August 11, 1993                                                                     PUBLIC ACCOUNTS COMMITTEE


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

MR. CHAIRMAN (Windsor): Order, please!

I would like to welcome everybody. First of all, just a few procedural notes to mention, particularly to those who have not been here before - the witnesses from the Health Services Board and members of the general public.

This is basically an extension of the House of Assembly. We are a standing committee, it's a committee of the House of Assembly. We are here basically to gather evidence, not to pass judgement. This is not a trial or anything of that nature. It's simply a matter of investigating the management of the Regional Health Services Board, particularly and specifically as it relates to some of the comments the Auditor General's department has made in the annual report of 1991-1992.

Although we are a committee of the House, an extension of the House, we like to operate somewhat informally. As you will see, I've removed my jacket. Please feel free to do so. I would not be entitled to do so in the House of Assembly. But then, we have air conditioning as well, so....

First of all I would like to introduce the members of the Public Accounts Committee and say how we're pleased to be here. This is the first time that the Committee has met on the Great Northern Peninsula. In fact, I think it was only two years ago that we started to meet outside of St. John's at all. The Committee felt that it was important to take the House of Assembly to the people and this was an opportunity to do so, and an opportunity for the Committee as members and representatives of the House to have a look first-hand at some of the facilities, problems and situations in various parts of Newfoundland so that we had a better understanding and could better report to the House of Assembly.

At Mr. Dumaresque's invitation - Danny Dumaresque being the Member for Eagle River, a neighbouring district just across the Straits where some of us are heading tomorrow to participate in the great bakeapple festival - Mr. Dumaresque specifically asked that we have a meeting up in this area. This being an issue that was on the report we took the opportunity to seize on that and come to this area to investigate particularly the issues relating to the Grenfell Regional Health Services Board.

To my immediate right, Mr. Danny Dumaresque, the Member for Eagle River, the Vice-Chairman; next to him, Mr. Oliver Langdon, the Member for Fortune - Hermitage; Mr. John Crane, the Member for Harbour Grace; to my immediate left, Mr. Melvin Penney, the Member for Lewisporte; and Mr. Glenn Tobin, the Member for Burin - Placentia West.

Next to Glenn is Mr. Mark Noseworthy, who's a research officer assigned to the Committee. Next to him is Ms. Elizabeth Murphy, who is the Clerk of the Committee. Our technical gentleman at the far end, Mr. John Oates, who works with Hansard and who records everything that takes place in the House of Assembly, and in committees, and transcribes it all into Hansard. I should say now, particularly to the witnesses if you would, we need you to identify yourself. There is a host of ladies back in Confederation Building who will have the job of transcribing all of this. They don't know your voices as much as they would know ours, having listened to us as much as they do they know us when we speak. I will normally identify the person when I'm recognizing you, but if I fail to do so, please help me by identifying yourself before you speak, for the benefit of Hansard, and please speak carefully into the microphones if you could so that it's easier for them to transcribe accurately what takes place today.

Perhaps now I'll ask Dr. Peter Roberts, the Executive Director of the Grenfell Regional Health Services Board, if he would, to introduce people.

DR. ROBERTS: Mr. Bruce Patey to my left is the Chairman of the Board of Directors of Grenfell Regional Health Services. To my right is Mr. Alwyn Sansford, the Controller of Grenfell Regional Health Services, and on the extreme right is Mr. Wayne Noel, Director of Purchasing with Grenfell Regional Health Services.

MR. CHAIRMAN: Thank you. We also have of course Ms. Elizabeth Marshall, the Auditor General. Perhaps if you would introduce people who you have with you today.

MS. MARSHALL: To my right is Mr. Bill Drover, Audit Principal with the office, and to my left is Mr. Clive Janes, Audit Manager with our office.

MR. CHAIRMAN: Thank you. Before we proceed any further I have to ask the Clerk of the House to swear in the witnesses who are here for the first time. As I say, you are giving information, or giving evidence, under oath, so we have to swear in all the witnesses. Ms. Murphy, if you would swear in the people who are with us today, please.

 

SWEARING OF WITNESSES

Mr. Noel

Mr. Sansford

Dr. Roberts

Mr. Patey

MR. CHAIRMAN: Thank you very much. Perhaps now I will ask the Auditor General if she has some opening comments but before I do that, I want to recognize the officials from the Department of Health. Chris Hart is the Deputy Minister here, would you like to introduce the other people with you?

MR. HART: Sure. We have Dave Saunders, who is director of institutional financial services and Roy Manuel who is the director of hospital services.

MR. CHAIRMAN: Thank you, I did not identify you earlier because I knew that you did not have to be sworn in and if an issue arises where we need your assistance, then we will swear you in at that time. Generally, the officials of the department are here for backup purposes and can be consulted if desired. Now, I will move to the Auditor General and ask if she would like to make an opening statement to introduce some of the topics that are before us today.

MS. MARSHALL: Thank you, Mr. Chairman. The audit of the Grenfell Regional Health Services Board was carried out by my office in August and September of last year. The audit was directed primarily to those systems and transactions relating to financial management, fixed assets and purchasing. Audit procedures included testing for compliance with the various authorities under which the board operates. Our review had several objectives; one, whether the financial management system was adequate to provide information to management and the board for decision making and control of the boards revenues and expenditures; two, whether transactions of the board were in compliance with the Hospitals Act and other related legislation, regulations and by-laws; three, whether the policies and procedures were adequate relating to the control and use of fixed assets and four, whether the purchasing system was adequate to ensure monitoring and control of the purchase function and compliance with statutory requirements including the Public Tender Act.

As part of this review we did not perform a detailed review of the system of control over inventory. However, as a result of our review we became aware of deficiencies in the system of physical control over inventory. As a result we intend to perform a more detailed review of the complete system of control over inventory during this fiscal year. As a result of the audit concluded last year, we concluded the following; first, several aspects of the financial management system require improvement, including the areas of budgeting, financial monitoring and reporting. Also, the boards accumulated deficit of $5.6 million as of the 31st of March, 1992, is of concern. Second, policies and procedures related to the acquisition and disposal of fixed assets are inadequate to ensure the safeguarding of all assets under the control of the board. In addition, the policies and procedures relating to the accounting and recording of fixed asset transactions result in a valuation of fixed assets in the financial statements that does not represent the actual cost of fixed assets being used by they board. The third conclusion was that there were significant deficiencies with the boards purchasing practices. We are concerned whether the board's purchases are adequately controlled and are in compliance with the required legislation. The many cases of non-compliance with the Public Tender Act which we noted are of particular concern. Thank you, Mr. Chairman.

MR. CHAIRMAN: Thank you very much. Dr. Roberts would you or one of your delegation proceed.

MR. PATEY: If I may, Sir? First I would like to welcome you and your members of the Public Accounts Committee to the Grenfell Regional Health Services, along with the members of the Auditor General's Department, the Department of Health and to the members of the press here and to any visitors that might be here. We come today to speak specifically to the recommendations of the report paragraph and the Auditor General's Report. These recommendations concentrate on the financial management, fixed asset management, and purchasing policies and procedures.

Within GRHS, the board of directors and management have addressed and are addressing each recommendation contained in the report paragraph, and GRHS continues to comply with these recommendations. As a result of these recommendations and our response I believe that GRHS is now better able to serve the people of northern Newfoundland and Labrador, and I would like to thank the Auditor General and her staff for their generous assistance in this process.

I now call upon Dr. Peter Roberts, the Executive Director of GRHS, to speak clearly on each of the recommendations.

Thank you very much.

MR. CHAIRMAN: Thank you. Dr. Roberts?

By the way, if any of the committee members address a question to either one of you, feel free to refer to anybody else. It is a very informal procedure.

Dr. Roberts?

DR. ROBERTS: Mr. Chairman and members of the committee, Auditor General and staff, the Department of Health and staff, and members of the general public, I join the Chair in welcoming you to St. Anthony Grenfell Regional Health Services and the hospital. I hope your visit will be both productive and enjoyable.

GRHS is an integrated regional health service providing health services for the people of this area. We function under the authority of the Hospitals Act and with the guidance and assistance of the minister and the staff of the Department of Health.

As a provincial agency, a public service organization, we face all the demands facing every public service in this Province today. Perhaps we are a little different in that we function in more locations than most hospitals do, and we have some unusual and varied activities. We also have an unusual history.

Like every hospital, we strive to balance the demand for service on one hand with the demand for fiscal accountability on the other. We have not always succeeded, but I am confident that our work is sound and that GRHS is a responsible public agency providing a valuable service at a reasonable cost to the people of Newfoundland.

I would be pleased, and my colleagues would be pleased, to address any specific issue as presented in the paragraph as you wish.

Thank you.

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

I think I neglected to mention - I do not know if there are any news media present, but they are certainly welcome to be present; these are public hearings - we operate under the same rules as in the House of Assembly in that voice clips can be taken. If you would like an opportunity to take photographs, I will give that to you, or silent footage for television. Those are the rules followed in the House of Assembly, and the committee operates under the same rules, but you are certainly welcome to be here and we are glad to see you here.

Perhaps we will open the questioning now. I will move to perhaps Mr. Tobin first, he being one of our veterans. Most of our committee members, Mr. Langdon, Mr. Crane, and Mr. Penney are new members. Since the great democratic exercise held in May the Committee has been reconstituted and we have a new committee. This is the first time the Committee has met in public hearings. We have had several internal administrative meetings to organize the work of the committee, but these are actually the first meetings we have held since - we normally do not meet when the House of Assembly is in session. Members have other duties to attend to, so we try to meet when the House of Assembly is not in session, and this is the first meeting we have held since, so I want to welcome these members to the committee. I might say, the seventh member, Mr. Alvin Hewlett, the Member for Green Bay, is on the mainland today and was unable to be with us.

I will start out by referring questions to Mr. Tobin. For the benefit again of the witnesses, normally I go around to all the committee members and give them an opportunity to ask questions and receive answers. I have asked them to be fairly brief and concise. I would ask witnesses to do so, but by all means take whatever time you feel is necessary to adequately explain the issue.

Mr. Tobin?

MR. TOBIN: Thank you, Mr. Chairman.

I would like, if I may, to begin with the public tendering, the purchasing aspect. We do have some material put in book form for us to discuss. There are various issues there but, as the Chairman said, we have to be as quick as we possibly can so I do not intend to ask all the questions in that area, but there is one area that I would like to ask the first question on and that is regarding the air ambulance, the twin otter contract. It is my understanding from the information I have that this contract expired on November 30, 1990 but was extended until the 31 of August of '92 for a twenty-one month period, and during that time there was $1,153,510 spent, or an average of $96,000 a month without public tendering and I am wondering, why did that happen?

DR. ROBERTS: The information is substantially correct. The first contract was negotiated in November 1985, for a five-year period. That contract was negotiated after an extensive consultation with government at that time and a revamping of the transportation service, the air ambulance service provided for the people of northern Newfoundland and Labrador. That contract was for a five-year period for a twin otter based in Happy Valley - Goose Bay and providing services for the people of northern Newfoundland and Labrador.

Since that time, from the period 1985 to 1990, extensive changes took place in the commercial scheduled service in the area. There were changes in government's thinking on how government wished to approach its relationship with Labrador Airways, and government does have a relationship with Labrador Airways as I suspect you all know. At that time, when the contract was coming close to its termination, we advised government of this and we sought direction from government on how to approach this issue. Government asked us to extend the contract on an interim basis while government worked through its relationship with Labrador Airways.

This was obviously a prolonged period and ultimately the contract was extended for up to almost a year and nine months I think, and when government concluded its negotiations with Labrador Airways and established the basis of its subsidy, we then went ahead in concert with government's direction to call tenders and to award a contract to Labrador Airways again. That was done on April 1, 1993 for a three-year period this time.

MR. TOBIN: So this was done with the approval of government, is what you are saying. Which department approved that for such a prolonged period?

DR. ROBERTS: The discussions that we had with government at that time were taking place with both the Department of Health and the Department of Works, Services and Transportation but principally with the Department of Health.

MR. TOBIN: So it was approved by them?

DR. ROBERTS: There was never any formal approval in the sense of: we formally approve this extension contract, but certainly government was aware that we were undertaking this and on several occasions we advised government of our concern that the contract had terminated and we were extending on a month to month basis.

MR. TOBIN: How much was the contract, prior to the new one being renegotiated, and how much is this one now?

DR. ROBERTS: I cannot give you the precise figure at the moment. It is approximately a million dollars a year and it varies with the amount of services offered in accordance with the contract. The new tender which we have awarded now on April 1, 1993 - we had two bids on that tender; the bids themselves were within 10 per cent of each other and we awarded it to the lower bidder and the cost of the contract now is, if I remember correctly, about 6 per cent approximately more than the last contract.

MR. TOBIN: 6 per cent?

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

MR. TOBIN: The average monthly expenditures of $96,000, what would that entail?

DR. ROBERTS: For that contract, it would be the basic contract for the service and for the use of that plane, the twin otter, for anywhere, depending on the service demand, anywhere between seventy-five and 125 hours per month.

MR. TOBIN: Who would have access to the twin otter?

DR. ROBERTS: To the plane? Gerry just calls upon Labrador Airways upon demand for the use of the plane so we would control the people using the service.

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

DR. ROBERTS: We have used it principally for the transportation of patients from the north Labrador Coast to Happy Valley - Goose Bay, the local hospital or to St. Anthony. In addition, we would transport staff on business and people such as board members on (inaudible).

MR. TOBIN: Are there logs available for people who used the plane and for what purpose?

DR. ROBERTS: We do keep logs. We have not published them but they are presumably available as is any public information.

MR. TOBIN: Could they be made available to the Public Accounts Committee?

