Assemblée Législative de la Nouvelle-Écosse

Les travaux de la Chambre ont repris le
21 septembre 2017

Public Accounts Committee -- Wed., Jan. 27, 1999

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HALIFAX, WEDNESDAY, JANUARY 27, 1999

STANDING COMMITTEE ON PUBLIC ACCOUNTS

9:00 A.M.

CHAIRMAN

Mr. Howard Epstein

DEPUTY CHAIRMAN

Mr. Hyland Fraser

MR. CHAIRMAN: Good morning. I think I will call the meeting to order and perhaps invite everyone to take their seats. I think we have a quorum assembled and we can get going. This morning, as you know, we are going to be hearing from officials representing the Queen Elizabeth II Health Sciences Centre. We have present with us today, Mr. Robert Smith, who is the President and CEO of the QE II Health Sciences Centre. He is accompanied by a number of people who work along with him.

I will just point out that today the committee has two substitute members. We have Mr. Muir here and Dr. Hamm will also be sitting in. I have seen him in the building; I think he will be along in just a moment. In any event, we do have a quorum. I have spoken just briefly, a few moments ago, with Mr. [Robert] Smith to explain that we would welcome any introductory statement that he or members of his team would care to make and then we will turn to the business of inviting members of the committee to ask questions. So with those few preliminary remarks, Mr. [Robert] Smith, I would invite you to start off.

MR. ROBERT SMITH: Thank you, Mr. Chairman, and good morning everybody. As mentioned, I am the President and CEO of the QE II, and I am also the Secretary to the Board of Directors. I want to introduce to you my colleagues who have joined me this morning. Next to me is the Chief Financial Officer, Mike Mahony; sitting next to Mike is Vice-President of Clinical Services, Chris Power, and next to Chris is Dr. Paul LeBrun who is the medical representative to the board of directors at the QE II and the head of Diagnostic Imaging at the QE II.

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We are really quite delighted to have this opportunity to meet with you today. There is very little of greater importance than the health of Nova Scotians and we are pleased to have the opportunity to help you understand the role and function of the QE II Health Sciences Centre in its service to your constituents. We look forward to our discussion. We are also going to talk about our financial situation, our merger, Project Quest, our Y2K preparedness and what we believe is necessary in the future.

To begin, I want to comment on four principles that guide our activities at the QE II. The first is that patient care is at the core of everything we do; all our decisions are made with the aim of providing the best care possible within our means. The second is that our board of directors understand their obligation of accountability to members of the Legislature and to Nova Scotians at large; we are aware that we must work within broad policy guidelines established by the Government of Nova Scotia. It is clear to us that we are the stewards and managers of a public asset of extraordinary importance to the province and indeed to all of Atlantic Canada and, because we are only stewards, we recognize that we must be open and accountable. Thirdly, we recognize that because we are the largest hospital in the province, we have a special obligation to participate in broader discussions about the future of health care and, in some cases, to lead that discussion.

The fourth and final point I want to make is that we are committed to maintaining and enhancing the standard of care of Nova Scotians. In pursuit of this goal, we are committed to making the tough decisions necessary to bring about a high standard of efficiency and effectiveness. Health care has changed in recent years. Let me give you some examples. In the last 12 months, nearly 0.5 million services were performed at the QE II on an outpatient basis. In other words, nearly 500,000 times, somebody visited the QE II, received a service or treatment and left. Some of those services were for X-rays or blood tests that have always been done on an outpatient basis, but thousands of others were the sorts of services that 10 years ago had to be provided on an in-patient basis or were not even possible.

A more specific example is that of gall bladder surgery. It used to require six days in hospital and up to six weeks off work. Today, the condition can be corrected on a day-surgery basis, with the individual healthy enough to return to work within the week. That is better health care. It requires fewer hospital beds. It is also an important benefit to the employers in Nova Scotia whose productivity is impacted when employees are hospitalized. Overall, it is less expensive to society.

To achieve this result, we needed to reallocate resources, acquire new technology, train our skilled professionals, and support and develop our work with research and innovation. The result is that those we serve spend less time in hospital, less time away from school and work, and less time away from friends and family. The point here is that the quality of health care is measured by more than just the availability of hospital beds, we have to have an open mind and a willingness to adopt new approaches which produce better results and sometimes even cost less.

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We are now going to move to the financial situation at the QE II, and I would like Mike Mahony to provide this overview.

MR. MICHAEL MAHONY: Thank you, Bob. First, I want to say that the Auditor General, in his report to the Legislature earlier this month, has, we believe, fairly and accurately described the situation at the QE II. Our management team worked very closely with the Auditor General and his team in developing the conclusions and, as we said at the time the report was released, there were no surprises in the report. His conclusions were our conclusions.

I have four handouts - which you have - which I hope will be helpful to show you how we arrived at this point. They were going to be overheads and I was going to be pointing to them but, hopefully, you will be able to follow them as handouts. What we wanted to do was firstly tell you how we arrived at the point, then what the current financial situation is, and then what we are going to be doing about it and I guess firstly how we arrived here.

In 1995, after the government made the decision to amalgamate several hospitals and form the QE II, a task force comprising the Department of Health, the Department of Human Resources, and QE II officials spent a great deal of time planning the implementation process. They recognized that in order to achieve the savings from amalgamation it was vital to do three things simultaneously: firstly, to re-engineer the organization to eliminate duplication and achieve efficiencies; secondly, to negotiate new agreements with employee groups; and thirdly, to renovate the buildings and buy equipment to allow for the amalgamation of departments.

It was clearly understood that these efficiencies could not be achieved immediately and a business plan was agreed upon between the government and the QE II in March 1996. The business plan anticipated a funding shortfall of $22.9 million in the first year and $24.9 million in succeeding years. The plan allowed for operating deficits of $20 million and $9 million in the first two years, before surpluses began to repay these deficits. Finally, the business plan recognized that there would be costs of information technology and renovations and equipment of about $25 million, which would have to be paid for by the QE II and amortize it into operations over the next five years.

By early 1997, a re-engineering initiative, called Project Quest, was well under way. Renovations and equipment purchases had also been undertaken, however, the labour agreements were still being negotiated. Because government wanted to bring stability to the health system and to avoid labour cuts before a fair agreement was in place, the hospital was asked to terminate Project Quest, which delayed the business plan initiatives. In return, the Department of Health funded the cost of the delays in the amount $12.3 million.

If you could turn to the first handout, which is a graph showing a schedule of actual operating results versus the business plan projections - the business plan projections are the

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unbroken line - the graph demonstrates the operating results. In the first year of the preparation for change, the deficit was approximately equivalent to the reduction in revenue, and you can see that the two lines are virtually the same.

In the second year, this was also the case, but the $12 million in extra revenue to fund the delays in restructuring brought the deficit back to business plan projections. So at this point, we are still following the line which the business plan said it would with the assistance of the $12 million. In the third year, the deficit has hardly changed. It is still running about the same level as the reduction in funding, but there was no funding to support the continuing delays and, therefore, the anticipated $10 million surplus from the business plan was not realized.

The next handout that you have, which is headed Amalgamation and Debt, shows how our unfunded capital has increased to $53.4 million. As you can see, most of the expenditures which were for renovations and equipment, are in the first year and one-half, however, you will note that we have ongoing needs for capital funding for equipment replacement and renovations. In fact, it is artificially low this year. We have had to defer $10 million in spending for projects such as the ICU at the Victoria General site because of our financial situation.

What is the current situation? If you could move to your next handout, headed Amalgamation and Debt, this overhead shows that together the operating and capital debt accumulated over the last three years is $136 million at the end of March, of which $83.4 million is operating and $53.4 million is capital.

Our future prospects do not look so bright either. While we plan to reduce our operating deficit to $8.5 million next year, on top of that we still have capital amortization costs of about $7.5 million; projected Y2K completion costs of $10 million; and then there is a capital requirement which is really limitless, but a facility of our size could expect to spend about $20 million a year on replacement and new equipment. This year I would note that we received $750,000 towards this from the Department of Health and about $5 million from the foundation, the fund-raising arm of the QE II, to assist with this.

What are we going to do about this? In your last handout, as noted earlier and shown on this handout, this is from our latest business plan; the projections are for our current $26 million deficit to be cut to $8.5 million next year. This will be done by implementing a series of initiatives, many of which come out of the Quest re-engineering project. We are currently working with the Department of Health to develop a multi-year plan to bring our deficit to zero and to retire the debt in the next few years.

Finally, I want to refer to Y2K. In the materials which we have distributed to you previously, we provided a status report. As you can see from that, we have an organization in place to manage and monitor the project. Testing is being done and remediation is under

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way. As you might imagine, our first priority is equipment which most directly affects patient care. As of the end of 1998, 98 per cent of our medical devices have been tested and of these, only 4 per cent are being found not to be ready. Solutions are being found and we will be ready when the new millennium arrives.

MR. ROBERT SMITH: Thank you, Mike. Clearly the financial picture is not as good as we would like but it is also important that we keep this deficit in perspective. First rate health care is expensive and it is essential. Teaching, research and innovation are also essential. To keep all of these elements in balance, we must bring financial stability to the organization and we must do that within the new fiscal reality facing all Canadian health care institutions.

Our publicly-funded health care system, which really began in the 1950's, involved federal and provincial partnerships built on a 50/50 cost-sharing basis. Today we are faced with the relationship that has the federal government contributing less than 20 per cent. This is the essence of the situation which has been described in the media as a crisis in the Canadian health care system.

As we work with government to get our financial house in order, let us not lose sight of the superb work and medical miracles being performed every day at the QE II. Let me share with you some examples, which are a reminder to all of us of what the QE II is really all about. My colleagues will be happy to elaborate on these examples later in our discussion period.

The Conference Board of Canada has released a patient satisfaction survey conducted just two months ago. After contacting almost 2,000 former QE II patients as part of a national survey, here is what the Conference Board of Canada said. "The QEII is demonstrating superior performance based on the number of 'best in class' scores. The QEII raised the bar for other hospitals in 37 categories -- that's 37 categories -- where they rated 'best in class' against all hospitals surveyed -- and established benchmarks in many other categories.".

At the QE II we are using a new surgical instrument which allows invasive, beating heart bypass surgery to be conducted with less risk, less pain and quicker recoveries. We have performed more kidney transplants than any other centre in the country and our results are spectacular.

The QE II is conducting some of the most active research in the country on the bacteria associated with stomach ulcers. Research of worldwide significance is being done on Alzheimer's disease at the QE II, and we have been named one of two centres in Canada for an internationally-funded study on manic depression. And finally and importantly, our cardiac team has been recognized for achieving the best outcomes for bypass surgery in the country. These are just a few examples of what we witness every day.

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As a province, we have wisely decided to build and sustain one of Canada's national health care jewels. We have decided to invest in and protect this institution, because we believe it is important. As a relative newcomer to Nova Scotia, I salute Nova Scotians and their leaders who over the generations have done the right things to create this wonderful facility. At the same time, I am very proud of and salute those who work in our organization. The QE II is a large, sophisticated organization that constitutes one part of an even larger, very complex health system. We believe that all of us involved in the system - including government, other organizations and the citizens of Nova Scotia - need to reflect on how to improve what we do.

In closing, I want you to know how proud I am to be associated with the QE II. I suspect many Nova Scotians take this hospital for granted but, from my point of view, Nova Scotia is blessed to have 65,000 dedicated, capable and caring people working on our behalf at the QE II. Their tasks are often difficult and the rewards are not always apparent. The QE II Health Sciences Centre belongs to Nova Scotians, and we invite you to work with us to find new ways of delivering better care and, in doing so, to monitor what we do and tell us where we let you down.

We welcome your questions and your constructive criticism. To do our best, we need your advice. We need your encouragement and we need your support. We have told you here today that we want to be accountable. We know that we do not have all the answers, and we can assure you that your insights and perspectives are important to us as we move forward. I urge you to work constructively with us to help us achieve excellence in patient care for the people of Nova Scotia.

Mr. Chairman, ladies and gentlemen, thank you for the opportunity to present to you today, on the commitment of the people of the QE II to exemplary health care and on the financial health of this great Nova Scotian resource. Thank you.

MR. CHAIRMAN: Mr. [Robert] Smith, thank you very much for your introductory comments, it helps set a context. As I explained to you earlier, we will move to members of the committee now for questions, and our tradition has been to move in 20 minute blocks according to each of the caucuses represented here today. The order will be first to the NDP representatives, then to the Progressive Conservative representatives, then to the Liberal representatives on the committee, and then we will circle back again. Since we are scheduled to be here until 12:00 noon, there should be a fair bit of time in which to cover various points.

If I may, I would like to lead off with an initial question. One of the things I wonder about is the current state of budget planning, particularly with respect to debt retirement. Slide four, which was suggested to us as a form of a budget statement, contains very broad categories. In your operating expenses, you only list, I think, four or five line items for a total of $350 million. That doesn't strike me as a very detailed budget. I am sure you have more detailed information. What I wonder though is you have $137 million in debt, so you are

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saying, by the end of March of this year, and what is not clear to me in your statement is whether your projections for the next couple of years includes provisions for debt servicing and/or debt retirement, or has there been no inclusion in those figures for dealing with the debt? Could I have an answer?

MR. ROBERT SMITH: That is a very good question. The current budget that is undergoing development within the QE II at the moment is focusing on the operating deficit portion of the debt. So this year we are anticipating approximately a $26 million operating deficit but we are in the business plan tabled with government last November, it forecasts that we will develop a budget that will bring that operating deficit down to $8.5 million in the year 1999-2000.

