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17 février 1999
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Sujet(s) à aborder: 
Public Accounts -- Wed., Feb. 17, 1999

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9:00 A.M.


Mr. Howard Epstein


Mr. Hyland Fraser

MR. CHAIRMAN: Good morning. This meeting of the Public Accounts Committee can start now. We do have a quorum. We will, unfortunately I understand, be missing two members of our committee. Normally, I believe, John Leefe, of course, and Neil LeBlanc would be joining us but I gather they are not able to be here this morning. Is that correct? Mr. Fage.

MR. ERNEST FAGE: I am not sure but my last contact with Mr. Leefe was that he may be here today but a little late.

MR. CHAIRMAN: Fine. Thank you very much. In any event, I think we can move ahead. We do have a quorum and I believe I saw Mr. Samson in the building as well. So he should be along in a moment.

The purpose of our business this morning will be to meet with officials from the Department of Health. We have here today the newly-appointed deputy minister, Dr. Kenny, and she has with her a team of her senior management. I will leave you to introduce the different members of your team, Dr. Kenny. The way we will proceed is we would invite you and any other members of your group to make opening comments to us. Following that, our normal procedure is to proceed through a rotation of questions which will come from the different caucuses represented here, so we will move first to the NDP representatives, then to the PC representatives, then to the Liberals, and then we will circle around through. Since


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we have three hours scheduled this morning, I would propose that we start with half hour blocks and then move to 20 minute blocks for the second round and see where we get in terms of the responses. That said, Dr. Kenny, I welcome you and ask you to introduce your group and make any opening statement that you care to.

DR. NUALA KENNY: Thanks a lot, Mr. Chairman. I was trying to think in my mind as I drove down here this morning, do I say I am happy to be here? Do I thank you for the invitation to do an accounting of the Department of Health for the last year? You know that I am brand-spanking new at this. I was officially appointed last Thursday morning. I was in the Department of Health most of last Wednesday trying to get some sense of what this was because, as you will all know, as well, I am not a career civil servant. This is a very unexpected position for me, but I will say to you that having spent most of my last six days trying to understand this group, I am happy to be here with the team.

I do want to just make one or two comments to you about why I was even willing to consider this since my career path has been a number of things in medicine and a number of things looking at the Canadian health care system, including a very interesting experience at the National Forum on Health looking at health care right across Canada and some of our real issues and challenges and problems. Latterly, I had actually thought I had gotten out of all administration and moved into an area of ethics and health care.

What has happened - because it tells you how I am here and it tells you the focus that I am going to be trying to help develop with the members of the Department of Health who are with me here today - was that it became clear to me that as modern health care became increasingly complex and we became an increasingly pluralistic society, even here in Canada where we have been fairly homogeneous in terms of a value system for so long, that the values-base on which we make decisions as we have this unending opportunity for medical and scientific benefit, really needed to be clear. Modern ethics, since its inception in the 1960's - so this is real new stuff - how do you identify and clarify values explicitly and then help people make decisions for the good based on those values.

Well, it has been tough enough in the last 30 years or 40 years in medicine with individual patients to face that and reconcile it but the pace of scientific, technological change is giving us more and more options all of the time and, particularly in a country like ours where we have a system that is providing the benefits through the health care system - which, by the way, in itself is expressing certain very Canadian values - the question became clearer to a few of us in ethics in the last 10 years or 15 years, that you can't just make decisions about the good for individuals, that we have to in some way begin to develop a new mechanism for value-based decisions for the common good. That is where, interestingly enough, politics and good health decision making within a context that scientific evidence would use for health policy, come together because the common good is the place where certain kinds of evidence are brought to the benefit of the whole.

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So, for my own interest, I have gotten more and more involved in that, organizational ethics and health policy. What does that mean? What does it mean to be clear about values? How do we respect different values? How do we make decisions for the common good and how do we make them so that if they are based on values that we accept are important, that we say that? If we make decisions that are based on some other kinds of values - political ones - that make what would be the privileged value not possible, then we say that that is the value we are privileging. So we are transparent in what the base is. A little theoretical departure but you need to understand the question, when it was put to me, would I do this, really came down to, I think, what the youngsters call walking the walk; not just talking the talk of how do you do that but walking the walk. So I am here to give a try with these folks.

Six days into this, there is lots of detail I do not know but I actually am amazed at how much I have learned in six days. So I am going to be depending - not just this morning, but for the period when I am deputy minister - on the team that is here and on enhancing and developing this group of folks. So let me tell you who they are and then we can let you get started on grilling us. We will do the very best we can. There has been a lot of preparation for this; quite intense.

To my left is Bill Lahey. Bill is in charge of the Corporate Services Branch and I have asked that he function in a very particular way for me. My strength is not operational. I am a more vision-oriented, people-performance oriented, morale-building kind of person when I am functioning at my best and I needed Bill desperately to be someone who would deal with corporate. So he is also functioning for me as the Assistant Deputy Minister of Health but he has been invaluable in my baptism by fire of the last six days. So he, today, will answer some general questions because he has been the Acting Deputy Minister of Health but he is also Corporate Services.

To my right is Elaine Sibson. Elaine is functioning as our Chief Financial Officer in Financial Services. You will realize how much of a hot seat she is in and she has been, like Bill and myself, in our responsibilities for relatively short periods of time. She is very on top of the issues of our very complex - and I know very important - area, for you of our finances in Health. Elaine will be graciously assisting us in all of those questions today.

To her right is Bob St. Laurent. Bob deals with Strategic Health Services and that is the group that has a lot of the acute, chronic, hands-on care type activity within the Department of Health. Bob will give us an overview, what is relevant to his area of some of the very important issues that directly impact on the care of the public. We share that as a major concern.

We have got two of our senior folk that are not here this morning. Dr. Mike Murphy is in charge of Emergency Health Services - he is out of the country today - and Dr. Ross Langley from Strategic Health Services was not available this morning.

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Folk here know all of the general areas that we think that you would be interested in. If we cannot reply to a question today, particularly because of my newness to this job, then we will get you the answer. I will not be embarrassed to tell you if we do not know and the folk I brought with me do not know. I promise we will get it to you.

Then we have got, in the back, to the right, Bill McKee. Bill is the Executive Director of our Health Services Support group. Regional health board stuff, HR planning, that type of thing and the big information technology stuff fits with Mr. McKee.

You will see that some things cross clinical lines and some things - for example, under Dr. Langley and Dr. Murphy - fit more directly clinical programs. Then the man who pays the bills, in a more direct way, Derek Dinham who is dealing with insured programs. Mr. Dinham is here with all of his background and wealth of experience with regard to the very difficult issues around our insured programs.That is the team that is coming to help me.

