. DUMARESQUE: Alright -

MR. CHAIRMAN: Do you not show any depreciation on any of that stuff you (inaudible)?

MR. HERRIDGE: Our auditors over the years haven't applied any depreciation on any of these assets, no.

MR. DUMARESQUE: Just one other item. When you were talking about earlier recruitment you noted that very well all your doctors come from South Africa. What is your experience? We in the northern region of Labrador are having a lot of problems recruiting. We know that there are a lot of Canadian doctors even in our own Province I guess, so many graduating every year. What is the main thing that you run up against in recruiting Canadian doctors, as opposed to obtaining and successfully getting foreign doctors to come to places like Twillingate.

MR. HERRIDGE: The main thing, I guess, that we run into in recruiting is dollars. We are not able to compete dollar wise with the mainland, and a lot of our doctors that have gone through here have gone there, and went to Saskatchewan, and some have gone to the States, and some have just gone back to England or South Africa. We just had two locals show up here today, who were previously here from South Africa, (inaudible) the summer months, basically because we couldn't find any local doctors.

MR. DUMARESQUE: Even like fee for service, I guess; say in St. John's, a fee for service doctor would probably make more than you can pay in Twillingate.

MR. HERRIDGE: Yes, definitely.

MR. DUMARESQUE: Do you think that the move that the government is making will bear any fruit, that new graduating doctors will not be reimbursed in full - I think only 50 per cent of the MCP charge in some areas of the Province; and are there any other suggestions you would like to give to government in that recruitment process?

MR. HERRIDGE: It won't work if - providing the students don't leave the Province, I guess. I guess it is already public knowledge that a number of graduating students have already shown their intentions to leave the Province. We are fortunate in one regard but again, I guess, time will tell whether or not it will deliver.

At the present time we have three medical students assigned to our hospital. One will graduate next year, and has expressed a desire to come to Twillingate and practice. Two other medical students, one from the Lewisporte area and one from Twillingate, have also expressed a desire to come to Twillingate to practice. When the time comes, whether or not they will come and stay I guess time will tell.

AN HON. MEMBER: (Inaudible).

MR. CHAIRMAN: Do you want to come to a microphone, please, and state your name.

MS. PINSENT: My name is Jennifer Pinsent.

You had asked for suggestions in terms of the recruitment of physicians. I am not personally involved with that recruitment but has government, in general, looked at a comparison between the salaried physicians and the MCP or fee for service physicians? Have you looked at the possibility of having all physicians salaried?

Furthermore, hospitals right now have to compete for physicians. What one institution does may differ from what another institution does. Some institutions may put physicians on steps higher than that which the regulations would require you to do. I don't think it is fair that institutions individually should have to compete for physicians. I think there should be a government body which addresses the need for physicians in certain areas, and I understand you are going toward that direction but I don't think we, as a hospital, should have to fight against another hospital to go through board funds or what have you to try to recruit physicians. There should be some attempt to have policies in place so that a rural hospital may be able to put a physician on a higher step, where the area has a difficulty to recruit as opposed to probably some underhanded policies which may or may not be occurring across the Province.

MR. DUMARESQUE: I appreciate that. I can't answer it directly, but I am sure the minister's officials would probably take note of that and give you a response to it in some other detail.

One point that I was wondering about from time to time is that other areas of jurisdiction where government spends a fair bit of money in educating people - I know in the ministry, for instance, there is a condition when you go and get funding under their bursary or any other aspect of it you have to give a commitment for three to five years or something along those lines. Do you think that is something that government should consider, having some kind of a condition that if you are in receipt of a substantial degree of funding for your education in this way, doctors, specialists, that may be something that would be a reasonable request upon that student?

MR. CHAIRMAN: Mr. Herridge.

MR. HERRIDGE: I think you can go around the Province right now because a similar arrangement is in place with the physiotherapy program. We had experience this past spring. There was a physiotherapist assigned to Twillingate from three years ago when they entered the bursary program and the person just refused to come. We - when I say "we," the government through the hospital has invested some three years of bursary to this student and when the time comes for them to be assigned to a certain area they just refuse to go.