DR. ROBERTS: They could be, yes.

MR. TOBIN: Thank you, very much.

MR. CHAIRMAN: Thank you Mr. Tobin.

Mr. Penney would you like to start out?

MR. PENNEY: I have a few questions I would like to ask relating to inventory and some discrepancies I see in the Auditor General's Report dealing with prices. As a businessman myself I can appreciate the importance of a year-end inventory count but as a pharmacist I am somewhat disturbed by some of the discrepancies I see printed on Page 60. I understand everybody has a copy of the report. If I may I would like to ask a few preliminary questions first so I can get a feel for what is happening here. I see it is listed here as drugs for St. Anthony, drugs for Goose Bay, and drugs for Churchill Falls. First of all would that be three separate purchasing accounts? Would there be three separate lots of purchasing for those three locations?

MR. WAYNE NOEL: No, it would not.

MR. PENNEY: So this would all be central purchasing? These three stores would receive their drugs distributed from some central warehouse?

MR. WAYNE NOEL: No, they would be distributed directly from the supplier.

MR. PENNEY: Under a single invoice?

MR. WAYNE NOEL: No, separate invoices.

MR. PENNEY: Single purchases but three separate invoices.

MR. WAYNE NOEL: It would not necessarily be a single purchase.

MR. PENNEY: So, each store would be responsible for purchasing its own requirements of pharmaceuticals?

MR. WAYNE NOEL: They would requisition their request through the purchasing department.

MR. PENNEY: And who would be responsible for the ordering and record keeping in each individual store?

MR. WAYNE NOEL: In the case of drugs it would be the pharmacist who would be responsible for requisitioning the goods and he would be responsible for the control of inventory.

MR. PENNEY: How many pharmacists would you have to look after those three locations, St. Anthony, Goose Bay and Churchill Falls?

MR. WAYNE NOEL: Two.

MR. PENNEY: And the pharmaceuticals would be kept in a recognized, secured dispensary?

MR. WAYNE NOEL: That is right.

MR. PENNEY: So when I see the figures here, general ledger and physical count, in the case of St. Anthony, $277,000, that would include narcotics and controlled drugs?

MR. WAYNE NOEL: Yes, it would.

MR. PENNEY: A notation is made here that large differences exist between the inventory actually counted at year-end. Could you explain to me the basic procedure that would be used in the physical counting of the inventory? Obviously each individual capsule and tablet would not be counted. Would it be estimated? What sort of general procedure would have been followed?

MR. WAYNE NOEL: Every single tablet would be counted. The procedure is done annually and it is done by the pharmacist in conjunction with the drug clerk and the purchasing director. There would be a separate count sheet made up, the count would be recorded on that sheet and then it would be sent to the comptroller's office to be consolidated with the general ledger.

MR. PENNEY: So the pharmaceuticals that would be recorded on your year-end inventory count would then be compared against your purchases minus the drugs that had been dispensed?

MR. WAYNE NOEL: Yes.

MR. PENNEY: How then do you account for the major discrepancy that is recorded here for Churchill Falls? The general ledger shows $32,802 worth and the physical count only $23,249 worth. That's a discrepancy of about 40 per cent.

MR. SANSFORD: Some of this can be attributed to obsolete items that were not taken out at the time when they were discovered. It went on for two or three years. Other reasons would be the pricing involved in the count, the difference between the count and the general ledger.

MR. PENNEY: If they were obsolete items that were not taken out that would make your count higher than what your ledger would show, would it not?

MR. SANSFORD: Yes.

MR. PENNEY: In the case of Churchill Falls, your actual physical count was 40 per cent lower than what your record showed.

MR. SANSFORD: I'm sorry, I don't have the details of the findings of those with me, so....

MR. CHAIRMAN: Would you be able to get that for us? I should have said this earlier. If questions are asked that you don't have the information on, it's quite acceptable to provide it to the Committee at a later date.

AN HON. MEMBER: Yes.

MR. CHAIRMAN: Perhaps you could get the answer to that and provide it to the Committee.

MR. PENNEY: Do you know whether in those discrepancies there were any narcotics or controlled drugs involved? Obviously your stores would have contained codeine, morphine, Demerol, those sorts of things. The discrepancies that would have been listed here by your accountant, Ernst and Young, would that have included any discrepancies in narcotics?

MR. SANSFORD: I wouldn't know that - the type of drugs that would be included in the discrepancies.

DR. ROBERTS: To the best of my knowledge it would not include specifically any deficiencies in the controlled drugs. We manage the control of drugs in accordance with the law. They are checked regularly by the pharmacists and by the external agencies involved in managing those. Were there a discrepancy, the actual loss of a drug, or a drug missing, account not reconciling, we would bring into play the normal management system for managing that controlled drug and for investigating and pursuing to a conclusion the discrepancy.

MR. PENNEY: Has either one of those locations - St. Anthony, Goose Bay or Churchill Falls - been audited by the narcotic inspector?

DR. ROBERTS: I cannot say specifically, but generally I would answer that to my knowledge the narcotic auditing people were here. They're certainly here once a year at least, if not more frequently. I can't say for certain in Churchill Falls. Most probably they are in Goose Bay at least once a year.

MR. PENNEY: Thank you, Mr. Chairman.

DR. ROBERTS: If I may add one point as well. Recognizing problems in inventory control, and the discrepancies between the counts and the evaluations, we've instituted a practice of counting inventory quarterly and reconciling differences at that time.

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

MR. CHAIRMAN: Mr. Penney.

MR. PENNEY: How have you found your records to compare since you've started this new procedure to what we see here in this report?

MR. SANSFORD: Discrepancies are very much reduced. This year, for the first time in several years, our external auditors have attended the count. The discrepancies are much less than they were. There are some small amounts, but they've been investigated and reasons for discrepancies have been found. Like pricing or change in invoices not being there, or the goods not being there when the invoice was there.

MR. PENNEY: I see. That's basically at your year-end cut off.

MR. SANSFORD: We do it quarterly now.

MR. PENNEY: Yes.

MR. SANSFORD: We make the reconciliation quarterly now instead of year-end.

MR. PENNEY: But back in the figures that we're looking at here some of your discrepancies could have been with the day of your cut-off or your year-end.

MR. SANSFORD: That's right.

MR. PENNEY: Thank you, Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Penney. We'll go to Mr. Crane at the far end. Mr. Crane.

MR. CRANE: Through some of the notes I have here I was fascinated with some of the remarks of the Auditor General. For instance, I note one note here which shows that the Public Tendering Act and purchasing was somewhat out of whack to what it was. For instance, a clerk purchasing under her name in the amount of $25,000, how would that get through without somebody nabbing it or checking on it? Somebody has to be supervising somebody. Somebody would catch that, would they not?

MR. NOEL: That particular section which refers to the $25,000 purchase specifically states the purchase order was signed by the clerk. In actual fact, all of the work leading up to the actual approval of the requisition was done by the purchasing director. It was just the physical purchase order itself.

Under our new computerized system, if the purchasing director does not sign the purchase order, it will automatically come off the system which is entered into by the clerk, so the approval is the actual requisition which leads up to that.

MR. CRANE: Looking at the deficit figures, I am sure this hospital is no different than any other hospital. Every other hospital is finding it very difficult and they have all been asked to cut costs over the last couple of years. I know a hospital in my area has gone through a rough time trying to keep the deficit down.

I was reading a note here that says: Ending March, 1992, the board's accumulated deficit for the revenue fund had increased to $2.56 million from $2.47 million the year ended March 31, 1989.

What have you done to curtail it, or have you done anything, or what are you proposing to do to reduce the deficit?

DR. ROBERTS: We have done many things to curtail the deficit. I presume it would go without saying that we are as concerned about the deficit as anybody else. No public service organization can function beyond it's means continually, and we have been aware of this problem and wrestling with it for a considerable time - long, extensive discussions with the Department of Health taking place over a period of time.

We have taken several actions. Looking at the bottom, right-hand corner figure, if you will, the ultimate of ultimates as I understand the accounting system, would be our combined fund deficit, or if it were positive our net worth. If we were to close shop today and cease business, we would have an obligation today - or at least at the time of the Auditor General's Report - of $3.43 million. In the past year we have succeeded in reducing that by 13 per cent and now, at the completion of this year, 1992-'93, the combined fund deficit is under $3 million. It is, in fact, $2.984 million, which is a reduction in our combined debt of 13 per cent over that time.

Referring back, the combined fund accumulated deficit, or combined funds, consists, of course, of the revenue fund, which is the principle fund of activity. It consists also of our grant program fund and our special purpose fund. Our revenue fund has not yet declined, although our bottom right-hand corner, the ultimate figure, if you will, has improved, we have not yet succeeded in totally eradicating our yearly deficit on the revenue fund. We have made substantial improvements, and we believe that we are in place to look forward to a - given all being equal, and no fee changes, if you will, in the coming year in the levels of government funding, we will be in a position to record a surplus on all fund activity in the coming year.

I think, speaking specifically to the question of the things we have done to challenge the deficit issues, we have obviously made operational changes throughout. We have tightened many activities. We have reduced services in some instances. We have reduced staff.

Overall we have exercised a much tighter degree of financial control than we had previously.

The last comment I think directly to this point is I think we must ask the question of how it is that this deficit has - what's brought this deficit, where has it come from. It is important to note that there is a substantial accounting change embodied in that which is noted in the report, and that we now in our deficit have accumulated $2.9 million liability for severance pay, which is a substantial part of our deficit. That is substantial. We have also accumulated and stated in our statements today upwards of $800,000 of vacation pay, liability, if we were to close shop today, which we would be liable to pay.

I know there's debate about the accounting policies, and the Province doesn't do it the same, and there's some discussion amongst hospitals on how this is shown. These are substantial amounts which materially influence the deficit which shows. I think I should also say obviously that in our operations our costs, in previous years, have exceeded the revenue which was available to us.

MR. CRANE: Purchases over $5,000. I notice there's many sole suppliers, one supplier. Is it possible there's that many things and there's only one supplier for them? I can understand certain things where there can only be one supplier. I know if you buy a certain colour range, a certain type range, you're going to buy it from one supplier. But there are certain things that may not have the same name but still you could tender to different suppliers, right?

DR. ROBERTS: Yes.

MR. NOEL: If I could address just a couple of the points there. The first one, which is purchase order 12799 which is equipment repair. This is a piece of medical equipment, a gastroscope, which has to be repaired by the manufacturer. No one else can carry out that kind of sophisticated repairs of fibre optics. So it was returned to the manufacturer. An estimate was provided to us, and of course we approve or disapprove of the repairs. It isn't the case where you can go to tender, where anybody's shop can sort of repair internal fibre optics.

MR. CRANE: You wouldn't say that all those come under that same situation. You know, all those listed there certainly wouldn't be specific... you know, pieces of medical equipment that couldn't be serviced.

MR. NOEL: It's not all medical equipment. The next one, which is purchase order 11847, is a service agreement. This is a service agreement on a piece of equipment that must be serviced by the manufacturer.

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

MR. NOEL: Yes, it's the sole source. The next one, 13661, was an actual surgical system. This is a sole source piece of equipment. This is the only company on the market that could provide us with a no burn guarantee. There are some electrical surgical units out there, but we wouldn't purchase a piece of electrical surgical unit that couldn't guarantee no burn, because of liability.

MR. CRANE: I notice you have the next one marked as to nature of the purchase if necessary to tender.

MR. NOEL: This one's a little bit different. This is carpeting. Instead of going to the public tender for $12,000 worth of carpet we invited tenders from the local area. In this case we went with the low bid.

MR. CRANE: Thank you, Mr. Chairman.

MR. CHAIRMAN: Mr. Langdon.

MR. LANGDON: I would like to follow up a little bit more on what Mr. Crane was saying, on the sole supplier of different commodities or medical equipment or what have you. I'm wondering, say when certain people come on staff, after they have been trained in a certain hospital and have become accustomed to a certain piece of equipment, then, when that particular piece of equipment is ordered, is it primarily of personal preference that they would be with this particular company rather than widespread tendering across the board? Does that ever happen to account for some of the expenditures of about $5,000 that you would tender?

MR. WAYNE NOEL: That often occurs but we discourage it whenever possible.

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

MR. WAYNE NOEL: No it is not one of the reasonings in any of the other reported purchase orders mentioned here.

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

DR. ROBERTS: Well, to add to that point, I would say also that one of the difficulties we have had occasionally with staff, is that we have refused to allow staff to enter arrangements with providers of specialized equipment which could be construed to be of unfair advantage to the provider of the equipment.

For instance, speaking generally, providers of certain types of equipment will say: we will give you the equipment if we can sell you the consumables that go with that, and some of our staff feel that we have taken, if you will, an unduly prudish attitude to that and said that we are spiting ourselves by doing that. We refuse to do that; it just does not work and invariably those kinds of arrangements work to the providers' benefit and we have refused to do this.

MR. LANGDON: Okay, that clears up that point. There are so many other things. For years I was a member of a town council and I knew the regulations and so on that we had, if we did not go to tender for things under $5,000 we would get quotes from at least, I think it was three people. That was specified in the manual and I saw here on one page - I cannot identify the page right now -where, I think it was $3,000 or $4,000, which is not a large sum of money, but it is a matter of principle as far as I am concerned and I think the quote was from here, I am not sure - somebody might be able to give me the page later on - that we did not think it was necessary to go Province-wide or across the Province to tender. If that was the attitude, that we did not have to go Province-wide, we could save a thousand here and a thousand there and before we know it we could have a million saved. I wonder, is that still the practise or have you probably moved away from that?

MR.WAYNE NOEL: I am not aware that is the practise first of all and secondly, for any purchase under $5,000 we usually invite bids or obtain prices from at least three reputable vendors.