Where I believe there is a very fundamental issue that I already understand, I will try to answer that but, for the most part, I will attempt to see if we can delegate to one of our folk. The rule for us today is, the person who is most expert in that area will attempt to answer for you but if I have an overview or general comment, I will make it.

If I may, Mr. Chairman, just one comment. The thing I have been struck with, and it relates to even my presence here today, there is this perception - and I have to say, I have shared it myself - that we have this bloated bureaucracy and all these people in some kind of Department of Health black hole. In fact, that is not the case.

Having been in a number of organizations, I am really very concerned at the lack of permanent vacancy positions being filled with high quality folk. Within the department - not only at the senior level but at more junior - we have got over 50 vacancies. I would say half of those would be identified in key areas.

I mean, to have vacancies in information technology areas at this time in health care, separate, even, from the Y2K is just unacceptable. To have vacancies at the most senior level in supporting the finance issue, unacceptable. To not have the highest quality possible - I mean, this is a $1.4 billion budget - it blows you away. The person who would be doing this outside government would be paid a fortune and our Civil Service does not allow that.

We have some very key vacancies. I believe the department has tried to maintain a hold on that but I need you to know that the issue for me of having an excellent team efficiently functioning for the people of Nova Scotia means that there are some of these questions that will have to be dealt with.

When we do not have enough good people to do the task, then the task, in fact, gets done as best as people can do it but sometimes that can be not good enough. Thank you.

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MR. CHAIRMAN: Thank you very much for that introduction. We will start with the NDP caucus and ask questions for about one-half hour. Perhaps, I will just start on behalf of the caucus.

Ethical questions in politics, Dr. Kenny, often present themselves in the guise of questions about money and so I want to start off, if I may, with a question that flows from last night's federal budget. The announcement by the federal Minister of Finance was of some additional monies to be transferred to the provinces in the envelope of the Canada Health and Social Transfers, the CHST. He announced transfers for up to the next five years. Probably you will know that the figure that was being used was some $11.5 billion in total over five years. However, when I look at a bit of the detail that emerges from Mr. Martin's statement yesterday, and I am reading here from a document called The Budget in Brief, 1999, issued by the federal Department of Finance, there appears to be a Table 3 with respect to the Canada Health and Social Transfer and it indicates that this $11.5 billion is being split into two components, one the normal CHST and the other something designated the CHST Supplement. Of these the CHST money is going to total about $8 billion of the $11.5 million and the Supplement will be about $3.5 billion of the $11.5 billion.

The footnote to that table says that the Supplement, the $3.5 billion, and I will just read to you what the footnote says, that the $3.5 billion CHST Supplement will be accounted for in 1998-1999 by the federal government. Payments will be made in a manner that treats all jurisdictions equitably regardless of when they draw down funds.

This business of accounting for that money in the present fiscal year, the one we are in at the moment, 1998-99, is an argument that the federal Department of Finance has had with the federal Auditor General for a number of years, that is to say whether they can actually account for something in a year if they don't actually spend the money in that year. But leaving that aside, what this footnote seems to be saying is that a provincial government could choose to draw down some of or perhaps all of its share of that CHST Supplement in this fiscal year, the one that is not yet finished, that is in 1998-99. What I would like to know is whether you have had any indication from the Department of Finance or anyone else in the management of the provincial government as to whether any of the CHST Supplement money will be drawn down in Nova Scotia this fiscal year?

DR. KENNY: That was, I can tell you, the question last evening during, I think the expression they use is the budget lock-up. I was able to attend here when our relevant deputies and the ministers were receiving the information about the budget. I can only tell you that as I left that room last evening, around 7:00 p.m., that was the question. I understood that there could be many different interpretations and it had to be pursued as to whether or not any money would be available for this year or not. I thought it was unclear as I left, but it is obviously an urgent question to address.

Did you have any difference from your perspective?

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MS. ELAINE SIBSON: No, actually I was in the budget lock-up yesterday and it was unclear as to whether or not there would have to be future expenditures before you could access the monies or not, and I think that is really the question. I don't know if you could actually draw in the money unless you had expended the money on new health care expenditures.

MR. CHAIRMAN: That doesn't seem to be a barrier for us, does it? Surely, we have already expended a lot of money on health care this year, we wouldn't have any trouble.

MS. SIBSON: We only have a month and a half left in the year and it will depend on what their interpretation is, whether it is future expenditures or past expenditures.

MR. CHAIRMAN: You are saying it is possible that it is only new expenditures between yesterday's speech and the end of the fiscal year that this might be attributable to?

MS. SIBSON: It is not really clear. I mean it clearly says that it has to be directed in the direction of health care.

MR. CHAIRMAN: When do you expect to get an interpretation on this?

[9:00 a.m.]

DR. KENNY: I can tell you that my minister seemed to indicate last night that was the very first thing that has to happen in terms of clarity about what this budget means for us and I am sure other provinces will be in the same position. It was the most interesting discussion having people giving interpretations. I just think it is wrong for us to speculate at the moment. Devoutly to be wished that we had some money for this year but our approach within the Department of Health, first of all, is to be very clear about something, this is good news that the federal government is approaching return of monies to health care but this is no windfall and if anything it requires us to be more clear and more direct about our priorities in health. So that question certainly would be very helpful but I think it is wrong to speculate at this stage. It is an urgent question and you are absolutely right to identify it as key but it in fact, one way or another, will be resolved and we will plan as well as we can with either answer.

MR. CHAIRMAN: Mr. Dexter.

MR. DARRELL DEXTER: I was interested in your preamble. You mentioned that the public good is where the health care delivery and management administration comes in contact with the political system. It is pretty fair to say that that is where the majority of the pressure points are, right at that juncture. Would you agree? You said that it was a matter of deciding which are going to be, perhaps, privileged programming beyond the health care base. Is that what I understood you to say?

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DR. KENNY: I think I said privileged values.

MR. DEXTER: You are talking about the provision of health care by exception? In other words, you set a particular base level of care and a base level of values and then when you go beyond that you are really talking about exceptions to those values when you provide anything more than that?

DR. KENNY: Maybe we are speaking two different languages here. Maybe if I can say it more clearly. Remembering now, I come from outside the government sphere so maybe my use is different. If, for example, it is, as was enunciated by the National Forum on Health, key that health care at the end of this century and millennium, and definitely as we move into the future, needs to be based on two pillars: one is scientific evidence, best scientific evidence; and the other is respect for other relevant values in making decisions. Then it becomes absolutely important, first of all, that scientific evidence itself becomes a value. So when the Department of Health using that as a value would commit itself to providing recommendations and care and programs, only when there is clear evidence that there is outcome, I mean that is a fiscal responsibility as much as it is a deliverable care responsibility, if we commit ourselves to that, we will only be recommending things that have clear evidence. Now, you understand there is a judgement of how much evidence is enough evidence, right? That's fair. But you are still within the paradigm of, you have committed to this.

