The Committee met at 9:30 a.m. in Room 5083.

CHAIR (J. Byrne): Order, please!

I would like to call the hearing back to order of the Pubic Accounts Committee and the St. John's Health Care Corporation. Yesterday we ended at about 12:05 p.m. and we will continue on this morning to see how far we go today. Hopefully we will conclude today, but we cannot say for sure.

Before we go on, can we have a motion to adopt the minutes on the hearing yesterday, November 23, 1998?

On motion, minutes adopted as circulated.

CHAIR: What we can do now is get right back into questioning again. I am sure you are all ready to go. We can go around the table again. Mr. Lush, if you want to start off, (inaudible).

MR. LUSH: Yes. Let me see where I want to start. I want to go back to page 21 and ask a rather convoluted question. I will ask the Sister to comment on whether the implication in the question is logical.

The Auditor General expressed some concerns that the savings of $20.5 million was insufficient in terms of amortizing the debt. As a further preamble to that, I wanted to make the point that I think Ms Young maybe said it, or maybe the Sister, that this was the first instance or the only example, I believe, in Canada whereby we were restructuring and erecting buildings on the basis of savings. That is certainly a creative initiative.

The Auditor General expressed the concern that particularly as the cost escalates there is more of a threat that we may not be able to take care of amortizing the debt, particularly in the way that we thought when in the beginning we were thinking of $10 million to amortize the debt and $10 million back into the health care. You do not have to be a rocket scientist to conclude that if the cost goes up then we have less to go back into health care.

The question I am getting to is this. Since we are doing this restructuring based on savings would the Province not be in a better position, and would the people in the Province not be better served, even if we spent the total $20 million on amortizing the debt? It is a saving we are talking about. Granted, we would have no money left over to go into the health care, but I do not think the government is in the position where they think they are not going to have to put money into health care to improve health care. We have improving technologies, improving medical methodologies, and if we are to move I think it is reasonable to expect we are going to have to put more money into health care.

The question - if you can see a question out of that - is this. Because we are doing this out of savings, if it came to the point, - and we hope that it doesn't - where we had to spend the total $21 million in amortizing the debt, would we not be in a better position now than we were previously as a result of restructuring, were we to come to that circumstance?

SR. DAVIS: I suppose the simple answer is yes. I do not think the concern is about having enough money to amortize the debt, because even at the amount we are looking at now, $130 to $135 million, as Mr. Crocker pointed out yesterday the amortization of that would probably be between $10 million and $12 million over the next twenty-five to thirty years.

The reality is that we have already taken $6 million of those savings and put them back into health care. Not to amortize the debt, but actually put them back into health care. If I can dare to paraphrase the Auditor General, I believe her concern is not that the $20 million does not allow for the amortization of the debt; her concern is that our deficits are going to grow and eat up even the $12 million that we would have set aside for the amortization. That is legitimate.

Your point, Mr. Lush, is very valid. Let's say next year our budget was $300 million. We will say the debt was starting to be paid off and that was $12 million. In order to do $300 million worth of business next year we would actually need $312 million, because the $12 million would have to amortize the debt. If we hadn't closed the buildings we would need $320 million to do the $300 million work because of the fact we would need that extra $20 million to keep the old buildings up.

The reality is that the $20 million has to be seen against the base that is shifting. You are right, that we are in the tertiary care business in our organization. It is the part of the health care system that is most susceptible to change. It is the part of the health care system that has the greatest intensity of technology and every day a new piece of equipment is being invented that improves - marginally probably - but does improve the quality of the health care we deliver. Because we have a national system it is the people's expectation that we are going to have that piece of equipment.

Just to give you a simple example, we need two more cardiologists in the Province. If we recruit to new young cardiologists they are going to expect, naturally, that they are going to have the equipment that they studied on in Vancouver or Toronto or wherever. Any new physician coming into this Province recently trained is going to expect the kind of equipment they were trained on. We have to keep at the forefront in terms of technology. Tomorrow morning there could be a drug finally marketed. It happens. Every couple of months a new drug is introduced into the system that we are expected to have available. I believe genetics is going to explode across the health care system in the next five to ten years in ways that we cannot even imagine. All of this stuff costs a lot of money.

Ms Marshall's point is very well taken, that every cent we could possible save with this indirect stuff we are going to have to put into health care to keep it at the level that people expect, comparable to what they would get in Toronto or Vancouver.

The $20 million is not the issue. The issue is the base the $20 million is built on and whenever that can be sufficient to provide the quality health care in the Province. We will save the $14 million in addition to the $6 million we have already saved. The debt will come somewhere between $10 million and $12 million, I think Cal. What happens to the deficits we are incurring on the other side of the equation, because the face of health care is changing, is a different question all together. Your question is very spot on in terms of the complications here.

MR. LUSH: Mr. Chairman, just following on in sequence, I wanted to come to page 22. The Auditor General has a description there of talking with officials in the Department of Health and reviewing policies and procedures as they relate to the Corporation. When I read what the Auditor General says and then the department's response, I am reading two very different descriptions, I think.

I realize this is not in the purview of the Board, but I just wanted to highlight four of the comments that the Auditor General made. She refers in the first bullet to audit coverage, and says: "Audit coverage is not sufficient and a multi-year plan has not been developed based on risk." In the second one she talks about:

"There are two analysts within the Department of Health who are responsible for monitoring the operations of all health care facilities in the Province; however, there are no standardized procedures to provide guidance to the analysts in the monitoring of health care facilities. Rather, reliance is placed on staff knowledge...," and so on and so forth.

In the third point it is noted that there are "...inconsistencies in the data submitted by health care facilities..." The last one says: "There is no formal manual in place which consolidates all departmental policies and procedures..." and so on.

In the Corporation's response they did not think that it was so inconsistent as maybe the report is suggesting. You talked about the MIS. I just wonder if you could comment on that general criticism levelled by the Auditor General, and to explain to the Committee the MIS, what that is, and whether it addresses any of the concerns raised by the Auditor General.

SR. DAVIS: Certainly I cannot comment on other organizations vis-à-vis the Department of Health. It would be just our organization.

I can understand, from our perspective, why the Department of Health would have trouble understanding us in our first year of operation, because as you know we had no experience in this Province of a change of that magnitude. As of one second on midnight March 31, 1995 we went from no responsibility at all, but six boards running St. John's hospitals, to one board running St. John's hospitals. Within that micro-second that switch happened, and therefore the first two years we were trying to get all our system statements consolidated. I can certainly understand why the department would not be getting consistent data from us.

However, there is a big question here that is not unique to Newfoundland, not even unique to Canada. Health care information systems are very unsophisticated, given the sophistication of the business we run. I would think, approximately next to the military, or probably even on par with the military, we have more sophisticated technology, more sophisticated procedures, more complex numbers of health care professionals, than any other industry in the world, but we are an old industry just the same. We are still, across this world, doing health care by traditional means. It is like our business practices were second. We were seen as a service industry, serving the needs of people, and we weren't so conscious of the fact that we were running multi-million dollar businesses, billions of dollars in Canada for example.

Our regional board, for example, in this Province, is the largest industry in this Province, next to government itself. There are times during the year when we actually have more employees than government does. We have never thought of ourselves in that light before. At Edmonton, for example, is the largest industry in Alberta, next to the government and Canadian Airlines. That is the magnitude of the businesses, but we never saw ourselves run like a business.

In recent years - in the late seventies, early eighties - we were starting to realize we could not keep running health care facilities in Canada the way we had been doing all along, that we had to come into the computerized information age. So the federal government commissioned a group to begin to help us do that, and that group developed these guidelines which they call Management Information Systems Guidelines. These are guidelines that cover all the business that we do, everything from the way we pay staff to how we count work done by staff, to how we count units of care, the cost of units of care. So it was a massive undertaking, done in the mid-eighties. St. Clare's Mercy Hospital, at the time, was one of the twelve test sites across Canada. By 1990, there was a set of guidelines that had been validated that are now used right across the country.

Early on in the process, most of the hospitals in St. John's had agreed to comply by these guidelines in their financial systems. However, it was not until the mid-nineties that all of the hospitals in the Province agreed to do this, and by then we changed. While there were single hospitals agreeing to comply with the guidelines, a single hospital is very different than (inaudible) West, for example, that runs hospitals and nursing homes, so we had to shift gears again in the mid-nineties when we became regionalized.

Our Province is one of the provinces that has the highest level of commitment to having all of us report by these MIS guidelines, but it has taken us time to shift gears with the new regional structures.

One of the problems - theoretically the MIS province does not have to be computerized, but it is really hard to do it if they are not computerized, and computers cost a lot of money. As you know, we were fortunate in the hospital side in Newfoundland that we all chose the same software, Meditech software, but what we did with Meditech software was each customize it. So even though our (inaudible) facilities all had Meditech software, they were all using it in a totally different way. It took us our first two years to consolidate our approaches for our finance and human resources.

While the MIS guidelines are there across Canada, while our Province has a commitment to abide by them, we are learning how to do that; and our learning is hampered by the fact that we do not have the resources to buy the computers and software that we really need to implement this.

The good thing we have going for us, though - which we also note in our response - is that the Province has put in place a Newfoundland and Labrador Centre for Health Information. That new entity has, as its mandate, to help all of us standardize our approaches to our systems. I believe that if that centre is appropriately funded in the next five years, we will be able to reach the ideal which the Auditor General has said: that we are all reporting in the same way; that what we are counting as apples are truly apples and what we are counting as oranges are truly oranges, that our clinical systems are connected with our financial systems in a sensible way, a businesslike way, but it is going to take us another five years to get to that point.

Having said that, though, we know the Department of Health in the past two years, for our organization, has reviewed us twice: once through the Budget Review Committee, which Mr. Crocker spoke about yesterday, and then more recently a team from the Department has come in to review what we are doing.

We have been making major strides in the past two years but I believe, realistically, it is going to be five more years before we are truly consistent, compatible, across the Province. If we do that, we will be the first province to have done it, by the way, because no other province has it any better than we have it today.

I am sorry for that long answer but it is a complicated issue.

MR. LUSH: That is okay.

On page 26 - my final question for now - more on page 27, really, I was delighted to learn that the Corporation conducted a survey of its board members and you had just about an 80 per cent response. Thirteen out of seventeen board members responded to your two questionnaires. From the survey it looks like the board members were fairly pleased with the way things were going, the way the board was conducting its business.

The question I would like to address, though, is the conclusion on page 27. It says, "Several Board members expressed concern about the level of health care funding provided by Government to the Corporation and the Corporation's ability to balance public expectations for quality health care with the level of funding provided."