The key part of your question, and I will invite Mike to elaborate on this further, was what provisions are you making to be able to repay the accumulated debt load. I think I have to be fairly frank with you. We have no money to repay that accumulated debt load. There is no cash flow and there is no plan. Having said that, we are awaiting instructions from the Department of Health that have been indicated will be coming to us, to assist us in working within their guidelines to develop business plans going forward. At the moment, though, there are no debt retirement provisions that we are contemplating from within our own resources.

MR. CHAIRMAN: Thank you. I actually asked two points. One was about debt retirement. What about debt servicing? Is there anything in your budget for debt servicing or, again, is the answer zero at this point?

MR. ROBERT SMITH: We are servicing the debt from a cash flow perspective. We, obviously, are in a situation where we need the Department of Health to advance money to us. They have been doing that and, in addition to that, we are meeting our cash flow requirements through a bank loan. Do you want to comment further on anything there, Mike?

MR. MAHONY: Yes. To clarify, the sheet that you saw is an extract from our business plan which was submitted to the department in November. It is not a budget, it is an estimate of what the expense will be next year. We are working in tremendous detail through our budget, working with all our departments right now, and we anticipate the board approving that budget in mid-March. At that time we will have detailed numbers but our commitment is to an $8.5 million deficit for next year. We are awaiting the guidelines from the Department of Health which will deal with the debt situation.

MR. CHAIRMAN: Thank you very much. Ms. Godin.

MS. ROSEMARY GODIN: Thank you for coming this morning and thank you for your presentation. In your presentation, Mr. [Robert] Smith, you said that the hospital is committed to maintaining and enhancing the standard of care for Nova Scotians and further on that you are going to retire the debt in the next few years, but then a little while later you

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talk about not having any money. We all know that there is quite a debt and I have to tell you that Nova Scotians are extremely concerned about this.

You keep reassuring the public that their health care needs are going to be met adequately and safely, but I just keep thinking that in my home when I am way over budget, I make cuts and I have to make cuts. I am just wondering what the strategy is and what kind of cuts are going to be made at the hospital?

MR. ROBERT SMITH: We believe that we can deal with the operating deficit in a reasonable period of time within a number of policies that we are guided by or constraints perhaps that we are guided by, but we cannot deal with the accumulated debt unless there is substantial investment in the QE II specifically for that purpose. So in terms of dealing with the operating deficit of about $26 million, we are working with a template in our budgeting process that we think will optimize both the efficiency and effectiveness of the limited resources that we have.

[9:30 a.m.]

We would like, for example, on our in-patient operation, to operate the available hospital beds at 89 per cent occupancy. They are currently operating at about 82 per cent. There are ways to change processes within the organization to do that, and the result of that is that it will put some resources in an idle mode, obviously.

We hope that our staff will be able to use references to a number of new procedures in terms of planning the way they work, designing the pathways by which people are treated and managed, better case management coordination within the available resources, shortening the length of stay where that is appropriate, using techniques to admit to hospital on the same day of surgery where that is appropriate. Within that template we think that we can bring an operating budget forward next year that we will be able to live in the business plan projection that we have.

Not unlike your home situation, we are designing a budget to be able to move forward in April, subject to board approval and subject to ensuring that the government of Nova Scotia concurs, that will effect that plan. I mentioned that there are a couple of constraints, there are significant constraints in many ways. We have a very large obligation to manage our workforce in a fair and equitable way. We have been doing that with making changes and endeavouring to avoid forced terminations. We rely very heavily on attrition. We have what is known as a severance incentive program that was developed a year or so ago in conjunction with the Department of Health, and we often can help restructure our organization by inviting people to take advantage of that program.

The long and short of this is that we cannot and do not want to use the slash and burn approach that has occurred in other jurisdictions, and we want to make steady, systematic

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change, and we want to move ourselves to an efficient operating base as it relates to the operating budget.

I think there are some other important considerations that we talked about, and that concerns capital. The organization is rapidly becoming undercapitalized. That is a serious problem, and we will need to work with the Department of Health and the government to have a better relationship around continuous capital funding.

MS. GODIN: You don't want to use that word cuts, do you? The c-word now is constraints.

MR. ROBERT SMITH: I think I could give you the example of the the introduction to gall bladder procedure. Some could say that there were cuts involved because it reduced our reliance on hospital beds, it reduced our reliance on some staff, and shifted some staff resources elsewhere. You could call those cuts. In our view, they are not cuts, they are a natural continuous transition of these organizations to a more efficient and effective level of operation.

MS. GODIN: Some of the ways that the hospital has identified savings, you have just spoken about, by shortening patient stays, reducing drug costs and making use of alternative care settings. I am just wondering, what about the liability when you start making changes like this? Are these savings going to be offset by higher insurance or legal costs?

MR. ROBERT SMITH: Obviously, we don't want to go from the frying pan to the fire. I think we have been making changes; if you look at health care over the past decade, we have made dramatic, remarkable changes in the delivery of health without exacerbating liability issues around insurance. As we move forward with change, we do that in concert with all of the players within the organization, particularly with an eye on what is effective and appropriate patient care. If we answer the first question about the quality of care, then we can fit the resources around that.

Oftentimes we find, if we have planned that well and we have used the current and evolving technologies - we have used guidelines that others are using in different parts of Canada and elsewhere - where our staff have opportunities to learn, we often call those benchmarks, we can incorporate those into our organization safely and effectively.

MS. GODIN: At this time, Mr. Chair, I think I will turn things over to my colleague.

MR. CHAIRMAN: Mr. Dexter.

MR. DARRELL DEXTER: Thank you very much, Mr. Chairman. Welcome. A very interesting discussion. I had a few things that I wanted to ask, just take another tack on this for a second. You might know that there are some people here today who became ill from

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working at Camp Hill and they are here because they have heard that there is a plan or part of the plan to cut off any further income support to them by March 31st. Do you know anything about this rumour or if it has any basis in fact?

MR. ROBERT SMITH: I am a bit at a disadvantage around specific dates and cut-offs. Obviously, the incident at Camp Hill with these employees happened well before me, but I am aware that we have notified them and made changes with respect to their level of compensation. Some were receiving Canadian Pension Plan benefits in addition to the amount of money coming from the hospital. There have been remedies effected around that. I think in some instances, the determination of their availability to return to work - it has been made clear that some of them will not be returning to work, that there is not an opportunity to re-employ them - in other cases we have worked diligently to bring many of those people back to work, but I would have to get back to you on the specifics of what is happening on March 31st.

MR. DEXTER: I realize that this is before your time, but I would assume that you are somewhat familiar with the position that was taken by the hospital at the time, which was that they wanted to bridge the gap between when these people went off sick and when there was some expectation that they would either be compensated through a particular program or plan or they would go back to work.

The problem, of course, is that, as you have noted, some of them might not return to work and there does not seem to be any plan for continued compensation. They are obviously upset by the reductions. I mean when you said remedies, what you meant was that the amount that they receive was reduced by Canada Pension Plan benefits, and my question is, do you see this as a responsibility that flows not from the hospital but from the government?

MR. ROBERT SMITH: I apologize to you. I wish I had known the question was coming. I would have to get more familiar with those details. The only thing I can say to you is that I am quite confused as to why this has never been a Workers' Compensation Board issue.

MR. DEXTER: Actually that is a very good question and I think you have, in that answer alone, highlighted some of the significant concerns that people have around how this problem developed. (Interruption) By my clock, we started at 9:24 a.m., so I have three or four more minutes left.

Last week we had an opportunity to hear from the Auditor General with respect to his audit of the hospital, and one of the things that concerned me specifically about this audit was that the QE II was notified that the Auditor General was going to go ahead with this audit. Within a few days they then went out and contracted for an independent audit, and the cost of that audit is rumoured to be in the area of $1 million. This is an odd thing. I would like to know: whether or not the cost of the audit has been, in fact, determined; is it going to cost

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the QE II $1 million for that audit or something near it; why was it done when the Auditor General was coming in at the time to complete that at maybe cost to the government, but not cost to the QE II; and was the purpose of that audit a defensive measure to defend against whatever criticisms might have come forward as a result of the Auditor General's work?

MR. ROBERT SMITH: Is your four minutes up yet?

Again, I started in the middle of October, and so I have kind of caught this ongoing. In the first instance I will tell you that the work of the external reviewers - and I use the word reviewers as opposed to audit because the board of directors asked for a review as opposed to an audit, and I think therein lies a bit of difference between what the Auditor General's responsibilities are to the Legislature and what the board felt it needed in terms of a review. I will talk a little bit more about that - the estimate of the final price of the PricewaterhouseCoopers review that included a financial review, Y2K, Project Quest and a review of the health staff contract that we had, the total costs are now forecast to be $619,000, a far cry from $1 million. We have no idea where the $1 million came from; I am not sure if the Auditor General in fact knows where the $1 million came from, but I won't put words in his mouth.

The Auditor General had an obligation to you as a Legislature. The board of the QE II, at the time of making an appointment of PricewaterhouseCoopers, had just shortly before got a new chairman, they had gone through a very difficult time that led to the departure of the CEO, and they were ramping up very quickly their financial debt situation. There was a high degree of extreme concern about whether this organization was under control or totally out of control. In the appointment of PricewaterhouseCoopers, the board sought to find rapid response to the needs of the QE II. In my opinion, by and large, PricewaterhouseCoopers fulfilled that role.

It was also very clear and certainly since I have been at the QE II we have worked very closely - as Mike Mahony alluded - with the Office of the Auditor General, to ensure that the information he had was factual and clear. There has been no defensiveness, if you will, between what we were looking at and what the Auditor General's questions were about our organization, none at all. I think it has been a very open and frank relationship and, as my associate indicated to you, his conclusions are not inconsistent in any way with the conclusions that we have about our own organization.

MR. CHAIRMAN: Thank you. We will move now to questions from Dr. Hamm.

DR. JOHN HAMM: Welcome, Mr. [Robert] Smith and representatives from the centre. It is a welcome opportunity to have this meeting of the committee and to be able to get a further understanding in what we all acknowledge is a very serious problem. All Nova Scotians are dependent on the QE II for so many services, so this is a provincial issue.

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There are a number of things that stand out in my mind from your report, not necessarily connected but all very important. One of the portions of your report makes reference to the fact that the QE II does provide a level of excellence in care that is to be envied by many other institutions right across the country. I truly believe that to be so, but one of the distressing things that came out of your report is that you have estimated that replacement and new equipment for an institution of this size and complexity should be roughly $20 million, and that currently you received, this year, $0.75 million through the Department of Health and $5 million from the Foundation, leaving a shortfall to keep the equipment up to scratch of some $14 million dollars. Does that $14 million occur in your debt analysis?

MR. ROBERT SMITH: No.

DR. HAMM: It does not. So if, in fact, the hospital had spent the appropriate amount on equipment this year, this year's debt, if we accounted for that, would in fact be $14 million higher than the numbers that we were given?

MR. ROBERT SMITH: Approximately. We had deferred in the mid-course of this year, approximately $10 million.

DR. HAMM: So, in other words, from a technological standpoint, we are $14 million poorer because of our inability to provide that amount of funding to upgrade the equipment in the hospital?

MR. ROBERT SMITH: I'm sorry, go ahead Mike.

MR. MAHONY: I guess I would just repeat that we deferred $10 million this year. We deferred $10 million of capital equipment this year, just to confirm that.

DR. HAMM: That is in the debt analysis?

MR. MAHONY: No, it's not in the debt, that would be additional.

DR. HAMM: So our equipment, we have worn out $10 million worth of equipment which we have not replaced and, in essence, it is not in the debt structure.

MR. ROBERT SMITH: Right. I think it is a good point and it gives me an opportunity to make a further point, if you don't mind.

If you look at the accumulated debt forecast of capital at about $53 million and you look at that running over, roughly, a three year period and you add in the fact that we have deferred some, you come back to a number, roughly $20 million, in capital requirements for an organization like this, so going forward, I think that is very important.

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The other point I wanted to make is that we have become quite reliant on the survival arm of our Foundation. We mentioned that there is some $5 million there. It is very important, I think, to appreciate that with this fiscal malaise that we are wandering in, it is very difficult for our Foundation to raise funds when we get a message in the media that is not necessarily consistent or it alludes to the concerns of the QE II and fiscal management.

I make the point because it is so critical to us to have the investment of Nova Scotians, not only through their tax dollars but through their philanthropy, to enable us to keep things in balance.

DR. HAMM: Thank you. In your estimation, what period of time would it take if, in fact, we underfund the replacement of equipment in the hospital, how long would it be before this would seriously impact the kind of care that people expect to be delivered at the Queen Elizabeth II? How long can that go on without some remedial action being taken to upgrade the equipment?

MR. MAHONY: I'm going to invite Dr. LeBrun to respond, but I would say just at the outset, that there are members of our health team in the QE II who will tell you right now that the under-capitalization is a serious concern. It would be really a very short period of time before program offerings would have to be closed down. Paul?

DR. PAUL LEBRUN: Sure, yes. Well, you probably know that my department, Diagnostic Imaging, is one of the heavy capital areas of the hospital. It is clearly, I think, our major concern now, relating to the aging of our equipment. We are not unique. It is a national crisis. I was speaking with heads across the country, and they have the same problems that we do.

I know I am constantly making the message to Bob and the executive that this is a looming problem for us. We currently have capital submission for one year. I think we are asking for in the vicinity of $5 million of replacements. We have two pieces of equipment that I have had to take out of service recently and we are asking for those to be replaced on an urgent basis. How long it will take for us to not be able to provide the service, that is difficult to put a number on but it is not measured in years, I would think. It is maybe a year or two.

DR. HAMM: To give it a name then, it could probably be a year from a technology crisis at the hospital?