What I am talking about is where I will understand that there are circumstances where the evidence may say, this is the best thing that could happen to this population of patients or this area. But the political realities to privilege that value in this circumstance would be unacceptable for another set of values. Or flip it the other way, it usually happens the other way. Something is not clearly based on evidence of good patient outcome. People think this thing works for patients but when you analyze it, it doesn't. It doesn't really provide the benefit that people hope. So that the department would not recommend it but your constituents are demanding it, whatever it is. So it is that type of situation where the Department of Health's basis for values should be clear and we should be saying to our minister, to the government and you to the people, as a Legislature, our recommendation was this new intervention, this new technology does not provide sufficient benefit for the cost. But you then may make a judgement that says, we think that in fact other considerations come into play.

MR. DEXTER: I think that was exactly my point and we have seen the development of a number of those programs over the years that may have been controversial in their inception but we decide that we are going to pursue those programs regardless of whether or not they are recommended or based on, I guess, what you would consider to be the best science. We continue to do that in, I would suggest, a number of areas.

It is a very interesting discussion and I guess I am happy to see that that is part of what is taking place in the department, in the sense that there does have to be some real

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thinking about the direction that the department is going to go in the future and how we are going to make and base those decisions. That is not to say it didn't happen in the past, I am just noting that it is obviously something that is of great interest to you with your background.

My recollection of the original blueprint for health care in Nova Scotia talked about the regional health boards assuming a fair amount of autonomy and there would be a kind of winnowing away of the Department of Health as these responsibilities flowed down to the regional health boards. It is not clear in my mind at all where the management lines have been drawn and what responsibilities clearly lie with the regional health boards and whether or not we can expect, reasonably, that there is going to be some kind of winnowing away of the Department of Health. I would like to hear your comments on that.

DR. KENNY: I do want to comment first on that but I think that the folks who have been dealing with the regional health authority in the department might want to help me. I actually had been on the task force on regionalization before I was asked to do this. Your question is mine. We have the same question about lack of clarity. I think that the original understanding of the blueprint that I had, years ago - just as a regular Nova Scotian interested in it - there were two conceptual thematics about regionalization. One was devolution of authority, where possible, bring decision making down to the place where people, in fact, do have the authority and accountability to do that but that is always where appropriate, bring it down.

The second, however, concept in that devolution was that the decision making now at the more local level, some kind of more naturally manageable level, would also take into account all the needs of the people that it was taking care of, because that is one of the problems with health care. Health care can override every other human concern when it is you or a loved one who is ill. You make decisions that in the long term are unsustainable, sometimes even for families. That is why the Prime Minister and the folks who voted for our health care system will tell you, they voted for this because they were concerned about people losing their farms and their homes in the event of catastrophic illness and its costs. But people still, if it was your loved one - your mother, your father, your spouse - you have to put every other consideration aside, but in fact, we still need roads, we need buildings, we need industry. So there is an issue in devolution that was also taken into account there are lots of other concerns and it is not just acute care, it is good acute care and good home care et cetera.

I would say to you that those concepts seem to have not been well understood and in the reality - now remember regionalization is still very new, it is very new and it is under review - my impression would be already - and I have tried to test it out with the folks in the department - this is such a new concept and it is one that has not yet been given the attention to determine the links and the clarity. I have the concern that you do, that now, in fact, we have people who think someone else is doing this, not them, and no clarity. I will tell you that as we sit here, there is planning out of my office to have a major meeting with the Provincial

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Health Council, the leadership, the advisory council, the regional health authorities, the NDO, we have to, in fact, have some kind of a dialogue together because I think your concerns are well placed, that this something that - it may be because we haven't had experience of it and we have been so busy with managing the budget - we have lost sight of the importance of communication and clarity. Clarity, coherence and communication. If I don't accomplish anything else in my time here, we are going to try to get those things in place for health care planning. So, terrific question and I am telling you, it is one I am asking myself. Now maybe I am being too hard on even my own folks. Is that a concern within, from the regional health boards?

[9:30 a.m.]

MR. ROBERT ST. LAURENT: Certainly I think, deputy, I would add that the perception becomes reality after a while and certainly the concept of regionalization was to move the decision making down to the grass roots, down to the communities and indeed that is happening in some aspects of it. Again I agree with the comments that the deputy has made with regard to the clear delineation of accountabilities between the regional health boards and the Department of Health.

MR. DEXTER: Would you say that the success of the regional health boards have been limited by unclear definitions of what their responsibilities and authorities are?

MR. ST. LAURENT: Quite frankly, there are those who believed that the department was not doing an adequate job. I think that one would look across this country and find the same circumstances in each of the provinces that entered into regionalization or into restructuring or reformation of the health system. So I believe that indeed the concept of regionalization is a good one but there has to be clear definitions of accountabilities between the regional health boards and the department.

MR. DEXTER: At this point . . .

DR. KENNY: To add to the same question, because with respect, I think what you have said is true but I think I would, from my perspective - remember I am still more outsider than inside, although this is my team - I think your answer is yes. I think that there has been lack of clarity. One of the questions that I am very interested in and I, at some point, would love to have - right across different political Parties - a real decent discussion about what we think would have happened with regionalization if we had done it in a time of plenty. So, some of my answer is, I think you are right. I think we embarked on something, we made definitions but you know that without reinforcement and education and support and revisiting, we thought this was the way it was going to be. Now we have to relearn it. Without that, you can't make something real. You just say what you think the ideal is. So I think you are right. There has been some lack of clarity and yet Mr. St. Laurent is perfectly correct, this is right across the country. I think people are confusing our economic situation and constraint with

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the concept - and understandably - but it is hard to understand how to unlink those to think them through well.

MR. DEXTER: They are inevitably linked because they happened at the same time. You had regionalization take place at a time when money was taken out of the system in a big way. Whether that was done by the provincial government or the federal government, it doesn't matter, it came out of the system and it seemed like regionalization was a response as opposed to a coincidence. I guess that is why people are cynical about the process because they see reform as simply another catchword for cutback. That is what it meant, essentially, instead of reform, it was a way to justify cutbacks in the health care system.

I just want to move on to a couple of very specific things. We have been speaking with the officials of the QE II and talking about their situation and about the deficit that they will run in 1998-99 rather, which is, we understand, somewhere in the vicinity of $54 million when you include the Y2K costs. They have an accumulated debt of somewhere in the order of $141 million. Now this is all booked to the hospital. Is it reasonable to expect that that money is going to come from anywhere but the Department of Health?