I am just wondering how that came about in the questionnaire, whether there were specific questions asked to address that. Because my feeling on this is, this is an important role of the Corporation to determine what are the financial needs to meet servicing the public, giving them good health care in the St. John's region, and to rationalize those expenditures to government.

I get the impression here, almost, that we are unhappy with the money that has been given us up front, kind of thing. I see it the other way. I see the Corporation determining and rationalizing what indeed are the expenditures, making that presentation to government in the hope that they will give you what is needed.

MS YOUNG: I will begin a response to that. Those two questionnaires were given to the board by the Auditor General's office. We do our own yearly board review and (inaudible) and all that. The response that we are referring to on page 26 was the two questionnaires. Thirteen of the seventeen board members, as you noted - four people did not respond. We spoke to the Auditor General about that because some people were not happy with the questions, so rather than respond negative they said: Look, I am too busy to do this.

The thirteen people who did respond, and in discussion with the other four at the board meeting, the board has been very pleased with the way management is running the Health Care Corporation. Yes - not several - all members of the board believe there is not enough money to do the business we are expected to do, especially by the public.

If government should decide that they want to dismiss a service, we would go along with government's wishes. However, the board has made a decision and said to management - and I, myself, to government - that we will not take a service out of the Health Care Corporation. We will not say tomorrow: We are not going to do any more dialysis; dialysis will go on in Halifax.

If government wishes to save the money and take that out of the system, that is their prerogative; but that is not in our mandate. Our mandate, as you know, is to take the money that we have, do the best we can with it to be responsible to the public and their expectations; and, as hard as we work, there is not enough money.

Is that the answer you wanted?

MR. LUSH: Yes. The only thing I see here is, again, I would have thought one of the tasks of the board would be to, as I said, determine and rationalize what the costs were and present that to government. Hopefully, with your expertise and knowledge, they would conceive that yes, you need this money.

In this questionnaire, it comes out to me that we were putting the cart before the horse; that we expected the money - government gives us a pot full of money now and we will...

SR. DAVIS: Just to add maybe to the question as Ms Young has expressed it, every year we present a detailed budget to government which is done with the involvement of all of our programs and departments. They are very much involved in that. Our budget documentation is extensive. We never just present figures; we always present it in the context to what the needs are.

The Budget two years ago - if you remember, Mr. Dicks, the President of Treasury Board and Minister of Finance, had a public consultation that we were very much a part of, again outlining explicitly the needs of the tertiary care and rehab centres that we run.

One thing we felt it was important that we would do, though, is make sure that we had done everything possible to reduce expenditures in non-direct patient care. As we said earlier, the reduced positions we have had in our organization have been in management and support services. We have consolidated all of our administrative and support functions.

What we have done, then, is made sure that all the savings we are capable of making have been made. Then, with that, we have gone to government saying: This is the situation that exists.

In fairness to the Department of Health, they have come in with those two views to make sure there is nothing big that we have overlooked. They said to us point blank: There is nothing that we can see in your organization that you need to be doing differently in non-patient care areas, so that is not a bone of contention between us.

It would be totally impossible to give us enough money to satisfy the expectations of the public. That is not just us. We recognize that across the country. I think the reality is, we cannot provide the clinical services we are providing today without the deficit that we are incurring this year.

Government still has not allocated $10 million for this year so we really do not know what the final position has been. We have said to government that we are going to incur a deficit of some of that $10 million that is not allocated to our organization because we cannot see anything more that we can do over and above what we have done. That is on the operating budget side.

The board has expressed concern to government, and continues to do so, and also concern about our capital equipment budget, which is a separate budget. The one thing about our business is that the technology is getting increasing sophisticated. Every year, new equipment is being introduced and we do not have nearly enough funding in this Province to support the capital equipment that would be on par with most other provinces in Canada.

MS YOUNG: Excuse me. Just to finish up that, in fact, the board asked a couple of months ago for management to bring forward the request for capital equipment this year, and we put it on the wish list and the needs list. We have two lists. What they wanted was gold and what they could afford was the Volkswagen. I think the wish list was $25 million but the need list was $12 million or $15 million, and we are going to be able to give them how many hundred thousand?

SR. DAVIS: One million (inaudible).

MS YOUNG: One million. They would like $25 million to keep current with what is going on in Canada - not the U.S., Canada. That is not for extraordinary things at all; that is to just update the services we now provide. We said: That is very good. That is your wish list, now come back and give us a definite need list.

In every program, in every department, the doctors and the nurses came back and worked and worked and brought it down to $14.15 million. All we can give them this year is $1 million. That is frightening.

MR. CROCKER: The other thing on that is, we just completed a five-year capital equipment projection for the Health Care Corporation in terms of all of our program and corporate departments involved. That comes out to about $60 million over the next five years as to what we would require in capital equipment purchases just for the Health Care Corporation.

CHAIR: Thank you.

Mr. Lush just asked a question, the very next question that I was going to ask, but I wanted to get a bit more into the nitty-gritty of it. In the reports I read that - I have my numbers wrong here now - with respect to downsizing of beds, oftentimes you will hear a response that the beds are full. Yet, I have been over to the hospital on a number of occasions, many times, walking through, and empty bed, empty bed, empty bed. On one floor, one evening, I counted eighteen empty beds. Yet, I am told the hospital beds are full. I have a concern with that.

I think the answer is, and sometimes we might be playing with words, beds that are allocated to be open are full, not the hospital beds. That is a bit of a misconception for the public.

Community health; I think there is a direction of moving more towards community health, and oftentimes I have heard - we have gone that route, but we have to put the money into it to do a proper job. That all gets back again to the public expectation versus the funding.

Would you like to comment on that? Because I have another question that is directly related to that as soon as you answer the question.

SR. DAVIS: In the first three years of our existence -

CHAIR: I am sorry for cutting you off. The figure I saw, I believe, was that the number of beds were cut from 1,160-odd down to 900-and-some odd, so it was over 200 beds.

SR. DAVIS: The first question on beds, you have really answered yourself. We have more capacity for beds in the system at the present time but they are not allocated to be open. We have reduced the number of beds we actually use in the system. That is a trend across the country, across North America, really.

CHAIR: Does that make it right?

SR. DAVIS: The reality is, we are trying to stop measuring acute care, quality acute care, by the number of beds we have. There was a time when all the acute care we did was through in-patient beds. Today, one of the good news stories about technology is that lots of things we used to do by in-hospital we can now do as out-patient, which is much better for patients. Hospitals are not safe places to be. The chance of infection in a hospital is obviously much higher than in your own home.

For example, we all know that our relatives who had cataract surgery ten years ago would be in hospital for ten days. Today, if you get cataract surgery, you do not come in hospital any day; you just have your surgery done as an out-patient.

Gallbladders, for example, used to require seven days hospitalization. For most gallbladders now they are done, at worst, for one overnight. The technology has changed, how we provide health care, and we are reducing beds to accommodate that.

The reality is that the beds in our system, for example, are not occupied only by people who need to be there. We have, at any one time, thirty to fifty beds in our organization that are occupied by people who do not need to be in hospital but an appropriate place for them is not available right now. We call them and assist those patients, medically discharged patients, meaning they are patients who could go into a nursing home or back to their own home but for some reason that cannot. They kind of stay in our hospital waiting for that to happen. That is one of the issues we are facing.

We have enough beds in the system to provide quality health care if the beds were able to be used properly. We are still bringing people in a day or two sometimes before surgery when actually they could come in on the day of surgery. They do not do anything except wait that day or two before. Our systems are improving to help us get better at that, but even at that the length of stay of patients in our hospitals would still be slightly higher than many places across the country.

From the bed point of view, we have enough beds but we are not always using them appropriately. That is why you get the beds being too full, as we rightly point out. The technology is going to help us change that. Also, how we use nursing home beds has to change so we can do that.

The link with the community health board is a really important link because if people are going to be getting service in their own homes that has to be funded too. The first three years of our organization we transferred $1 million a year to the community health services, but it did not actually go into services that would reduce the stress on us. It went into necessary services, but not areas that would reduce the stress on our beds. Right now, for example, we in community health are looking at a home IV program. Some people need IV treatment on a regular basis but they do not have to get it in hospital if they could safely get it in their own homes. The problem with that is if they get it in hospital the hospital covers the cost of the drugs. If they get it in their own home they have to pay for the drugs themselves.

Most Newfoundlanders could never afford that kind of expenditure. We are working with the Department of Health to try to come to a way within the Canada Health Act - that is the problem on this one - where we could fund the drugs from our budget even though they get the care in their own home. We are doing that. The Department of Health, ourselves, and community health are working on that together.

CHAIR: That is a good point you make, because I remember a few years ago I was on a needle three times a day and it was costing $1,500 a month just for that one drug.

SR. DAVIS: Any IV drug treatment is very expensive.

CHAIR: You brought up a point there when you talked about the length of stay in hospitals. I have heard on many occasion that people have major surgery, are sent home, and are back within a few days with major infections. What impact is that having?

SR. DAVIS: I do not think that happens frequently. That will happen occasionally. We have special programs in our hospital called infection control programs to monitor that to see if that is happening too often, or is it kind of happening at a standard level, and is it happening in a certain area more often than others. Compared to across the country our patients stay longer, so we are certainly not on the small side of that equation. We start and keep people longer than you would stay in hospital in Toronto or Winnipeg.

CHAIR: Just one more question before I move on and that has to do with salaries, which is the biggest expenditure. You have pointed that out a number of times since yesterday. There has been down sizing. You have already said people have left a number of positions. (Inaudible) come up with a figure. I kind of touched on this yesterday. In my mind, from the beginning of your restructuring to the end, you must have a number in mind of jobs gone out the door but you haven't got that figure. In the meantime, there has been a decrease in the number of positions.

SR. DAVIS: Very definitely.

CHAIR: Definitely. From what I can see there has not really been a decrease in the expenditure for salaries. To me, there are a lot of nurses being called back, that type of thing. I do not know if they get paid overtime or whatever the case may be. Would you like to address that concern?

SR. DAVIS: First, the first part of the question. The decrease in positions has been on the support staff side. We had increased positions on the direct care side. I think you always need to keep that in perspective.

CHAIR: Okay.

SR. DAVIS: We have more nurses working in our organization today, for example, than have ever worked in our facilities in St. John's, but we have fewer finance people, fewer managers, and fewer housekeeping people. The numbers are changing in balance, the total number is not changing very much, but where the positions are decreased and where they are increasing is the change.