MR. LANGDON: Okay, there are other examples which I could go with, but just to branch off to another topic, how many people do you have employed in the hospital, the total people here?

DR. ROBERTS: 800.

MR. LANGDON: 800?

AN HON. MEMBER: Yes.

MR. LANGDON: I found it somewhat strange in a sense when I looked at the group insurance and I think one of the points being made by the Auditor General was that they were still paying premiums for people who were no longer with the hospital. I am not sure again what page but it was there somewhere.

AN HON. MEMBER: Page 48.

MR. LANGDON: Page 48, it says: During our audit of the group insurance payable it became apparent that you have been paying premiums based on a number of employees greater than that enrolled in the plan. This should be reviewed by the personnel department and if appropriate, brought to the attention of the insurance company and a refund of excess premiums requested.

MR. SANSFORD: That has been corrected and we have adjusted that discrepancy.

MR. LANGDON: Okay, I will pass. There are others but I will not monopolize and will come back again.

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

MR. DUMARESQUE: Thank you, Mr. Chairman.

Page 39, item 7 on Special Purpose Funds: We recommend that GRHS continue its review of the use of Special Purpose Funds, and GRHS said that they would develop terms of reference for each Special Purpose Fund. On page 317 of the accountants report, Ernst & Young, the last paragraph says: in reference to the Special Purpose Funds this information has not been subject to the auditing process applied in the examination of the basic financial statements and accordingly we do not express an opinion on the fair presentation of the information referred to above. Would you mind reviewing the purpose of the Comptroller's Consolidated Funds, and the Executive Director's Discretionary Funds, and the overall purpose of these Special Purpose Funds?

DR. ROBERTS: The Special Purpose Funds are funds which have accumulated and which are used for special purposes. They are acquired in many different ways. We do not have written descriptions for all those funds and how they are used. Many of them have stipulations on them depending on the manner in which the fund was acquired or accumulated. We have, generally speaking, established working practices, if you will, for the use of special funds and for the control of those Special Purpose Funds, and that has been the guide. We are working on written guidelines for each of the funds but we have not yet completed those. We are at work on those.

The Executive Director's Discretionary fund was a fund which existed prior to my becoming executive direction and which was established by donations to that fund by individuals, and I am not sure how else in the beginning, and was to be used by the executive director at his discretion for purposes obviously within the work of Grenfell Regional Health Services. Through the years we have used it for various projects and various activities at the discretion of the executive director and with the agreement of the comptroller.

The second one you mentioned, the Comptroller's Consolidated Fund, is a fund where we have accumulated unusual funds which have come to us, almost as if to say, funds which did not have another place. The interest on accounts is in there and at certain times other funds which we did not know what to do with we put there.

MR. DUMARESQUE: Would they be actual board funds?

DR. ROBERTS: We have no funds which are not shown in these statements. In other words everything is shown in these statements. There are no independent GRHS funds. There is no separate board fund which you have not seen. It is all here. These funds are all the responsibility of GRHS obviously and as executive director I would be responsible for the management of those funds and it would be a matter for me to ensure that the board is properly consulted and had the opportunity to participate in the dispensing, as would be our standard practice.

MR. DUMARESQUE: Is it fair to say that these funds, the Special Purpose Funds, including the Comptroller's Consolidated Fund and the Executive Director's Funds, could be used for other operating expenses or deficit reduction?

DR. ROBERTS: If I may ask the intent of your question? Do you mean to say that they have been used that way or that they would be available in future to be used that way?

MR. DUMARESQUE: If the board were to decide that these funds did not exist, is there any problem with these monies being taken and used for other operating costs of the board or addressing the deficit?

DR. ROBERTS: Not in a legal sense that I am aware of, however, there is a very real and practical sense in that these funds are in fact used as the working capital of the organization, so we have in fact increased those funds as best we could to ensure that we have the working capital and to resolve some of the cash flow difficulties we had at one time.

MR. DUMARESQUE: On Page 321 in particular we look at items like the New England Library - for March 31, 1992, $101,000.

DR. ROBERTS: All of those funds that are there refer to funds which are not within the discretion of GRHS and, Mr. Chairman, if I may, it takes a moment of explanation.

The International Grenfell Association is a private, separately incorporated entity which has its own endowment and its own income. For various tax purposes, particularly the requirements of the International Revenue Service in the United States, Grenfell Regional Health Services has agreed to serve, if you will, as a conduit for the funds from the International Grenfell Association to avoid tax liabilities in the United States and in Canada, so we have funds coming through Grenfell Regional Health Services which are not at our discretion - funds which the International Grenfell Association would make decisions about and we, upon the instruction of the board of directors of the International Grenfell Association, would carry out the precise Act.

For example, the New England Library Fund is an amount of money that the IGA determines each year. I think presently it is $10 per year, per student. Presently, the International Grenfell Association is providing $10 per student to every school board in this area to supplement their library and resource materials, and that is what that amount is.

MR. DUMARESQUE: Okay, just to get it clear, the IGA receives funds from donations, from anybody in the world, and they request that you, Grenfell Health Services Board, pay out these monies in accordance with a list that they submit. So you are saying you are a rubber stamp for that particular department, at least.

DR. ROBERTS: We are not even a rubber stamp, if I may. We make no decision. We provide an accounting service and we provide a business service to them to allow the IGA to carry out their business in accordance with the requirements of the IRS.

MR. DUMARESQUE: On occasions where we have seen the supporting agencies like the New England Library for $90,000 and then the actual expenditure is $101,000, there would be a deficit of $11,000 there. Also, in other areas there are deficits. Would these expenditures above what would be noted be borne by the board?

DR. ROBERTS: By the board of GRHS?

MR. DUMARESQUE: Yes.

DR. ROBERTS: No, absolutely not. The International Grenfell Association would make up the differences, and conversely, if they have forwarded more funds than we have used, that is clearly recognized as an IGA fund.

Obviously, this statement is at a particular point in time and there may be transactions in progress one way or the other which do not exactly balance out at the point in time that this statement was done.

MR. DUMARESQUE: You say the terms of reference for these Special Purpose Funds have not been finalized. Have terms of reference for any of the Special Purpose Funds been finalized?

DR. ROBERTS: No, we have not presented any to the board, and the description of those terms of reference is for all of those funds which really have to be subject to the board's approval.

MR. DUMARESQUE: So, in respect of expenditures, again, like the Lions Club for $25,000, and the St. Anthony Recreation Committee, the IGA International Board would say: `We would like for you to spend these'?

DR. ROBERTS: I don't have it right in my eye, but I presume you are referring to the fact that the IGA made a grant of $25,000 to the Lions Club to assist in the construction of a recreation centre. The IGA gave us $25,000 and said: `Disperse that to the Lions Club,' which we did.

MR. DUMARESQUE: Do you, at any time, make representations to the IGA Board for any of these monies - this part of this budget - to be used for anything other than -

DR. ROBERTS: Yes we do. The International Grenfell Association has established a grant application process. The International Grenfell Association exists, in the most simple terms, for the well-being of the people of Northern Newfoundland and Labrador, and that is its constitution, summarized, obviously, two pages in one sentence.

We, as a public service agency in the area, applied to the International Grenfell Association for specific grants from time to time, and the IGA does award some specific grants, from time to time, to Grenfell Regional Health Services. Obviously, there is a strong continuity of interest between the International Grenfell Association and the work of Grenfell Regional Health Services.

MR. DUMARESQUE: Okay - that is the line of questioning I wanted to pursue on that part of it but if I could, Mr. Chairman, I would like to look at another area, which is the relationship between the Province of Quebec and the Province of Newfoundland and Labrador. I note in your Budgets of 1990-91, 1991-92, that there is some non-residents income of $800-and-some-odd thousand dollars. Would that be largely from the Province of Quebec?

DR. ROBERTS: Principally, it would be from patients coming to this hospital from the lower North Shore to here, to the current hospital, yes.

MR. DUMARESQUE: Do you have any idea of the cost of patients going from Newfoundland to Quebec, particularly, Forteau? Is there somewhere that that accounting is done?

DR. ROBERTS: I don't have it. That would be a transaction between the Government of Newfoundland and the Government of Quebec. Presumedly, and I stand to be corrected, but presumedly, the Department of Health would have that record.

MR. DUMARESQUE: So that is not something that you would, as GRHS, incur as a part of your budgeting?

DR. ROBERTS: We have no direct financial relationship with the Government of Quebec. They do not make payments to us. They make payments to the Government of Newfoundland in respect to services rendered by GRHS.

MR. DUMARESQUE: And the government gives it back to you as an item?

DR. ROBERTS: That is correct.

MR. DUMARESQUE: So, is it fair to say then, that it doesn't concern you to what degree there is a usage by Labrador Straits residents of the hospital in Long Point, because it doesn't reflect upon your budget?

DR. ROBERTS: I do not think that the premise and the conclusion are related. If I may, I do not think it is fair to say that we are not concerned - we are concerned. Equally and separately we are concerned with our budget, but the fact that patients going from Labrador to Quebec does not affect our budget, does not mean that we are not concerned - of course, we are concerned.

MR. DUMARESQUE: What area would you be concerned about?

DR. ROBERTS: We are a provider of health services to the people of Northern Newfoundland and Labrador including the people of Southern Labrador, and we strive and aspire to provide the best possible service that we can for those people. We like to believe that we can provide a better service in Newfoundland and Labrador than is available in the Province of Quebec. It disturbs us that patients from the Province of Newfoundland feel that they must go to the Province of Quebec for services. Equally, I am sure the Government of Quebec, by corollary, is concerned that patients in Fermont, extensive numbers of them, would feel it necessary to come to Labrador City. It is the argument in reverse there.

MR. DUMARESQUE: Right. Has there been any type of analysis or any type of communication with the people of the Labrador Straits and more particularly, I guess, any kind of follow-up with the people that do frequent the hospital in Quebec, as to why they are going there? Do you feel that it has reached the point where maybe your facilities, in Forteau are not being fully utilized?

DR. ROBERTS: I do not know of any specific study asking the question of individuals: Why have you gone to Quebec? We have, to date, not felt that that would be a productive or worthwhile exercise. Yes, we certainly are aware that people go and we know, generally speaking, why some people go.

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

MR. DUMARESQUE: Well, just whether it has now or at any time in the past reached a level where you were - as you said earlier, you are really concerned about the fact that it is happening, but has it reached a level where you would see fit to take some steps to try to prohibit its happening?

DR. ROBERTS: We have, yes.

MR. DUMARESQUE: Or the complete utilization, as you see it, from your service.

DR. ROBERTS: We have a constant discussion about that, and generally speaking, on why people go to Quebec. There are some general reasons. Some people, purely for their personal preference, with no professional reason known, will choose to go that way. Some people will choose to go that way at particular times because they feel they can get a service in Quebec at a particular time which is not available to them in Forteau, in Labrador.

There is a certain amount of that and there always has been. It depends on people; it also depends on practitioners. Sometimes a certain doctor in Forteau, for argument's sake, might attract many people who otherwise used to go to Quebec, or vice versa. We have had a bit of coming and going on that. To my knowledge, the level of - migration isn't the right word - of treatments outside the Province has not changed dramatically, that I know of. My suspicion, and I recognize clearly, it is a suspicion, is I doubt that we can - I am not sure what we can do to materially change that number.

MR. DUMARESQUE: Just a final question relating to my district and also the Forteau Chronic Care. Recently, I think, maybe a month ago, there was a public statement made to the effect that you plan to open a chronic care facility in Forteau in January, I believe.

DR. ROBERTS: That is correct.

MR. DUMARESQUE: Is that still on target, and is there any concern that January is when the ferry terminates, or anywhere from the twentieth to the first, and if furniture doesn't get in, and so on, that it may not open?

DR. ROBERTS: I have no concern of that nature. We have established with government the funding mechanisms and have government's approval to proceed to open that service. We are looking forward to it, we recognize the need for it and are somewhat anxious to get it going. It doesn't make us very happy to have a building built which is plumb empty and not of any public use. I don't know any reason why we won't get that service going on January 1, and as far as I am concerned, we will. As I say that, I have to say that we have not received the levels of funding that we have requested, but we have negotiated a suitable level to allow us to provide the service. I think it would go without saying that every public service would like to have more funding than they sometimes have awarded to them.

MR. DUMARESQUE: Thank you.

MR. CHAIRMAN: Thank you, Mr. Dumaresque.

I will move, first of all, into a few general questions. I want to revisit the issue of the overall deficit situation. Something like $5.5 million, I think, last year was an overall deficit. Perhaps you could tell us: How did the board develop such a deficit? You had a budget, the budget was approved. There were comments from the Auditor General relating to the apparent lack of participation of departmental heads. Your response indicates the departmental heads certainly are involved and submit their budgets, and therefore, they have a budget that they are responsible for and should be managing. Why would a deficit grow seemingly so quickly last year? Was it unusual things, or was it something -

DR. ROBERTS: Yes, it is a mixture of all - if I may, it might be a little bit rambling in the response, but if you bear with me. I think, as I have said - well, first, to put it in context.

Up until 1988 Grenfell Regional Health Services had a positive fund, a positive variance on the revenue fund, and we were certainly positive in our combined fund balance. At that time, our situation started to deteriorate, if you will, financially. We were aware of that. There were many changes taking place in the environment within which we function. Obviously, this was the time when the strain on all public services was just coming in - I am sure you know more about that than I do - and it took some time to work through. So there was that very general difference in the environment and the costs of providing services, which came on heavy at that time.

There was a substantial change in the accounting policies, as I mentioned, and we were required to show, or to book, or whatever, the -

MR. CHAIRMAN: Have you moved into an accrual accounting system, or partly into that now? Is that where you are?