DR. KENNY: You realize with this tough question, now, I turn to the left. Quite seriously, this is a huge problem and what I would like is if we could get the folks in the department who know the history of the negotiations with the QE II. We know that you have heard the QE II, itself, so let's get some response from the folks who dealt with this inside and then I will comment for you at the end on how seriously I think this issue is affecting any of the good planning that I hope that we can improve, continue to do and improve in the department.

MR. WILLIAM LAHEY: I'll speak first, deputy, and perhaps Elaine can speak to the numbers as well. I will try to stay away from the numbers but deal with the general question as best I can. We are aware of the presentation that was made by the people from the QE II and respect the communication that they gave to the committee that although they are comfortable and confident that they can make progress in a reasonable period of time on the deficit, they don't believe they have the capacity to make an impact on the debt.

In terms of the numbers, the size of the numbers relative to the budget of the institution, I don't think there is any alternative but to have respect for that perspective and that attitude that the management of the QE II have. On the other hand, from the point of view of the Department of Health, we have embarked, we hope now, on a more rigorous and more collaborative business planning process than was previously in place, either between ourselves and the QE II or between ourselves and other regional health boards and NDOs.

MR. DEXTER: But in fact business plans haven't even been approved, as of yet, for 1998-99.

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MR. LAHEY: I understand that and hopefully we will have an opportunity to address that as well. I guess, nevertheless, the process is going forward and we are very confident that the outcomes will be business plans that are more detailed, that are more in depth, that are more realistic than those that may have previously been in place and that they will give us the system, both the department and the QE II and other organizations, the ability to deal with the deficit situations. Until we deal with the deficit situations, I think our point of view on this would be, it is really very hard to say how much progress can be made on the debt situation. The first step is that we have to get the deficit situation under control.

It is reassuring that the QE II is confident that they can take their deficit situation for this year, which is approximately $27 million, that they can bring that down to $8.5 million next year and that in the year after that, they can operate without a deficit. I believe that is going to put us in a position where we can start to make better judgements about what kind of capacity the institution might have to start to make progress on the accumulated debt as well. I think that is the logical sequence and we have to work through the deficit situation first before we can be more sure than we are today, certainly, in terms of how much progress can be made within the institution in dealing with the debt situation. Elaine, did you have anything to add?

MS. SIBSON: No, I think you have summarized it pretty well. The process we went through, I think you could say that the business plans are not yet approved for 1998-99 and that is true. They did have a budget approved and that is what they have been working on. The assumption was that we would try to look at a three-year plan. We would go in and sit down with them, which we did. We actually didn't get the QE II business plan until November 1998 so it is a little difficult to approve it in that short time-frame.

What the process was is we went out to each institution, we sat with the senior management, we went through all of the issues facing them, the capital issues facing them, what they thought the pressures were on them for the coming year, where they thought they would be at the end of the year, where they thought they would be at the end of year two and end of year three, what they could do within their own ability without jeopardizing patient care to make the types of cuts that would be needed - whether it is layoffs or whatever - so that we would have some indication of the types of things they would have to do. That is the process we are going through right now. We got to a point where we said these changes are fairly significant that would have to be made and it would be premature to do it before we know what the federal government has planned and what the provincial budget process has in store for the coming year. So we hope now that we know the federal numbers, that we can proceed fairly quickly in giving the institutions approval for next year on their business plans.

MS. ROSEMARY GODIN: Hello. I am Rosemary Godin. I am the MLA for Sackville-Beaver Bank. I have been hearing from constituents both in my own riding and all across this province, their concern about the Pharmacare Program. Seniors talk to me about this all the time. It is really on their minds. I know Dr. Kenny knows that.

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Now, just last week, the department announced that Pharmacare was going to become the insurer of last resort. I believe that is one of the ways that was put. I am just wondering what financial benefits will be coming to the department because of this.

DR. KENNY: Let me just say - because I will ask - Pharmacare is an issue close to my heart and care of the elderly is very close to my heart, just personally. They are both identified as issues of priority within the department. You will hear more about what we do with that but for this particular insurer of last resort question, I really do need - because I was not involved in any of that - to have our folk describe their understanding of this.

I want to say to you that I think - if we have an opportunity and we are trying to make that in the very near future - if we have it as soon as I want, to look at the priorities that we feel are most important to the care of Nova Scotians, then I think that these two issues of concern, Pharmacare, pharmacy, in general, and then care of the elderly, they are going to be a high priority for all of us.

This particular issue goes to Derek, because Mr. Dinham deals with insured programs. I asked him, actually, last evening to be conscious that this was a question that is as much of a concern for me as it is for you.

MR. DEREK DINHAM: I guess I have to stand to be seen, if not heard. The Pharmacare Program, like many insured programs based on an insurance model, based on entitlements, is very difficult to explain as one of issue. I will answer your specific question.

In relation to the challenges of that, not only the department has, but the seniors Pharmacare Board of Directors that provide overall policy advice to government on the program, itself, as well as a special working group that was established worked throughout last year to come up with some of the interim solutions to try to accommodate some of the cost increases of the program, itself.

The Seniors Pharmacare Program in Nova Scotia, in terms of coverage - that is, the universality of it - we don't have any cutoffs related to income levels, whether it is based on a person receiving the guaranteed income supplement, or not. It is still a universal program.

As well, in Nova Scotia it is still, in terms of cost to individuals, one of the lowest costs per capita programs to individuals - not necessarily one of the lowest costs per capita overall - which means that government's commitment to the Pharmacare Program has been maintained. In actual fact, it still pays approximately 75 per cent of the total cost of the program, itself.

The challenge that we have is, I guess, based on a number of factors. One of which is the overall cost of the program, regardless of who pays for it, in terms of aging population, the number of seniors that are becoming eligible for benefits.

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Even more of a concern to us is the cost of technology. This is the introduction of new drugs and what is driving the program costs, itself. Over the last year, Nova Scotia has maintained its overall cost of the program to about 12 per cent per year. Most other provinces have seen their costs escalate by about 17 per cent. As I said, there is a wide variety of reasons for that but the technology is driving the program, the introduction of new or expensive drugs.

The working group - the department and government, in general, as a group - to come up with some solutions to the program to maintain its long-term viability. That is, to maintain coverage to the extent that it has.

The committee recommended a two-phase approach. The first one would become effective April of this year. In concert with that, it is forming a group to look at the long-term implications of any change to the program or expanding the program itself.

The short-term initiative is trying to address some of the immediate cost escalation of the program itself. The insurer of last resort isn't intended, was never intended, to disenfranchise any individual from coverage. What it is intended to do is to move the cost from the province to those national bodies, including national insurance programs for retired groups, that could include government as well as private sector groups, to move the cost of the first insurer from the province to private plans. The cost, then, would be absorbed by groups other than the provincial government.