The second question you asked me is related to the call back of nurses. That is a very important issue for us, an issue that, again, is not uncommon across the country, and that is the use of casual nurses to be called back to fill positions. We will always need a significant number of casual nurses to call back. Our sick days are very high. We have, on an average, in our organization fifteen sick days per person, and it is a bit higher in nursing. We will always need it because nurses have to be replaced. We would have to replace for sick days. We have sensible, I think, rational annual leave benefits, but many of our nurses have been with us a long time and so (inaudible) get from five to six weeks holidays every year. They will need to be covered for that period of time. We also have family leave days, as you know, three days a year, and we have compassionate leave. As our staff get older, obviously the number of compassionate days they are going to need increases. We have a significant number of days that have to be replaced for every single person in the organization.

Having said that, though, we still have too high a number of casual nurses in our organization. Not as high as it would appear, because we would have to keep casual nurses to replace these other positions. We are working with the Nurses' Union - we were before the negotiations began and now we are working through the negotiations - to try to find ways to convert some of those casual positions into permanent positions. I think I indicated yesterday that we could see that as high as seventy-five full-time positions in our organization over the next couple of years.

We have also the support staff which feel they need to take such sick days. We have just introduced an occupational health service into the organization. We contracted with an occupational health physician and he is working with the unions and with our managers to see if there are ways we can support staff differently so that they will not feel it necessary to take so many sick days. So we are looking at that as well.

CHAIR: I worked in government a number of years ago before I got into politics, and there were fifteen days at the time or whatever it was, sick leave days. The attitude was that they were holidays, they took them. (Inaudible).

SR. DAVIS: We have twenty-four days a year entitlement now which is a good entitlement. I think staff though do not consciously abuse sick leave. I believe staff - first of all the work is hard, so people get physical issues related to the hard work they are doing. Also, there is a considerable stress in all our social systems, not just health care, and people are affected by that stress.

The other reality is, 80 per cent of our workers in the clinical side are women who have families and therefore they are caring for children at home and they are also caring for elderly parents at home. So they are often caught in situations that make life very difficult. There are lots of stresses in our system and that is why we have introduced the support through the occupational health system that we have brought in. We also have a very good employee-family assistance program to help staff who are facing those kinds of difficulties.

CHAIR: Ms Marshall, would you want to comment on the salary situation?

MS MARSHALL: Sure. When I did my audit work at the Corporation I was trying to get a handle on whether salaries had in fact decreased because the Corporation had gone through some down sizing initiatives. As you indicated earlier - and it is shown on page 43 - when we compare 1995 and 1996, what that analysis indicated was that the total salary dollars had in fact not gone down, had not been reduced.

The other issue which arose during our work on salaries is that some of the information - what I was trying to do was track what was happening to salaries over a several year period. I wanted to look at, for example, the budget, the revised budget and the actual salary figures for several years so I could see how the salaries were increasing or decreasing. Some of that information was not available at the time that we had done our review, and as a result that part of our review was inconclusive.

CHAIR: Thank you.

SR. DAVIS: That was obviously a factor of the fact that we went, as I said, at midnight on March 31, from six independent organizations to one organization. Subsequent to the review, though, that work has been completed.

CHAIR: The simple logistics of putting it together caused the problem.

SR. DAVIS: For 6,000 staff.

CHAIR: Any other Committee members with questions?

Mr. Smith.

MR. SMITH: Thank you, Mr. Chairman.

On page 48 of the briefing document there is a reference to subsidies that were paid to palliative care unit positions, and there is a figure of $50,000. The Auditor General's office in its review picked this up. Could you just address that first of all? Then I have a couple of follow up questions because that leads into a broader thing, from my perspective. Could you speak to that first of all, that (inaudible)?

SR DAVIS: I know about this from my former life as well as my present life. Palliative care is a unique service in the Province. As you know, that is a service provided to persons in terminal illness. The only palliative care unit, as a unit in the Province, is at St. Clare's Mercy Hospital. That is staffed by family physicians who have regular work in the community as well. Our MCP budget did not have a recognition of this group of people, so they did not have a fee schedule that was able to address this kind of work because it was such a small amount of work compared to what is done in the medical budget. St. Clare's, who had that unit, had made a separate arrangement to pay a subsidy to the two physicians at the unit.

You can see it is not a large amount of money to start with, and these physicians have to be available twenty-four hours a day because these patients are dying. It is not like other kinds of illnesses. St. Clare's had started that process and, under the Hospitals Act, we were bound to abide by the agreements that were in place prior to our taking over.

What we have done, subsequent to this, is tried again to get the palliative care matter addressed; but, as you know, there has been considerable negotiation with the physicians in the last couple of years on the bigger issues. The palliative care issue is not one they are going to spend time at, at this point in our history, so we will be renegotiating with physicians to slightly reduce the amount of the subsidy. We are still paying the subsidy there and we will be paying it until we finally get the Memorandum of Understanding between the Province and the physicians resolved, the allocations done, and then get down to very small services like this one.

MR. SMITH: Are there subsidies being provided in any other areas?

SR. DAVIS: No. In our organization we have had contracts with a number of physicians, particularly psychiatrists, because we had such a job during the 1980s recruiting psychiatrists to St. John's. We do not pay any subsidies now for clinical work, to our physicians; however, we pay subsidies for administrative work which is new work for a number of our physicians (inaudible) our programs.

Mr. Crocker, did you want to comment on that a bit further?

MR. CROCKER: In terms of the actual subsidies, the process in place in terms of program management, I guess there are two leadership people involved. One is a program director, which is our staff physician, and the other one is the clinical chief. That clinical chief is given a subsidy for the administrative work that they do. That ranges anywhere from a day a week, to two or two-and-a-half days a week. The subsidy is based on how much time they actually spend in there.

With respect to the psychiatrist, I guess particularly when the Waterford Hospital was independent, we did have some contracts for psychiatrists because it was the only way that we could recruit psychiatrists to the St. John's area. The Waterford was pretty successful in terms of picking up three or four really good psychiatrists for the Waterford Hospital.

At this point, I think there is still only one contract in existence from that set-up that I can recall. Again, most of those arrangements have gone by the wayside in terms of the people moving on or moving to their own independent practice.

MR. SMITH: The subsidies in question here, that are still in place, are they basic figures that are set by the Corporation or something that is negotiated in terms of (inaudible)?

SR. DAVIS: For the administrative, we just took set rates. They are only subsidies. It would be nowhere near the amount of money they would make in their practice. That is for the administration work the physicians do. The clinical work, we abide by the fees that are set by the Province, which are now being negotiated through a Memorandum of Understanding.

We did, for one period, increase the payment to our emergency room physicians pending a resolution of the emergency room fees because we were losing our emergency room physicians and could not keep our emergency rooms open. The board made a decision for a period of six months that they would pay an extra fee to those emergency room physicians just to enable us to continue to provide the service. We do not pay that now; that was just for that six-month period because, as you know, the emergency room physician rate has increased.

MR. SMITH: That brings me into another area. I think we are all, in this Province, very much familiar with the difficulties we are experiencing in the rural areas in terms of recruitment of doctors and health care professionals.

I heard you mention one specific area earlier this morning, that right now the Corporation is in need of two new cardiologists. I guess that is certainly one field that gets an awful lot of attention in the media on a regular basis. Certainly the Opposition are pursuing it regularly in the House. I think it really captures the attention of the people of the Province generally because obviously it is such a - especially in terms of cardiac surgery. Just talking to the recruitment of doctors generally, first of all, do you do your own recruitment? Are you involved directly in the recruitment?

SR. DAVIS: Yes and no. The Province, through our provincial health care association, has a physician recruiter. We would use that person for some of our physicians; but you know that in our organization most of the positions are high level specialists. They really recruit their own people because they have - for example, orthopaedic surgeons; they have a network of orthopaedic surgeons across the country. They have links with the residents in orthopaedic surgery in medical schools. So the program of surgery would really focus on recruitment in those speciality areas.

For our emergency room physicians, for example, while we work with the physician recruiter at the provincial association, we also do a lot of that through our vice-president of medical services because, again, he is the physician who is familiar with the physicians who would be available. We don't spend a lot of money on recruitment. We do it through the networks that we have in place.

We also have responsibility, though, for recruiting, for example, for Ferryland clinic. There are two salaried physicians in that community health centre in Ferryland, the Shamrock Health Centre, so we are responsible for recruiting in that area as well. Again, we would do that kind of recruitment in conjunction with the physician recruiter at the provincial association.

It is a combination of using the provincial association for those areas where they are skilled, and using our own people for the areas where they would have more contacts across the country.

MR. SMITH: In terms of recruitment generally, would you say that the Corporation has difficulties? You mentioned that cardiology is one area, but are there other areas where there are concerns?

SR. DAVIS: We are only 550,000 people in this Province so we don't have large numbers of any single speciality. For example, neurosurgery; we have three neurosurgeons. They would have seven in Halifax. While we have three that's great, but if one of those goes then all of a sudden we have a major issue; whereas if one leaves Halifax, that is not a big issue because they have six who can cover.

When you have high level specialities with few physicians in them, there always is an unease. Now we have been very fortunate in this Province that we have been able to keep core groups of specialists; and that I would say, without any hesitation, is due to the fact that we have a medical school here. So we are not in a crisis in terms of recruitment of specialists at this point in time but because the numbers are so small - we have three cardiac surgeons. With very small numbers like that you are never totally comfortable, but we have been very fortunate in the Province.

We were concerned for awhile about our emergency room coverage. That was our biggest crisis, rather than the speciality areas. Again now, thanks to very aggressive recruitment on the part of our vice-president of medicine we have good coverage there; but again, the wrong move - through the Memorandum of Understanding that has now been allocated, we might lose people there. So you are always unbalanced, you are always anxious, but at the present time, as far as specialists go, we are not in crisis.

MR. SMITH: In the area of recruitment - and you mentioned specifically cardiologists - the fact that we have two openings here right now, is that primarily due to the fact that there are not a lot of specialists available? Or is it a reflection of the remuneration which such specialists can expect to receive in this Province?

SR. DAVIS: Well, I use the example of talking about new people coming back and how they are going to want the kind of up-to-date equipment that they trained on. We have a fair number of cardiologists, so at any one time we could be recruiting one or two. That is not a crisis; it is just an example I was using.

Remuneration is a question. We do not pay comparable rates with Toronto, for example, or Vancouver, and not just for physicians. We do not do it for other health care professionals either. That is an issue. The small numbers mean they have more call. If there are only three neurosurgeons they are on call one in three nights, whereas if there are seven of you, you are on call one in seven nights. They work harder, I believe.