DR. LEBRUN: I do not want to make a headline but clearly it is a major problem and if we do not deal with it in the future, it is going to result in longer wait times to access our procedures. If that equipment is not available, we will not be able to deliver the same number of procedures.

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MR. ROBERT SMITH: Just if I might make a comment as well, I think as we look at the federal debate and all of the earmarking that they want to put on the transfer of money, they are well aware nationally of the undercapitalization of the system. We are optimistic in our discussions around going forward with government to deal with the accumulated debt that, in concert with that, will be a clear strategy to craft a solution around capital.

DR. HAMM: Thank you. One of the points that you made in your presentation, Mr. [Robert] Smith, was that in a national performance examination, the QE II scored first in 37 categories. My question is, how many categories were measured?

MR. ROBERT SMITH: Does anybody remember? Well into the hundreds of categories were measured and I think the question I sort of prepared for is that there was about 40 hospitals in the database, of which seven are teaching hospitals relatively comparable to us.

DR. HAMM: Thank you. We always try to ask the unanticipated question. One of the points that you made is that you are working with the Department of Health to develop a multi-year plan to bring the deficit to zero and to retire the debt in the next few years. That is rather open-ended. My question is, would you give us perhaps a clearer definition of what exactly that is saying and, secondly, what is the current status of the business plan that was circulated and was dated November 6, 1998, because it became rather a controversial document?

MR. ROBERT SMITH: Yes, it did, unfortunately. It is still under review within the Department of Health and we have not been given further direction from the Department of Health with respect to that plan. What I did discuss earlier, though, is that we are working to approve that plan internally in terms of the budget that we are developing.

There was another part of the question; I apologize, it had to do with what we are doing about retiring the debt?

DR. HAMM: You made a statement that you are working with the department to develop a multi-year plan to bring the deficit to zero and to retire the debt in the next few years. Would you be a little more specific as to what you would say would be a reasonable time line to work toward?

MR. ROBERT SMITH: As far as the deficit is concerned, we believe that we can bring the deficit to zero within the next couple of years; ostensibly, we believe we can do most of that in the next year. That is the deficit that we referred to in terms of the $26 million deficit that we will have this year. When we say that we would like to retire the debt within the next few years, it is important to appreciate we do not have the resources to deal with that debt at all. The retirement of that debt we hope will come out of our collaboration and work with the Department of Health, in order that they find strategies to help that. We believe, very

[Page 15]

importantly, that from the standpoint of the QE II and the ability for us to move forward and fulfil the mission we have, debt needs to have some firm commitments.

DR. HAMM: Just so I fully understand, even though the November 6th business plan has not been approved internally, that is your working document right now and, secondly, there is no plan at present that has been worked out that relates to debt retirement.

MR. ROBERT SMITH: That is correct on both points.

DR. HAMM: One of the questions that comes to mind is the statement that certain initiatives were apparently being planned to make the operation more efficient, and those plans were shelved and the planned savings were compensated for to the centre by a payment by the government, or the department, of $12 million. When was that payment put on your books? What would have been the savings to this point, estimated, if in fact you had proceeded down the road to savings? I would presume the kinds of savings that you would be working toward would in fact accumulate year after year after year? What has been the ultimate result of the centre receiving a payment of $12 million to delay the implementation of cost-saving measures? What has been the real cost of that?

MR. MAHONY: Looking at the overhead, which showed you how we were doing compared to the business plan, as you saw in there, in 1996-97 there was a planned deficit of about $20 million. In 1997-98, that was when we received the $12 million. Our actual deficit without that would have been just over $20 million, which was the reduction in funding. We were still at business plan level at that point. The delays have continued, and therefore this year you can see a spread between where we are, which is still on the same track of the $24 million to $25 million deficit, instead of a $10 million surplus which should have been. So there is $35 million right there, a spread. Then the earlier two deficits, if you add those to it, that is how we get to the operating deficit situation.

DR. HAMM: Just so I am perfectly clear, and correct me as I go along, you received $12 million to delay the implementation of cost-saving measures, and as a result of those delays there is an accumulation of debt, because of that delay, of some $30-plus million.

MR. MAHONY: Actually more than that. There was . . .

DR. HAMM: What is the number?

MR. MAHONY: There was $20 million in the first year, $11 million in the second year, $25 million in the third year. That is just the operating results. If you add to that the amortization of debt, you get to the number on the other overhead which was the $83.4 million deficit. That is how we got to the $83.4 million.

[Page 16]

DR. HAMM: Just so I am perfectly clear, because of the delay which was paid for by $12 million, $83 million more debt has accumulated because of that action. Is that what you are saying?

MR. MAHONY: In total over the three year period. We were anticipating there would be about $30 million of operating debt, until that time, but the extra $53 million has come as a result of that.

DR. HAMM: So you were paid $12 million so you could run up $83 million more of debt?

MR. MAHONY: No. We were paid $12 million to keep us on the business plan. We were anticipating moving to a surplus in the future.

DR. HAMM: Since that is what has happened. If you had gone on the route you were going to go, there would have been a savings that hasn't resulted, and it has resulted in a debt of $83 million because of the failure to implement what you wanted to implement.

MR. MAHONY: That is right.

DR. HAMM: Thank you.

MR. ROBERT SMITH: And we would be as well, if I might just add, in a position this year where we would be starting to retire the accumulated debt, which is not the case.

DR. HAMM: If the $12 million hadn't been paid, now you would be in the process of starting to retire the debt.

MR. ROBERT SMITH: That is right.

DR. HAMM: Thank you.

MR. CHAIRMAN: Mr. Fage.

MR. ERNEST FAGE: Good morning, members from the QE II. It is a pleasure to be here to ask a few questions. Continuing on where John has left off, whose decision was it to implement the plan not to continue with the re-engineering, was that the QE II's administration or management that made that decision or was that a decision brought on by a government policy or the government itself? Why was that decision made to stop the re-engineering and take a payment?

[Page 17]

[10:00 a.m.]

MR. ROBERT SMITH: As my associate explained, the desire to move forward with achieving the benefits of merger required that we move forward on really three points. We needed to address the coming together of a huge workforce covered by I think 14 separate agreements. It had to move forward in tandem with the withdrawal of some operating funding from government, the consolidation of clinical services, the capitalization of things going on internally.

The key to this plan was a simultaneous approach. What happened to it is that the movement, particularly with respect to the terms and conditions of employment of our staff, did not move forward and we were trying to react really to a fiscal dilemma. We were trying to make dramatic change inside the organization without that agreement in place and basically the Department of Health asked the QE II to stop moving forward with what at that time was a re-engineering initiative or a redesign initiative that we called Project Quest.

MR. FAGE: When was that request made?

MR. ROBERT SMITH: I think it was basically concluded approximately November 1997.

MR. FAGE: So then, in essence, you are saying that it was the Department of Health's decision to stop the re-engineering plan, not the administration of the QE II then?

MR. ROBERT SMITH: That is correct.

MR. FAGE: The situation, if that is indeed the view, disturbs me greatly because as we all know in past events labour discussions were occurring in Nova Scotia. An election was coming very shortly which, indeed, happened on March 24, 1998, and the financial security of the most important medical institution of this province may have been - certainly has put it into a huge debt load - but certainly has put it in a precarious position because of Department of Health policy that may have had more to do with expediency.

MR. ROBERT SMITH: I can't really comment on all of the implications of that. What I would observe though is that internally to the organization, we had employees working side by side earning as much as $4,000, $5,000 and $6,000 a year less than their workmates. We had benefit plans that had not been synchronized and coordinated. So the alternative to the point of view is that you could have had an impossible labour environment in which to make change and I am not sure, but I presume that part of that factor influenced the decision of the day, but I can only speculate on that retrospectively.

MR. CHAIRMAN: We will go back now to Mr. MacKinnon.

[Page 18]

HON. RUSSELL MACKINNON: Thank you, Mr. Chairman. How would you rate the QE II with all the other hospitals in the Province of Nova Scotia?

MR. ROBERT SMITH: There is no comparison.

MR. MACKINNON: In what regard?

MR. ROBERT SMITH: This is a tertiary/quaternary level service organization. Close to about 20 per cent of its operations are not duplicated anywhere else in the province and in some extent not duplicated in Atlantic Canada. So there is a dramatic difference. On the other hand, the QE II has a very large community obligation to this metropolitan region and does provide extensive community health services that are similar to other community health hospital operations in the province.

MR. MACKINNON: It is also a teaching hospital as I understand you have indicated. Could you indicate what the associated cost is with the fact that it is a teaching hospital?

MR. ROBERT SMITH: I don't know precisely what the cost would be. Typically the literature tends to suggest that to sustain organizations it is in the range of about 20 per cent.

MR. MACKINNON: Of your total budget?

MR. ROBERT SMITH: Of the operating budget.

MR. MACKINNON: And who benefits?

MR. ROBERT SMITH: Certainly the people of Nova Scotia benefit. We are the major training centre for all the health provider services in the province.

MR. MACKINNON: I noticed you made mention of the collective agreements, bringing them together, harmonizing if I could use that word. Could you indicate what the associated costs were with settling the labour issues arising from merger at the QE II?

MR. ROBERT SMITH: We can give you some precise numbers. Interestingly, we looked at that schedule yesterday morning, of the cost impact of that agreement over the three year period, and I think it was around $40 million impact over the three year period, wasn't it?

MR. MACKINNON: Out of the total accumulated debt?

MR. ROBERT SMITH: The Department of Health made a funding adjustment to accommodate the costs of the collective agreement, and as we move forward into the next

[Page 19]

fiscal year we are under the understanding that the increased costs associated with that agreement will be funded.

MR. MACKINNON: I read the Auditor General's Report and a number of consultant reports and they indicated a number of concerns at the QE II Department of Finance. Have those concerns been addressed?

MR. ROBERT SMITH: We have had a fair amount of change within our Department of Finance. The Vice President of Finance left just shortly before I started. The Director of Finance has now left for another position. Mr. Mahony has joined me on an interim basis and we are currently advertising for a new chief financial officer. Mike referenced managing the cash flow projections, and we have tightened that area up quite dramatically.

MR. MACKINNON: Does that apply as well for your inventory levels? I understand there was a considerable criticism there.

MR. MAHONY: PricewaterhouseCoopers made a large number of recommendations, and we have accepted and implemented nearly all of them.

MR. MACKINNON: I look at the big picture, from a financial perspective. The bottom line is, if you look over the last number of years, the federal government has essentially left provincial governments across the country carrying an excessive amount of the responsibility as per the original agreement under the Canada Health Act. Would you agree that that is part of the problem?

MR. ROBERT SMITH: There is not any question of that. I think the QE II circumstances as a consequence of the federal-provincial funding arrangements are quite severe, but I think if you look across Canada, you will see similar patterns in just about every province, particularly manifest in organizations as complex as ours with teaching research and large patient care portfolios.

MR. MACKINNON: I just wanted to touch on the issue that my colleague, Dr. Hamm, the Leader of the Progressive Conservative Party raised with regard to delaying the plan. What would have been the net result had an alternate course of action been taken?

MR. ROBERT SMITH: I guess a consequence could have been, as I have referred to, a significant labour disruption within the hospital could have occurred. The circumstances with disequilibrium due to the merger certainly bore all of the seeds of significant basis for labour upheaval. There had been a clawback, as you know, on the wage basis, they had inequality of benefits, inequality of compensation. You had this clash of all the cultures of the organizations trying to work themselves out, so it was a very difficult, strenuous time. I think as well, the organization, perhaps in retrospect - and again what happened in Nova Scotia is

[Page 20]

not too dissimilar to other jurisdictions across the country - we tried to take the savings out of merger before they were available.

MR. MACKINNON: Just to be clear. Given the circumstances, it was a good decision.

MR. ROBERT SMITH: To merge?

MR. MACKINNON: No, to delay.

MR. ROBERT SMITH: To defer?

MR. MACKINNON: Given the circumstances as you have described and the impact that that would have on the QE II, given its uniqueness within Nova Scotia's health care system vis-à-vis other hospitals and health care agencies.

MR. ROBERT SMITH: At a moment in time, it was probably a good decision. The fact is that it hasn't been supplemented, and so we haven't gotten back onto a plan. We have continued in a situation of inappropriate funding at both an operating and a capital level.

MR. MACKINNON: But your Quest plan of action, so to speak, in the long term it will work; that is the objective.

MR. ROBERT SMITH: In the long term, we will continue to make changes that are not dissimilar to the kinds of suggestions that came out of the re-engineering work.

MR. MACKINNON: Thank you.

MR. CHAIRMAN: Mr. Fraser.

MR. HYLAND FRASER: Mr. [Robert] Smith, in your response to a question earlier, you indicated your bed usage, I think, at 82 per cent or something now and, in order to get some of the savings that you were looking for, that you would want to get to 89 per cent.

MR. ROBERT SMITH: Yes. We have a number of relationships within the organization. We can operate certain parts of our resources at higher occupancy than 89 per cent; they are typically areas where the length of stay is very long, and geriatric services would be an example of that. In other areas where the turnover of beds is quite rapid, it is a little bit more difficult to operate at 89 per cent. When we look at balancing the staffing relations, the staffing ratios that we use, we can operate at the same standard of care more efficiently at a higher occupancy level.

[Page 21]

The person who has a lot of responsibility about getting and finding that balance for us is Chris Power, who is the Vice-President of Clinical Services. Did you want to just comment on how we do that?

MS. CHRISTINE POWER: Sure. We are going through a process now at the QE II of examining how we staff our nursing units or our in-patient units, and in the areas where we have low occupancy rates, we don't have efficient use of our resources. What we are attempting to do is to group our patients by patient population, so that they have the same kind of care needs and staffing appropriately for those care needs, and we can have much more efficient use of our staff and all of our resources doing that.