The implications of moving to insurer of last resort, the net implications of that, is in the range of about $6 million to $8 million. That is in terms of a cost reduction in the program itself. This is not going to be borne by seniors but it moved from the provincial cost sector to private insurance. We are still working on a situation of, for those who their benefits move to private insurance, we are still insuring that if anybody falls between the cracks, that is their private insurance at a national level, what would be normally available under the seniors' Pharmacare Program will still stay intact but the cost wouldn't be any greater because of this initiative.

To answer your question, the direct savings would be in the range of $6 million to $8 million.

MR. CHAIRMAN: I have to move now to the PC caucus. Mr. Fage.

MR. FAGE: Dr. Kenny, I want to welcome you here today and certainly welcome you to your new position. It is a critical department, the Department of Health in this province, and it is so critical to the care of the citizens and well-being that it is well-staffed and maintained. I listened very intently to your remarks in regard to senior positions not being filled within the Department of Health and, as you said, up to 50 positions across the

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department critically needing those type of positions filled. I guess if there is one thing I feel I have observed, is that lack of clarity or direction of why those positions are not filled.

I didn't want to look across the entire system where there are regional health boards. Those type of situations, the positions held, I think the experience, the understanding that if they are administrative positions with Masters of Business, that type of training, people with that knowledge are critical and to see those type of vacancies being filled by people whose credentials may not match the position. We see a fair amount of that, or I feel we do, in the department across the region. Also, the vacancies across an entire position, and I think of your chief financial position which is currently, I believe, being filled by an outside consultant.

Those type of situations to a department as large as the Department of Health, are really, at the end of the day, not acceptable. How can we get a handle and have the degree of confidence, whether it is in your department or in this House, when we are assured, when asked about debt levels - whether it is the QE II or the department direction - the minister is replying to everything in hand, there is a very small debt or there is no debt. Then as people within the department become extremely worried that the picture is not reflective of what is happening out there, I mean documents show up that begin to uncover and then small amounts like $10 million or $12 million from the QE II as late as a couple of months ago, was supposedly what is there, and then the QE II comes in and definitively shows you $136 million is the accumulated debt.

Those situations do not give any degree of comfort to Nova Scotians. It calls into question everybody's judgement and the department is full of fine, qualified professionals. Those situations, to me personally anyway, are not acceptable when we start to examine situations. Mr. Robert Smith's testimony two weeks ago and his staff were extremely heartfelt. They were worried about the situation, the services, what they will be able to offer to Nova Scotians if the debt is not alleviated, if it is not dealt with in a forthright manner.

That probably is a long preamble to set up a few simple questions because I, myself, am not an expert in health care. I am a legislator elected by the people of Cumberland North to represent their interests and ask questions on their behalf. The health care system, and correct me if I am wrong, since 1993, people talk about cutbacks. The federal government did cut back funding to the Province of Nova Scotia but the Department of Health funding year over year, to my knowledge, did it ever decrease the program, the actual health budget in this province? Yes.

I think there are some big misconceptions and I think the first thing we have to do is be honest with the situation and health care spending actually rose during that period in this province. Funding from the federal government was cut, and it shouldn't have been cut in my estimation. They had their priorities wrong and I was very happy to see what happened yesterday. I think we are coming back on stream with funding. It is putting realistic funding back into this province.

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Those things being said, I think we have to take the responsibility for where we have taken health care in this province over the last eight years and over the last eight years health care spending rose in this province, it didn't decrease. The allocation of the resources, where they were spent within the province, changed radically with regionalization, those types of issues. Obviously I assume procedures, costs have gone up, all those type of things. As I visit hospitals around this province and staff, that budget of the last five years or six years has lacked that clarity and priority of what we are trying to deliver. I see equipment that is absolutely outdated. I see a budget that frightens me because the budget is based on a global budget where it is up to the local hospital or the regional health board to decide the allocation between capital investment and equipment and what you will spend on labour and operational staff.

I heard a comment here earlier. We have to do more realistic budgeting. Well, that comes pretty close to saying to me, as a layperson, if the budgets weren't realistic for the last six years, maybe that is why we are in that situation we are because we were setting targets that we couldn't meet.

In that regard, the health care debt for the QE II, as given to us last week, was $136 million. I am concerned, what is the debt carried by each one of the regional health boards? If that number could be supplied to us, what is the debt being carried by the Northern Regional Health Board, the Western Regional Health Board, the Cape Breton and the other non-designated institutions? I think if we are going to open this dialogue and decide how we are going to straighten out where we are going to go with the health services in this province, we have to take the responsibility for each one of those debts and then we put a plan in place and then we move ahead. So that would be my first actual question. Could we have those numbers?

DR. KENNY: You had about half of my agenda as I identified it over the weekend for myself in your list. But I want to make three general comments and then I will ask if Ms. Sibson will give us a little detail for the debt question.

First of all, we are all happy that the feds, I think, are doing what they are doing. The National Forum on Health, some of you may know I chaired the Values Committee there, we were dead with them as that $12.5 million was not enough and that the cash floor had to be increased. I mean we were big on that. I would say to you that one thing about this issue of expertise, I am struck that the Civil Service is different in a number of ways. I go home every night shaking my head about something that I didn't expect. First I would say to you that the folk in the Department of Health, and I have met everyone who has been in the building, I think, in the last four days or five days, just to say hello. If I haven't met them, they weren't in their office when I went. The Civil Service commitment to the good of Nova Scotians is actually very heart-warming. People who think that these are folk of another kind don't walk the building. I am very impressed by that.

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I will say to you, why can't we fill the vacancies? Well, one, I think that there has been an issue where health care is the toughest portfolio. No matter what we do, we don't do enough. The inability to feel that you have done a good job and that somebody then gives you credit for it, is real tough because there is always another expectation. This is tough stuff and what they deal with is incredibly complex. It is not easy work.

The Civil Service remuneration scale, particularly at the level of people with high expertise - I have already alluded to - that is a problem. I mean, anybody else would be making $0.75 million a year as a senior executive, with stock options and whatever other things those kind of folk get, and they are running a budget here for which they are paid $70,000, or whatever that range of high earnings is here. So there is an issue.

Your point is so important, where we have positions, where we do need to fill them and, in fact, many of them were not filled because they felt that was one way to keep the cost down. Well, I can tell you right now that filling key vacancies is a priority for me because, otherwise, you create a vicious circle. You have too few people doing the job; you have people doing more jobs than they should be able to do; you have people demoralized because they are working too hard. Then the jobs do not get done well. That doesn't save anybody anything and it has great adverse potential for the care of Nova Scotians whom we serve. Vacancies are a big issue. But there is some internal stuff here that is very problematic to deal with, with regard to the expertise that we need.