On the other side of the balance sheet, it is a good place to raise children, there is a strong community feel here, and lots of Newfoundlanders want to come back home to do their practice. It is a give and take. You lose on some sides, you gain on the other. We have to be constantly aware of that balance in our system.

MR. SMITH: If I could, with regards to cardiac surgery, the waiting list, what is happening there now? Are we making any inroads? This comes up regularly. Are we gaining or are there moves underway to try to address that whole situation?

SR. DAVIS: We are constantly trying to address the situation. We are in a fortunate position in our organization in that we have very low waiting lists except for cardiac surgery. We did major renovations to accommodate more patients. We were successful in recruiting a third cardiac surgeon. Once we had all those pieces lined up, two of our four profusionists left the Province to go to jobs that were higher paying in Ontario. It is such a complicated work, cardiac surgery. It seems that as fast as we get one piece fixed then another piece is in trouble.

Profusionists are a good example of specialists. Not physician specialists, but specialists on the other side of the equation who are scarce across Canada. Therefore, they can pretty much go anywhere in Canada they want. Government supported us in increasing the salary for profusionists, but again there is not a number out there looking for work. What we have done is gotten positions in the training program for two people who are going to do that training program and have a commitment to come back to work here.

Again, in the interim we are working with what we call local profusionists, people who come from outside and work a week or two weeks every couple of months with us. That is not satisfactory, but it is enabling us to stay, at least, to ten a week. We really need to be at twelve (inaudible) to be doing the numbers that we would have to be planning to do. Until we get up to the four profusionists again we are only going to be able to do twelve (inaudible). Because of the kind of work they do, they have a limited numbers of cases a week they are allowed to perform.

MR. SMITH: Right now, in terms of the wait for this procedure in this Province, is there a significant difference in what is happening in other jurisdictions in this country?

SR. DAVIS: Yes. Some jurisdictions would have longer waiting lists or as long as ours, but most jurisdictions would have shorter waiting times.

MR. SMITH: There is just one other area, Mr. Chairman, that I would like to pursue just for a few minutes. You have referenced the medical school, and the fact that we have a medical school here is attractive in terms of some of the specialists who want to come in. One of the things I had noted and I was just curious about is in terms of the relationship between the Corporation and the medical school. Because obviously there is a connection there. Do you want to speak to that as to how that operates?

SR. DAVIS: Yes. The medical school, as I have said, is an essential part of our doing our business. We would not be able to recruit the kind of specialists we do without a medical school here, and I have no fear of any contradiction on that. Our relationship is symbiotic, to say the least about it. We share the same space. The medical school is part of the building that the General Hospital is; as you know, the Health Sciences Centre.

All of our physicians have joint appointments. They are appointed by us, they have privileges in our organization to provide clinical care, but they also have teaching appointments from the university. Some are full-time teachers, some are part-time teachers, but they all have teaching appointments. Every physician in our organization comes in to work with us with the expectation they will do teaching of medical students. We have medical students, interns and residents who go through our facilities. They provide service and we provide the educational setting for them.

At the governing board level we have a joint liaison committee where the Chairperson of the Board of Regents, plus the President of the University and the Dean of the Medical School, meet quarterly with the Chairperson of our board, another board member and myself, and our vice-president of medicine.

At the administration level, my senior team - there are six of us - meet with the Dean of Medicine and his senior team every six weeks. As well, each discipline in the medical school - there are nine disciplines: medicine, surgery, obstetrics and so on, there are nine of those groups - each one of them is lead by a chairperson, called a discipline chair. Those discipline chairpersons sit on our medical advisory committee.

We have a very tight relationship with the medical school. Our own accreditation process commended the relationship, and the university's accreditation process has also commended the quality of that relationship. Neither one of us could exist without the other.

MR. SMITH: In terms of the actual operation costs of the facility itself, this is borne completely by the Corporation, or does the university contribute towards it as well?

SR. DAVIS: No. We have a shared services agreement with the university. We provide some things for the university and the university provides some things for us. For example, we provide housekeeping for medical school but the university provides security services for us, so it is (inaudible). I talked yesterday about the boiler plant. We share the same boiler plant and we each pay our share of that cost. The university owns its own part of the building, we own our part of the building, and then we share some rooms jointly. We have teaching spaces in all our hospitals for the interns and residents. The medical school pays for its own existence, we pay for ours, but then we have some joint shared payments as well.

MR. SMITH: Thank you. Thank you, Mr. Chairman.

MR. LUSH: Ms Thistle, MHA for Grand Falls-Buchans.

MS THISTLE: Thank you, Mr. Vice-Chair.

I would like to ask the Committee to go to Volume II, actually. It would be page 136. I am wondering what preparation has the Health Care Corporation made for the year 2000 with regard to your computer systems.

SR. DAVIS: I will start to answer that now and let Cal answer it in more detail because it falls within his purview.

MS YOUNG: The board (inaudible).

SR. DAVIS: Do they?

The year 2000 affects us wherever we have computer systems that have microchips that are date and time sensitive. Some of our computers are not time sensitive, but any computers we have where the time is important - for example, we might have a piece of equipment in one of our Intensive Care units that needs preventive maintenance, and if it is not done by a certain date then the machine just stops, it won't keep going. What is going to happen on January 1, 2000, is the computer is going to think it is 1900 and we have not done preventive maintenance for one hundred years, so the machine is going to shut down.

There is an easy and hard part to the challenge of the year 2000 for us. The easy part is where we know for sure those kinds of things are built in. For example, our information systems. I mentioned earlier that one of the things we had done in the Province is we had all agreed to go with Meditech Software. Meditech was one of the few software groups that had a capacity to deal with the year 2000 with an upgrade. We have upgraded to that. On the computer system side, the information side, we should be okay.

The problem with our equipment is that we are not sure which pieces of equipment are sensitive to the time date and which are not. That is not unique to us, obviously. We are working internally and we are working with suppliers to make those corrections where we can. Identify them first, and then make the corrections where we can.

Provinces like Alberta have put, now, $300 million into solving the Y2K problem for health care alone. So has Ontario. One of the sad benefits we have here is a lot of our equipment is so old it is pre-computer chip, which means it does not chips in it, which is on one side of it, but a lot of our equipment does. That is the second piece.

The third piece is the people who supply us. For example, the electrical company, hydro, the water supplies, and so on, they are also working out of computerized systems. We cannot tell Newfoundland Power what to do, but we obviously have to have links with Newfoundland Power to make sure we are not going to go totally black at midnight in the year 2000.

The further complication, as I understand from Cal and his people, is that most of us thought the year 2000 was not a leap year, and now we find that somebody forgot the calculation, that it was divisible by 400 not just four. Because 1900 was not a leap year, 1800 was not a leap year, 1700 was not, but 1600 was. Most of us did not know the rules about leap years, including the brilliant scientists who built the computers. That is another problem. Now we are wondering - Cal told me recently -, we do not know if September 9, 1999, might be a problem.

Another problem we are encountering is that as we start to test some of the equipment for the year 2000, once you test it sometimes you cannot get it back to 1998. There are a number of those issues. The Board has commissioned our planning committee to be the committee that oversees what we are doing. Now, I will ask Cal just to tell you the process we have in place to deal with all of that complexity. Cal?

MR. CROCKER: We do have a Y2K committee in place at the Corporation that we set up last year, and it reports through to a corporate team and to the planning committee of the board. We are concentrating on three main areas. One is the IS area, which is a big area for us in terms of our systems. As Sister said - I do not know if we are lucky or if we are good - we have the Meditech system. We are currently going through an upgrade from version 4.4 to 4.6 which we will have done by June 1999, and that makes us year 2000 compatible.

That Meditech system represents about 90 per cent of our computerization. We are fine on the IS side, whereas most provinces in Canada have a major problem with IS. We will not have it. Most things outside of Meditech are just something desktop on PC. If a date came out wrong it is not a significant problem for us. We feel pretty comfortable on the IS side.

Facilities management is another big area for us, because everything like elevators and fire alarm systems, and the auto-systems that are installed on your boiler plants and everything else, are certainly controlled by computers. We are now going through a process to ensure that that is year 2000 compatible. Our newer systems we know they are, in terms of the ESCo we are doing through Honeywell now in terms of our new boiler plants, our new lighting, and things like that.

There are some issues with the old fire alarm systems and the old elevator systems that we have, and we are just working through that process. So far we have incurred some problems. They have not been expensive problems to fix. The fixes are after costing us about $50,000 to date. It is not a big issue.

The big concern for us is the medical side of it. We did an inventory through bio-medical engineering. We have about 5,600 pieces of equipment that we will consider over on the medical side, of which there are about 1,300 different components. It is a big area. We have our bio-medical engineering department now going through a process of tagging every piece of equipment that we have and putting it in categories, as opposed to: Is it high risk, low risk, medium risk, in terms of if something does happen.

Our process will be anything that is a high to medium risk will certainly be tested and fixed before the year 2000. The low areas we may or may not get done. Our plan is to get it done, but we are certainly going to concentrate on the areas that we have. So far it has not been a big expense. In terms of the Department of Health looking for some information, we had estimated that Y2K issues would cost us about $500,000 this year. It will probably cost us that in terms of fixes, plus the staff time we are having to put in on this.

CHAIR: Excuse me. It is now 10:45 a.m. Could we probably take a ten to fifteen minute break and then we can continue at that time?

CHAIR: Ms Thistle (inaudible). Lose her turn. Okay, let's move on. Mr. Whelan, do you have questions?

MR. WHELAN: Just one, Mr. Chairman. I was just wondering if you could probably walk us through, not in any great detail, the move of the children's hospital at Pleasantville, the Janeway Hospital, to the Health Sciences Centre. I was just wondering how you plan to integrate it, to what extent it should be integrated, and things along those lines. Could you just give a general overview of how you plan to operate that facility?

SR. DAVIS: When the decision was made to close the current Children's Rehabilitation Centre and the Janeway Child Health Centre the first decision we made was we would integrate the rehab services and the acute services because the children in rehabilitation use acute services as well. That was our first decision.

The second decision we made was that we would not integrate the children's services into the adult services. There was a sensible expectation of the public that children have different kinds of health needs than adults and therefore they should be treated separately from adults by staff who are used to working with children. That was the second decision.

The third decision related to that then was this. Even though we would not integrate the services, we have fewer and fewer children as you know in this Province, which is sad, but we do have fewer and fewer sick children, which is good. The high level of service that we have for these children, we really need to link that with the high level of service for the adults. There are certain kinds of equipment, for example, like the MRI, that we could never afford just for children but children need access to it.