MR. FRASER: What percentage of the patients that you have are referred from other institutions versus the service you provide in the metro area for instance? How can you control that or how do you do that in the mix of patients that you have?

MR. ROBERT SMITH: I will go back to Chris on that.

MS. POWER: Yes, about 58 per cent of the patients that we see are from the central region in Halifax, because we are the regional or community hospital for this area. The remainder of our patients come from the other regions within Nova Scotia, and a proportion of them also come from the other Maritime Provinces, and a very small proportion from Newfoundland.

MR. FRASER: The patient satisfaction survey - and you referred to, Mr. [Robert] Smith, the Conference Board of Canada - was that done from patients from across the province in the same percentage, for instance, as the admitting was done, or would it be just an exit poll? How was that done, were people contacted by phone?

MR. ROBERT SMITH: It was actually in the form of a written questionnaire. The Conference Board of Canada randomly chose from a group of patients through the May, June, July 1998 period and, presumably, that random selection should have been reflective of the mix that Chris has referred to.

MR. FRASER: Another survey that I understand has been done was one by Research Development last year. Are you familiar with that one?

DR. LEBRUN: Sorry? Research . . .

MR. FRASER: Research Development Corporation, another survey that has been done on patient satisfaction?

MR. ROBERT SMITH: Paul, do you want to elaborate?

[Page 22]

DR. LEBRUN: Yes, there was, I've heard a presentation on it. Did you have a specific question about it?

MR. ROBERT SMITH: It was done by the Foundation.

DR. LEBRUN: The RDI, is that the . . .

MR. FRASER: Okay. I understand that there is. When people are asked about the state of health care in the province, they say it is declining; when people are asked specifically about their own care, it is improving. Why would that be? Any opinion on that?

MR. MAHONY: Who wants to take a shot?

MR. ROBERT SMITH: I can comment a little bit while Paul and Chris are scrambling for some creative answer. I think that that attitude is prevalent right across the country. The National Forum on Health that was commissioned by the federal Liberal Party found that when they went out in a consultation process with Canadians, they found that the reform movement, if you will, had dramatically compromised the level of confidence in the integrity of the Canadian health care system in the eyes of all Canadians.

The quite wonderful outcome by the way of all of this reform - and this is why people like me can be extraordinarily proud to be associated with an organization of the calibre of the QE II - is that the staff on the front line, the professionalism of the caregivers continues to be exemplary. That is why I think when you come into the system, you are getting exemplary care from the physicians, nurses, physios, OTs, the caregivers and support staff. You are getting exemplary care, but in terms of the anxiety we have with the process of change in this system, we, as Canadians, on the whole are very anxious that it will be there for us when we need it.

MR. FRASER: You spoke a little earlier about the pride that you have in the care that is offered at the QE II. I know people in my own area who have been treated here, who have been operated on, and who comment on the quality of care. Do you feel that if the business plan, or the recommendations of Quest were carried forward, which involve I understand quite a number of staff cuts, that you could sit here today and say the same thing?

MR. ROBERT SMITH: We want to use the best treatment modalities possible within the resources we have available and there are opportunities for us to change the way we do our business and not compromise the quality of care. There are some complementary things though in the form of us going forward that the Department of Health needs to address, and that includes particularly the ability to provide home care services in the province that will complement the kinds of changes that we need to be able to make.

[Page 23]

MR. FRASER: The call, I guess, continues to be from Opposition to get at the plan and do what you need to do to get back to a balanced budget, if that is the term you want to use, but if you are not going to lay off staff, or do you feel that you can still provide the service with less staff, is that what you are saying or if the plan is carried forward and, obviously, a big portion of your budget is the cost of staff, if that is caused to happen are you still going to be able to provide the health care that people are saying in a survey that they think is great today at the QE II?

MR. ROBERT SMITH: The short answer is, yes, there will be less staff. Yes, we can sustain the current level of volume of care and, in fact, we can absorb dramatically more care in the process of the shift that we have from in-patient services to ambulatory care service. Our emphasis on ambulatory care, which has been growing at the rate of about 10 per cent per year - and Chris can elaborate on this - as we reduce the core traditional hospital bed setting and we use technology, both technology in the form of equipment and technology in the form of pharmaceuticals, we can manage patients much more effectively, and achieve better quality of care oftentimes in an ambulatory setting. I really would like Chris to comment on that.

MS. POWER: I will just start by saying that my number one responsibility is to provide quality patient care and ensure that that happens at the QE II. I am also leading the initiative of changing the way we do business. I would not be comfortable to do that if I didn't believe absolutely that we can either maintain or improve the quality of care in the way that we are moving forward. I would just like to tell you a little story as an example of public perception and how we can help people understand these kinds of shifts to a different level of care.

Whenever there is a headline about bed cuts or job loss, my phone rings off the hook from people in Nova Scotia calling to ask me how I could be doing these kinds of things and could I explain that to them. I talked with a delightful older gentleman a number of months ago who called me to say he was sent home from the hospital when he wasn't ready. When I asked him to tell me about his story and why he didn't believe he was ready, he said when he got home he didn't feel like he could get up and make his own meals.

I talked to him about that and asked if he thought it was really necessary he be in an expensive hospital bed with nurses caring for him. He said, no, you are right. He didn't need nurses, but what he needed was somebody to help him with meals, and he really would have liked to have gotten in the bathtub, but he wasn't comfortable to do that. When I talked to him to say there are home care resources, there are lots of resources in the community that we could help him with, and perhaps we failed him by not having provided that, and now we will work that through, so I did help him to get that, and at the end of our conversation, he said, you are right. I didn't need to be in that hospital bed.

[Page 24]

I think a lot of it is our public education of people. To say when you need us, we will be there and we will take excellent care of you, but when you are no longer in need of care in a hospital with nurses and physicians, then we will also help you to have that care in a different setting. We will bring you back on an ambulatory basis. We won't abandon you, but you don't need to be in an expensive hospital bed.

MR. CHAIRMAN: Thank you. We will move back to the NDP caucus at this point. Ms. Godin.

MS. GODIN: If I could just briefly return to the environmental illness issue, because there are so many people here and I don't think they are going to leave here satisfied today.

A big part of the problem must be that staff is constantly changing. Mr. [Robert] Smith, you said that you weren't prepared to answer, you didn't know enough about it because you have only been here since October. I am just wondering, these were people who worked at your hospital and they were made ill through working at your hospital. From your answers, I was getting the idea that the hospital just wants to pass them off to somebody else, that there is no sense of obligation to the Camp Hill workers. I am just wondering, perhaps - since you said earlier that you didn't know the answers - Mr. Mahony can shed some light on this. Is there anything in the budget that provides for the Camp Hill workers who were made environmentally ill? The reason I ask is I think there are over 100, for example, in the organization that they have who have not returned to work and if you did have to pay out liability to those workers, it would be a lot of money in the budget. They are asking what is going to happen on March 31st because they are hearing that they are going to be dumped by the hospital. Now, is it in the budget . . .

MR. ROBERT SMITH: As I said to you before and I want to reiterate, the hospital did take a position some years ago to endeavour to provide benefits to these employees who were deemed to be injured at work and I said to you that I had some concerns as to why that had not been managed in an equitable manner within the Workers' Compensation Board but the fact is it was not. So the fact is we have been managing that. Our obligation to those employees is the same as it always has been in the sense that we want to treat them and manage them as fairly and equitably as we can.

Those that can return to work, we would love to have them return to work. Some cannot return to work and so we need to come to some resolution for them in regards to that but as far as the magic of March 31st, we have said to you, and we will communicate to them through our Human Resources Department, if these questions have not already been presented to the Human Resources Department, we will communicate to them what we are able to do. I will give you my undertaking that, obviously, I will be briefed much better on the terms and conditions of what the Camp Hill employees are entitled to and are being benefited by.

[Page 25]

MS. GODIN: So as far as you know, Mr. [Robert] Smith, they are not dropping off your books after March 31st?

MR. ROBERT SMITH: I said to you that I will go and be briefed and I will communicate my understanding through the Vice-President or chief of Human Resources to them, who has been working with this group.

MS. GODIN: Who is the Vice-President of Human Resources at this time?

MR. ROBERT SMITH: Ivano Andriani.

MS. GODIN: I wrote to him in November or December and I have not heard. So perhaps he is saving money by saving stationery.

MR. ROBERT SMITH: I guess we would want to be diligent. I apologize to you that you did not receive a communication.

MS. GODIN: It should not be you, Mr. Smith, who should be apologizing and perhaps it is not to me that you should be apologizing. As I said earlier, staff seems to change an awful lot, do you know why senior staff keeps changing at the hospital? In the Auditor General's Report there was an inference that that is part of the problem, that the communication is not as good as it can be and possibly the constantly changing staff - for example, Mr. Mahony is just an interim financial officer which does not really, as much as some of us would like him to stay, it is still a temporary thing and it does not really bode well for the communication at the hospital.

MR. ROBERT SMITH: Yes, I recognize that there has been a quite remarkable change. After merger more than 100 management positions were eliminated from the hospital as part of the reaction to meet the cost-saving measures envisioned with amalgamation. When you take that much of a knowledge base out of an institution, you certainly do destabilize it. We have in the past year undertaken a survey around communications. A number of recommendations about how we can communicate better within the institution were made and we are addressing and implementing all of those important recommendations to improve communications.

[10:30 a.m.]

I think that change at the vice-president level in particular, where you are seeing a lot of change and at the CEO level, unfortunately we have lost some very talented people. It is a price of the merger phenomenon that has come across the country, and again I would say to you, in my experience, what you have seen here at the QE II is not inconsistent with what you have seen in other institutions.

[Page 26]

All of that being said, it does interfere with our ability to sustain good communications; we are addressing that. I am very optimistic that we will continue to make good inroads in this regard. One of the things that came out of those recommendations involves the town hall meeting concept. I have attended many of these town hall meetings and, in fact, this afternoon will be presenting at another town hall meeting. We have an internal publication that was developed initially as a monthly document; it is now an internal communication tool that is moving out on a weekly basis. We are conscious of that. But 6,500 people is a lot of people to communicate with and we are trying hard to do that.

MS. GODIN: Back in September 1998, there was a lot of talk coming from the hospital about saving money through management restructuring. Do you know if that is being done, or if there is any action on that at all?

MR. ROBERT SMITH: I am not really privy to all that was envisioned in September 1998. Does anybody have any comments on that?

MS. POWER: It might be in reference to the nursing division. We did go from 75 managers down to 50 and continue to restructure with the nursing. That may be the reference.

MS. GODIN: Is that through attrition or restructuring? Are you losing staff or are you moving staff?

MS. POWER: Through management?

MS. GODIN: Yes. Management restructuring.

MS. POWER: Some of it has been through attrition, some of it has been people who have been interested in the separation incentive program. As we move nursing units around, sometimes we don't have the same needs as we did previously.

MS. GODIN: Okay. Mr. [Robert] Smith was mentioning 6,500 employees. That is a lot of employees and yet it appears that the hospital uses consultants an awful lot. In your deliberations, looking at cutting back, is there any talk of using consultants less and using staff that you already have in place at the hospital?

MR. ROBERT SMITH: I am not sure that it appears that we use them a lot. That is relative to something you might have some information on that I don't have. I think . . .

MS. GODIN: It is quite a large expense, the consultants.

MR. ROBERT SMITH: Let's put a few things in perspective. The organization was merged, a huge organization was created, a complex organization. We eliminated close to $10 million in management staff positions as a result of that merger. A fair amount of resource

[Page 27]

went out of the organization but, in addition to that, we were faced with a new organization in need of dramatic redesign. We made a choice: either we went out and hired those resources as employees or purchased them on a short-term basis. It is critical for us in these times of endeavouring to manage efficiently and effectively, that we do go out and acquire the knowledge we need on a short-term basis. When they have transferred that knowledge to us, then we use our own resources to move forward.

I cannot say to you today that in going forward we won't hire consultants. We will hire consultants. We are in the business of acquiring new, current knowledge all the time. That has to be looked at in the context of what those consultants can bring as knowledge to us that enables us to do our jobs better.

I have some dispute with the fact that we use them a lot. I think, in my short experience in the private sector, we used consultants far more extensively than anything that has happened at the QE II over the last three years. I think if you look across the country at the reorganization of health care, it is in constant need of acquiring the knowledge on a short-term basis that consultants bring.

MS. GODIN: Well, if I can just comment, I think consultants are a hard sell with the public, especially with the debt that is there.

MR. ROBERT SMITH: Well, I accept your comment. I understand it. I think what is critically important is not to focus on a one-off issue like consultants without looking at the context of the whole. This is a very complex, sophisticated organization and if it is going to operate efficiently it needs those kinds of additional resources.

MS. GODIN: Mr. [Robert] Smith, in the Auditor General's Report, I believe he said that about the only hope the hospital has of getting help is through the Department of Health. Well, the Department of Health is part of a government that also has its own huge debt or deficit. I am wondering if you have a contingency plan if the Department of Health just says, sorry, we cannot help you out to the extent that you need.

MR. ROBERT SMITH: No.

MS. GODIN: You have put all your eggs in one basket, have you, with the Department of Health?

MR. ROBERT SMITH: Well, they are the primary funder of health care. This is a publicly-funded, publicly-administered health care system. It is based on the tax dollar and we do not have a separate bank account.

MS. GODIN: Okay, thank you.