I have got two big priorities. One is internal, with the department, itself; the other is the relationship and links to these external bodies. The accountability of regional health boards and the non-designated hospitals to the Department of Health is not clear to me six days into this job. I will tell you that that is probably as much an issue for all politicians.

I am not a political animal here, friends, but this crosses every political Party because no matter what we do, if we do not help maintain some degree of accountability and eliminate certain kinds of interference for little p, big P, political reasons, everyone inherits a health care system, whoever the Party is in power that, in fact, is not functioning well for Nova Scotians. None of us want that. So I think that the authority, you are absolutely right, is not clear. In some of this evolution, those links about accountability were not there.

To establish what is the proper relationship, it is not that it should all be under one health czar - that is not my goal or focus at all - but how do we identify, more clearly, links so that we can properly give authority and accountability to the regions, even the community health system is totally unlinked from its own regional health system at the level of the very local community sense. So there is a lack of, kind of, ownership and disenfranchisement, which I know all of the political Parties are very concerned about and so are we.

Now, we come to the debt, itself. One thing about ongoing debt that I think is important. The things that keep this escalating cost - and, you know, it may have been slowed

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in one area - but the cost, overall, as I understand it - or Bill will tell us differently - sure, it goes up. It is very complicated as to why but, at least, increased technology; regionalization, itself; and the extension of the continuum of care assumed to be the responsibility of the Department of Health are all in this, just to give you two examples at the beginning and the end. Regionalization, we have spoken to.

We no sooner buy a first-rate MRI machine, MRI No. XXX, but by the time we go through the process, get the money, put it into the institution, the flyers are out for the MRI XXX3, and you have got people saying, this is better, therefore, we should have it.

Now it goes back to your question, Mr. Fage. How better is better? How do we get a scale of judgement because technology will always provide some kind of an improvement. People then want that and expect it. How do we make judgements that are clear and careful about that because technology becomes extraordinarily important here?

MR. FAGE: I think that is, truly, a philosophical question. I was in the hospital, meeting with the staff, last Thursday and they were dealing with equipment criteria, 1955, 1965, not six months ago, which is the V-chip and which is the X-chip. I think the realistic diagnostic equipment that is purchased should be standard, uniform, up-to-date and endurable. We all know we cannot afford to replace that technology in this province every six months but it is buying something with standard and uniformity. The real crux out there, and at the QE II and you talk to the equipment manager, it is not whether it is six months old, the problem is the thing is so obsolete that you can't find a part for it anymore. That is where they are coming from.

[10:00 a.m.]

DR. KENNY: You are absolutely correct. Let me just tell you, it is probably a combination of both those things happening, with no ability to relate those in priority, that is also part of the problem.

MS. SIBSON: I am again going to give you some numbers. I relate entirely to your concerns. My background was with, first, the Grace hospital for four years and then we went through to the merger and then the IWK-Grace for another four years and dealt with all of those cutbacks, so I know the issues that are facing the institutions. I think the summary that you are looking for was contained in the Auditor General's Report. It gives a good overall picture of where all of the institutions are at March 1998. The accumulated operating deficits of all the institutions as of March 1998 is $121.8 million. They are carrying about $30 million of outside bank debt financing.

MR. FAGE: I guess the question that I was wondering was the QE II has the number that is projected to March 31, 1999, that is $136 million. I am concerned this past year, what is . . .

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MS. SIBSON: The numbers that they gave you are a little confusing because what they were giving you were their debt numbers. Their debt numbers include about $50 million of unfunded capital acquisitions they made in the last two years, about $20 million of that being IT equipment. That is really what, in addition to the deficits, has driven their debt position up. A lot of the other institutions have not spent that kind of money on IT infrastructure or on equipment. So you are saying where the QE II is going to be, the anticipated deficits for all of the institutions based on our planning is somewhere in the vicinity of $70 million for 1998-99.

MR. FAGE: So we are talking $70 million to $80 million to March 31st of this current year. Can you give me a breakdown of the regional health boards what you expect the debt for the northern, the western and Cape Breton, another line breaking that down?

MS. SIBSON: It is not significant for any of the RHBs, truthfully. We are in the vicinity of $1 million to $4 million or $5 million kind of thing. Most of it lies in two institutions, the QE II and the Cape Breton Health Care Complex.

MR. FAGE: How is the situation at the Cape Breton Health Care Complex? Is there a business or an operating plan in place to bring that situation into closer control such as is starting to come here with the QE II?

MS. SIBSON: Yes, John Malcolm has been, since he has been there, working on a plan to reduce the operating deficits as well and we went through the same process with them. We went out and worked through all the issues with them. The operating deficit for Cape Breton was a significant amount last year because they are not a legal institution yet, so they can't go out and borrow is one thing, so the Department of Health has financed all of their deficit basically. The operating deficit for 1997-98 was about $5.8 million.

MR. FAGE: I guess it comes back to the question that was asked earlier, too, in regard to the debt. There is no conceivable way unless there are user fees or payments at the door or those types of things or you are not renting the meeting room at those institutions. I mean those debts in reality, I don't see those institutions having budgetary surpluses in coming years, those debts are the debt of the Department of Health or the debt of the Province of Nova Scotia.

MS. SIBSON: Well, other than the QE II and Cape Breton, possibly, I think that based on our work in the business plan some of the changes are doable without major implications to patient care. As the deputy said, these RHBs are relatively new, they don't have the IT infrastructure set up to properly manage patient care in a lot of cases. We are far above provincial guidelines for some of the types of costs of care that we provide and some of the bed stays and that type of thing. So we do feel that there are some efficiencies in the system that can help over a period of time.

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MR. FAGE: To alleviate them?

MS. SIBSON: To alleviate some of those problems.

MR. FAGE: I guess it distresses me a huge amount when you say there is how we can gain efficiencies but it would seem that when we went to regionalization in this province that those would have been the basic building blocks. When I go to communities, I guess I hit them maybe at a different level than the department do but I hit communities that are frustrated because the community health boards have no mandate, one is concerned about foot care, the next one's priority is a senior's vehicle and they are all worthwhile causes but there is no mandate, no cohesion. The regional health board, those directors are appointed positions with no mandate other than a little budgetary appropriation for lunches for the community health board. The grass roots in the community is not involved, not in any way, quite honestly, they feel frustrated, they feel isolated. Patient assistants call you, they phone the regional health board, they have no idea who to keep on phoning because they never get an answer and if anybody phones on their behalf and you push the system hard enough, they tell you to call the Department of Health in Halifax. There, when the question gets a little tough, they tell you it is the regional health board's authority and you should return to their level.

That accountability in the system, I know you have a hard job and it is not an easy one but if people feel that that they received a reasonable answer, they can accept a no or a modification but they can't accept the delay, I can't deal with it, we have higher priorities. All I am saying is, if the system can be a little more definitive and give a yes or no, people can accept that, what they can't accept is the inevitable delay.