We said that what we need to do is create a new building that links the high level of service for children and adults but allows us to provide service separately for children. With that as kind of the mind-set then we set about designing the building. The building will be separate architecturally. In other words, when you drive around that complex you will be able to say: This is the children's part. You cannot do that today, for example for the medical school or the School of Pharmacy. They are all like one lump there. The Janeway itself will be separate, it will be identifiable as a separate kind of architecture. When a child needs to come to the Emergency at the Janeway they will come to a separate emergency department than the adult emergency department. They are far enough separated for that.

Now to the children's rehabilitation service. There are about 1,000 children at any one time in this Province who have chronic disability and would need to use that service. The lower levels of the facility will be used for that. That is one of the reasons we have the underground parking, so that the parents don't have to wheel wheelchairs during snow or rain across the parking lot.

The main levels of the new centre will link with the adult hospital for the obstetrical area. One of the strong reasons for putting the two facilities together is that when a baby is born sick - and very few, thank God - but the ones who are born sick, if they are really sick, they need to use the Janeway site. So what will happen at the new site is that the place where the mothers would give birth is in the new building; the intensive care unit is in the new building, if the baby needs intensive care. If the mother needs to stay in longer, or come in earlier, then the beds for that service for the mother would be in the main part of the General Hospital building. That link is there and you will be able to go right across. If the mother is in hospital she will be able to go right across to see her sick baby. That is that situation.

The in-patient and out-patient areas are all separate for children, and their staff will be staffed with children services. Things like housekeeping - the housekeeping staff will be shared, obviously, with the General Hospital and so on. Some equipment will not be shared; it will be dedicated just for children. Some equipment, like the MRI, there will be certain days the children will use it and certain days when it is used for adults. When it is used for children it will be staffed by people who work with the children. That is, kind of, the concept.

The building will be finished - it looks realistic now - by December of 1999, because of the good weather last winter and because the same contractor got the second contract, which meant we did not have that in-between learning curb again. The work is going well there at the site and it is coming in on budget so it is realistic, I think, to say we think it will be finished by December of 1999, barring something very unfortunate. Then you commission that when you decommission the old one.

Then, depending on the winter, that winter we will begin the moving process. The moving process will require us to have, for a short period of time, two buildings operational. We will have to keep the Janeway open as we open the other building and then do the gradual movement, with probably the easier moves first, outpatients and those things.

At the same time we will be moving the women's health service, the obstetrics and gynaecology service, from the Grace to the adult site. That process is going to take several months. It sounds like we should be able to do it more quickly but realistically taking care of the sick - (inaudible) sick mothers - is going to take that period of time.

Inside the General Hospital itself, now and into 1999, we are doing renovations as well so that the obstetrical beds, where the mother has to stay a longer period of time, will be ready as well for that service.

Mr. Whelan, does that answer your question?

MR. WHELAN: Yes. I just have one other question pertaining to that, with regard to layoffs. You mentioned that there would be some layoffs as a result of combining the several buildings. Relating to the Janeway, to what extent do you see it pertaining to it?

SR. DAVIS: The first survey we did back in 1995-1996, when we knew that we were going to be closing buildings - we have all known that in St. John's for awhile, I think, realistically - we worked with the unions immediately to create transition agreements with the unions. I am pleased to say we were the first region in Canada to get those transition agreements negotiated. The layoffs will not necessarily be just staff at the Janeway; it will be the junior people in the support staff areas, so that everybody is treated fairly and people at the Janeway and the Grace are not penalized because they are at those two sites. It will depend on where you are in the seniority lists. That is one thing we have already done and had in place now for two years.

The second thing is, we filled any permanent vacancies with temporary staff who know that they have short-term work. The third thing we are doing now, and we are in the final stages with each of the departments, is identifying which areas will see the reductions and beginning to move towards early retirements to make some of those positions vacant. We are not waiting till the year 2000 to do that. We are doing a lot of that work. We started it in 1995 and we are still continuing to do that. Our hope by doing it that way is that people will know earlier than the actual closures where they are going to end up eventually. People who could see potential for early retirement will be starting to think that way, and the human resources staff will be working with staff who are affected, to help them through that. We are working with the unions as well to reduce the amount of bumping that will result from that. We are actively doing that right now, today.

CHAIR: Can I just interject? I think we pretty well covered that yesterday, really.

SR. DAVIS: Yes.

MR. WHELAN: Yes, thank you.

CHAIR: Anna, do you want to finish up your questioning? Then we will get to Sheila.

MS THISTLE: Sure.

We talked about the year 2000, and you indicated that $500,000 might be an average type figure to accommodate those changes, but you are responsible for quite a lot of health care facilities. I am wondering, are you looking at how that might impact your budget next year? Are you making allowances for that?

MR. CROCKER: The $500,000 that we mentioned will be approximately what we will spend in this fiscal year in terms of salaries plus (inaudible) that we will be putting in.

We think there will be more costs next year, because by the end of December we will have a good fix on our medical equipment side in terms of knowing exactly what we have and knowing which areas we are going to have problems in. We do not have a figure as to what next year will cover or cost us in terms of the calendar year 1999.

The $500,000 this year was basically budgeted for in our departmental budgets for this year, so that is already in our budget system in terms of (inaudible).

SR. DAVIS: I might add to Mr. Crocker's comments that the Department of Health has also now named the year 2000 coordinator for the Province. That person will be working closely with our group as well, identifying what the provincial costs will be in terms of making (inaudible).

MS THISTLE: I guess the general public out there are not so much concerned about information systems; they are concerned about being in the middle of an operation and something going wrong. Would you have a backup contingency plan, or a trial run before the year 2000? I am sure you would.

SR. DAVIS: The reality is, we do not have any unique equipment in our organization. This same issue is faced by every health care facility across the country. Actually, next week or the week after, we are bringing in the leader of that initiative in Ontario to talk to us about what Ontario is doing. We are working with suppliers in that instance, in a common approach across the country, of course, with areas like that. But yes, we will be doing a minimal amount of work on January 1, 2000, to make sure that in every system we have, we have caught all the bugs.

MS THISTLE: You are probably looking at postponing or delaying, if they can be, surgeries until you are certain.

SR. DAVIS: For one thing, it happens at a good time of year when we are down anyway in terms of numbers, which will be a benefit.

MS THISTLE: No doubt it is a concern that people will feel comfort with by the year 2000.

I would like to switch gears a little bit. Sister Elizabeth, you alluded to the fact that the nursing staff are aging; some of them are, or a fair number of them. What would be the average age of nurses in the system for the St. John's Health Care Corporation?

SR. DAVIS: I am not sure. I think we had a figure the other day of thirty-seven. Ms Thistle, I am not sure about that.

What we are doing, though, is we have - because of the nursing shortage we are expecting across the country - put a special working group in place in our organization to begin to develop strategies with the provincial union about ways to address that impending shortage that we are expecting around the year 2003. It is a serious issue for us.

MS THISTLE: There are two reasons why I ask that question. I looked at the employee assistance plan. I know it has gone up $10,000 in 1998. You mentioned the fact that, of course, as people get older they would be using up more compassionate leave and so on. Would that account for some of the increases in your employee assistance budget?

SR. DAVIS: There are two reasons our employees assistance program monies are increasing. One is, our program is getting better and therefore we are reaching more people. The second is, we know that more employees are facing greater stress, not just in their work life but also in their home life, because of the stresses in the Province. Employees are more ready to come forward asking for help now that they are more confident in the program.

It is hard to tell if it is because of the greater stress level or the better program we have, but it is probably a combination of both. I don't think it is any secret to anybody that the stress level in health care across the country has increased considerably because of all the changes. Health care is a very conservative industry and we have not had a major change, other than growth, since medicare was introduced in the late 1950s and early 1960s. Then all of a sudden we introduced, in one year, buildings closing, new ways of providing programs, and consolidation of functions. That level of change is unprecedented. We have never had an experience in the health care system with that kind of change before, and all of us have different ways of coping with that kind of change. For some people they need - well, we all need support; some need it in different ways than others.

MS THISTLE: The fact that our nurses in the future now will be graduating with a degree, no doubt that will have an impact on keeping nurses in this Province; because a lot of them, as we all know, head to different parts of Canada and the U.S. They come back with specialities and then we are only too anxious to take them back, once they have a speciality. The fact that they will now be graduating with degrees, will that be a standardization throughout Canada? No matter where they go, they are then accepted into any system? Will that encourage us to hold on to them longer, our system?

SR. DAVIS: That is a very good question that I cannot answer, Ms Thistle, really. Not all provinces will require a degree by the year 2000. I think there are about six provinces that will.

We find that our graduates from our Schools of Nursing here are very highly regarded across Canada and in the States. I have, on a number of occasions, been talking to people even from the States, who did not very much know who I was, saying to me: If you are connected with the health care system in Canada, I have to tell you, the Newfoundland nurses are the best that we have ever recruited.

They already have a very good reputation throughout the States. What the degree will enable nurses to do, though, is to be more prepared for the increasing complexity in health care. It will certainly benefit us here, and I think anywhere they go they will be certainly more marketable, definitely.

That will not mean, though, that every nurse in our organization in the year 2000 will have a degree. Nurses who presently do not have degrees will not lose their jobs because of that. The new nurses coming in will be expected to have the degrees.

MS THISTLE: I am thinking, because our health care is changing so rapidly and you are requiring so many specialities, that it would almost make sense that the degree nurses would certainly be in an advantage situation wouldn't they?

SR. DAVIS: Yes, definitely. They will be able to go anywhere in the world, with a degree, and be able to get into a health care system.

MS THISTLE: Definitely a positive move, yes.

CHAIR: Can we conclude it and move on?

MS THISTLE: Thank you, Mr. Chairman.

CHAIR: Thank you. Sheila Osborne.

MS S. OSBORNE: On page 30, the second paragraph, "The Department of Health has informed the Corporation that within the three years ending 31 March 1999, they are not permitted to be in an overall deficit position for that three year period. The Department subsequently extended this for an additional year....", bringing it up to the end of March, 2000.

The information that I have here from the Auditor General, the operational deficit for the year ending March 31, 1996, was $211,000; ending March 31, 1997, it was $4,800,000; for the year ending March 31, 1998, there was a slight profit of $9,000, and that is an accumulative debt of approximately $5 million with a projection of $10 million for the current year.

What has the Corporation done to address this problem? What measures have been put in place to try and come in with a balanced budget in the future?