Yes, we could impose the terms of the contract I guess and force them to come but I certainly don't want an unhappy physiotherapist walking in through my doors down there, especially when the person is from St. John's and she wants to live in St. John's, she wants to practice in St. John's, and so on. (Inaudible) Baie Verte I understand went through the same experience.

The program in certain areas may be working but in the rural area, no, they are not working. I think that is the general consensus of most places throughout the Province right now.

MR. DUMARESQUE: Thank you very much.

MR. CHAIRMAN: Mr. Penney, do you have any other comments?

MR. PENNEY: Just one brief question. That must be very frustrating Mr. Herridge, when you invest that much time, energy and money in a student when you find that the graduate refuses to honour his or her commitment.

MR. HERRIDGE: Yes it is, it is very frustrating, because in this particular case I guess we were sort of telling our community, telling our board, telling our (inaudible): We have a physiotherapist coming in the spring of 1994. Then all of a sudden we receive notice: No, this particular person is not coming.

MR. LANGDON: Is there any way to recover from that?

MR. HERRIDGE: No, because the arrangement is through the bursary program of the Department of Health. In this particular case I think the student was assigned to another institution. I'm not sure if it was in the region but certainly within the Province, so....

MR. PENNEY: What do you think of the idea of the government subsidizing the cost of a med student for a full year or two years or three years, and then in exchange for every year that the government would subsidize the cost of his training he would then be required to go to a portion of the Province selected by the Department of Health? One year for one year. If we paid his way through med school for two schools and you need a doctor down here for two years, send him out here.

MR. HERRIDGE: In theory it sounds good, but when that person graduates and they decide they don't like the area or they don't like the terms or they can't come to a reasonable deal with the institution, they say: I'm leaving the Province, I'm going to the mainland, and an institution on the mainland offers to pay out the bursary. You just can't compete.

MR. PENNEY: Yes, I guess at that stage (inaudible) -

MR. HERRIDGE: That does happen.

MR. PENNEY: Yes. If I might go back just for one second to the public tender exemptions on page 18. Just a brief explanation on.... Sigmoidofiberscope. It says that the "doctor required specific equipment even though other suppliers exist." Did other suppliers exist for the same equipment or was this a special case?

MR. HILLIER: No, this was a particular brand name of equipment that this physician requested. There may be six or seven different types of instruments out there that would basically perform the same thing.

MR. PENNEY: Was there much of a difference in the price of them?

MR. HILLIER: No, there's usually not very much difference in the price.

MR. PENNEY: But this was a brand that the doctor was familiar with?

MR. HILLIER: Yes. It was compatible as well with the equipment that was in house and the (inaudible) source that was used to do this work.

MR. PENNEY: Had you gone to public tendering and gotten a cheaper one (inaudible) do you consider a possible savings advantage?

MR. HILLIER: Well, I'll go -

AN HON. MEMBER: (Inaudible).

MR. HILLIER: Yes, let me answer that this way, I'll ask the same question to you that I asked the CPA about four or five years ago, what do you do when you have one physician that you're desperately trying to hang on to and he/she says to you, `you get me what I want or otherwise it will sit in the box and I won't use it.' You're going out and spending $30,000, you tell me what you'd do. What they said to me was, `give her what the hell she wants.'

MR. PENNEY: I think we would also come to the (inaudible) as detailed.

MR. HILLIER: That is the explanation for me.

MR. PENNEY: Okay, thank you very much.

MR. CHAIRMAN: Mr. Penney are you finished?

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

MR. CHAIRMAN: There's just a couple of general things I'd like to raise. First of all from the point of view of the capacity of the hospital now and staffing there, in a report that was done in '93 it was recommended I think an additional twenty-nine long-term care beds. That's in addition to the acute care beds you have now. I think you said that you have enough acute care beds and so on, term care that you're looking for. This ties in with the policy that we heard earlier of more ambulatory care. Is there a real need for that? What is your view with the board with that Mr. Ralph?