DR. KENNY: I don't know what I am doing with my head, it is up and down and side to side. What I am doing is I am acknowledging that the frustration of ordinary citizens about the health care system in spite of the fact, despite the fact that we deliver this incredible care day in and day out throughout this system to thousands of Nova Scotians is just heartbreaking because it then colours all of the good stuff. But I will only say to you that what you hear as my angst about linkages from the Provincial Health Council down through the Department of Health gets seen in microcosm. It is the same reality from regional health board to the community health boards.

In fact, it is interesting that at the level of the involvement that I had with the regional task force, the community health boards kind of, every once in a while, got on the table but the fact that their linkage to their own region, from the home base community wasn't clear. So that concept that we establish some general basic frameworks of how do we do good health care planning, the vision and values are consistent but they are applied according to the need of the area and that it is done with some degree of clarity.

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I mean I can't say that I am going to do this overnight or by myself but it surely is the direction of a major contribution I hope to make because I think that we are doing things and the average Nova Scotian is eminently reasonable, will tolerate all kinds of things that other folks won't just because that is the way we are. But the failure of the system to be able to even say where to go and to know who to communicate with is a major frustration. I hope this time next year that is better.

MR. CHAIRMAN: Mr. Leefe.

MR. JOHN LEEFE: Mr. Chairman, I welcome the people from the Department of Health who are with us today and particularly you, Dr. Kenny. It is certainly baptism by total immersion going into a deputy ministership and I know the Department of Health is perhaps an even deeper immersion than other departments may provide.

I would like to stay on the topic of regional health boards for a few moments. My colleague, Mr. Fage, mentioned accountability. To whom are the regional health boards accountable? Your head is going both ways, I am not sure . . .

DR. KENNY: No, I am not leaping to the microphone. Does anyone know what it should be?

MR. LAHEY: First of all, the department has issued an accountability structure for the health care system, issued in December 1997, and it makes an attempt to set out what the roles and responsibilities are of the various different players in the system, and in particular the Minister of Health and the Department of Health. Very generally, I won't be able to remember all the words, but it defines the role of the Minister of Health as funding the system, as establishing the standards, setting the general direction of the system, monitoring the performance of the regional health boards in terms of meeting standards and generally being responsible for the quality of care that is being provided.

In the case of the regional health boards, it defines their responsibilities, again, I won't be quoting it verbatim but generally in terms of taking the funding that is made available to them and allocating it in accordance with provincial standards and provincial definitions of what are core programs and what programs have to be offered and making, generally, the management decisions that have to be made in taking the general provincial direction and making it operational on the ground in terms of providing programs.

MR. LEEFE: Well, you have told me what they do and I already knew that but you still haven't told me to whom they are accountable.

MR. LAHEY: Well, I think it is in that context that I think that document tries to establish accountability of the regional health boards back to the Department of Health for discharging those roles and responsibilities, meeting provincial standards in the programs they

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deliver and meeting those program objectives within the resources that are made available and providing the information, which I think is one of the key elements, providing the information that the Department of Health needs to do budgeting, to monitor the expenditure of funds, to determine consistency with budgets and also the information that the Department of Health needs to make decisions for example in approval of programs or the approval of capital expenditures.

MR. LEEFE: So are the regional health boards directly responsible to the minister or are they responsible to various senior persons in the Department of Health who deal with specific delivery areas?

MR. LAHEY: Well, in terms of their accountability to the Department of Health, people in the Department of Health work as the agents of the Minister of Health.

MR. LEEFE: What about the regional health boards? The boards are appointed out of the minister's office, is that not correct? Every one of those appointments comes over the minister's signature. Is that correct?

MR. ST. LAURENT: Mr. Leefe, can I answer your question by perhaps putting it in a little bit of a context of pre-designation of hospitals to regional health boards. The Department of Health at no time in the past operated hospitals. Hospitals across this province were operated by boards of governors, boards of directors or administered by a management staff, pre-designation. The fact that designation occurred did not change that accountability to the Minister of Health. Pre-designation, the boards of governors of hospitals and the management of hospitals were responsible for, as Mr. Lahey indicated, being the agents of the minister to perform the duties in the health care sector on acute care in hospitals. So that accountability was solid, was there pre-designation.

Following designation, the only thing that occurred was that individual hospital boards were put aside, one hospital board was created, as in the Western Regional Health Board, with a number of sites. So now the board of the western regional hospitals, if you will, are accountable for the management and governance of the sites or the hospitals within the western region or as in any other region. The accountability of the non-designated facilities and the regional health boards is no different today than it was in 1993.

DR KENNY: The reason I hesitated for the answer is because I know that is the answer on paper. I truly will have to say to you that I don't understand what that means. As the Deputy Minister of the Department of Health, that's not clear enough for me about what kind of relationships and reporting accountability needs to be in place. It is exactly that concern as well as clear communication and coordinated delivery of care to Nova Scotians that has made me say that, in fact, clarification about this. If coherence and clarity are things that I want, this does not help me to understand the issue and it will be a major issue. We will be meeting with all of the players at the regional/provincial level to discuss their

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understanding of this and what are the problems, strengths and weaknesses of the current understanding, because it is not clear to me.

MR. LEEFE: Dr. Kenny, I, of course, speak from my own experience which is not province-wide, but I have had heard similar concerns expressed in other parts of the province as recently as last week in Antigonish, at the other end of the province from where I live and which I represent. There has been a very real sense of loss of ownership and empowerment in many of our communities. I understand that several of the hospital boards prior to designation did consist of persons who were appointed by government. In my case and in the case of many hospitals, the boards came from the community, they were elected at annual meetings. The board at the annual meeting had the public responsibility in a public forum for any who cared to come to make a report of what they had done in the past year and presumably to say where they hoped to go in the next year. That's all gone.

Now, we have a regional health board which, insofar, as the public is concerned doesn't seem to be accountable to it at all. School boards are accountable, they are elected. Their meetings are held in public. Municipal councils are accountable, their members are elected. They meet in public. Members of the provincial Legislature are accountable, they are elected, they do their business in public. Can you or any of you tell me of any instance where any regional health board held its regular monthly meeting in public? No, because it doesn't happen. So public accountability is being very grossly short-changed as a consequence of this.

DR. KENNY: That's fair. But I also say to you, remember that there is a task force on regionalization, even though that process of regionalization is early but I will say to you that your question and concern regarding representation, how does it get there, what does it represent, that has already been identified as a key issue. I agree with you, I think it is a central issue in accountability to the public. I was commenting earlier on accountability through the system so that there is some kind of a seamless continuity about plans even though the lower down or the more close to the communities, the more appropriate those particular needs are answered. So representation is a huge concern.