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

MR. CHAIRMAN: Not totally, though?

DR. ROBERTS: Not totally. We did not show severance pay and we did not show vacation pay, both of which we are required to show now by the industrial standard - the Canadian Hospital (inaudible) Society or whatever, both of which we are required to show, and both of which are substantial amounts.

It also came at this time that the amounts of those things have increased dramatically. The limits were removed, for instance, from severance pay. Instead of having the twenty-year limit, it increased. There is no limit now, so - excuse me, I am saying that improperly. Instead of having a $12,000 limit, we now have a twenty-year - in other words, twenty-week, and there is a huge difference there. Also, salaries increased dramatically during that period of time, and that works through with great differences in pensions and with severance.

MR. CHAIRMAN: Was none of that included in your budget preparation, though?

DR. ROBERTS: At that time, those things were not accounted in hospitals anywhere, to my knowledge, and I suppose it is proper to say this is why the industrial standard changed. People recognized what a liability that was out there for severance pay and vacation pay.

MR. CHAIRMAN: I can appreciate that, but salary increases - surely there must have been allowance in your budgeting initially for projected salary increases.

DR. ROBERTS: There was allowance for salary increases, of course, in the day-to-day, but not for the liability that would come in years hence in severance pay -

MR. CHAIRMAN: I can appreciate that.

DR. ROBERTS: - which is a big difference. Salaries have doubled since that time, with the limit going up at the same time, so instead of having a limit of $12,000, we now have a limit of twenty weeks which, in some instances, means that some of the more highly paid employees are now entitled to $30,000 or $40,000 worth of severance pay, which is a huge difference.

The other factors, if I may, or some other factors - we, during that period of time, undertook substantial capital improvements throughout the area, all of which were not funded. We have, as noted by the Auditor General, a policy of expensing capital improvements at the time they are completed so that they show on our books as an asset of $1, whereas something that we may have spent $1 million for, or whatever amount, now shows on the books for $1. This is an issue which has been raised and which again is an accounting debate, if that is the right term.

We have had substantial capital improvements over the time, and that has partly contributed to the deficit, as well. We have incurred consistent - perhaps I shouldn't say consistent, but we have incurred substantial overexpenditures in the provision of transportation services over the time.

MR. CHAIRMAN: Can you tell us why?

DR. ROBERTS: Simply because we spent more money than we had coming in. When we discussed this problem - and it was a known problem, it was not a secret; it was something we discussed constantly with government - and we would present government with the option of either reducing the service or maintaining the service and incurring the deficit, we never did get a direction from government. And it is a government policy, or it has to be in accordance with government, and we never did get a direction to reduce those services.

MR. CHAIRMAN: You are talking ambulance services, air services -

DR. ROBERTS: Air ambulance services.

MR. CHAIRMAN: Primarily air ambulance.

DR. ROBERTS: Primarily air ambulance.

MR. CHAIRMAN: What would cause the - you budgeted a certain amount, but (inaudible) required.

DR. ROBERTS: Utilization.

MR. CHAIRMAN: Why would utilization increase so much?

DR. ROBERTS: That is a good question. I wish I could answer it, but I can't. Since 1985, we increased the capacity on the North Coast of Labrador especially, and since that time, the utilization of our service has - I don't have it in front of me precisely, but I would say it has doubled in the numbers of people coming from the North Coast communities to Happy Valley - Goose Bay for particular services.

What drives that, I don't know, or let me say it this way, I can't say anything any different from: Why do we have increased utilization of hospital and health services everywhere? It is the same phenomenon. What happened is, if you will, we removed one of the gates. Transportation used to be a gate. You couldn't get a seat on a plane. There wasn't a space so you didn't get transported. When you removed the gate and made more capacity available, well, the capacity was used. We have, in the past year, worked, and are working now, to reduce the utilization of transportation services. We are at present holding it steady, but believe me, it is a mighty battle.

If I can put it into very practical terms by illustration, you are faced with the dilemma - a nurse or a doctor in a North Coast community who sees a patient, for the example's sake, a woman and a man bringing their child: those parents feel that that child should have an X-ray, which is not available; the doctor, or nurse, feels that it is not necessary, and that doctor or nurse is then left with the question, how do you negotiate that conclusion to that patient visit?

Now, it's fine to say, you should say no. We do that, and we try to do that, but the reality is that sooner or later, in the system that we have established, and which we presently maintain, most patients get what they want. And that comes at great cost, great difficulty. It is the same problem, really, as MCP. If you go to a doctor in St. John's and you don't get what you want, you go down the road to Mount Pearl and you don't get it, then you go out to Torbay and you do get it - and we have paid for it all around.

MR. CHAIRMAN: The comments the Auditor General made in the report were dealing with a budget monitoring system. How accurate and how beneficial is that?

DR. ROBERTS: How accurate is the system?

MR. CHAIRMAN: The budget monitoring -

DR. ROBERTS: The system.

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

DR. ROBERTS: At the time of the Auditor General's audit, we were then establishing a variance reporting system. It was new. We have now had a one-year experience with it. It is greatly improved from what it was but I can't say that it is absolutely perfect - it is not. We are working with staff to train and educate and help them in developing this variance reporting system to the point that it is of practical use to us and them in making management systems. I think we have made dramatic improvements. But it is a struggle. We operate in many different locations. We have all the problems of transmitting information back and forth, and people learning this aspect of their management responsibilities.

MR. CHAIRMAN: Apparently you do not have a financial management manual in place, which is a pretty basic tool. You are doing that now. Why only now?

DR. ROBERTS: We do have a financial management - the paper, the document in place, the book of words. As for myself, I can't - Mr. Sansford can offer - I can't offer you any specific reason why we didn't do that, and I do not offer it as an excuse, except to say that in my experience, most hospitals would not have the kinds of policy manuals that we have since developed.

MR. SANSFORD: There were different manuals for different policies by different sections of the accounting, and they weren't assembled into one policy and procedure manual, as such. Now we have done it and put it into one place so that we can continue on.

MR. CHAIRMAN: Perhaps I could ask the Auditor General: Have you seen this new policy manual since you have done your audit?

MS. MARSHALL: No, Mr. Chairman.

MR. CHAIRMAN: You have no idea whether it is acceptable or not.

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

MR. CHAIRMAN: A problem we have found with many agencies that we have investigated is that their management policies and procedures have not been adequately documented and there has been no control to ensure that policies made by boards have been followed up. One of the real weaknesses we find every time we sit down with this type of information is that procedures might be there but they are just not followed, and the question is, why are they not being followed?

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

MR. CHAIRMAN: The 1990-91 fiscal year annual report was not prepared and submitted to the minister. Can you tell us why that was not done?

MR. WAYNE NOEL: We submit to the Department of Health, or to the minister, obviously, our financial statements for the year, our statistical and financial information, and the working documentation which is called the HS-1s and HS-2s. They are submitted regularly. There is some question whether or not that constitutes an annual report. I am not sure of the answer to that, but we have regularly submitted those without any question.

In previous years, I, as the executive director of GRHS, in addition, submitted a written report, which would have been fifty or sixty pages of commentary on the work of Grenfell Regional Health Services. At one stage - I guess there is no other way to say it - one year I didn't even get an acknowledgement that I had submitted this. I checked with various other hospitals and I learned that many hospitals, in fact, most hospitals, to my knowledge, were not submitting a commentary such as I had prepared. So, we ceased the practice. It seemed not to be productive and not to be appreciated and not a worthwhile exercise. The first comment to the contrary, obviously, is the Auditor General's comment and we now have determined that we will submit a written/verbal annual report, in addition to the statistical and financial information.

MR. CHAIRMAN: Thank you.

Let us have a look again at some of the tendering procedures. There is evidence that tender documents have not, in the past, been deposited in a locked tender box, opened in public, and so forth. That has been corrected, I am told. Would you like to refer to that, Mr. Noel?

MR. WAYNE NOEL: Yes, it has.

MR. CHAIRMAN: It is also disclosed in our documentation on Page 11 that tender evaluations are not adequately documented. Was there any evidence in the past that tenders were not properly awarded and that there was any tampering by anyone? I am not pointing fingers at anybody here, but did you, prior to putting in place these proper procedures, have any reason to believe that there may have been any discrepancies in the way tenders were awarded?

MR. WAYNE NOEL: No reason whatsoever.

MR. CHAIRMAN: There was one tender awarded in December 1991 for a Mobile Infant Radiant Warmer. Refer to Page 15 of the book there. The closing time and date of the tender was January 15, 1992 at 3:00 p.m. Only one tender was submitted in the amount of $18,903 prior to closing time. The second tender was submitted on January 21, six days later, a lower tender, and the board subsequently awarded the second bidder. A: Why was the second one even accepted after the closing date? And, B: Why was it awarded to, really, a bid that was not a valid bid because it was not in on time?

MR. WAYNE NOEL: The first bid that was received did not meet the specs and we asked for a quotation from another company that could provide the equipment we were looking for. The first warmer did not meet the specs; it was not computer controlled, which was part of our requirement.

MR. CHAIRMAN: Then it wasn't a valid tender. You said it didn't meet the specifications - it was not a valid tender at all.

MR. WAYNE NOEL: Exactly. There are only two manufacturers of infant warmers. The first one didn't meet the specs, so we obviously went out and asked for a quotation from the second one, and the second one was a lower bid.

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

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

MR. CHAIRMAN: It wasn't explained as that, I guess, in the documentation we have here.

DR. ROBERTS: I think, if I may, to make a general comment, the business of a sole supplier is obviously a difficult one for a place such as a hospital dealing in specialized equipment. And my conclusion is that we may only have one supplier but, like it or not, we more often will have to go through a tender process knowing that there is only one supplier.

MR. CHAIRMAN: The tender Act is not designed to frustrate the work of government or any government agencies and if there is only one source, then there is provision in the Act that allows you to go to that one source and report that. In this case, I assume you didn't know prior to calling tenders that the other - you say there is that much difference in the two pieces equipment?

MR. WAYNE NOEL: Well, one piece is old technology, it is an old, manual system and the newer piece of equipment is microprocessor-controlled, it is state of the art.

AN HON. MEMBER: But it is still cheaper.

MR. WAYNE NOEL: But it is still cheaper, yes, as is in many of the electronics in this day and age, it is much, much cheaper. We knew full well, when we tendered, that those two tenders were out there, but this particular vendor didn't bid; that is, we probably neglected to send him a copy of the specs. It is obviously required under the Public Tender Act, to advertise in a newspaper that is in general circulation in the Province, which makes that The Evening Telegram only, and, of course, in any other printed media that is deemed appropriate. But we only advertised in The Evening Telegram for that particular tender and that is why they didn't bid, and we obviously couldn't accept the one who did.

MR. CHAIRMAN: We are getting close to 3:30 p.m., and time for coffee break, as I understand we normally do.

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

MR. PENNEY: Thank you, Mr. Chairman.

I have a few follow-up questions to some of the questions that have been asked and at least partially answered already. I will not direct the questions to anybody specifically, but I would just like to pick up where we left off on some of them.

I believe it was Mr. Crane who was asking questions - I am not absolutely certain about that either - concerning the notation that was made there on a number of occasions that there was only one vendor who could supply a particular piece of equipment, and the answer started to refer to the purchase order number at the beginning of the page. It was equipment repair, and obviously that could only be done by the company which supplied the piece of equipment. But I would like to go a little bit further down that sheet - we are on page 31, if you would like to check. Let's go down to number 13603 - `Enhanced Video Camera'. We were informed that only one vendor could supply this camera. Certainly, that can't be true, that in these days of electronic technology, this particular camera is so different that there is only one supplier?

MR. WAYNE NOEL: This is an enhanced video camera used in the OR for orthopaedic surgery. The camera had to fit on to existing Synthes equipment and I am informed it is the only one that will work.

MR. CHAIRMAN: So we are talking compatibility rather than it's old.

MR. WAYNE NOEL: Yes.

MR. PENNEY: So, if you were replacing the entire system it would have been totally different?

MR. WAYNE NOEL: Yes.

MR. PENNEY: This was the only camera that you could purchase that would fit with the other equipment you already had.

MR. WAYNE NOEL: Yes, existing equipment.

MR. PENNEY: What about the second one down from that, 15286 - `Brochures' - only one could provide brochures for $10,000?

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

MR. PENNEY: Number 15286, serviced by the same vendor, but brochures - and it says we are not aware of the reason on that one.

DR. ROBERTS: Those brochures were prepared for the Grenfell Centennial which was funded by the International Grenfell Association, in conjunction with some funding that was provided by government, and arrangement was made in conjunction with government to purchase those from one provider.

MR. PENNEY: On the following page, number 13558 - we are talking about orthopaedic equipment. Does the same thing apply? Is there only one vendor who could supply this equipment as well?

MR. WAYNE NOEL: Yes, that is correct.

MR. PENNEY: When we say one supplier, are we talking about one supplier available in the Province of Newfoundland and Labrador, one vendor in Canada, or -

MR. WAYNE NOEL: This would be in Canada. My understanding is, this is highly sophisticated orthopaedic equipment used to provide special procedures and that is the only company that can provide that piece of equipment.

DR. ROBERTS: It would be a type of equipment used, for instance, for joint replacements and for fracture repairs. It involves hardware which is used internally and special equipment to insert that equipment.

MR. PENNEY: As Mr. Windsor stated at the outset, my questions are not designed to be interrogation, they are simply questions looking for information. I hope you can appreciate that.

Page 48: Mr. Langdon asked about the group insurance premiums. It became apparent that you have been paying premiums based on a number of employees greater than that enrolled in the plan. The answer was that that has been corrected. My question is: How long did this exist before it was corrected? Did this situation apply for one year or was it three or four years, or had it been going on for a long time?