[Page 28]

MR. CHAIRMAN: Actually, if I could just interject. I don't disagree at all with what you have just said, Mr. [Robert] Smith. Let me point out to you, however, that there has been some suggestion made publicly, I think, by the Premier, by the Minister of Finance and I think I saw it also today in your presentation, that there might be some opportunity for additional funding to come from the federal government towards health.

The concern I have is that you do not have in your heads an unrealistic expectation as to the amount of money that might come to Nova Scotia and, consequently, to your institution. My concern is that the Premier actually suggested that $342 million was the erosion to Nova Scotia and he was hoping to see that amount restored.

Unfortunately, the federal government is talking about adding in the order of $1 billion to health, to the CHST, the Canada Health and Social Transfer, this year, perhaps another $1 billion next year.

Because the money is distributed across the country on a formula that is a three year rolling average that is tied to population base, Nova Scotia's allocation in addition to what we already receive, for every $1 billion that the federal government puts into the CHST, Nova Scotia could expect to receive $30 million to $40 million. That's total, in addition. I hope you have those same figures in your head.

MR. ROBERT SMITH: Thank you, Mr. Chairman. I might just comment that your calculations and our pencil scribbles work out to pretty close to the same number. We are not hanging our hat on massive amounts of money coming from federal government but, nonetheless, that is new money and so we do hope that some of that is reflected on our needs.

We also know that while they have talked about $1 billion on the CHST, they have also talked about two other dimensions of health care that are important to Nova Scotians. One is an allocation of funds, perhaps, toward specific projects.

In that context, having had an opportunity to attend the National Home Care Conference here last year, we continue to wonder if some of those monies over and above the $1 billion in transfer might be targeted to initiatives like that.

The third element evolves around the commitment to enhanced research opportunities to the Medical Research Council and other important organizations that we work with.

I think, as we try to forecast on the revenue side, we are not trying to look at direct flow-throughs coming to us from federal transfers. We realize that funding for the QE II is ultimately the responsibility of this Legislature and it is this Legislature that we want to vote on the appropriate resources for us.

MR. CHAIRMAN: Mr. Dexter, four minutes, did you have another question?

[Page 29]

MR. DEXTER: Thank you very much. There are a number of questions I want to ask and I know there is going to be another round so I am going to concentrate on one part now and then maybe get back to some others.

In being questioned by Dr. Hamm with respect to the business plan, the November 6th document, I think you said is, in fact, the working document for the hospital. Is that correct? Did I hear that right?

MR. ROBERT SMITH: The November 6th document, and I am sort of worried about what words I am going to get here, is a document that fulfils the requirements of the Department of Health forecasting what our operation was going to look like in 1998-99 and 1999-2000. It was developed in the context of guidelines and parameters set by the Department of Health. That document was also approved by our board of directors, and in the context of that document, we are now developing a more detailed operating budget that for all intents and purposes parallels the spirit of that business plan.

MR. DEXTER: Well, that is right and there is no alternative document anywhere that you are working or coordinating your budget process through. This is it and although it was approved by the board in November of last year, you might recall that the Premier and the Minister of Health went a good way out to say this was never accepted by the Department of Health. We do not accept this document. That is what they said and I see, in fact, that there is a letter in our materials that is to you, dated December 17th, in which that point is again made by Deputy Minister, Mildred Royer, who says, we have not approved this business plan as of yet.

This business plan was set up to cover, in the first instance, 1998-99. So here we are coming up to February 1999 and the business plan that I assume was to cover April 1st to March 31st is not approved. In fact, the entire year, which is to be covered by the business plan, may expire before the business plan is approved. Is that what we are looking at?

MR. ROBERT SMITH: Well, it is not approved. We expect that we will receive information; we have been told we will receive information shortly. I think there have been some illnesses with the deputy that have probably delayed things but, the fact of the matter is, we know what our forecast is for this fiscal year and there is no way that we are going to change anything there.

MR. DEXTER: So whether they like it or not, this is the business plan and there cannot be any substantive changes made on your end to effect the projections that exist here?

MR. ROBERT SMITH: For the first year, and what we are doing now is building the detail around the second year and targeting the $8.5 million deficit forecast that we have in that plan.

[Page 30]

MR. CHAIRMAN: Mr. Muir.

MR. JAMES MUIR: Mr. Chairman, I have two or three very short questions. First, what is the cost per bed a day at the QE II?

MR. ROBERT SMITH: It is about $1,200 approximately but, as you know, the more intensive beds are about three times that cost and the less intensive beds can be dramatically less than that.

MR. MUIR: What was the cost prior to amalgamation?

MR. ROBERT SMITH: Do you have a sense of that number?

MS. POWER: It would be dependent on the organization. I think the bed days at the Victoria General Hospital would have been significantly greater than that at the rehab. So they were all over the map, probably from about, if I recall information, $500 a day upwards to $900.

MR. MUIR: I guess really the crux of my question is, I am trying to get a handle on how efficient or effective this amalgamation has been vis-à-vis the costs prior to amalgamation?

MR. ROBERT SMITH: We can give you some sense of that. We took out 100 people and we have saved about $10 million on a cumulative basis, just around that initiative alone.

MR. MUIR: You have indicated in administrative costs.

MR. ROBERT SMITH: Yes.

MR. MUIR: Next, a quick question. Mr. Dexter and two or three people have dealt with this. You have indicated that you have no plan in place to pay back the debt. Have you been given an indication by the current government that there is a bailout coming that will cover that? I can't see how you couldn't make provisions if you didn't have some knowledge that it was going to be covered.

MR. ROBERT SMITH: The board of directors and senior staff continue to work with the Department of Health and the Minister of Health to ensure everybody is well acquainted with the severity of our financial situation, but we do not have a joint plan signed off on the debt.

MR. MUIR: The third very quick question is, and I agree that when people can get into a hospital, they are generally satisfied with the care that they receive and I would think probably as satisfied in the QE II as any other hospital in the province. Notwithstanding that,

[Page 31]

wait times and access are things that concern me. Again, you are going to have to diminish your resources. I am like everybody else, I hear stories that people have not been able to gain access to the services at the QE II, which has had a detrimental effect on their health. I have heard that in some departments this is actually increasing. I could be more specific, but I am not going to at this time. Is that something that you are concerned about?

MR. ROBERT SMITH: Of course. Yes. Wait times and access are critical measures of our performance as a hospital. Unfortunately, we don't have all of the infrastructure to produce the data as precisely as we would like across all sectors. In some areas, we do. Cardiology for instance, we have a very good information base within that department, and we can monitor wait times quite well, and often take action to respond to them. In other departments, it is not quite as easy. Sometimes the wait times just to access the private practice of the specialist who will ultimately admit can be part of the problem.

We look at wait times across many measures. This is reported regularly to the board. We endeavour to address them through, oftentimes, some re-engineering initiatives. I think one of the examples of that, Dr. LeBrun can speak to, where it certainly was a major area and was resolved, can you take a second to . . .

DR. LEBRUN: Clearly, when our department got in trouble at the time of the merger, and we were one of the departments more severely impacted because we were trying to operate on two sites, one of our major problems was access and our wait times got really unacceptably long. Even that is difficult to set a standard to. One of the things we did was to establish standards for wait times, what was reasonable. We now manage to those wait times. In almost all of our areas, we have been able to improve access through changing the way we do things; within the same budget, with slightly fewer people, we now provide access in almost all areas within our targets. We have a couple of areas, you may have noticed in the material provided, where we can't meet our standard, those are in the areas of MRI, screening mammography (Interruption) well reported in the media, those two. But that is a measure of quality, and certainly we are meeting it better than we did.

MR. ROBERT SMITH: I just may add one more little point, it is important to remember that as we have set these standards and try to manage to them, hospitals are a kind of triage type of organization, and so, depending on the pattern of acuity that is coming at us, oftentimes less acute issues create longer wait times.

MR. CHAIRMAN: Dr. Hamm.

DR. HAMM: Some of my questions will be to attempt to get more clarity on some answers that were given earlier. One of the questions that was asked this morning is what will be the change and the result of the relationship between those employees that are suffering with environmental illness and the hospital?

[Page 32]

Mr. [Robert] Smith, you did point out that you were not prepared for the question but, nevertheless, the question was asked in terms of what changes are going to take place by way of a changing relationship and, primarily, a financial relationship between the hospital and those employees. Since you are not prepared to give the answer today, would you be prepared to provide the answer to the committee?

MR. ROBERT SMITH: Yes, absolutely.

DR. HAMM: In writing?

MR. ROBERT SMITH: Sure, yes.

DR. HAMM: So you would be prepared to give us that detail. I think it is important that that be clarified.

MR. ROBERT SMITH: We will delineate that and forward that to the Chairman as expeditiously as we can.

MR. CHAIRMAN: For the information of the committee, I have already drafted a letter to Mr. [Robert] Smith and handed it to the committee's secretary. It will be out later today, requesting that information. Thank you.

MR. ROBERT SMITH: Thank you. I am pleased that the Chairman has been listening attentively.

DR. HAMM: Yes. He has not gone to sleep. (Laughter) There are a number of issues of concern, the recent information that there will be some significant numbers of resignations from the Dartmouth General that will, of course, impair the ability of that hospital to fulfil its mandate or its mission.

What is the current status of the physician component at the centre and do you have information that would suggest to you that there could be or, perhaps, might be, or may be significant losses of staff, particularly critical staff, in terms of providing the tertiary care services? What is the current state of that relationship now and are you anticipating a problem, not unlike the Dartmouth General?

MR. ROBERT SMITH: Not unlike? Am I anticipating . . .

DR. HAMM: Do you have information that would suggest that a number of staff are, perhaps in the near future, going to be leaving the institution?

MR. ROBERT SMITH: The QE II?

[Page 33]

DR. HAMM: Yes.

MR. ROBERT SMITH: Well, you are ahead of me then.

DR. HAMM: I'm asking the question.

MR. ROBERT SMITH: No, I think that we are constantly in a situation where our staff is coming and going. Some of the medical staff has opportunities that are challenging to them. We live in an international world with these people.

We are very optimistic that we have put in place some platforms, alternative funding programs within the Department of Medicine, for instance. We are quite encouraged that that will assist in our ability to recruit people. At least once or twice a week I am meeting new, potential candidates of quite an outstanding calibre to join our medical staff.

DR. HAMM: Yes. The question was prompted, of course, that over the last few years, a number of very talented people have left this province and the difficulty in replacing them is very significant. As you see it now, has that process has levelled out and you are just seeing the natural attrition that, perhaps, we had seen over a number of years prior, say, to 1993, that that is not a major problem for the institution right now?

MR. ROBERT SMITH: Paul and Chris might have perspective on that.

DR. LEBRUN: My sense of it, Dr. Hamm, is that, in fact, it has turned around a bit. If you had asked that question a couple of years ago, I think I would have been very concerned. Certainly, in the areas of neurosurgery and oncology, I think the alternate funding programs that have been put in place should enhance that. I think neurosurgery has already turned that around. Some good, young physicians have joined that group.

My understanding is that the alternate funding in medicine will help in the oncology area as well. I am not aware of any impending loss of physicians, no.

DR. HAMM: Thank you. Ms. Power, across the province, many of the regional hospitals, many of the community hospitals are experiencing difficulty in staffing on the nursing side. What is the current situation at the centre? Are you experiencing any similar difficulties?

MS. POWER: We have, over time, experienced some difficulties in our critical care areas but we put in place a program and trained our own nurses to support that particular area.

Our current need is in casual nursing staff and it is the same problem across the whole province. Our young graduates who are coming out are not interested in casual employment.

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They are looking for full-time employment and so often leave this province. We are working with the Department of Health and Health Human Resource Planning on trying to establish some recruitment and retention strategies to get casual nurses and have them in place throughout the whole province. So in today's situation we are holding our own. There is no question it is a concern right across the country for the future and, hopefully, we are going to be ahead of it.

DR. HAMM: Thank you, and you are quite right. Across the province it is to get people on the casual list and being able to say you are holding your own really means that you are doing better than most other hospitals in the province, because it is a real problem in many communities.

MS. POWER: We are an attractive place for people to want to work in a high-tech environment. So we are most fortunate to be able to attract some but it is a daily effort on our part to get those folks.

DR. HAMM: Yes. I want to go back just so I have a little bit of clarification, and this question was answered by Mr. Mahony. This is a somewhat cumbersome environment and we start to deal with a lot of numbers when we are not sitting around a table and can exchange pieces of paper readily. I was inquiring as to the amount of savings that did not occur as the result of delaying the onset of money-saving measures. If I can quickly find my numbers, you had given me the numbers $20 million, $11 million, $25 million, adding up to $56 million, but then you went to an accumulated number of $83.4 million. Would you just clarify those numbers for me, please?

MR. MAHONY: Yes. Those are the three actual operating deficits. On top of that you have the amortization costs over the last three years of capital and that was around $10 million. We had re-engineering costs on top of that, which would have been about $9 million, and Y2K costs are on top of that as well. So that would get you to the $83.4 million.

DR. HAMM: The $20 million that you started with is 1996-97?

MR. MAHONY: Right.

DR. HAMM: And that was actually an operating deficit before the delay occurred?

MR. MAHONY: Right.

DR. HAMM: But that would have been picked up with what was going to happen?

MR. MAHONY: Yes, that was part of the business plan. The government reduced that much money out of our budget based on the fact that it would occur. We were anticipating picking that up later on with surpluses.

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DR. HAMM: Yes. So the remedial action would have backtracked and looked after that particular amount?

MR. MAHONY: Right.

DR. HAMM: Thank you. When we look at the amalgamation of the institutions that compose the Queen Elizabeth II Health Sciences Centre, it has created a lot of concern and, I believe, it has created a lot of problems. I believe that some of the problems that it was designed to fix are still there. I believe that it has created problems that were not there before. Now, those are negative comments, I realize that. Mr. [Robert] Smith, if you were here before that amalgamation occurred, would your recommendation have been to go ahead with it, would it have been to go ahead but in a different way or would it have been not to do it at all?