SR. DAVIS: Ms Osborne, in terms of what you just said, you crossed over what is here plus what has happened since this document was written. The numbers here are no longer accurate because the Department of Health put (inaudible) money into health care for the two past years. You rightly summarized that by saying that in the first year, depending on which statement you look at, our new modified approach shows a slight surplus in the first year. The second year we had a $4.8 million deficit. The past year we had a $9,000 surplus. This year we are projecting a $5 million deficit, which would mean at the end of this year our debt would be $10 million: the $5 million from the previous year and the $5 million this year.

The first unknown is that government has identified a $10 million amount they are going to put in health care before the end of March 1999. We do not know at this stage what our share of that $10 million will be.

The second fact is that the department's own review that was done in detail over the four month period showed that they saw that we should add at least $3.6 million to our budget to do current operations.

The third thing we have done ourselves is this. We have done quite a number of things to try to bring our budget in line. The obvious things we talked about yesterday: the integration of all our administrative and support departments; we have out-sourced housekeeping, central laundry and food services. We will be going early in 1999 to a central kitchen to save money from that source.

We have done, at this stage, everything we think is possible on the support services side. We had an accreditation in May from a team from outside Newfoundland and they told us we could not cut our support services any more.

We have been meeting with government on quite a number of occasions talking about this situation, and since April have told government we are anticipating a $5 million deficit and that there is nothing we can do more than we are already doing on the support side. Government has told us at this point in time that we are not to reduce clinical services. Government is aware that we are anticipating this deficit. Our monthly statements to date are very much on target for that size of a deficit.

The review team from the Department of Health came in in July and went through our financial systems, as they have done for every board in the Province. Where we are right now, there is no question that we will have a $5 million deficit at the end of March, depending though on how much of the $10 million government allocates to us. If we get $5 million of that then we will not have a deficit; if we get $3 million we will have a $2 million deficit. The minister is aware of that.

We do have to get approval from the minister to incur a deficit. In the most recent correspondence - and our chairperson wrote the minister in August to express concern - the minister said she is aware of our financial situation. These reviews had to be completed before a final determination is made. There is no way now we can save that money. Because of our collective agreements, even if we were to close some service we could not lay staff off fast enough to not incur the deficit this year because of our system. The size of the deficit will be $5 million minus whatever we get from government.

That begs the question of what happens next year and the year after. We don't know what decisions government will make. Because they have had that major review underway and I would imagine by now it is close to going to government, to the political level. We don't know what will come out of that. We know ourselves, on the support side, there is nothing further we can do.

On the clinical side there are changes we need to make but these changes, as Mr. Byrne has pointed out a number of times, like length of stay, bed utilization and so on, take a long time to change because they are on the patient care side. We are working to change these but they are not going to be quick fixes here.

MS S. OSBORNE: When you were trimming, and you are constantly being asked by government to cut, you said you did not reduce any expenditures, or the expenditures were reduced in non-direct patient care. I am concerned about emergency rooms. You said that situation had been addressed. What is the situation now with lineups for people?

I know that I came upon a situation in an emergency room about six or seven months ago and it was pretty horrific, and it had to do with not enough beds to admit a person. Actually, what happened was this. There was a woman who came in, I guess she was in her late 60s, and she had had a stroke and they were going to admit her. I was there watching all of this. Then another woman came in with chest pains and there were just no other stretchers. They had to take the woman who had had the stroke off the bed in the emergency room and prop her up in a wheelchair to utilize her stretcher to do a EKG on the person with the chest pains. That is pretty horrendous. I guess it goes back to the fact of the non-utilization of the empty beds, I suppose.

SR. DAVIS: That is part of it. We have peaks and valleys in that situation though, and fortunately in the last year the peaks are fewer than we had in the previous year. I think as we are getting to understand better our organization we will find other ways to deal with those issues.

You will always have times though where your emergency departments will have an unusually high level of activity. We had a lot of black ice this month, for example. My immediate thought was that the orthopaedic surgeons are going to be very busy. There are peaks we can expect. After Christmas we always have peaks. I do not know what it is. People delay things during the holidays, people are together so much that, I do not know, but there are always peaks then. There are some peaks we know are going to happen and we prepare for. There are others we cannot predict, and we could never operate the emergency (inaudible) to keep it at peak level all of the time. We could never afford to do that.

We have, as you know, extended now the hours the Grace emergency is open, so we have been able to improve that because we have enough physicians to cover. That is good news. We are working on the bed number situation to make sure the beds are appropriately utilized. That is the real issue there. We are working with the nursing homes in terms of making sure people who need nursing home care can get out into the nursing homes. We are working on that home IV project I was mentioning earlier. That means people will not have to be using beds when they could get their care at home.

We are also opening a medical daycare at the General Hospital which never had a medical daycare, so that they can, again, prevent people from actually having to come into hospital to get care as an out-patient. There are quite a number of initiatives throughout the organization. One of the good things our program approach is helping us do is find out different ways of (inaudible) each program where we can do exactly what you are talking about. Now, will we be ever be able to say without any fear of being contradicted that we will never have peaks again in the emergency department? No. (Inaudible) peaks will come (inaudible).

MS S. OSBORNE: They are getting fewer, are they?

SR. DAVIS: They are getting fewer and more spaced. We are getting better connected with community health and people who do not need to be admitted to hospital at all to get (inaudible) for those patients. Our systems are getting better. They are still not as good as they need to be, but they are certainly getting better.

MS S. OSBORNE: Page 51 is totally unrelated to patients. It has to do with tenders. The Auditor General found 170 tender exceptions that were identified as being available from only one supplier. This seems a little high, especially since the Auditor General found that one of the exceptions was for a photocopier, and it was noted that GPA questioned the support for the purchase at the time. Can you comment?

SR. DAVIS: I will let Cal speak to that. I think we have something like 40,000 purchase orders a year. I would say before I ask Cal to talk about it that I will say without any fear of being proven wrong that we have the best public tender record of any government funded organization in this Province. We have an incredibly high number of purchase orders. We have a very efficient staff running that department. We identify almost all our exceptions. One or two may go through the cracks in terms of sole source. It would not be unexpected that most of our exceptions would be because of the unique kind of equipment we have. That would not be unusual. We infrequently, but often enough, have emergency purchases that we cannot wait to go to a tender process. We are very conscientious in recording those Form Bs, as they tell me, that we submit to the minister.

Cal, do you want to speak in more detail?

MR. CROCKER: In terms of our material financial department, we do about 40,000 purchase orders a year, so we are a very large operation. We do tend to have a fair number of exceptions, although the number is not big, in terms of the volume we put through the system. The fact that we have so many specialized services in terms of the (inaudible) and the different types of medical procedures and equipment that we have, there are exceptions and they are legitimate exceptions. If you are going to go out and buy a piece of equipment, while there may be different vendors out there in some cases, the fact is that we have already got ten of one piece of equipment and we are buying the eleventh;, so because of standardization, maintenance and people understanding your equipment (inaudible), it makes sense to go with that vendor again in terms of the system that we are running.

In terms of what I have seen in the system, we are probably more efficient at filling out Form Bs than tends to be the practice. Our department tends to fill out a Form B on everything that it considers exceptions and how they interpret the act. I think you even see more from us in those areas because we fill out the Form Bs and send it up through the system. I guess the documentation is provided.

There was one issue there with the photocopier. Again, my understanding was that there was a feature that someone wanted. It was when we were just starting out as an organization and we were just bringing together our departments. Even in the areas where the Auditor General mentioned there was insufficient information, that was during the same time period of trying to bring together a materials management department. Did you have all of your systems up and running in terms of a centralized system? Since then, as Sister said, we are awfully comfortable with the people we have up in materials management. I guess they are following the process of the Public Tender Act.

CHAIR: Further to that, I had some questions I wanted to ask on sole sourcing, seeing that we are on it, if Sheila doesn't mind.

I am just wondering what policy the health board has with respect to employees selling to the health board itself? I had a call a month or so ago where a person in ambulatory has a business set up where he sold some equipment to the Health Care Corporation. I have nothing to back this up, but the individual told me that the specs were almost written so that person could get the contract. I am just curious. Do you have a policy in place to address that?

SR. DAVIS: We have. In terms of first the bigger question, conflict of interest, we have been working in the past three years at the provincial level as well as looking in our own organization about developing a specific conflict of interest policy. Actually, at our last board meeting the board approved conflict of interest bylaws for the board itself and conflict of interest principles that we are to build the other policies around. We do not have written policies on conflict of interest at this point in time, other than those guidelines that are there from the board, and the conflict of interest surrounding the board itself.

In terms of the purchase of equipment, the specifications are developed by the people using the equipment in conjunction with the support staff from materials management, and then the equipment goes to tender. Most of our supplies are tendered through group purchasing which is a provincial group purchasing plan, not just for our organization. It is only on isolated pieces of equipment that we would go on our own.

Is it possible that a employee would own a company that got a supply contract through group purchasing? That is certainly possible.

CHAIR: I think it may have gone to tender but the complaint was that the specs were written specifically. Maybe it is something you should investigate and probably come back to us about.

MR. CROCKER: In terms of our policies - I will just skim through some materials management policies - we have a policy on sole source and low-cost purchasing in terms of the process we follow. We also have a tendering policy, so there is a process. We also have a policy on vendor relations. We do not have one dealing directly dealing with employees, but any employee who would happen to have a company, and things we do not know about, the policies apply to everyone. Once we go to the market or develop specs, it is certainly open to anyone.

I am certainly not aware that we would have ever done up any spec to suit a person. If we did up a spec to suit a particular product, it was because of a standardization issue or specialty issue.

CHAIR: Thank you.

With respect to the kitchen facility that is being worked on presently, I do believe, has there been an extension or change order to the cost of that facility in the amount of approximately $200,000? And that it was just a change order and not tendered?

MR. CROCKER: There is some work that we are doing on the central kitchen in terms of, we purchased the central kitchen and left it in a condition with no floor because we -

CHAIR: This is the one in Pippy Place, is it?

MR. CROCKER: This is the one in Pippy Place.

We did not do the floor on the new extension we put in when we did it because we were not sure of where the piping would go in the floor, because we did not have the specs done for the equipment. When we let the building go, we said that once we figured out where the piping and everything goes we would then get that work done.

What the engineering firm who was looking after that project did, was negotiate the price with the company we bought the building from - Marco - that they would do that work once we figured out where the piping would go. Ideally you would do it when you were buying the building, but the fact that we were the ones who did not know, that was the arrangement that was made, and that was done through our engineering firm.