MR. WAYNE NOEL: I don't have the details on it, but my understanding is, it was just for a few months, and when it was discovered, the correction was made.

MR. PENNEY: Could you give us some idea how many dollars were spent in excess of what should have been?

MR. WAYNE NOEL: I cannot.

MR. PENNEY: Approximately, what was the saving when it was corrected?

MR. WAYNE NOEL: I can't answer that. I can get the information, but I don't have it with me.

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

MR. CHAIRMAN: Mr. Penney.

MR. PENNEY: Again, I am referring to the Auditor General's Report here, for convenience. I ask this question to give you a chance to correct any misstatement if, in fact, there is one, or to give you at least an opportunity to defend yourself against a statement that is made by the Auditor General.

In the middle of page 23, it refers to an $800,000 overdraft. The Auditor General reminds the reader that Section 26(1)(g) of the Hospitals Act states that approval of the Minister of Health shall be required, or is required, in order for there to be such an overdraft. The statement is made: "We could find no documentation that these overdrafts were approved by the Minister." Is that, in fact, correct?

DR. ROBERTS: That is correct. We were not aware that we were required to have that approval. We are aware of the Hospitals Act, of course. To my knowledge, the Hospitals Act - I can't cite the precise article - allowed us to carry on the day-to-day business as necessary and authorized us to do that. It was our understanding, not through a formal opinion ever rendered, that I know of, but generally understood to my knowledge through other hospital administrators, that overdrafts or lines of credit in the day-to-day operating, and particularly at the end of the year when there is this hitch, if you will, in the transfer of funds from the Province to the agency, that overdrafts were common practice.

We understood that that provision was intended to address the situation where an agency would seek a loan for some specific project, such as constructing a building or whatever, above and beyond the ordinary day-to-day activities of the agencies. The Auditor General has made the comment, and is quite correct, that we did not have that approval. Being obviously concerned with such comment, we have sought such approval now and the minister has granted that approval.

MR. CHAIRMAN: Mr. Penney.

MR. PENNEY: Thank you. I would like to just deal with a few more specifics. Mr. Windsor, when he was questioning - you dealt with the overall general report, the general finances and the accounting procedures. I would like to deal with a couple of more specifics. On page 49 of the report, it says under Receiving Reports: "When goods are received there is no written report prepared to indicate receipt of goods."

Now, my understanding of that, again, from a business background, is when an invoice is submitted to your office to whoever would be responsible for making out the cheque, unless there is some kind of documentation, some kind of a packing slip, carrier's receipt or something to show that you had, in fact, taken possession of a piece of equipment or supplies, conceivably, the board could be paying for merchandise or equipment that you did not receive. Is this, in fact, the procedure that had been followed? Secondly, has it been changed and do you anticipate that maybe money was expended for merchandise or equipment that was not, in fact, received?

MR. WAYNE NOEL: Not that we know. No, I am not aware that we paid for any equipment that we never received. Yes, that was the procedure prior to January 1 of this year. Since then we changed from a manual system to a computerized system, whereby the computer generates a receiving report which has to be completed, and then, the data entered into the computer before the invoice can be paid.

MR. PENNEY: Is there a possibility that something may have slipped by - something substantial? How would the person making the payment know whether or not the merchandise was received?

MR. WAYNE NOEL: He wouldn't know; previously, he wouldn't know, he would now.

MR. PENNEY: Yes, prior to this change.

MR. WAYNE NOEL: Prior to this, he wouldn't know, but the invoices would have been sent to the using department, they would consolidate their invoices with their purchases and anything that got paid for would obviously be picked up on that end.

MR. PENNEY: In other words, if the check were made out for $10,000 worth of pharmaceuticals that were never received, that would account for some of the discrepancies that I asked about in my first line of questioning, would it not?

MR. WAYNE NOEL: No, it wouldn't, because when the invoice went back to the pharmacist, he would pick that up.

MR. PENNEY: Okay, I accept that.

If I could direct you to page 52, in the middle of the page under Inventory, there is a comment there by the accountant, Ernst and Young: `Several inventory pricing errors were found when conducting our audit work.' And, on page 45 - this is August of 1990 - `Several inventory pricing errors were found when conducting our audit work.' Page 52, we are looking at July 1991: `Several inventory pricing errors were found when conducting our audit work'; page 59, we are now into July of 1992 and find practically the same comment again, three years in a row. Could somebody explain to me how that could happen, that your accountants, your auditors could make the same comments to you three years in a row and it would not have been corrected?

DR. ROBERTS: I can explain how - I am not sure it justifies. The answer would be that counting an inventory manually demands substantial effort from staff, and, in spite of - we discussed this many times but people felt that we were not sufficiently staffed to count that inventory as was suggested.

MR. PENNEY: When I asked the question first I believe I was told that you had two pharmacists on staff for three locations. Which is the location that does not have the pharmacist?

DR. ROBERTS: Churchill Falls doesn't have a pharmacist.

MR. PENNEY: Churchill Falls.

DR. ROBERTS: And two pharmacists is grossly understaffed for an organization of this size.

MR. PENNEY: I can appreciate that.

DR. ROBERTS: We have a pharmacist here who does, by our estimate, the work of three pharmacists. That is a substantial problem and concern for us which we have not been able to correct.

MR. CHAIRMAN: Because you can't get personnel?

DR. ROBERTS: Funding of the position -

MR. CHAIRMAN: Funding.

DR. ROBERTS: - of an additional position, and, secondly, the difficulty of attracting a person to come and work in the community. We are not able to offer salaries which are competitive with private enterprise. And, until very recently, pharmacists were in great demand, as I am sure you know.

MR. PENNEY: And they all want to stay in St. John's.

DR. ROBERTS: And we know they all want to stay in St. John's.

MR. PENNEY: Why, then, would the comment be there that these errors, the pricing errors, were most prevalent in Goose Bay?

DR. ROBERTS: I have no specific answer. I don't know. I think I could say generally - and again, if I may ask that you appreciate the difficulties of a regional system, where we have to weigh the balance of trying to operate a system of shared services, at the same time allowing sufficient autonomy to people working in the periphery to make the decisions reasonably that they need to carry on their work, that we have a swing back and forth.

Many of us believe that we should have only one material management system throughout the organization. We have not succeeded in achieving that yet. We have improved our material management system by the addition of a module to our computerized business systems, and we are now actively, at this moment, investigating extending that to Happy Valley - Goose Bay through a communication link, either through satellite or telephone, to be decided. But, in the absence of that single system, we have had to live with this difficulty of managing at a distance and allowing people autonomy, and sometimes things happen which are not as we would like them to be.

MR. PENNEY: One more very quick question, Mr. Chairman - we have another minute before it reaches 3:30 p.m. If I could direct your attention to page 95. Now, I know there is obviously a very simple answer to the question I am going to ask. I just can't seem to come up with one on my own. It shows the 1990-1991 budget for the Paradise River Nursing Clinic to be $18,725. Between 60 and 65 per cent of that is for housekeeping, $10,979. First of all, could you tell me what that involves? Because it doesn't include linen or laundry. What does housekeeping mean in this case and why would it represent almost 65 per cent of the total budget for that clinic? Because I have looked at the others, and I see housekeeping for Port Hope Simpson Nursing Station to be $1,650 - that's on the next page - out of $276,000.

MR. SANSFORD: In Paradise River the nurse would visit from Cartwright - it would be the nurse from Cartwright, so it doesn't show any nursing visits salary there.

AN HON. MEMBER: That's right.

MR. SANSFORD: So that would not show in the Paradise River budget.

DR. ROBERTS: So the part-time aid in Paradise River would be shown under housekeeping. At that time when we operated that clinic we had a person in Paradise River working part-time with us and that is where the salary was shown.

MR. PENNEY: So the salary expense is actually shown here in the budget sheet under housekeeping?

DR. ROBERTS: Paradise River was an unusual situation and not a typical station. We had a part-time arrangement there. It is a small community, as you know, of seventy people, and this was, if you will, a makeshift arrangement that we made to provide services in that community. The nurse from Cartwright would provide the service. We have since discontinued that service, pretending to run a clinic in Paradise River.

MR. PENNEY: Yes, I note that there is a figure for nursing units in all of the other nursing stations but not that one.

Thank you very much.

MR. CHAIRMAN: Still, the housekeeping expenses are much higher.

It being 3:30 p.m., we will take a ten-minute break. A cup of coffee is coming somewhere, I think - compliments of the Board.

DR. ROBERTS: Coffee is in the room next door if you would like some.

 

Recess

 

MR. CHAIRMAN: Order, please!

If everybody is ready we will call the meeting back to order. Mr. Penny has indicated that he is finished for now. What about Mr. Crane, at the far end, now? Mr. Crane, would you like to put a question?

MR. CRANE: Thank you, Mr. Chairman. I have one question for Mr. Patey. I am very closely connected with a hospital board, Mr. Patey, and I know some of the problems you are going through. First of all, I would like to congratulate people like you who work so hard for boards for no remuneration. Sometimes you get a good kick in the pants for doing the work you're doing.

Do you have any problem with just the administration when you question them as to certain deficiencies that are noted in this report? Say, if you questioned any of the officials of the hospital, do you have any problem in getting answers?

MR. PATEY: Not really. I would just like to say, I have been Chair since February of 1991 and had no prior experience with hospital boards, etc. At that time, we became very concerned over the fact that there was no active finance committee within the board. We were concerned over the quality of the information that we were getting from the comptroller's office. It was no reflection on the comptroller, I think it was primarily because of the system that was being used. It was information that I did not understand and I am sure that the board members did not understand either. Since that time we have had a consultant in the person of Mr. Butt, who was with the Carbonear system there, I think, Mr. Don Butt, and since that time I must say that the information has improved dramatically to the point where we do get monthly reports, statements from the comptroller's office. We have also introduced variance reporting from our staff people, the department heads, and that also is improving. The question as to whether we get answers - I have had no problem. I have had no reason to doubt -

AN HON. MEMBER: That you were getting the correct answer.

MR. PATEY: Yes. This process here today has opened up for me, at least, some areas of concern and I do appreciate that.

MR. CHAIRMAN: Mr. Crane.

MR. CRANE: That is fine, because I know in some areas sometimes management and the board more often clash than they co-operate, causing some headaches and some difficulties.

Now, I think I will pass it on to Oliver.

MR. CHAIRMAN: Thank you, Mr. Crane.

Mr. Langdon.

MR. LANGDON: On the Native Blue Cross, at the bottom of page 53, it says, at present there is only one account for the Native Blue Cross dental revenues which were given in 1991. 'Moreover, only revenue is recorded for Native Blue Cross whereas all other locations with dental services record both revenue and expenditure.' What is the reason for not including expenditure?

DR. ROBERTS: We provide services to native peoples and we receive reimbursement from the native people's support organizations via Blue Cross, who function as the administrator of their funds. Specifically in dental services we would provide dental treatment to a patient and we would then bill the Blue Cross plan for that service so, in that sense, there is a straight revenue and we don't identify a specific expense. Other than seeking the revenue we do not identify specific expenditure to that actual treatment.

MR. LANGDON: On the next page - page 54 - under `Vacation Pay'; I find that a little bit strange. In fact, it says, `Through our discussions with management, we have observed that a number of employees had vacation pay accrued in excess of that allowed by personnel policies. In effect, employees are carrying forward vacation days during one period and being paid for them at a higher wage rating during a later period.' How long has that been a practice, just one year, or what?

DR. ROBERTS: That has been a practice since my time, and there are some good reasons for that, even though it presents problems. For instance, when you have a sole provider of a particular service and work is such that he or she is not able to take a vacation, we have had to recognize that that person - we can't disentitle him or her to their vacation so we have allowed them to carry that over.

I think we could say fairly that in the past we resorted to that expediency far too often and we have greatly reduced the numbers of people whom we allow to carry over vacation time. In fact, to some people's unhappiness, we have forced people to take their vacations or to forfeit them. So we have greatly reduced the number of people who have accumulated vacation for which we have the liability. But it is a difficulty. If you have one doctor in one location and life is such that it is not possible to say to that doctor: Take a holiday, and either go without a replacement, or have a replacement in place, then we have had little choice in some instances other than to allow them to accumulate.

MR. LANGDON: I also note in the report that there are a few instances, although only minor, and the number of personnel involved is minor as well, where several people went on vacation without the personnel and management people in the hospital knowing about it. I am sure it must have been difficult for an executive director like you, and the personnel, but what about the patients?

DR. ROBERTS: Yes, it is difficult, of course it is, and it is a management issue on which we, I hope, have a good handle. I don't know of any instances ever where we would have deprived or lessened the service that we provide to a patient because of such an occurrence.

MR. LANGDON: But the person who obviously did that, documented from the Auditor General's Report, would that person's contract be terminated because of that, or would there be some extenuating circumstance to allow him back?

DR. ROBERTS: It would be unusual. We would discuss the occurrence with the staff person and given that there was reasonable intent or, if you will, no untoward intent, we would accommodate that person with instructions and the expectation that he would not repeat that.

MR. CHAIRMAN: Mr. Dumaresque.

MR. DUMARESQUE: Thank you, Mr. Chairman.

Page 39 indicates that there is no strategic plan in place for Grenfell. Has any progress been made on strategic planning for Grenfell, and if so, when do you expect to conclude?

DR. ROBERTS: We do not have a strategic plan in place at this time in the sense that we do not have a document which says that this is what we are trying to do. Given the realities of the environment within which we work, and the changes which have occurred in the past, let's say, five years, and the possibility of future changes in the organization of health services, the range of health services, and the manner of providing them, one does have to ask the question: What is the utility of a strategic plan at this time?