[11:00 a.m.]

MR. ROBERT SMITH: I think my recommendation would have been to consolidate and converge as you have. I think you have put in place a platform to work more effectively from in the future; without it, you would have had difficulties attracting the calibre of expertise that you currently have.

The bottom line is it was the right decision. It has bumps and scratches on it. It needs a lot of polishing. I am very optimistic that working with the government and the people within the QE II and within this province, that we can make this place really shine.

DR. HAMM: Thank you for that optimistic statement. A lot of the concerns that have been passed on to me have been observations such as the clinical arrangement that we left in the old building was better than the clinical arrangement that we are now involved in in the new building, particularly making reference to the fact that the new building was not now being put to the same use for which it was originally designed and really it became a compromised kind of situation. On reflection, would you have done that differently? You talked about consolidation, but would you have done it in this particular way, with the great cost of renovating a building which had never been occupied, which had been really designed for something else, and leaving a building that, while it was old, had a great deal of thought gone into it, and which provided, certainly for some services, a not-bad clinical setting?

MR. ROBERT SMITH: Well, the same people who say that they are upset with change and have spoken to you about it, are probably sometimes the people who tell me that it has worked out wonderfully well. We have had effective consolidation and elimination of duplication. I think I would have made the same decision. It is unfortunate that the Infirmary was designed in the way it was. It is just a matter of timing. I think I would have made the same decision to move to the new plant.

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As I look at our VG site, we are making tremendous improvements in the infrastructure there but, quite frankly, to try to sustain that site going forward at the level of sophistication that it would need would be an extraordinary investment. The problems in that site go right into the heating and ventilation systems; they are dated, there is a lot of structural issues there that we are continuing to chip away at. I think, in retrospect, the right decision was made to move to the Infirmary and change some of the roles, even though we are labouring under some of the inadequacies of the Infirmary.

Chris, you were quite involved in the clinical rationalization, and maybe you . . .

MS. POWER: I think one of the points that we need to reconsider is that prior to the merger there was on the books with government that the VG site was grossly inadequate from a critical care perspective, and a whole critical care wing was established at a cost of millions of dollars. By consolidating and making the changes at the new Halifax Infirmary, we were able to not have to go to the critical care building, and we did that at less of a cost than it would have cost to build that separate critical care infrastructure. Our only piece left is our intensive care unit at the VG site which does need to be refurbished and is on the books this year. My perspective is that the right decisions were made. I was intimately involved in the clinical rationalization, and numbers and numbers of hours and days and thoughts of all kinds of people went into that planning, and I believe we have created a good infrastructure to support us for the next number of years ahead.

MR. CHAIRMAN: Thank you. I have questions from Mr. Samson.

HON. MICHEL SAMSON: Mr. [Robert] Smith, I just want to go back to some of the points that Dr. Hamm made about the $12 million payment and the fact that the Department of Health didn't approve the original plan put forward under the Quest document for the QE II. Dr. Hamm has come up with some arbitrary number on the effect this has had by not being implemented and left the impression that for some unknown reason the Department of Health did not implement this. Could you tell us for the record, had the Quest document originally put to the Department of Health been implemented at that time, what would have been the total staff reductions and bed closures that were being suggested in that plan?

MR. ROBERT SMITH: Can I just clarify? The original business plan of 1996 was approved by the Department of Health. I was not sure if I heard you correctly. So I just want to make that clarification. Now, you were asking more specifically . . .

MR. SAMSON: The 1997-98 business plan.

MR. ROBERT SMITH: . . . about how many staff positions would be cut.

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MR. MAHONY: Project Quest in total was looking for an amount of around $30 million to $40 million a year of savings. That was what was in the business plan as well which had previously been approved by the government. Staff savings would be a good part of that.

MR. SAMSON: Is it safe to say that staff savings would have meant a reduction of approximately 800 staff at the QE II?

MR. MAHONY: I have heard that number being said. That sounds high to me.

MR. ROBERT SMITH: I think the other thing to keep in mind is Project Quest - as much as it endeavoured to quantify what the opportunities were and validate them, they still needed to be applied more specifically to the QE II experience. What was stated there is not necessarily what was going to be reality. I think they were two different things. It was more on the one hand the theoretical argument relative to the implementation argument. So a lot of those numbers that came out had a certain sort of greyness about them that needed, in the course of time, to become more tangible.

MR. MAHONY: Perhaps I could just clarify a little bit more on Project Quest. It was not intended that one study would be done, at the end of that study all the changes would be made all at once and there would be, say, 800 cuts. Project Quest was initially a review of the whole facility and then looking at various aspects of the facility to see where improvements could be made, working with the members of those departments. So it would happen over time and working with people in the department.

MR. SAMSON: If I am correct in the testimony we have heard from you today, you indicated at the time that the 1997-98 business plan was being proposed to the Department of Health, it was a time when collective bargaining was looming. There were concerns with staff and inequality of pay with staff working side by side. Ms. Power already indicated that any indications or rumours of staff cuts would quickly get to her and the sense of panic would hit. It is quite clear though that Project Quest, we can debate the numbers, but a large part of the project was in staff reductions, was it not?

MR. ROBERT SMITH: Well, of course, 70 per cent to 75 per cent of our expenditures are in staff costs. So when you are reducing anything, you are going to be changing the number of staff that work.

MR. SAMSON: Just for my own information again, how much did Project Quest in the 1997-98 plan suggest in potential staff cuts? You threw out a number there and I did not get the number. Was it $30 million to $40 million?

MR. ROBERT SMITH: The total implementation along the business plan lines that we have shown you in that graph would have ultimately amounted to around $40 million, I think was the number.

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MR. SAMSON: That would have been in staff reductions?

MR. ROBERT SMITH: Oh, no. A large part of that was in supply savings in terms of managing the inventory a little more efficiently; a new infrastructure around telecommunications and so forth.

MR. SAMSON: Not wanting a specific number, but what portion of this $40 million would have been represented in staff reductions? You have already indicated 75 per cent of your budget goes to staff so out of this $40 million savings, what would have been earmarked through staff reductions?

MR. ROBERT SMITH: You are looking for an FTE count number. I do not have that. Chris might have more information that . . .

MS. POWER: I can certainly speak to the clinical side because that is the side that I am most involved in. Over the course of the project, what Project Quest was forecasting, is that we would have about a $25 million saving on the clinical side. That would be over a three year period as we changed our processes. The FTE number that we were talking about was in the range of 600 over that course.

I might just, if I could, comment on the fact that we did stop that Project Quest. Although it had a fiscal reality check for us, what it did provide us as an organization was an opportunity to validate those figures with our medical staff and staff, and work through a change-management process. So there was an upside to the delay in that project for us.

MR. ROBERT SMITH: I think the other thing I just want to point out, and Dr. LeBrun might comment on that, the use of Project Quest resources in his area enabled not only the resolution of an operating issue but the absorption. Do you want to talk about the absorption of volume?

DR. LEBRUN: Yes. Our budget is relatively stable and we have improved the quality of the service that we are providing, we believe, measured in terms of access; as I mentioned before, in terms of turnaround time, in terms of the amount of time spent by patients in the department. We have done that in the face of, this year, somewhere between 5 per cent and 6 per cent increase in clinical volumes. So it has enabled us to deal with that without additional resources.

MR. SAMSON: I am just curious, Mr. [Robert] Smith, and I guess it is difficult to predict what could have happened but, in your own opinion, had the 1997-98 business plan been approved by the Department of Health and with it a projection of 600 staff lay-offs over three years, what would, in your opinion, the impact have been on your labour situation at the hospital, considering that collective bargaining was looming and that eventually an agreement

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was completed in February 1998; what would have been your labour situation had that plan been approved by the Department of Health?

MR. ROBERT SMITH: I can only reiterate what I think I have said earlier on this, that the environment for a destabilized workforce, certainly all the attributes of a destabilized workforce existed at that time. Negotiations were going to be extremely difficult, extremely important. Because a resolution had not taken place earlier on, an awful lot of things had festered and so I guess, looking back on this, there was a collective recognition. The Department of Health asked that the plan be deferred, that they would make adjustments to the plan's deferral, and that might have been a very reasonable, prudent decision at the time but what I would leave you with is that at November 1997 when that decision was made, it put the business plan on the shelf or, in effect, ended the business plan.

Now you have had a gap moving forward here and we need to get back on course, on some kind of course. Certainly we have to make changes in the organization. We have made minor changes since that time but we have to make change realistically and we have to be funded by this Legislature realistically.

MR. SAMSON: Just back on Project Quest, what was the situation, how did this project even come to life, I guess, who commissioned it and why was it commissioned?

MR. ROBERT SMITH: The compelling reason for its commission was quite aptly I think shown in that graph that we have tabled with you. The Department of Health had reduced the operating budget of the organization systematically amounting to a fairly dramatic, in a sense, capture of revenue deemed, I suppose, to be the benefits of merger and an imperative response within the organization was essential to eliminate duplication and achieve better operating efficiencies.

In hindsight, we may not have had to go the Quest route or the degree of going the Quest route had we had a much more slower transformation planned than what had been worked out in concert with the Department of Health. But that is hindsight. It is easy for us to say today that this would have been better, but reasoned people made that decision, we jumped in, we needed the resources, so you went in, the process was to make change quickly and deeply. Quite frankly, in most processes of management change, that is exactly what you do. In this environment, the environment changed and the decision was to go back into a different context and make change slowly. So you make change slowly, there is a financial consequence of that.

MR. SAMSON: What did the QE II get for its money out of the Project Quest? What value did it get out of the project and that it is currently getting out of the project?

MR. ROBERT SMITH: I think Chris commented and it would be much more useful for Chris Power and Dr. Paul LeBrun to speak to this. My observation in the short time I have

[Page 40]

been here is that the dynamic of Project Quest provided a much more fiscal-outcome-oriented mindset within our organization than we previously had collectively. There are some benefits in the change of attitude and in the development of new knowledge. I think there have been other benefits that I will ask my associates to speak to. Additionally, I think that there will be downstream benefits from the work and the investment we have made in Project Quest. Maybe Chris Power and Dr. Paul LeBrun, you would be good enough to comment on value.

MS. POWER: I think that in the packet that we provided for you, there is an overview of some of the benefits that we have outlined that Project Quest has brought to us. Most importantly I think it has brought to us a methodology of how we move forward. We have seen the effects of the benchmarking information, the best practice information that has come from Project Quest to our clinical departments already before we have even implemented any of those projects. We have seen that over the last number of months when we have been able to reduce our beds by 50 beds. They were beds that were not being utilized. We came to be in that position merely by medical staff looking at the practices that they were currently doing and comparing that to other practices and reducing their lengths of stay.

We have a number of initiatives that we are just starting to introduce, such as our transitional care unit, where we are moving patients who are waiting for nursing home placement, and their care is being provided by licensed practical nurses and nursing orderlies under the direction of a registered nurse in a much more cost effective manner. We are moving to a sub-acute care unit where patients need a little bit more rehabilitation, but they don't need the services of a highly intense area. We are bringing up to speed our home with resources, that is sending people home with the resources that they need, the equipment that they need to stay in their own home, working with home care to have staff go into hostels or alternative arrangements and provide care there. Clinical decision-making tools, on and on.

There are a number of initiatives. We know that there are significant cost savings to be made when we implement these, and we do have a plan in place to move forward. We are just moving into that implementation phase of what Quest has brought to us.

DR. LEBRUN: Without boring you with any talk on re-engineering, what it did for us was that it relatively quickly trained our staff in how to look at what we were doing and how to look at it from a different perspective not from the way we had always done things before. The biggest legacy of Quest for us is, I think, that staff have the experience of having done this and are better equipped to deal with problems as we move forward. It left us with ways of measuring the quality of our care in a way that we couldn't do before, and that allows us to manage the department in order to meet those standards.

MR. SAMSON: Ms. Power, we have heard many reports through the media and the Opposition that our health care system is in disarray and falling apart. What you have just discussed in your last answer with expanding some of the care that is being given, do you

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view this as a collapse of quality or do you see it as an improvement in the quality of health care for the patients that the QE II serves?

MS. POWER: I see it absolutely as an improvement in the health care that we give to our patients. We are caring for patients in the most appropriate environments for them. We are moving them out of hospital quickly.

Hospitals are great places to be when you are sick but if you are not in the need of that, they are not great places to be. You don't get rest when you are there; there are sick people there that you can receive germs from and it is not a good place for you to rehabilitate. The better place is for you to be home. So, my answer is, much better quality as we move forward.

MR. SAMSON: Mr. [Robert] Smith, just one last question. There have been some comments made about the use of consultants as a waste of money. I certainly appreciate your comments and having to constantly update our information and new technology.

Mr. [Robert] Smith, from a business viewpoint, what savings do you expect to realize in the long term as a result of the plan put forward in Project Quest?

MR. ROBERT SMITH: I certainly think that it is the essence of our ability - had we not made some changes that had been proposed, as Chris mentions, in Project Quest, our deficit this year would be tracking well over $30 million.

We believe that there are abilities to make improvements with reference to the knowledge we gained from the Project Quest work that will enable us to address this operating deficit we currently have of $26 million. In the context of managing within the constraints, in terms of our collective agreement and SIP programs, we will be in a position to eliminate the operating deficit over a couple of years. Certainly, we will probably come close to realizing, on an annualized basis, within a couple of years from now, the approximate forecasts of the savings identified by Quest. They just will not all look exactly the way they were described by Quest.