MR. RALPH: Yes, definitely a real need. All the studies that we've had done or has been done apart from the provincial bed study which we took exception to but everything else supported that kind of capacity. If you look at the functional plan, the master plan is indicating by the year 2006 the increased capacity of the hospital bed wise will be between sixty-nine to seventy-five with about twenty-five of these in acute and the remainder in chronic. So from all indication of the studies that have been done, there is a desperate need right now and certainly a long-term need by the year 2006 for that type of capacity. We have an aging population and we have a significant number in this area that are aging people. I think the average occupancy rate in the hospital, the age of the people, something like seventy and over a little while ago, the age of the people.

MR. CHAIRMAN: It's becoming an old age home.

MR. RALPH: Yes.

MR. CHAIRMAN: How does that priority stack up? Was I not reading recently that you've lost some of your surgeons here and this sort of thing? How does that tie in with that problem?

MR. RALPH: How does it tie in with the problem? Our only surgeon Dr. Chalker is leaving at the end of this month and that's due to, with reference I made earlier, the fact that the anaesthetist is discontinuing service. The litigation that's ongoing now is that you don't solo practice an area like this, it's very risky. So that's why he gave up and our efforts to recruit have basically ended in no success. Even if we did get someone to come and serve they probably only would be here until six months to a year and if you read the recent article in the Pilot on Dr. Chalker's leaving it will give you a good indication of what the problem is. So surgery in this area is basically, as in any rural area of the Province, we are one of the few hospitals who do any surgery of any sort apart from lumps and bumps and this type of thing but basically it will be a nonentity in the very near future.

MR. CHAIRMAN: So you basically will not be an operating hospital or surgical hospital?

MR. RALPH: That is correct. In fact as she made reference in the article if she were to return she could not see it continuing beyond nine months, I think, the reference was, because of the danger and risk, and a couple of possible serious cases we had just within the last year. It is a matter of litigation that is the real problem, and the changing times of course. We have access to two regional hospitals that provide services that are much better than what we are able to provide from an equipment point of view and from a staff point of view and people themselves are demanding that type of service. It does not appear from the public things you hear but in essence most of our people are going off both islands to receive speciality care. They are either being referred or by choice.

MR. CHAIRMAN: The Auditor General in the report went to some great lengths to talk about management controls, budgeting controls, lack of schedule for completing a budget, lack of monitoring on a regular basis throughout the year, compliance or variances from budget, problems in human resource management identified under staffing in their view in that particular area. In other words there are quite a number of concerns expressed in this report relating to overall general management and administration in the hospital.

Can you tell us what your views are on some of these things and have you undertaken, or are you proposing to undertake some of the recommendations, or all of the recommendations made by the Auditor General here? And let me explore a very broad question as well. Are you satisfied with the degree of control? I realize you have touched on it earlier, the degree of control that the board is exercising over here in administration. Is there a clear delineation here between the administrative function and the overall management policy function of the board, the board being ultimately responsible, of course? It is a broad question, a big question. Would you like to try to address some of that?

MR. RALPH: Well, certainly as board chair I feel that we have adequate control and do not feel that anybody is trying to hide anything from us. We have had very open and frank discussions as a board with the CEO, the present and the past CEO. My experience with the CEO and myself has been very open. I have been informed almost to the nth degree as to what is going on. We have committees in place that report back to the boards, whether it is the executive and ad hoc committee, finance or property. All of these committees we have sitting on the board as well. We have the Director of Nursing, and also Mr. Herridge when he was Director of Finance sat on the board and also our senior medical officer.

The board of the day feels that it has been adequately informed and involved. There is somewhat of a dichotomy between governance and management. If you look at how a board is constituted in this area, how it is made up, you will find that most of us came from town councils or from church boards, or whatever, where governance and management was one and the same thing.