We have seen a lot of strategic plans go up in smoke very quickly after very prolonged efforts in producing them. It is a difficult issue. Having said that we don't have a written document which is a strategic plan, we do have a good concept of our business, of the work which we do, of the range of services that we provide. We have a constant discussion with government through the minister and the Department of Health. The Board is actively involved in discussions of what range of services we will provide. So we are proceeding in a generally accepted direction, recognizing the uncertainties within which we work.

MR. DUMARESQUE: I was wondering earlier when you said you were trying to adjust the transportation cost, or trying to economize, if that is an appropriate word - I think particularly about my area, and say, the Mary's Harbour to Charlottetown area, Norman Bay area, whether some thought has been given, as far as strategic planning is concerned, to upgrading, say, the Port Hope Simpson facility and having local transportation provided, like through the same airline as you do now for Medivac, and so forth, that something along those lines would be looked at in the future.

DR. ROBERTS: Two comments in response to that. When I first became involved in administrative work in GRHS in 1975 - in fact, I was the travelling doctor in that area - I had the great idea that I was going to get all the patients to go from Mary's Harbour to Port Hope Simpson. After about two clinics in that area I quickly realized that my great ideas weren't well-founded and that the reality on the ground, and people's wishes, and the infrastructure in the communities weren't going to allow that.

We have not a specific plan to upgrade one of the stations on the South Labrador Coast, or the Southeast Labrador Coast, in that Charlottetown - Port Hope Simpson - Mary's Harbour area. They all function pretty much as equals in terms of what they can do. Port Hope Simpson does have the largest population. I should add Fox Harbour - St. Lewis as well. They all function pretty much as equal. Up until this summer, there has been the additional problem, especially in Port Hope Simpson, that the great majority of the people from the community have gone out to the summer fishing settlements. This summer is different. The majority of people have stayed in Port Hope Simpson, and that may, in fact, lead to some reconsideration of the way we provide services in that area.

The second comment is with regard to transportation, which, as you know, is as important as health services in this area. It is crucial to all activities, especially to health, when you are talking about a small number of people dispersed throughout a large area. We set up a transportation service in 1985 with a thorough discussion with government, with consultation from outside experts retained by government, with a long process, and we established the transportation service we have now - with one exception. The plan was that we would keep the turbo Beaver, which we had at that time, and that we would operate that, because that was most important in providing transportation for people from the South and the Southeast Labrador. In fact, in our view, it was essential. Unfortunately, when we went to implement the plan, the private contractor who owned that aircraft demanded what we considered to be too great a price for the aircraft, and, in conjunction with government, we made the decision not to purchase that aircraft.

I think, in retrospect, it is the one element of our transportation system which has not worked as well as we would have liked. Consequently, we have subsequently, since 1985, monitored our transportation system. We continue to monitor, and we continue to discuss the possibilities of changing the transportation system with the idea of improving it, particularly for the people of the South and Southeast Labrador.

MR. DUMARESQUE: Page 43 - No Conflict of Interest Guidelines. Since every member of the House now is coming under extreme scrutiny on conflict of interest, I just wondered if there has been any thought given to putting guidelines in place.

DR. ROBERTS: We will develop conflict of interest guidelines, obviously, if that is a recommendation and we are required to do it, and in good, prudent business practice, without any hesitation we will do that. Having said that, in my time and in my involvement, I am not aware of a conflict of interest situation which has ever arisen, which we have not adequately and properly surfaced, put up on the table and dealt with as it should be dealt with. I have not seen an activity, again to my knowledge, and obviously, I may have missed or could be mistaken, I have not seen any activity taken by GRHS with a conflict of interest component to it.

MR. DUMARESQUE: The International Grenfell Association board membership - what participation does Grenfell have on that board?

DR. ROBERTS: The Board of GRHS?

MR. DUMARESQUE: Yes, do you sit on the IGA Board?

DR. ROBERTS: GRHS does not have any representation officially on the Board of the International Grenfell Association. The IGA is a private corporation which is entitled to select its own board members and does. As a matter of courtesy, the Board of the IGA has adopted the practice of inviting the Chairman of the Board of GRHS to attend meetings, and through a business arrangement, I, as the Executive Director of GRHS and formerly of the International Grenfell Association, have attended board meetings and acted, through an agency agreement which we have with the IGA, in their interest.

MR. DUMARESQUE: One final area, Mr. Chairman, is that, in the Labrador Straits and particularly in Forteau, in the health care facility, many people have mentioned to me about the make-up of the staff at the hospitals. In particular, about 80 per cent of the staff are of one religion and they make up probably 5 per cent of the population in that area. I am not saying that these people are not being hired with all the credentials that the position calls for; however, a general perception is that there is something different about how that process has worked in the past. I know that you would probably be bringing on some more staff in the not-too-distant future, and I am wondering if there has been any thought given to that process to ensure that certainly that perception is not a valid one.

DR. ROBERTS: We are aware of perceptions and we are aware that many perceptions are incorrect. I grew up in St. John's at a time when I thought CBC stood for Catholic Boys Club! It is incorrect to say that there is any bias or discrimination on any grounds in hiring practices within GRHS. We have well-established policies and procedures which we employ when we employ people of any sort; there are policies which apply to all levels of staff whom we employ and appoint.

In this instance, in the Forteau area, and you are referring in the future, of course, to the addition of staff for the long-term care component of our work there, we will go through the standard employment practices which will involve our staff person who is responsible for the administration of that facility, in conjunction with our human resources office.

MR. DUMARESQUE: One final question for the Auditor General.

In light of what you have heard today and what you have gotten back from the administration board of the hospital, how do you feel about compliance with respect to the deficiencies that were noted in the audit of last year?

MS. MARSHALL: Based on both the written response and the hearings here today, I feel that the board will be addressing the issues.

There was one response there which I did not feel was satisfactory. That was with regard to the annual report, where I believe the commitment was made to submit the audited financial statements to the minister and a verbal report on the activities of the board, and I felt that a written report should be submitted.

MR. DUMARESQUE: Okay, well -

MR. CHAIRMAN: I think, by verbal, he meant a written report versus an oral report. Is that right?

DR. ROBERTS: Yes.

MR. CHAIRMAN: I made the wrong assumption earlier, but I corrected myself when he spoke to it.

DR. ROBERTS: A written report in addition to the audited statements and the statistical -

MS. MARSHALL: Information.

DR. ROBERTS: Information, yes.

MS. MARSHALL: We will be doing a follow-up audit usually around two or three years after we have made the initial recommendations, to follow up.

MR. DUMARESQUE: Okay. Maybe, if you wouldn't mind giving me an opinion on that aspect of Page 317 that I noted earlier - that the information in the Special Purpose Funds `has not been subjected to the auditing procedures applied in the examination of the basic financial statements and accordingly we do not express an opinion on the fair presentation of the information referred to above.'

Is that the general procedure that would be adopted by an accountant?

MS. MARSHALL: Yes, but that would depend upon what the board wanted the auditors to do, so that if the board wanted an audited statement I am sure that could also be arranged through the auditors.

MR. DUMARESQUE: But just the fact that these funds are going through the budget, or the budgeting process of GRHS, would that not automatically tell these people that they should come under some kind of an audit and general auditing procedures?

MS. MARSHALL: Yes. As an auditor, I would lean towards having audited statements as opposed to unaudited statements, but again that is at the discretion of the board.

MR. DUMARESQUE: At the discretion of the board? Okay. Thank you.

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

MR. DUMARESQUE: Yes, Mr. Chairman, I am.

MR. CHAIRMAN: Thank you very much.

There are a few things I would like to get back into. Fixed assets - it was brought to our attention here earlier that there has appeared to be some weakness in recording when purchases are made and what is received and what is paid for. At least until recently - I don't know if you have changed - there was no system of identifying fixed assets, equipment, capital purchases. Have you now, in accordance with the recommendation of the Auditor General, put in place a system in which a tag is attached to any piece of equipment?

DR. ROBERTS: We are in the process of doing that. Referring to fixed assets in the sense of equipment and furnishings and that sort of thing, as opposed to buildings - major capital items - yes, we are acquiring a module for the computerized business system dealing with the fixed assets, and we are employing a volunteer to go through the process of putting that system on. It involves a lot of work, as you know, I can imagine, and will take a fair amount of time to do that. It will take a year, probably, to go through that process. We have equipment in twenty different locations.

MR. CHAIRMAN: So I take it previously you had no idea of where things were, or if they are still there, if anybody has taken them, or -

DR. ROBERTS: If you will allow me to agree with you slightly, yes, it has been a continuing problem and we have never had the staff to deal with it. We have attempted in the past to tag and identify and record equipment, but it has become an overwhelming job requirement and we haven't had the people to do that.

MR. CHAIRMAN: Even more important when you are dealing in twenty different locations.

DR. ROBERTS: Agreed, without any hesitation.

MR. CHAIRMAN: Housing - there is a reference here to the board operating housing. Would you like to tell us, first of all, what housing you do provide, in which areas, and what some of the policies are, as to whom we provide housing? Is this an incentive to get professionals in, or is it -

DR. ROBERTS: We have housing in many different locations. To run through them, we have housing in St. Anthony, Happy Valley - Goose Bay, Roddickton, Flower's Cove, Forteau, Nain, and I guess that's it - a combination of facilities independent of the health facilities. Some of these stations have accommodations as part of the station. The station includes a clinic and an upstairs part which is the living quarters.

We have a substantial involvement in accommodation. This developed in the first instance as a necessary part of doing business, to attract the staff and to retain staff whom we require to do our services. There is always great debate about housing. It costs money, without question. We have a major involvement in terms of effort, and, if you will, tie-up of our assets in accommodation. In St. Anthony we have four apartment buildings and I guess, at the current count, twenty independent residences. They are, on the whole, occupied by professional staff, but not exclusively so.

We have, at times when we have had vacant accommodation, tended to try to fill that accommodation, perhaps, if necessary, with a non-professional person, but in the interests of getting some revenue for that vacant accommodation, we have filled it. We have, on an operational level, a continued - and I suspect will for the future, whatever give and take on the accommodation issue. We have to have accommodation available for certain people to attract them to come to this area. From my experience, I would say that it is simply pointless to expect a doctor to come to this community and to establish himself in practice unless there is some accommodation available in the community - not speaking about cost, just the availability of the accommodation service.

I speak personally. I came to Roddickton in 1973 and would not have dreamed of going to Roddickton if I had been expected to find and provide the standard of accommodation which I felt I would need to allow me to live and work properly in that community. We still provide accommodation there. Similarly, in this community, we do.

In the past year, we have identified the costs attributed to accommodation much more accurately than we had previously. They tended to be combined with various operational costs and recognizing the involvement of accommodation, recognizing the changing times, we identified costs more accurately and attributed them where they should be attributed. Having done that, we have adopted a new accommodation policy which will do two things: number one, which will better recoup the cost of providing that accommodation, and secondly, which will encourage people to be responsible for their own accommodation. I assure you that if we didn't have to be involved in accommodation services, we would be out of it instantly, but that is not a prospect that we foresee in the near future.

MR. CHAIRMAN: How does the cost of your accommodation compare with the private market in the various areas we are talking about here? Is it comparable?

DR. ROBERTS: It is very difficult to determine what the private market is. Let me give you an example - well, there are a couple of examples - but one: We attempted to sell a house recently. We put it on tender. It was a house that about eight or nine years ago we spent $30,000 to acquire. We needed accommodation for our staff, since we were increasing and so on. We have not done a tap of work on that house over the time and it has deteriorated. No longer feeling we needed it, we put it on public tender. The first response to the tender came back with the highest bid being $10,000 - two tenders? three? - three tenders, the highest bid being $10,000. The property is appraised by the municipality at $22,000. We refused the tender - we did not accept it. We re-tendered it. We have no bid. So what do we do?

MR. CHAIRMAN: How about the cost, though? Can you compare the cost of what it is costing the board to provide accommodation for staff versus renting accommodation from the private sector?

DR. ROBERTS: That is hard to answer because there isn't a sufficiently large market to gauge -

MR. CHAIRMAN: That is one of the areas I can appreciate, but

here, (inaudible) and I think, for example, it must be stopped.

DR. ROBERTS: Well, it is difficult enough here in town. The comparisons are the federal Department of Transport, which owns some housing; the school board doesn't own housing anymore; we are by far the biggest landlord. We are the biggest landlord north of Corner Brook, more even, and our accommodations generally speaking, are probably a bit better than is available in the private rental market in the community. There are two apartment buildings that I can think of, one which was - I don't know the status of it, but it was taken over by a receiver recently, and it would not be of a standard to which we would aspire. But, having said all that, it is a constant problem and we have to continue the effort to regain costs and to encourage people to be responsible for their own accommodation, balancing the need for services.

MR. CHAIRMAN: Is this accommodation made available at cost or free of charge, or is it part of the overall package?

DR. ROBERTS: No, it is not available at cost, by the current policy, which is different from what was in existence when the Auditor General did her review. Our rates vary, from approximately - at this moment in time, I don't have the list in front of me, but they would vary from approximately $800 a month for a six-bedroom house to about $300 or $400 a month for a two-bedroom house, with heat and light included. We are not recovering the cost of providing our accommodation.

MR. CHAIRMAN: So there is a subsidy?

DR. ROBERTS: There is definitely a subsidy. This becomes an issue, especially with professional staff, in that many professional staff consider housing to be a subsidized service for them and they feel that is part of their terms of their employment and it becomes an issue of contention that we have to bargain. And it is especially difficult at a time when salaries in the Province have been frozen, when most professional people have noticed a decrease in their take-home income because of taxes and so on.