MR. CHAIRMAN: Mr. MacKinnon.

MR. MACKINNON: Mr. [Robert] Smith, with regard to bed closures, could you expand on that in the sense, where do we stand today as opposed to when the amalgamation first took place and the impact?

MR. ROBERT SMITH: I am going to defer to Chris Power on the bed closure issue.

[Page 42]

MS. POWER: We are about 125 less beds than we were prior to merger. What we have done is we have increased some of our critical care capacity just because that has been the need of the patients and the province. We have reduced on some of the lower-tech beds.

We do have a plan over the next year and one-half to bring more beds off-line as they become available. Our plan is to put in place the initiatives that we have outlined to you and then we anticipate that we will have excess capacity in the system. We still, as a province, have far more beds per thousand population than the rest of the country. We know that we are over-bedded as a province and we know that there is opportunity there to bring it down without detriment to our patients.

MR. ROBERT SMITH: I would just like to add another dimension that is, perhaps, overlooked. By the nature of the QE II, it is really an integral part of the safety net within the province. When we manage, we cannot manage in isolation of everybody else, quite frankly. We are, oftentimes, the resource that they have to defer to, depending on what is happening to them.

If changes are occurring in their constituencies, that sometimes bounces to us. There was talk earlier today about, perhaps, problems occurring in Dartmouth. Well, we will be the safety net to deal with issues like that. So when we close beds, we have to close beds in a flexible way, because we are always going to be reacting to a calamity that may beset us. It is not a precise linear thing, but we do know that we can bring more beds out of service.

MR. CHAIRMAN: Thank you. We are into the last round of questioning. It will be about 11 minutes each grouping. I think that will bring us up to our time; perhaps I could just start. Can you help me, Mr. [Robert] Smith, and see if I understand correctly what the overall picture is that has emerged here?

What I am trying to understand is whether your costs are going up, down or stabilizing. Really the picture seems to be, right now spend about $350 million a year, this year you are going to lose about $25 million or you will run a deficit next year at about the same level of expenditure, you will have a deficit of about $8 million, and the year after you hope that that will be it but, as I look ahead, there is nothing in that, of course, for the equipment upgrades that we identified before, nothing there for debt retirement, there is nothing there really for increase in use perhaps as the population ages, or as the contracts come up for renegotiation a few years down the line, and then all of those are on the upside and, on the downside, there are these savings that might come from the amalgamation and the efficiencies.

I have no sense of whether the savings that you think are yet to come could possibly offset the anticipated increases that I also just outlined, so it looks to me as if, on the whole, your costs at about $350 million are probably certainly not going down, and there is very

[Page 43]

likely to be some pressure to increase. Is that really your perspective as well, and is your bottom line that you just need more money?

MR. ROBERT SMITH: Yes.

MR. CHAIRMAN: I thought so. Okay. Thank you.

MR. ROBERT SMITH: Sorry. If you don't mind, I think it is really essential that we recognize that notwithstanding this dilemma around the money, the QE II is going to continue to be there for the people of Nova Scotia, it just can not be there.

MR. CHAIRMAN: No. I don't think anyone was suggesting otherwise. I think what we are trying to do is get a handle on what the costs are and, indeed, it may well be that this is how much it costs to run Atlantic Canada's premier health care institution and we have to pay the freight. There may be no choice. It may be that there are relatively few ways to get efficiencies and save dollars; that may just be the answer on this.

On the other hand, what you haven't told us really are the consequences if you don't get the money, because you can't continue to run a deficit; I mean, if you eliminate continuing to run a deficit - and you can only continue to defer maintenance and replacement on your equipment for so long - we have only had really the barest suggestion of what the consequences are in terms of health care. Dr. LeBrun suggested he might see, in Diagnostic Imaging, longer waiting lists, and I assume that this must be true throughout the whole institution. We haven't really heard scenarios from you as to what happens if you don't get certain numbers of dollars. I don't know if you are prepared now to lay that out for us in any sense or not, but I don't know . . .

MR. ROBERT SMITH: I can't lay that out in any detail for you. What I can say to you though is that the board of the QE II is exasperated over the circumstances. They feel that the fiduciary responsibility of the board must find the resources to run the QE II appropriately and are making every effort to ensure that the Department of Health is well aware of the urgency of the issue and the need to address it.

The optimism that was referred to earlier on my part is this is a dynamic that must be resolved, and it must be resolved in the reasonably near future. I think we are doing everything we can to have an open debate about this; we appreciate this opportunity that we have had today to advance the discussion around this issue.

MR. CHAIRMAN: Mr. Dexter. Seven more minutes.

MR. DEXTER: Quest. Does it stand for something? Is it an acronym?

MS. POWER: . . . in search of better.

[Page 44]

MR. DEXTER: No? Okay, so that is just the project name.

MS. POWER: That is right.

MR. DEXTER: It seemed like QE something.

MR. ROBERT SMITH: Oh, yes, I see. I've never drawn that connection, but it was just there when I arrived and so . . .

MR. DEXTER: I was just wondering if it stood for something. The recommendations from Quest haven't gone anywhere in the sense that the implementation of them, they still sit there and you are waiting for the implementation to go ahead. Is that fair?

MR. ROBERT SMITH: No. As far as Quest was concerned, that project came to an end in November 1997. The knowledge transfer that we have around a number of things, we continue to work on rolling that stuff out and so it is a reference point for us as we try and bring ourselves into a more efficient relationship. We use the suggestions of Quest, but we use other suggestions.

[11:30 a.m.]

MR. DEXTER: You mentioned earlier that there is a need to get back on a course of some kind . . .

MR. ROBERT SMITH: Right.

MR. DEXTER: . . . and that part of this is the debt reduction, and I tie this together with the suggestion that there was to be on the clinical side - and correct me if I am wrong, but that means registered nurses, licensed practical nurses, nursing support staff - that there would be 600 full-time equivalent jobs cut in that area, and that is where we are going, that is where these two things meet. At some point in time, as you move toward your deficit reduction, the implementation of that initiative is what is going to happen, is that fair?

MS. POWER: If I can just speak to that. Quest indicated that there could be a possibility, if we reached all best practice, that 600 staff could come out. That is not our current plan. What Quest did for us is show us opportunities and directions we might take. What we have done internally is look at what are the possibilities that suit Nova Scotia that are appropriate to the QE II. So there will be staff reductions as we move to more efficient, but not only from the nursing portfolios, from the other health care providers as well.

MR. DEXTER: The reality is that there will be staff lay-offs on the clinical side over the next number of years. You don't know - or at least you are not telling us if you know -

[Page 45]

what the number of those projected staff lay-offs are, but they are going to make up a significant part of bringing the budget of the hospital back into balance. Is that fair?

MS. POWER: No, it is not fair. We have not laid off one nurse yet any time that we have taken beds off-line or changed the practice, and we will continue in that mode. We have an attrition rate at the QE II of about 100 nursing personnel a year and in proportion that would be in the other health disciplines as well. So, through management, what we will do is not replace when we are able to do that.

MR. DEXTER: But those jobs are disappearing, is that right?

MS. POWER: Those jobs are disappearing . . .

MR. ROBERT SMITH: I just want to intervene for a second.

MR. DEXTER: . . . there are 100 less nurses a year.

MS. POWER: Oh, not necessarily that 100 less nurses a year would be disappearing. What I am just telling you is that is that our attrition rate. So, just demonstrating to you that there are opportunities.

MR. ROBERT SMITH: I think you are focusing on debt and we are focusing on deficit. We have no plans to retire the debt. We do not believe we can make enough changes inside the organization to materially affect the debt.

MR. DEXTER: No. I think I was talking about, in fact, bringing the budget back into balance, which is addressing the deficit as opposed . . .

MR. ROBERT SMITH: Then do not quote the 600 number.

MR. DEXTER: Okay.

MR. ROBERT SMITH: Okay. We are working on that right now but I cannot tell you, in the context of the work that we have done to date on our budget, what the impact will be on the FTE count for next year. So 600 is a number I feel very uncomfortable with having anybody quote and this is why we do not want to inflame the situation when we do not have the facts.

MR. DEXTER: Well, the only way for us to carry out an examination is to ask the questions and I guess what I am hearing is that there are going to be staff reductions. Whether they take place through attrition or through actual lay-offs is the question.

[Page 46]

I have one other question, and I know we are quickly running out of time here. Do you - and you may find this comes from, it does come from a completely different text - maintain at the QE II, a kind of VIP room for, you know, if a dignitary was to come to town and something were to happen to them, do you have a special place set aside there that they would be treated or cared for . . .

MR. ROBERT SMITH: Well, you know, we might be able to do some debt retirement if we build . . .

MR. DEXTER: No, I am serious, I mean does that exist?

MS. POWER: No.

MR. DEXTER: You don't prepare for the visits of state dignitaries by setting aside places like this?

MS. POWER: We absolutely prepare for the visits of state dignitaries. We know if they have any predisposing conditions and we alert those particular areas. We have physicians on call but, no, we co not clear out a ward or anything.

MR. DEXTER: Okay, I was just wondering.

MR. CHAIRMAN: Time's up. Next caucus. Mr. Fage, is it?

MR. FAGE: Thank you, Mr. Chairman. A number of questions seem to be trying in my mind to confuse the issue a bit about the deficit and the debt and I would like to just go back and clarify. The debt of the QE II that the Quest program, when you looked at it before the Nova Scotia Government put it on hold by getting you to accept $12.3 million, that was there to deal with the debt of the hospital, not the operating deficit, is that correct?

MR. ROBERT SMITH: At that time the plan was to handle both debt and deficit.

MR. FAGE: So when that was rejected . . .

MR. ROBERT SMITH: At the time of the original business plan.

MR. FAGE: Yes, with a payment in November 1993 that eliminated the plan, the portion that dealt with the debt of the hospital, by accepting that $12.3 million. That is in essence what happened, is it not?

MR. ROBERT SMITH: It kept the deficit on track but it did not help in the accumulated debt.

[Page 47]

MR. FAGE: Exactly, but the Quest plan was in place to accommodate the accumulated debt. When that decision was made in December 1993, when the government asked the QE II to accept $12.3 million, then that portion left it in limbo, the debt portion?

MR. ROBERT SMITH: Yes.

MR. FAGE: Okay. As we move into the future, . . .

MR. ROBERT SMITH: I am sorry, did you say 1993?

MR. FAGE: Excuse me, 1997. As we move into the future, then the reality for the QE II in dealing with the debt, or elimination of jobs, curtailment of beds, services and procedures, is entirely in the hands of the provincial government. You are assigned a budget and asked to operate within that. So if you cannot operate within that, there are ultimately two choices, curtailment of services or there is extra money coming from the government to make that budget work?

MR. ROBERT SMITH: Did you want to say anything?

MR. MAHONY: I guess, just referring to the point about operating within our budget, we are operating within our budget. We are working to the business plan that we were working for the first couple of years. We are now operating within our budget. The debt is a different matter.

MR. FAGE: Yes, but to accommodate operating a decline in operating deficit or an operating budget that was allocated to you, the Nova Scotia Government in reality - because that is your only source of income - will determine whether at the end of the year ultimately you have a surplus or you have a deficit in your operating as well because that is your source of income, what is allocated to you through the budget of this House, and you have said that three or four times, Mr. [Robert] Smith, today.

MR. ROBERT SMITH: Right.

MR. FAGE: So the question then in relationship to the number of jobs, timing, ultimately is the decision of the government of the day in relationship to the QE II and the amount of budget allocation that you will receive? They will ultimately make that decision for you?

MR. ROBERT SMITH: On jobs?

MR. FAGE: Yes, through the amount of money you will be allocated. If it is insufficient to pay your commitment to professionals, doctors, nursing support staff, and all

[Page 48]

your other expenses, that is one of your options at that point if funds are insufficiently allocated to you?

MR. ROBERT SMITH: That is one course of response. What I do not want to lose sight of is that these things do not link directly. We are globally funded to provide services and, therefore, within the context of the responsibilities of the board of directors and the executive team of the organization we make decisions on how we deploy resources, and so we are constantly changing the mix of the human resources and the technological resources. Is that helpful . . .

MR. FAGE: Yes, certainly and you have articulated very well that one of the options is the human resources may be the quotient if you did not have enough money allocated to you by the Nova Scotia Government through the Department of Health, that you would look at that as one of the options to be on line for a balanced budget. That is control of the human budget envelope which is 75 per cent.

The debt of the QE II is projected, I believe, now at $137 million. The growth of that debt obviously over the last three years is in direct relationship to an operating budget and an accumulated debt that is not being serviced. That is why it is accumulating to $137 million. Last year, in December 1997 there was approximately $80 million more allocated to the health care system in this province. This current fiscal year winding down in February, there was an additional $29 million approximately allocated into the health care system. Even with these additions and the QE II receiving its portion, government clearly has understated the amount of money required to operate the QE II or you would not have an accumulated debt of $137 million. Is that a fair statement?

MR. ROBERT SMITH: I think the Auditor General's Report implies that that is the case.

MR. FAGE: Would you agree with it though?

MR. ROBERT SMITH: Yes. The resources are not there to sustain the platform that we need to operate on.

MR. FAGE: In another vein, services for residents of Nova Scotia are provided out of province, large numbers of residents of Nova Scotia go for procedures offered in Saint John, and Moncton, New Brunswick, and obviously a transfer of services. You are talking efficiencies, I believe you said, of 81 per cent, could those procedures be more efficiently handled in Halifax for the residents of Nova Scotia on a timely basis, or is it to our benefit as a province to allocate the money for those procedures to another province?