CHAIR: The building itself - government purchased the building, correct?

MR. CROCKER: Yes.

CHAIR: Then they awarded the contract for renovations or whatever work -

MR. CROCKER: There is a tender out now for renovations.

CHAIR: - work to be done. Has Marco been doing work on this building?

MR. CROCKER: Marco is doing the floor as part of the original purchase. We did not let him do it when we purchased the building because we were hung up on: Where does the piping go in the floor for the (inaudible)?

CHAIR: You did not have a handle on what that cost would be at that time?

MR. CROCKER: Not at the time. Our engineers recommended that we do it this way, so we followed the advice of the engineers.

CHAIR: But normally it would be tendered.

MR. CROCKER: Normally it would have been tendered as part of when we bought the building, because we should have bought the building with the floors completely done.

CHAIR: With respect to that building itself, how much money did government pay for that building - do you know that - or the board?

MR. CROCKER: We paid $1.8 million.

CHAIR: One point eight million. I won't get into it. I will leave it alone.

MR. CROCKER: The other thing, though, in terms of buying that building, that was a public tender. We had price quotes in from six different individuals but there were eight different combinations in terms of either leasing a building or buying a building. We moved away from the leasing because the purchase price of the building was so much more of an advantage to us, and the purchase price of that building was the low cost building in terms of what the tenders came in. So the $1.8 million was certainly the best price we had on a building, plus the fact that, that was a relatively new building and in an ideal location for us in terms of running a central kitchen, which is just up from the General Hospital.

CHAIR: The history of the building itself, do you know how much the people that you bought the building from paid for the building?

MR. CROCKER: We don't know officially. We heard rumours, but what people forget in terms of when that discussion went on was: that building was 12,000 square feet, so what the vendor did was bought a 12,000 square foot building. What we tendered for was a 30,000 square foot building, so basically there had to be an extension put on that building of 20,000 square feet. So the purchase price and what that building would have actually cost the vendor are certainly not the same. He did not sell us the exact same building; it was a 20,000 square foot one.

CHAIR: Just off on a different tangent now, the liabilities of the board - the board was sued some time ago by a nursing supervisor with respect to redundancy and severance being paid jointly. Is that correct?

SR. DAVIS: That was the Waterford (inaudible).

CHAIR: Yes, that's right. Are there are any more suits pending? Has the board been sued by anyone else? How many? Is there a class action possibility here for the same reasons?

SR. DAVIS: First of all, the board is often sued.

CHAIR: Yes, I know that.

SR. DAVIS: We are sued for medical reasons; we are sued for performance reasons.

CHAIR: But for these purposes, former employees?

SR. DAVIS: The management employees - Ms Fitzgerald was the case that was made public first, and that was before our Corporation came into being. That situation (inaudible). There have been subsequent suits by - well, there have been eight that have actually been issued against us and there are a number of others pending, I would think, depending on the outcome of those.

This is really an issue that has broader implications than our organization, but it has implications for other boards across the Province because it relates to an interpretation of Treasury Board policy.

At the present time we are talking with other regional boards in the Province to see if there is a joint approach we should be taking here. As well, we are in conversation with officials of Treasury Board in terms of even broader implications of this. We have not made any final decisions on how the matters are going to be treated. I expect, though, that we will be going to court soon on one or two of those cases.

CHAIR: So you really do not have a handle on what the end result would be with the amount of dollars and what impact it is going to have on your budget, do you?

SR. DAVIS: We do know, in all the cases settled against us, there was a $2 million to $3 million bill. We do know that. We do know as well, though, that all the redundancies are not the same and most of our employees who went through redundancies signed releases that have legal weight. The worst-case scenario is $2 million to $3 million.

CHAIR: I do not want to hog the show here. Does anyone else have any questions? Because I have a number I can continue on with.

WITNESS: (Inaudible).

CHAIR: Okay. I will try not to cover anything that we already covered yesterday and today.

On page 41, the third bullet down, it says, "The Corporation has not reconciled its bank accounts in a timely manner. Instances were found where such reconciliations were several months behind."

Has that been addressed? I don't think we covered that, did we?

SR. DAVIS: Yes, we did.

WITNESS: (Inaudible).

SR. DAVIS: We didn't? I thought we did.

MR. CROCKER: Again, that was when we just went through our consolidation of services and funded a new finance department up and running. Certainly since that time all of our bank accounts are reconciled on a monthly basis; plus, there is a signature from the manager of general ledgers signifying (inaudible) as was recommended by the Auditor General.

CHAIR: Okay.

I just had some pages highlighted here so we will have to skip to the pages as we go through this.

On page 55, under the Capital Equipment Policies, second sentence in the first paragraph, it says, "Our discussions with other officials indicated that they were unclear as to what the Corporation's policies were with regard to certain capital equipment issues. In addition, there are no documented policies with regard to physical security over capital assets to prevent the unauthorized or unrecorded movement of assets."

I have a note here; I was going to ask the Auditor General to make a comment on that.

MS MARSHALL: Basically what I was hoping for there was a broad policy on capital assets: how they were acquiring them; how they were recording them; how they were checking on their existence after they had purchased them; what they were doing with regard to dispositions; how they were disposing of surplus matters; whether they were tagging the physical assets, things of that nature.

CHAIR: Mr. Crocker, would you want to answer that?

MR. CROCKER: Yes. In terms of the capital equipment area, and again this is certainly a combination - and certainly the health care I am familiar with is -, we do not do a good job in terms of having fixed asset ledgers which is really how you control your fixed assets. We did not do it as individual sites. Since the Health Care Corporation and since this report we have done a full physical count of all of our fixed assets and tagged all of our fixed assets.

We are now going though a process through our materials management of inputting all that data into a fixed asset module. We will have a full fixed asset ledger. We do have a policy in our materials management department on assets - I am trying to remember what the title was, if it was asset disposal and removal; it was asset relocation storage and disposition, and that was dated January 1997 - in terms of how we allocate our fixed assets.

We have come a long way since the Auditor General's report. We do know there were initiatives. We did not have any fixed asset ledger, and without the fixed asset ledge that control is difficult. I guess in three months' time when all the input is done we will have a full fixed asset ledger with every piece of our fixed assets tagged.

MS MARSHALL: The one issue that we are particularly concerned with was the movable assets. We had some problems with locating some of the recent computers that had been purchased by the Corporation. That was (inaudible) special (inaudible).

MR. CROCKER: Again, the issue there was the fact that we did not have the full fixed asset ledger in terms of the tracking and did we tag everything that came in. We lost a couple of PCs that year. We certainly know we lost three. I think it was two PCs and a laptop, but outside of that the rest of the equipment was around. It was a matter of taking a PO and actually finding where it went. Because again, with all of our staff changes and department moves, the equipment might have went to the General Hospital, but is now down to St. Clare's. Because again, when we move staff around we are so short of PCs that people tend to take their PC with them, because we do not have any (inaudible). So it is trying to track it through the system.

CHAIR: That is being addressed?

MR. CROCKER: (Inaudible).

CHAIR: In Volume II, page 138, look at the Employee Family Assistance Plan at the bottom of the page. It cost the Corporation $85,604.20 in March 31, 1998 and $75,552.43 in March 31, 1997.

WITNESS: We did that one.

CHAIR: We did that one? I did not mark it off, sorry. Alright. Volume II, page 143. The cost of the energy performance contract increased by 17 per cent. Would you want to comment on that?

MR. CROCKER: I was just looking for a sheet here before I comment, because there are (inaudible).

SR. DAVIS: Just to explain to everybody, this is the Energy Performance Service Contract we initiated early in our existence as an organization. Because most of our buildings which, as you know, are quite large, are heated through boiler plants that have become significantly outdated. We had a major concern expressed by the community with the burning of Bunker C, for example, around St. Clare's and the Grace Hospital site, and around the Janeway site. They were concerned about the residue from the Bunker C.

We were concerned we were going to have failures in our equipment that would significantly impact on our ability to provide service. We needed a large output of money to replace the boilers, to be blunt about it, so we would have more efficient boilers that burn the cleaner fuel and that we could depend on for reliability (inaudible) our systems.

We did not have any way of getting the money to do that through the normal process. ESCos are common now throughout the country as ways of getting the money up front and paying back through the efficiency systems. That is what we went for. We went to tender for that kind of system, so what we have here is the budget for that ESCo that we have agreed with Honeywell for.

MR. CROCKER: Again, understanding the process, when you go into an ESCo it is really a request for a proposal process that you go through in terms of going to the market. The ESCo companies come in and basically tell you what they can do for their system in terms of installing new boilers, lighting and insulation, which are the three big things people tend to get.

In terms of discussing with your facilities management staff, it is what you think both sides need and what the project is. Once you actually get into it, that is where you get into more detail. The major change that we made to our ESCo, the big one, was the expansion of the boiler plant at the Miller Centre to look after the workshops. We did not put that into the ESCo. We certainly knew we had to do it because we were tearing down some space there that had workshops in them. That is an issue that does not give you any increased energy savings. The only way you could do that through your ESCo is if there was some flexibility in your ESCo to be able to handle that. We did not put it in the tenders and let's see how our ESCo comes in. If it comes in that we are comfortable with the repayment period over the seven- or eight-year period that you want, then we will do that project through the ESCo.

Even though that was done through the ESCo, which is with Honeywell, that would have been tendered in terms of when we did the boiler plant. We put it in the ESCo but it was certainly tendered, and we called it part of the ESCo in terms of: How do we finance it.

The other two major changes that we made were these. One had to do with the St. Clare's boiler plant. We went into an old boiler room, tried to live with the piping that exists between the boiler plant - I mean, with St. Clare's, which is across the road from the building. We tried to live with the piping that was in place. When they started working with the piping, it was old and corroded and they said: Look, you are putting in new boilers, you can't install it with this old piping. So we had to replace the piping, hence the $200,000.

The lighting retrofit, there was an increase in lighting retrofit at the General because when we did the ESCo we were also doing plans for the site redevelopment. We were not quite sure in some areas; would the site redevelopment handle the work, or would the ESCo? Once we had the final plans from the site redevelopment there were some areas where the old lighting was remaining, so we added that to the ESCo. That was just a case of - we didn't know exactly where one project would stop and where the other one would pick up. That was some of the overlap that we had to do. Those were the three big areas that we did on that ESCo. It is after coming in pretty decent outside of that.

CHAIR: Thank you.

I am just skipping through the notes I made here now and marking them off. You have a lot of the questions answered that I had highlighted.