MR. CHAIRMAN: There was a time, I recall, when Newfoundland and Labrador Housing Corporation held a housing portfolio available for nurses, teachers, and others, particularly in isolated communities. Were they subsequently turned over to the board, some of them, or do you still utilize some of their accommodation? The second part of the question is, Do you see any advantage in turning your portfolio over to the Housing Corporation and have them manage it for you?

DR. ROBERTS: We have never had Newfoundland and Labrador Housing Corporation involvement here; we have discussed it with them in the past and my memory was that they just weren't much interested in it and they said, in effect, look, you are running the accommodation in St. Anthony - we have no ability to do anything in accommodation in St. Anthony and it will only get worse, and with respects, I think that would apply right now.

MR. CHAIRMAN: It is not true, they are not interested, unless the Department of Health told them they weren't to be interested; government made that decision, so -

DR. ROBERTS: I think -

MR. CHAIRMAN: Would you see that as being of benefit to the board if you had a professional housing organization manage a portfolio rather than - not that you are not professional, but you are professional from the medical operational point of view. What staff do you have managing that for you - or is it just something that is done in your spare time, so to speak?

DR. ROBERTS: As you say with a smile, it is something that is done in our spare time by other staff doing other things, including myself, hospital administrative staff, maintenance staff and so on. Would another agency do it better? I don't think so, personally. I think we do it better making decisions on the spot with those who are most involved.

I think what has to happen - and this is an area of contention between the board and staff - is that the board has to recognize that it is a health board and not an accommodation board, and we have to do everything possible to encourage people to be responsible for their own accommodation, and for those who choose to rent accommodation for us, that they carry as much of the cost as is possible. School board experience is perhaps instructive on the Coast of Labrador. They took a different approach - they just sold all their accommodation, period, got out of it. They stumbled and had trouble for a year or two and then, gradually, the private market filled in. We have considered that approach but have chosen not to do that because we feel it would be too disruptive to our work at this time.

MR. TOBIN: How many units do you have here in St. John's?

DR. ROBERTS: We have four apartment buildings and twenty houses.

AN HON. MEMBER: A hundred and ninety-nine beds.

DR. ROBERTS: A hundred and ninety-nine bedrooms - that is a lot.

MR. CHAIRMAN: In St. Anthony?

DR. ROBERTS: Yes.

MR. CHAIRMAN: How about overall, throughout the Province?

DR. ROBERTS: I can't give you the exact number overall, but that would be the vast majority. There would probably be 250 or 270 overall.

MR. CHAIRMAN: So that is available to professional staff, doctors, nurses, laboratory staff and so on?

DR. ROBERTS: Yes. The need for that is not what it was ten or fifteen years ago, but there still is a need.

MR. TOBIN: I would just like to follow that for a second.

MR. CHAIRMAN: Go ahead, Mr. Tobin.

MR. TOBIN: Do you find that many of the professional staff are now people who were originally residents of this area?

DR. ROBERTS: Do we find many of them? There are some, and that is a particular wrinkle that is a concern, because you say to yourself, why should we provide accommodation for a nurse, for example, whose home is in this community? Yet, if that nurse will not come and work here unless we provide him or her accommodation, then it is an operational issue for us. Now, the nursing market has changed dramatically and we no longer have to say to every nurse, we will provide you accommodation. We can say, we will provide you a job, and you, like everybody else in this world, will be responsible for your own accommodation.

MR. CHAIRMAN: Can you, on a related issue, tell us, is there great difficulty in attracting professional staff to these areas of the Province? I know you had some difficulties with doctors a couple of years ago; it was quite a public issue up there.

DR. ROBERTS: The answer is, yes. I can talk for half-an-hour, as you wish, but briefly (a) we are in the market; (b) we are not always at the top of the market or the most advantaged part of the market, by geography, by location, or by compensation. All of these things tend to mitigate against us; (c) there is great confusion elsewhere. There are so many factors that come into this, licensing, opportunities elsewhere. There are so many other opportunities and uncontrolled situations which mitigate against us. You would have heard that MCP has now taken action which MCP hopes will make St. John's a less attractive place for doctors to practice, and we hope that will encourage people to move to communities such as this, or smaller communities, whether they be Ramea or Nain.

MR. CHAIRMAN: They will probably move to Florida then.

DR. ROBERTS: The suspicion is that nobody is very certain this is going to work, because the experience has been, thus far elsewhere, that professionals will stay in the major centres and accept less income, dramatically less income, and I don't think this is going to solve the problem of the distribution of professional services throughout the Province. I think we will have to take other approaches.

MR. TOBIN: What specialists do you have here working in this hospital?

DR. ROBERTS: We are a regional referral hospital and we believe that we provide services here to look after probably 95 per cent of the presentations that come to the door. We provide surgical services of all sorts. We do not provide elective cardiac surgery or elective neurosurgery. We will provide emergency cardiac or neurosurgery. We have pediatrics, internal medicine, pathology, radiology, anaesthesia, ophthalmology, obstetrics, and gynaecology. We cover all the major services. In effect, we are providing the same major services which would be provided in any of the large hospitals in the Province, and more services than are provided in some of the other regional hospitals.

MR. CHAIRMAN: Can I go back to aircraft tender again? I am not sure I am satisfied with the responses we received there and I am not sure where the problem lies. You were telling us that the Department of Health advised you to withhold calling tenders for a new service - re-examining, I think, was the word - the means of operating aircraft services. Can you enlarge on that for me?

DR. ROBERTS: Yes, that is what I said, and I don't know how much I can enlarge on it. The way I would say it, is that the provision of the general air service in Labrador has always been an issue of some concern to government. There has always been a subsidy involved, as you know, and there is the question of all these service aspects of it. There has been great debate about that.

There has been a lot of discussion through the years on how best to provide that service, whether it could be done differently, whether or not our involvement in air transportation was mitigating against the general schedule service and whether or not, if our service were combined in some way with the schedule service, it could be improved. And we certainly were, and are, prepared to discuss that. When our contract came up - our contract was up in 1990, and prior to that we advised government, and the response was, `We want to see if there is a way that we can get this together and come to grips with this "problem" of the service in the North.' It is a very difficult and complex issue which is not easily resolved. We went on for months and months waiting and hoping that there would be some clarification of the more general thing and it was only when the Labrador Airway Subsidy was renegotiated and established that we were told to go ahead and make our own contract for the provision of air ambulance services.

MR. CHAIRMAN: So you then called tenders?

DR. ROBERTS: And we then called tenders, yes.

MR. CHAIRMAN: I think the question was asked, and I am not sure of the answer: How does the price compare with - it was 6 per cent, was it?

DR. ROBERTS: The new contract, I think, if I have it precisely, is about 6 per cent greater. It varies, of course, with the usage.

MR. CHAIRMAN: On an hourly rate.

DR. ROBERTS: On an hourly rate, yes.

MR. CHAIRMAN: Somewhere in the midst of these monthly extensions, I saw the hourly rate increased substantially.

DR. ROBERTS: Those will be fuel escalations which were built into the contract.

MR. CHAIRMAN: The numbers I was looking for are not here.

DR. ROBERTS: The figures of $350 versus $536?

MR. CHAIRMAN: Something like that, yes.

DR. ROBERTS: Well, I think those numbers were that the first fifty hours cost $536 and the additional hours cost $350. So, in other words, the more it was used, the hourly rate went down, but it was still a cost, of course, in that original contract. Now, that has changed - the manner in which they bid on the contract. The rates are more equal now for each hours. In fact, the contractor complained that by using the plane as often as we did, they were having trouble meeting their requirements.

MR. CHAIRMAN: Can you answer the question: For what purposes do you use the aircraft? Are there any occasions when people other than hospital personnel get transport on those aircrafts?

DR. ROBERTS: There would be, occasionally, other people travelling on the Twin Otter. There are a couple of current situations: staff, not on business, would at times travel on the aircraft free of charge. A flight would not be originated for that purpose, but where there is space and a flight going, they would travel. Also, other people on public business in the Province, court people and government officials of different sorts on public business, would travel. Lastly, there would be occasional incidental passengers travelling on our aircraft when there was no other means of travel available to them and when there was cause for them to travel.

MR. CHAIRMAN: This would not incur any additional cost for the board?

DR. ROBERTS: No.

MR. CHAIRMAN: None whatsoever?

DR. ROBERTS: No.

MR. CHAIRMAN: Who decides who goes on, and when? If there is a seat available, do you fill it?

DR. ROBERTS: Not quite as simply as that - we have dispatchers and we certainly say no. We have a guideline on who is eligible to travel.

MR. CHAIRMAN: Who makes the decision?

DR. ROBERTS: Who makes the decision? The dispatchers, or in this instance here, the manager of the air operation service, or in Happy Valley - Goose Bay, the particular that you are referring to, it would be the administrator of the hospital.

MR. CHAIRMAN: So you have a person here who is responsible for your operation.

DR. ROBERTS: We have a person here who is responsible for our air transportation services.

MR. CHAIRMAN: That is his sole responsibility.

DR. ROBERTS: Yes.

MR. CHAIRMAN: So there is not an occasion when somebody could order a flight knowing that they had a family member who wanted to get to Corner Brook (inaudible).

DR. ROBERTS: I don't think that happens.

MR. CHAIRMAN: Okay.

Mr. Penney, did you have some questions?

MR. PENNEY: Thank you, Mr. Chairman. I don't know if it is a question as much as a comment. I want to get back to one area. I would like to make a comment, though, that this is the first public hearing that I have had the occasion to sit in on as a member of the Public Accounts Committee. I believe this has been a most worthwhile exercise. I am absolutely delighted that we decided to come to St. Anthony, as opposed to inviting the witnesses to come to us in St. John's. I think, what we have done is demonstrate to the Board, the staff, patients, that there is an accountability. I think this process has done just that. I have heard some comments from the Chairman of the Board. I think the comment was that he has certainly learned a few things by our doing what we have done here today. If nothing else comes out of it, that comment alone makes it worthwhile.

I am pleased with the responses we have gotten, even though the answers haven't probably been as precise as we would like. Information can be made available to us, documents can be obtained, but there is one area in which I am not satisfied with the response. I guess it is the fact that for a good number of years before I became a politician, I was a pharmacist. When I look at the figures here and I see a 40 per cent deficiency in the physical count of pharmaceuticals compared to what is in the general ledger, I find that frightening. That is absolutely shocking. We are not talking bed linen, we are not talking bed pans, we are talking drugs. I think there is a little bit more than managerial accountability here - I think this is nothing more or less than professional accountability.

The question was asked, and the answer was given, that the drugs are counted physically, every single tablet and capsule. The answer was given that the invoices are logged into the ledgers; the number of pieces of each particular pharmaceutical that is dispensed is logged into the ledgers; therefore, what is left should be what is physically in stock. Now, I have taken stock in pharmaceuticals on at least twenty-five different occasions. I have been in dispensaries when the pharmacist would estimate what was left in the bottle, knowing that when the bottle was full 500 would be up there, so what was left would be approximately 250. A discrepancy percentage of 10 per cent was not acceptable.

Now we are told that every single one has been counted and we have a discrepancy figure of 40 per cent. We are told that some of this had to do with drugs that were probably outdated and should have been removed from stock. That would explain the discrepancy where the physical count is higher than what the ledger shows but it does not explain the situation where we have $9,553 worth missing from Churchill Falls. And I haven't heard anything at all today to explain how that could happen.

Now, are those drugs physically missing? If so, where did they go? That concerns me. As a pharmacist that concerns me immensely. If anybody would care to add to that I would love to hear some explanation.

DR. ROBERTS: I don't have a precise explanation for that. As was mentioned earlier, I think some of it has to do with the pricing policy, that drugs were priced in at the purchase price and when the inventory was taken, a different price was applied. That obviously is a discrepancy. I am not involved, personally, in the - I do not put my own hands on drug counts, but it is obvious to us that the control is not what we would want it to have been, we have recognized and have taken corrective action.

You refer specifically to the situation in Churchill Falls which is again a bit of an unusual one, where we do not regularly have a pharmacist, where a pharmacist visits once every year or so to review the inventory, to clean it out and upgrade it. This has all been done manually. We have been pressured for staff. We recognize it is not adequate and we are taking corrective action.

MR. CHAIRMAN: What have you done, though, to try to really identify where that 40 per cent discrepancy came from? You have given us some hypotheses basically, but what are you doing to find out where did it go - was it taken illegally or not.

MR. PENNEY: You have recognized what we have pointed out to you.

DR. ROBERTS: Yes.

MR. PENNEY: You have recognized that, yes, there is a 40 per cent discrepancy, but have you done anything to address where they went, other than the fact that you said -

DR. ROBERTS: I can not give you the specific answer of where that - I will find it and we will report to you.

MR. DUMARESQUE: The other example there, is the Goose Bay Drugs, where there is a general ledger for $76,000 worth of drugs, but the physical count found $127,000. That is almost a 60 per cent difference.

DR. ROBERTS: The same problem applies, with the additional comment of the management of many different sites in a regional system trying to maintain the balance between local autonomy and people who want to manage their own piece that they are directly responsible from, while at the same time meeting the needs of a regional system. We have great resistance within certain parts of our organization to the development of regional-wide shared services. That is part of what we are facing right now. We are in the process of establishing a computerized material management system, of developing the communication links, and we will have one material management system throughout which will allow us to manage all of the material, including the pharmaceuticals, equally, everywhere.

Admittedly, it has been a struggle. We used to have five payrolls and, believe me, four of those people who did payrolls didn't want to give up the writing of payrolls and they fought tooth and nail. Those are operational problems that we have to work through.

MR. CHAIRMAN: Mr. Penney.

MR. PENNEY: That is fine, Mr. Chairman. Thank you very much.

MR. CHAIRMAN: Mr. Tobin, do you have any additional questions at this time?