MR. ROBERT SMITH: I know that people receive some services elsewhere and perhaps Chris Power and Dr. LeBrun can also comment on this, but the vast majority is in

[Page 49]

Atlantic Canada services coming here. We do provide a pretty comprehensive range to meet the needs of Nova Scotia. I think a lot of cases of people going elsewhere could, in fact, be situations where family support is important to them. But we are not as a matter of course referring out a lot of services. If you wish to take the QE II apart, you could lift off service components and decide to buy them in Toronto or Boston. That would be changing the basic comprehensive framework of this plant if you will. Do you have knowledge about the outward transfers?

MS. POWER: The ones that I am most aware of are those for services that we cannot currently provide in Halifax, and there are very few that I am aware of that would go to Toronto or other places. When you are referring to New Brunswick . . .

MR. FAGE: Yes, and I didn't refer to Toronto in any way, I referred to actually Saint John and Moncton, New Brunswick. Certainly in the northern region, many orthopaedic surgeries, many cancer treatments, cardiac services are accessed in New Brunswick which is a reasonable, practical arrangement, I would certainly contend. My question was not to try to confuse the issue, but when you said that 81 per cent and you would like to get that to 86 per cent, my question was simply asking is there room for Nova Scotians to be the ones to bring that to 86 per cent, therefore triggering efficiency and instead of those outflow of dollars out of the province, being allocated to the QE II helping with both ends of that equation, your efficiency going up and more dollars being allocated for you?

MS. POWER: There is a steady stream of patients waiting to come in to the hospital for sure, but oftentimes it is physician practice patterns that dictate where the physician will send the patients, and that may be the case for the northern region of those physicians working with New Brunswick. Are you asking can we accommodate more Nova Scotians in order to put that up?

MR. FAGE: Yes.

MS. POWER: We have a volume level that we are working towards, and we are not in an expand mode, but certainly those patients could queue with the rest to come in.

MR. FAGE: Thank you very much for appearing today. Mr. Chairman, I would like to pass to Dr. Hamm.

MR. CHAIRMAN: Dr. Hamm.

DR. HAMM: How long, Mr. Chairman?

MR. CHAIRMAN: One minute.

[Page 50]

DR. HAMM: One minute. Quick questions then. Who at the hospital is primarily responsible for the Y2K solution?

MR. ROBERT SMITH: Ultimately the board of directors are responsible for Y2K.

DR. HAMM: I mean the working individual.

MR. ROBERT SMITH: We have one vice-president of hospital services, Steve Jensen who has this in his portfolio. The leader of the project is a gentleman named Paul Rudderham.

DR. HAMM: Who is contracted?

MR. ROBERT SMITH: No. He is a member of our staff.

DR. HAMM: Have there been persons taken into the hospital under contract to carry out the work?

MR. ROBERT SMITH: As part of the Y2K solution? Yes.

DR. HAMM: What is the value of those contracts to date?

MR. ROBERT SMITH: I could again give you an answer, but I don't have the amount paid out to date.

DR. HAMM: What has been the amount of money that has been spent to date on Project Quest, because there was some debate as to how much actually had been paid and whether or not there was an amount yet that was being contested?

MR. ROBERT SMITH: We have paid $5.9 million of invoiced work, and the claim is for about $8.9 million. That is the area where we are having continued discussions.

DR. HAMM: My time is up?

MR. CHAIRMAN: Yes it is. Perhaps we can hear in writing on that, or perhaps Mr. MacKinnon will follow it up.

MR. MACKINNON: Indeed I will. We know the cost, but essentially what was the benefit of Quest? Did it exceed the cost?

MR. ROBERT SMITH: Yes. I think we have responded to that.

MR. MACKINNON: I just wanted that simple so that there is no misunderstanding. It was a worthwhile investment.

[Page 51]

MR. ROBERT SMITH: We believe it will continue to bring downstream benefits to us. Yes.

MR. MACKINNON: Given the fact that when you look at the total number of employees at the QE II which, in effect, the total complement there is actually larger in population than the entire constituency of Clare, the magnitude of it is something that I think we should keep in perspective, with a payroll of over $0.25 billion. I want to focus on the issue with regard to the environmental illness, the pay scheduled with regard to these individuals; there have been some adjustments in that. I am not entirely clear as to what was the original intent and where do we stand now and where are we going with it? If you could give us some detail on that, I would appreciate it. Or is that something that you want to take on notice? I know the question has been asked, but from a financial point of view, I would like some detail.

MR. ROBERT SMITH: We would be happy to take that under advisement. We will draft a document endeavouring to respond to those questions.

MR. MACKINNON: Another thing that I wanted to put into perspective because, over the last few months, I have noticed the attention that has been paid to hospitals and deficits and debts and so on, but this is a real problem that exists right across Canada. Here in Nova Scotia - and I am just doing some quick calculations in my head, and I might be off a few million here or there so don't hold me to an exact number - we have a budget of about $4.2 billion; $1.5 billion goes to Health, $1 billion goes to Education, $700 million goes to Community Services, and between $750 million and $800 million goes to paying interest payments on our provincial debt. That leaves us $200 million to run 13 government departments. Any which way you cut it, the math does not add up. Yet, we are being criticized, quite vigorously, by critics because of balanced budgets.

Yes, I ran a business all my life and I know if you have more money going out than coming in, you are not going to survive. That is the reality. It is a little more complicated than this.

We have the situation at the QE II. We had the NDP in Cape Breton last year demanding that the provincial government put another $9 million into the Cape Breton Regional Hospital Board to deal with their concerns. I am sure that, perhaps, what they are saying, very subtlely, is they believe in deficit financing but don't want to admit it.

The most important factor in this whole equation, as far as I am concerned, is the quality of health care. What I have seen and heard today is that, in fact, the integrity of this system has not been comprised. We have some of the best health care, second to none, of any jurisdiction in Canada. Am I correct?

MR. ROBERT SMITH: You're correct.

[Page 52]

MR. MACKINNON: Okay. We also have a rational, well-thought-out business plan, given some of the weaknesses in it, on balance. It is an excellent plan to take us where we have to go to have a more efficient, effective and sound, financially-run process. Am I correct?

MR. ROBERT SMITH: We can give you that assurance.

MR. MACKINNON: Also, if you look at where we stand as a supplementary to all the outlying reaches of the province - as we would call metro and the rest of Nova Scotia - without the QE II moving in the direction that it is, we would be in a compromised position in the rest of the province. Is that what you are telling us here today?

MR. ROBERT SMITH: We believe that we are an extension of the ability for the rest of the province to meet the health care needs in their communities, yes.

MR. MACKINNON: It disturbs me, and it is a reality in politics that we have to deal with, whether we like to or not, but perception is reality in many cases. Sometimes you will see the ad on TV, the medium is the news. They carry it out. (Interruptions) Mr. Marshall, or whoever. The fact of the matter is, it disturbs me that there seems to be so much negativity placed on the financial aspect of this when the big issue is the care, the health and well-being of our citizens, which is number one. The studies do show that people are extremely happy with health care that is provided by the QE II. I think the survey shows 88 per cent satisfaction. Am I correct?

MR. ROBERT SMITH: In that range, yes.

MR. MACKINNON: I don't mean to sound clinical - and I don't mean that in a Freudian way - but the aging of our population, the demands that are put on facilities such as the QE II with the transplants. You mentioned about the one-day procedure as opposed to the six-day procedure for gall bladders. In politics, you have to have lots of gall if you are going to survive.

MR. ROBERT SMITH: We have a cure. (Laughter)

MR. MACKINNON: I want to leave here knowing that I have a comfort level as a public policy maker that, number one, given the circumstances, the provincial government, the provincial Department of Health and the QE II are working cooperatively, given the tools at their disposal, making the best possible decisions that can be made, realizing that we have been hammered to pieces by the federal government on cutbacks. It doesn't matter whether it is Liberal, Tory, NDP or a banana republic, the fact of the matter is we have less money coming in than we need and that goes beyond provincial jurisdiction.

[Page 53]

I want to compliment all the staff at the QE II. Yes, I know there have been some wrinkles over there but the fact of the matter is that is part of the process. If you identify a difficulty, you correct it, whether it be in human resources, finance, or whatever. I want to compliment everybody because working with the provincial government, my NDP colleague mentioned the fact that the provincial government has not made a decision on an action plan, okay, but yet by the time it will be acted upon, before the provincial Department of Health will make a decision, that is only for one year. That action plan is for more than one year. Am I correct?

MR. ROBERT SMITH: It is for two years, yes.

MR. MACKINNON: Precisely and there is interchange, discussion and activity between the Department of Health and the QE II board of directors, senior CEOs and so forth that would make sure that there was not any compromise within the integrity of the health care system. Am I correct?

MR. ROBERT SMITH: We believe.

MR. MACKINNON: So the semantics about, well, did they say no, that is the side issue. The real mechanics is that the provincial Department of Health and the QE II have identified a whole series of problems in a new process and they are working towards a solution. Am I correct?

MR. ROBERT SMITH: We believe that is . . .

MR. MACKINNON: And they are making gains in that regard, significant gains without compromising the integrity of the health care system for Nova Scotians. Am I correct?

MR. ROBERT SMITH: I would say that you are very correct that they are 100 per cent supportive of our ability to maintain the integrity of the care we provide.

MR. MACKINNON: And, finally, my question is, in this House and it disturbed me because fear-mongering is what I do not appreciate, for those who are least able to defend themselves, day after day after day Opposition critics saying that the QE II is not going to be Y2K compliant and that the health and well-being of our citizens could be in jeopardy and will be in jeopardy. Personally I think the approach and the forum was incorrect. It was irresponsible but I need to hear from you folks, are you people prepared for such emergency situations?

MR. ROBERT SMITH: We have assured you Y2K will be met. We can also tell you unequivocally that - and I alluded to this a little bit earlier - where this House debates without the facts, we have set in motion a lot of anxiety that has repercussions throughout our

[Page 54]

organization. It is inappropriate to demoralize the employees of QE II with some of the rhetoric that seems to be reported in the media. I find that very disabling and I think what we need at the QE II is, much as has been envisioned in the legislation that created this organization, we need to have a relationship with the Legislature and the Department of Health that allows us to manage and to take on and live within our resources and to manage effectively.

We need, from the Legislature, recognition of the cost of the quality of what we are providing and it simply needs to be funded. So I do very much appreciate the points that you have made. I am immensely proud and I commend the staff of the QE II to all of you and invite you through your debate to provide your constructive criticism to us. We are not afraid of that. It is when we have to spend time with information that is ineffectual to us being able to manage. I think today we spent a lot of time in our discussions trying to identify how many people Bob Smith is going to lay off. Well, the issue is that it is critically important to maintain a sound, reliable and secure workforce but it is equally critical to allow us to manage for what you are paying us to do. Now, if you are paying us to employ people, that is one thing but if you are paying us to provide an exemplary health care system to the Province of Nova Scotia, that is something else; that is what we think we were created, and that is our mission and that is what we want to be able to do.

[12:00 p.m.]

MR. CHAIRMAN: Mr. [Robert] Smith, thank you very much. As you can see, our time is up for today but, before everyone disperses, I would like to thank the president and CEO of the QE II and his colleagues for coming here today.

I have one brief announcement about schedule. We meet next on February 9, 1999. That is a Tuesday at 9:00 a.m. This is unusual, but it is the Tuesday and we follow that on February 17, 1999, which is again 9:00 a.m. but that is a Wednesday. I had a request from Mr. Dexter to speak about our future agenda.

MR. DEXTER: I want to say that I would like to have added to the list of potential witnesses to this committee: Roy Sherwood, the Economic Development and Tourism manager; Lawrence MacDonald, who is the regional manager of the Office of the Environment in Sydney; and Brian Boudreau - Crusher, I think he goes by - as well. Added to the list because there is, obviously, an emerging little issue there and it may be in the context of other initiatives by Economic Development and Tourism.

MR. CHAIRMAN: This is a request for a future agenda. Ms. Godin and then Mr. Fage. Again this is a procedural matter, is it?

MS. GODIN: It is about the next meeting.

[Page 55]

MR. CHAIRMAN: The next meeting is Tuesday, February 9th.

MS. GODIN: Yes. Is this an in-camera meeting?

MR. CHAIRMAN: It is a briefing.

MS. GODIN: So let's get this straight because we go through this all the time, okay? I thought we were going to come up with guidelines about what was going to be in camera. You know how the NDP feels that things should be out in the open. We are the Public Accounts Committee; I do not know why we keep going behind doors. I would like a reason why it is going to be in camera.

MR. CHAIRMAN: We should take the opportunity to discuss this perhaps before that. The procedure that has been put in place is that when we hear from the Auditor General, which is for a briefing before a public session, it has been in camera in that limited sense that all members of the Legislature are invited if they wish to come and listen, but it is not a full public session. It is meant as a background briefing. We have not yet had the chance I think to discuss this as a committee, but I think we have to stick with that for the moment unless there is an agreement among the Parties. In the interim I think that is what we have as our procedure at the moment and the session, next Tuesday, is to hear from the Auditor General as a follow-up to today's session and last week's briefing in anticipation of meeting with Department of Health officials to continue the discussion that we have had today.

MS. GODIN: Could I just ask that at some point soon that we could discuss it at Public Accounts?

MR. CHAIRMAN: Absolutely, yes.

MS. GODIN: Thank you.

MR. CHAIRMAN: Mr. Fage.

MR. FAGE: Yes, just the same as Mr. Dexter, I wanted to ensure that Alan MacNeil would be on the list, if he is not now, of potential witnesses to be called.

MR. CHAIRMAN: That is fine. Thank you very much. We stand adjourned. Thank you.

[The committee adjourned at 12:03 p.m.]