On page 15, I had three questions on that page and two have been addressed. The bottom sentence on page 15, Volume I, says, "Requests for proposals to design and manage the construction of the child health care centre were issued in September 1996. Health Care Design Consultants were selected and engaged for a three year contract."

I would imagine you had certain criteria put in place when you put the request for proposals or whatever. How much was that contract worth, for the three year period?

SR. DAVIS: I am not certain where you are.

CHAIR: On page 15, Volume I, the last sentence on the page basically. "Health Care Design Consultants were selected and engaged for a three year contract." How much was the contract valued at?

MR. CROCKER: I cannot recall off the top of my head on that, but it was a tendered process that we went through.

MS MARSHALL: Page 64 of the document provide some details on consultants. I don't know if Mr. Crocker can determine from that list (inaudible).

CHAIR: Also in that same document, the Auditor General pointed out the (inaudible) planning - four contracts with no proposal call.

MR. CROCKER: In terms of the first question, I guess the major contract at that point was the $3.5 million, which was Health Care Design Consultants, which was an association of four or five engineering firms in St. John's. So that was the original (inaudible).

SR. DAVIS: I think it is important to point out that those consultants charged a standard fee, which is a percentage of the work that they do. that is how they are paid. It is regulated by their own industry in terms of how much is paid. That is the group that is overseeing the new building, the Janeway (inaudible).

CHAIR: Thank you.

On page 16, Volume I, the first bullet, "...that the savings achieved by the consolidation of the hospitals would be in the order of $25 million". We have been using the figure of $20 million over the past two days. Is it $20 million or is it $25 million?

SR. DAVIS: We said it was $20 million. We have always maintained it was $20 million.

MR. CROCKER: The government at one point put $25 million in their documents, but that was not our figure; that was their figure.

MS YOUNG: If you go back to the announcement that we made in June of 1995, when we made that announcement the number twenty was used.

WITNESS: That would have actually been an excerpt (inaudible) document.

CHAIR: On page 65, Volume I, Proposal Calls, the third and fourth paragraphs down, I will take the second-last paragraph: Engineering consultants are engaged on a regular basis by the Corporation to manage construction and renovations projects at the seven sites. While individual projects may not exceed $100,000, total engineering fees paid are significant. Fees, including GST, paid during the -

MR. LUSH: Excluding GST.

CHAIR: Oh, I am sorry.

"Fees, excluding GST, paid during the period 1 April 1995 to 31 December 1996 exceeded $500,000. A proposal call has not been undertaken by the Corporation for on-going engineering consulting services for the existing seven sites."

Could you comment on that, or have we covered that already?

MR. CROCKER: First when we came on the scene, there were two sites that had tender calls for engineering on their own individual basis. The Waterford used an engineering firm that we had gone to proposals for in terms of RFPs and had chosen the (inaudible). The Janeway tended to use BFL. The other buildings were using one of (inaudible) engineering firm.

We continued that practice because what we found was that these firms knew the buildings. The things that we were doing were renovation type projects and fees we were getting, again in terms of engineering fees, were based on percentages. So you don't tend to get any (inaudible) appeals from engineering firms. These firms knew the buildings and did not have to spend as much time in terms of actually acquainting themselves with all the buildings, so we tended to use that.

At this point, we have not gone to the market for engineering services for ongoing work. We still use different firms. The fact that we are using so many for the sites we are developing, we are still basically using just about everyone in St. John's for one project or another.

CHAIR: With respect to pages 66 and 67, Contract Documents - I will start on page 66. "The contract documents for the thirteen projects reviewed indicated the following:..." - these are some of the points the Auditor General had, I believe - "...Neither letters of agreement nor contracts were prepared for the engagement of consultants for the asbestos hazardous waste management plan and the graphic design services."

Next, "The contract with the Health Care Design Consultants was prepared in draft but had not been signed as at the time of our review. Work under this contract was started in December 1996 and two invoices totalling $315,940 were approved for payment prior to the completion of our review."

The last one there, the third sentence, "In some cases clauses addressing issues such as responsibility for delays, ownership of documents resulting from the consultant engagement and record keeping were not included."

Would you like to comment on why, for all three?

MR. CROCKER: Just in terms of my personal involvement in some of the contracts, the second bullet there related to a contract in terms of site redevelopment. There were some ongoing issues about actually signing off that letter, and we certainly were delayed in terms of getting that signature, but the work was certainly ongoing. We certainly had an agreement with the contractor, and the letter did get signed after the fact.

Also since that time, in terms of the Corporation, again it relates back to the Corporation just coming into being, trying to get, in that case, the facilities management department consolidated and then getting a process in place. Since then, we do get the signatures and we do have a policy that was approved by our board in terms of Sister Elizabeth having to personally sign off on any change orders in terms of projects we are doing.

CHAIR: Thank you.

The last page, page 77, that chart there, says that acute care beds in operation in 1992 were 1,163 - I touched on this earlier - and in 1996 there were 924; acute care occupancy rate, 83.3 per cent, up to 85.6 per cent in 1996; and the acute care length of stay is down, of course.

The question I had here was with respect to the acute care occupancy rate, up basically 2.3 per cent. I just made a note there. Is that because of the percentage of the beds - there are fewer beds so obviously that would have to increase?

SR. DAVIS: The occupancy rate that we strive for in hospitals generally is 85 per cent, so we are well within the overall number here. The problem is, it varies across our sites. That is why we are working at the number (inaudible) to try to get everywhere at 85 per cent so the places we have - medicine is our most difficult one and is often at 100 per cent. Trying to get that back down to 90 per cent is our goal right now. We have processes in place involving physicians, nurses, and other staff, looking at a number of strategies to get us there.

CHAIR: Again, that is the allocated beds.

SR. DAVIS: Yes

CHAIR: Not really the available beds but the allocated beds.

SR. DAVIS: No, the 85 per cent would be the actual beds that we have in operation.

CHAIR: Yes.

I really do not have any further questions. Does anyone else on the Committee have any more questions?

MS S. OSBORNE: Just this one, and it is just a matter of interest. When you have the central kitchen, do you anticipate that the level of food services for patients will drop, improve or remain the same?

SR. DAVIS: We do not anticipate it will drop. Certainly, we have had a good experience. We are not just creating a central kitchen, we are also using a new mode of tray delivery connected with that. We have actually had an opportunity to begin the testing of the tray delivery system from the present General Hospital site to the Miller Centre and to the Janeway site. That has proven to be better than it was.

I have been in health care since 1985. The very first time I have gotten letters complimenting us on the quality of food has been since we put that new tray system at the General Hospital. Some of our sites have better records of good food. I always said if I was to get sick I would want to go to the Grace because they have the best food. We have variable levels of food quality across the sites. What this will do is insure standard quality. It will also help us improve the safety, which is always a major concern. Since we have had problems in other provinces and other countries it becomes more of an anxiety level.

Will the food be the same as you get in your own home? No. It will actually probably be closer to it than we have traditionally had in hospitals in the City. Overall, the quality will improve. At some sites it may not be what people are used to, but we are comfortable with the new tray systems they have, which are quite sophisticated from an engineering point of view, that that will happen.

The other good thing we have is that our staff in that area have been very responsive to patient complaints. So if there is a family or a family member who has a major complaint, staff will immediately go meet with that person and they will look at what they can to improve it. This is particularly sensitive for our long-term care residents. If you are only in hospital for five days it is really not an issue.

MS S. OSBORNE: It doesn't matter.

SR. DAVIS: For people at the Miller Centre, at the Veteran's Pavilion for example, it does. Our food services' staff have worked very closely with the Canadian Legion advocates at the Veteran's Pavilion, and we are very pleased with the outcome there. We have been much more pleased than I ever thought we could possibly be, actually.

We have been very clear with patients and families that this is an ongoing process and that we want to be notified when people have concerns so that we can continue to improve the system for that. That measure of comfort comes from the fact we have already implemented, for over a year now, the tray system and it has given us a lot of benefits.

CHAIR: Thank you. Before we clue up, would you like to have any closing remarks? I will ask the Auditor General the same thing, if she feels free to do it.

MS YOUNG: Just to say to the Committee this is my first experience at this. This is my university degree every time I have this experience, and it was really a good experience, wasn't it? There was a bit of a concern when we came here, but when you look at former students (inaudible) then you realize they are not out to get you at all. This has been an excellent thing, and I thank you all very much for the very important questions you did ask. I hope that we answered them to your wishes. If there are any more...

CHAIR: No, that is fine for now.

SR. DAVIS: We have certainly benefited from the review done by the Auditor General's staff. We would rather she had come at a different time. We were right in the middle of the changeover, but what we did learn from her and her staff did help strengthen system we were putting in place and it helped us target certain areas that we needed to place priority on. In hindsight, that six-month period was an important learning experience for us. We very much appreciated the time and attention to detail that Ms Marshall and her staff gave us, because it could not have been easy for them either. It was not just new for us, it was new for everybody. That has been an important element in terms of enabling us to strengthen the foundations for our new organization. We are very grateful to them for that.

CHAIR: Thank you. Ms Marshall.

MS MARSHALL: I was pleased to hear that most of the issues raised during the audit have been resolved. I would just like to mention again that there are still a couple of issues outstanding. The first is the savings required to finance the debt. I still have concern over that and whether it will in fact materialize.

Another issue I am concerned about is the total cost of restructuring. Some of those costs are reflected in the books of the Health Care Corporation, but there are some reflected in the books of the Department of Health and some in the books of the Department of Works, Services and Transportation. At some point in time somebody has to go through and consolidate all those expenditures to find out what the total cost of restructuring in the St. John's area actually cost and compare it to the actual savings that are going to materialize. Because I think it is important to go back and take a look and make sure whether the savings that were generated were actually sufficient to cover the total cost of restructuring in the St. John's region.

CHAIR: Thank you.

Before we clue up I would like to thank Sr. Elizabeth Davis, Ms Young, Mr. Crocker, Ms Marshall and her staff, Committee members, and the Clerk and the recording people for spending the past two days here. I personally got a lot of information from the questions I asked and listening to the questions that were asked.

I think what we probably should do is this. I will recommend that maybe a few months after the completion of the restructuring is done we will probably have another look at it, as has been suggested by Ms Marshall. That will be some time in the year 2000.

Other than that, I just appreciate you coming here and giving us the answers. You were pretty forthright, as far as I can see, and hopefully we will make some recommendations, if need be. We will be reporting, I would expect, to the House of Assembly probably early in the new year when the House opens, which will be at the call of the government.

Other than that, thank you for coming out. We appreciate it.

On motion, the Committee adjourned.