Health care, hospital boards have put us in a new direction. We have had some difficulty coming to grips with that but I do feel confident that the board of the day has had three years of experience and some of us have gone off to seminars. A recent excellent seminar put on by Dr. Carver in St. John's a few months ago certainly gave us good information, and I do believe we are getting a handle on what is going on. The criticisms are fair but I certainly do not feel that the board is in the dark, or is not in control. We do have in place, as I mentioned to you earlier, a resource committee and one of its mandates is strategic planning. We are into that area as well.

MR. CHAIRMAN: (inaudible) such things as management policy manuals and strict scheduling for budgets, that sort of thing. I thought I hear you say earlier that you are looking at that now.

MR. RALPH: Yes, we are.

MR. CHAIRMAN: I think our concern was that there is no strict policy guidelines, no management booklet that says: Here is what shall be done that is approved by the board. In other words, the board has not said these are the guidelines - may have said them but they may not be documented.

MR. RALPH: The report is absolutely right when they say that they are not documented but that doesn't necessarily mean that they are not being done.

MR. CHAIRMAN: Exactly.

MR. RALPH: We do go through a fairly formal budgetary process every year and have consultations with the various department heads, senior management and ultimately to the board, but you are right, there is no documented policy as to the procedures to follow. As far as reporting to the board, reporting is done both statistically and financially. Financial reports are presented to the board on a monthly basis and all variances are normally accountable.

MR. CHAIRMAN: Any final comments you would care to make in cluing up this round of discussions?

MR. HERRIDGE: Basically to say a word of appreciation to the PAC. We appreciate the questions you've asked and we have no problems with understanding why you've asked them. Our experience with the Auditor General's office has been nothing but very positive. They did an intensive review assessment of the hospital, gave us all a chance to have input. In fact, Mr. White and the other gentleman sat with myself for about an hour and a half and were very fair. We have nothing but commendation for you folk, and it has been a very worthwhile experience. At times we've been tense and wondering why it is happening, but there is no problem. We are very pleased. I think it will make us a better institution. We have nothing but the intent to carry what has been recommended. We (inaudible) thank you for it.

MR. CHAIRMAN: Thank you very much. That goes along with what I said earlier that one of the great things I think this Committee has accomplished is making boards and agencies more aware of their responsibilities in the accountability process, and our responsibilities as elected representatives to ensure that everything is accounted for properly.

Ms. Marshall, do you have anything by way of a final statement you wish to add? I've not bothered you very much here today, you've gotten away easily.

MS. MARSHALL: No further comment.

MR. CHAIRMAN: Thank you very much.

Any members of the Committee have anything final to say other than...? If not, let me also express to the board, to the management and staff, our appreciation for being here today, for the candid way in which you've responded, and the approach that you've taken in responding to our questions. I want to assure you again that we are not here to judge, we are here simply to gather evidence and present it the House of Assembly. We appreciate your time and effort in preparing for this and being here with us today.

Thank you also to the Auditor General and her staff, officials of the Department of Health, officials of the House of Assembly who make this all possible and look after us when we are on the road, and members of the Committee for your diligence today once again.

MR. RALPH: Mr. Windsor, could I make one final comment?

MR. CHAIRMAN: By all means, Mr. Ralph.

MR. RALPH: I'm not sure the report made any reference to it but we are very happy to blow our own horn. I think you people should know that this institution has received accreditation for five times. Three year accreditations five times in a row. After going through a very difficult year and last year too with the cutbacks and these kinds of things we again came up with a first-class accreditation. When you consider that we have a board that commits a lot of its time to the hospital and we have a management group, people at the hospital, working under such stress and strain yet coming through with that kind of accreditation, I believe you should commend us. I'm joking, but I mean this.

MR. CHAIRMAN: Thank you very much. On behalf of the Committee I commend you on the excellent performance. I'm sure you will continue.

The Committee adjourned.