MR. TOBIN: No I don't. I would just like to get one point of clarification here from Dr. Roberts' exchange with Mr. Dumaresque earlier in the day, and that is regarding the $90,000 to $100,000 New England library, the funding that - I wasn't clear on what you said about it.

DR. ROBERTS: The International Grenfell Association, from its endowment, has decided that it will make a grant of ten dollars per student to school boards in the area, Northern Newfoundland and Labrador, in fact, including Labrador West. So that grant of $90,000-plus, the IGA gave us the money and said: Would you please disperse this money to the school boards? This is in addition, of course, to the existing provincial grant, which I think is about four dollars per school board right now.

MR. TOBIN: This is only passing through your hands.

DR. ROBERTS: It is only passing - we are the agency providing that service, that money management service, if you will, to the IGA.

MR. TOBIN: Is that a yearly grant?

DR. ROBERTS: Yes. The IGA considers its grants annually and makes its decision annually.

MR. TOBIN: So the students who are served by the IGA are ten dollars better off than other students.

DR. ROBERTS: You say that with a smile on your face, and, yes, I suppose that is one interpretation. School boards in this area are receiving that amount of money in addition to what they are receiving from the Province.

MR. TOBIN: Your centennial celebrations - how much did that cost?

DR. ROBERTS: How much did it cost to whom?

MR. TOBIN: The IGA.

DR. ROBERTS: Well, that is IGA's information and, with leave, I am not sure if I am at liberty to disclose that.

MR. TOBIN: Did you contribute anything to it?

DR. ROBERTS: Grenfell Regional Health Services contributed the support of many staff. I have forgotten the expression we used earlier with accommodation but, yes, I and many other people worked with centennial activities. We did not contribute any money to it. It was in kind support.

MR. TOBIN: There was a transfer of $224,000?

DR. ROBERTS: Again, that is International Grenfell Association money coming through IGA to be spent on centennial activities.

MR. TOBIN: The other funding here, such as the Lions Club, St. Anthony Recreation Committee, Battle Harbour restoration - is this the same sort of funding?

DR. ROBERTS: The same explanation.

MR. TOBIN: In most cases, is that funding requested by you or your associates?

DR. ROBERTS: No. For instance, the Battle Harbour Historic Trust made a grant application to the International Grenfell Association and said, `Please give us some money to support the work which we are doing.' The IGA, in its wisdom, chose to support that, and the money came through us and we wrote the cheque.

MR. CHAIRMAN: Thank you, Mr. Tobin.

Mr. Dumaresque.

MR. DUMARESQUE: Just to follow again, to make sure we do clarify, the main reason you say you are doing that is the tax liability to which they could be open.

DR. ROBERTS: Yes. The IRS, Internal Revenue Service in the United States, has very stringent rules governing the operation of charities in the United States, and within the IGA's there are supporting associations which are incorporated in the State of New York and in Boston, Massachusetts, which must meet IRS requirements or else lose the endowment, and we would not have that $10 per student to provide, and all the other things as well.

MR. CHAIRMAN: Thank you.

Mr. Crane, do you have any additional questions?

MR. CRANE: No, thank you.

MR. CHAIRMAN: Mr. Langdon.

MR. LANGDON: I have one question that is hypothetical, I guess. Hindsight is always 20/20. If the regulations that the Auditor General has called for, and ones that you have in process now, or in the making of the process, had been in place, how much of your deficit could have been reduced?

DR. ROBERTS: That is a little bit difficult to answer. Speaking only of the recommendations with regard to financial management, the first group of recommendations, obviously if we, as a board, and government, had supported, encouraged or whatever, the Board, to undertake deficit reduction earlier on, we would have done it, because in this world you do what you have to do, and even if you think you can't do it you find a way to do it and life goes on. So, if we had had that push whenever, three or four years ago, yes, we might have been having this discussion, and have done the things we are talking about now three or four years earlier on.

The great majority of the other recommendations, as I interpret them, would not have materially influenced the deficit situation. They would very definitely influence the way we do business and, without any hesitation, improve the way in which we do business, but I don't think they would, of themselves, have caused any reduction in deficit.

The issues that we have, when it comes down to deficit, is the expenditure of money for providing services, and the reduction of deficit has to do with spending less money - and those are the decisions that have to be made.

MR. LANGDON: Just one minor one - for example, the accrued holiday pay and so on - you start adding up dollars and over the number of years they do add up, and that is just my point.

DR. ROBERTS: Well, they sure do, and who knows what is going to happen with severance pay and vacation pay, but it is obviously an issue which is of great concern to every hospital. I don't know - well, I don't ask question here, but I don't think the Province accrues its liabilities for severance pay, does it? This is an issue that - multiply what we have by however much in the Province and the liability the Province faces is huge.

MR. CHAIRMAN: The annual budget shows the contingent liabilities (inaudible).

DR. ROBERTS: Government has major policy issues to address in this regard in the future, and that is what you gentlemen will be doing.

MR. CHAIRMAN: Thank you very much.

Mr. Dumaresque.

MR. DUMARESQUE: I don't have much more, just a little note that I - on page 70, the response to Mr. Crowley from Mr. Roberts saying that; `Certain travel advances have been outstanding since September, 1991.' How could a travel advance be outstanding for so long?

DR. ROBERTS: Why would it be outstanding?

MR. DUMARESQUE: Yes.

DR. ROBERTS: I don't know which particular ones are referred to there. We have a few people who have travel advances. I don't know who they would be, not more than three or four people at this time, that I know of, and they would be in the order of maybe $500 in advance of travel.

MR. DUMARESQUE: It doesn't note which one, group, or whatever, this one pertains to, but would you be able to say that certainly no travel advances are now outstanding since September 1991?

MR. SANSFORD: We don't have anything outstanding any more than three months, now.

DR. ROBERTS: And we generally do not use travel advances anymore. We tell people to travel at their own cost and to seek reimbursement. We do, in some specific travel advancement, where the costs are unusually large.

MR. SANSFORD: That is a policy, too, that we are putting in place so that it would be cleared within thirty days of the return.

MR. DUMARESQUE: I have no other questions. I would just like to say that I appreciate the answers and the frankness with which you have delivered your responses to me. I appreciate your taking the time to come to this Committee and giving us the overview that you have. It certainly has been enlightening for me and I am sure it has been a very beneficial process. I look forward to continuing working with you and the Board to better deliver the programs, services and care that you have been known for, for so long. Thank you very much.

MR. CHAIRMAN: Thank you.

Mr. Langdon.

MR. LANGDON: Thank you, Mr. Chairman. This is a first-time experience for me, and the discussion has been frank and the answers forthcoming. As Danny says, the IGA has been known, and also in this particular part of the Province where your health (inaudible). Thank you very much.

MR. CHAIRMAN: Thank you, Mr. Langdon.

I have one more question, one item in particular - Per Diem Costs, on page 55, for the Melville Hospital: Costs have increased from $458 to $670 in the past two years. I would like to address that seemingly dramatic increase in per diem costs.

DR. ROBERTS: It is somewhat - the word escapes me - spurious, if that is a good word, meaning it really doesn't mean a whole lot. It means that the hospital has less beds then it used to have. We have reduced the number of beds, but basically the staff have remained the same, the range of services have remained the same and the costs have remained the same. So the denominator is smaller - I have forgotten my - the one under the line is smaller, therefore the product is larger. Having said that, it is more expensive to provide services in Happy Valley - Goose Bay than it is here, and we recognize that.

MR. CHAIRMAN: Why should that be?

DR. ROBERTS: The cost of doing business, and all sorts of - Labrador allowance for staff, for one thing, would be - whatever that works out in percentage would be anywhere from -

MR. CHAIRMAN: Your staff don't get a Northern allowance of any kind here?

DR. ROBERTS: In St. Anthony, they don't, which is an issue of some concern, I might add, to staff, that we have people, for instance, in Harbour Deep who are equally isolated with anybody in Labrador, who do not get the Northern allowance. Staff here do not get the northern allowance.

MR. CHAIRMAN: It is a matter of definition of what is isolation, I suppose.

DR. ROBERTS: Precisely, yes.

MR. CHAIRMAN: I would like to give the Auditor General an opportunity. Do you have any other questions or anything further that you would like to raise?

MS. MARSHALL: I have nothing further, Mr. Chairman.

MR. CHAIRMAN: Mr. Patey or Dr. Roberts or any of you, do you have any other issues that you would like to raise with us or any other comment that you would like to make before we conclude?

MR. PATEY: I would just like to say thank you, to you and to everybody here. It has been valuable, I think, for me. Asking a good question, I think, is the essence of good information. Some of what I have heard here this evening would never have occurred to me, sitting as a board. As a board, you sometimes readily accept information as you get it and possibly don't ask enough of the right questions. I appreciate your abilities in that particular area. I guess you gentlemen are used to that.

MR. DUMARESQUE: They are, especially.

SOME HON. MEMBERS: Hear, hear!

MR. CHAIRMAN: I think, Mr. Patey, that most people are very suspicious of politicians, and that, in turn, makes us very suspicious of everything that goes on around us.

SOME HON. MEMBERS: Hear, hear!

MR. CHAIRMAN: We become experts at it.

MR. PATEY: I will just say that since the Auditor General's report, the Board has been concerned and we have been working on it. It is a slow process, frustratingly slow sometimes, but we will, indeed, address all of your concerns. I am particularly interested in Mr. Penney's assessment of the drug situation, which it never occurred to me before to address. Certainly. we will be looking into that area. Thank you very much.

MR. CHAIRMAN: Thank you very much.

Mr. Hart, do you or any of your officials want to contribute anything? Is there anything, from your point of view, that we may have missed?

MR. HART: Not really. I would just like to make a general comment that the Department of Health's role in this process is that we feel we have a great responsibility in terms of accountability. We control, I guess, roughly a quarter of the total provincial budget. For the most part, that ends up in the hands of grant recipients such as the Grenfell Hospital here. So we have a great responsibility and we are very interested in following proceedings like this, and just making sure that they are taking proper procedures.

We have processes in place at our end, as well, which is now and will in future, I am sure, be the subject of various hearings. We try to ensure the accountability process through various mechanisms such as our own budget monitoring at our end. We have an internal audit function so we have our own auditors. In addition to the Auditor General going out and doing their reviews we have our own people doing reviews. We have developed a cyclical program whereby we try to make sure that every institution in the Province goes through an audit regimen at some point in time. If the Auditor General is planning an audit we may go to another institution that they hadn't planned. We do work together, in that sense, with the Auditor General.

We are cognizant of our responsibility in this and we are trying to tighten up controls in terms of reporting requirements and that sort of thing. We are very pleased to see the progress that the Grenfell have made. They have had a lot of difficult times and they seem to have made great strides. Thank you for the opportunity.

MR. CHAIRMAN: Thank you very much.

MR. TOBIN: I would just like to join with my colleagues and say that I appreciate the opportunity to travel to St. Anthony, to meet with the Board and to participate in the discussion. I think it was a worthwhile venture for all of us.

Before I conclude, I want to make one passing comment, of the true meaning of `what goes around comes around'. You listen to Chris Hart, the former acting Auditor General today -

MR. CHAIRMAN: I was going to point that out.

MR. TOBIN: - as an assistant deputy minister, defending the position of the department, and Elizabeth Marshall, who is a former deputy minister, going after the Auditor General for three or four years, and now here in that position.

SOME HON. MEMBERS: Hear, hear!

MR. CHAIRMAN: It is a good point. I was going to raise it myself and you beat me to it.

MR. TOBIN: I know how she felt about the Auditor General at times.

SOME HON. MEMBERS: Hear, hear!

MR. CHAIRMAN: I could say Mr. Penney, here, has probably had the answer, somebody counting drugs in his drugstore.

SOME HON. MEMBERS: Hear, hear!

MR. CHAIRMAN: That being the case, and on behalf of the Committee, I certainly want to thank you, the witnesses, for your time and frankness in responding to our questions today. As has been said, this is probably the final step in the accountability process. We happen to think it is a very important step. We happen to think it is important that people know that there is this final step as well. That is one of the reasons why we are in St. Anthony and why we will be visiting other parts of the Province, because probably, as somebody said over coffee, less than 1 per cent of the people of the Province knows that the Public Accounts Committee even exists, and couldn't care less.

It is very important, I think, that the House of Assembly, through this Committee, have a hands-on approach to what is happening with taxpayers' dollars in this Province and that the taxpayers be assured that we are there to protect their interest. That is really why we are here - not for any other sinister purposes, other than to ensure that the greatest value for the taxpayer's dollar is being received.

From here we will be reporting, of course, to the House of Assembly, and it is entirely up to the House of Assembly what recommendations or actions will be taken. Generally speaking, I think, though, the most useful function of this Committee's meetings or hearings is to bring into the open, and to bring into a forum such as this, debate between the Auditor General and department officials and the board officials, as the case may be. That, we think, served a very useful and worthwhile function in making everybody aware of the position of the other people in the various debates that are going on here.

We hope that we have accomplished something by that. I appreciate the comments, Mr. Patey, that you, at least, as the Chairman and representative of the Board here have gained something from this whole exercise. I am sure the officials on all sides have, and I know the members of the Committee certainly have.

We thank the witnesses for appearing; the Auditor General and her staff; Mr. Hart and the officials from the Department of Health; and the public and the news media, as well as the officials of the Committee who have been here today.

Having said that, thank you very all very much. Have a pleasant evening in St. Anthony. We certainly look forward to spending the evening here and enjoying this part of our Province.

MR. DUMARESQUE: The Bakeapple Festival opens over here tomorrow night. Come over and spend some money!

SOME HON. MEMBERS: Hear, hear!

On motion, the Committee adjourned.