MR. CHAIRMAN: Mr. MacKinnon.

HON. RUSSELL MACKINNON: Dr. Kenny, how would you rate the Nova Scotia health care system in terms of our counterparts provincially and, indeed, if you could, internationally? How do we stack up against the rest of the country? Are we generally perceived to be at the bottom of the heap in terms of delivering quality health care or are we pretty much on line or are we above the pack or what?

DR. KENNY: Good decisions are based on best evidence and values, I don't have any comparative evidence to make any kind of a statement that would be fair and truthful. But having a perspective from issues about health care across the country, particularly through

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the National Forum on Health experience, and being a Nova Scotian by adoption - I am a passionate Nova Scotians by adoption - I will tell you, this is an opinion. First of all, I think we have grappled with the exact same issues right across the country with regard to the Canadian health care system. Secondly, I would say to you that I do believe that Nova Scotia has been grappling with this issue; very committed to the protection of the health care of its people. I think that that may have happened at the cost of some budgetary control that might have been given. But I do believe that is the Nova Scotia way to do things, the priority is care and response and I think we have tried to do that.

I would say that I think Nova Scotians have started this issue of changes in the health care system and attention to our budget problems in more of a have-not than have. If I compare complaints from friends of mine in Ontario or Alberta with what we started with before the cuts, they have had more drastic cuts more rapidly and that is a different problem because their expectations were so high. But I think Nova Scotians have always had to make do with less lavish kinds of answers to health questions. So I think we are more used to dealing with priorities well.

I think we are doing a good job but I think this issue of this being such a complex area and eating up so much of our budget for other things for Nova Scotians that even with our best intentions now, we are like every province, really trying to grapple as to how to make it better. I think we have done a pretty good job but I would not be able to say definitively that that is so in every area with which we found ourselves.

I will say I think that when there has been a conflict of values, I think that even with things like picking up debts and the like that the decision has been that fiscal accountability in those circumstances were less important than ensuring that services were delivered. I think that those decisions should be made in favour of services but then when you make those decisions acutely, you go back and you fix the system so that in fact you can deal with it better.

A report card, I wouldn't want to give you a grade but I think I would say that if you asked me to stand anywhere else now in my position as Deputy Minister of Health for Nova Scotia, I think there have been a couple of problems and mistakes but that is the retrospectoscope. I would be proud to say that I thought what we have done in health care in the last few years, grappling with this immense problem is as good as anyone else has done.

MR. MACKINNON: So in essence you have a very high confidence level within the Department of Health and how it is responding to Nova Scotians' needs.

DR. KENNY: I would say I have a pretty good confidence level in the folks that I have met in the Department of Health but I am terrified about the vacancies and the expertise lack. I have said that to you. These people can do their best job and all the folk they represent who are not here, only if we get some more expertise in the key positions. I am saying that.

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MR. MACKINNON: I know in last week's Public Accounts Committee briefing session that our committee held with the Auditor General, we dealt with that particular issue in terms of the outside consultant filling a senior finance position but equally recognized was the fact that the Department of Health had advertised nationally for someone to fill that position and couldn't get anyone out of 28 million people. So it is not that the provincial government and the Department of Health didn't try to do its job. There is obviously a difficulty there but equally so, it is very easy to be critical than it is to find out the source of a problem.

DR. KENNY: Right. Actually, let me say that I have already said to you that the senior vacancies in this department are crucial and within less than 24 hours of being deputy, I clearly indicated these vacancies have to be on my desk, we have to get the short lists and we will be moving on these as soon as we can. The chief financial officer presents a very interesting challenge to this general concern about the complexity of what we do now in Health in that we need the highest level of expertise and you can't afford that.

First of all, we have identified the chief financial officer position as being extremely important. I am extraordinarily grateful the person who has sat in that position, as surprised as I was when she was asked to do it, is committed to continue to help until we can get an adequate and appropriate replacement at some personal and professional cost. So that issue demonstrates that you get the best person that you can to fill a gap and I believe that that happened there. The larger issue of how we position leadership about finance within the department, because it is such a key area, is one that I believe I will be demanding that the government look at with some degree of creativity. I have identified looking at the issue of are there other ways to deal with both the senior accountancy type function in Health and the business planning function in Health because we need both of those now. We need somebody who can keep these complicated books but somebody who has this business-plan-type sense and we are actually meeting with that I think it is tomorrow or Friday for a major discussion about what that might look like. I do believe that is a serious issue in the Civil Service, particularly around areas of expertise like finance and information technology.

MR. MACKINNON: Doctor, as well, through you, Mr. Chairman, several months ago, here in the House of Assembly, I listened to Opposition demands that something be done about the Y2K problem within the Department of Health and by the end of the day I thought everybody who was on a respirator or a life support system was going to be not meeting tomorrow morning's target, that being surviving. It was very depressing to hear the negative approach that was taken. I would like it if you could bring some clarification and some confidence into that process.

DR. KENNY: First, let me say my question about Y2K was just that. My question is, can I be certain now that whatever our difficulties with Y2K - and, by the way Y2K is a government-wide problem as well as a world-wide problem - but within this department for which I am now responsible, my first question is, can you give me assurance immediately that

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we are in a position so that there will be no direct adverse patient effects when the Y2K situation occurs? I have been reassured that those kinds of situations directly related to patient care are in place but that there are some other administrative issues that are glitches and perhaps if Mr. McKee would just explain to you what that is but your question was mine and with regard to direct patient events, because that is my primary consideration here, I believe that is in hand well but maybe even at the cost of some other administrative stuff. Mr. McKee.

MR. WILLIAM MCKEE: Thank you, deputy. Mr. MacKinnon, that was the question that the deputy had asked and I responded to her on behalf of the organization that we have in place with respect to monitoring Y2K and that is our provincial coordination office that impacts the whole Health sector, including the Department of Health, was the fact that we are confident that all the mission critical equipment is being dealt with, it is in hand and that we actually have contingency plans in place.

One of the things that we found interesting since the assessments had been done, the analyses had been done and we have had a sense of being able to look at the medical equipment, when we first started the exercises it was our understanding that potentially up to 25 per cent of the equipment that we had been identifying, the medical devices, could be impacted by non-compliance with respect to Y2K. Since that time, and now that we have had the assessments done and had time to do the analysis and the testing of equipment, it would appear that probably that percentage is down to somewhere around 4 per cent or even less. So I think that is reassuring us of the fact that the number of devices that we originally thought were going to be impacted has been reduced in number. We feel comfortable with respect to the medical devices.

We are now moving into the next stages and, as the deputy said, there are other areas and, of course, like any project, as large as it is because probably about, if we look to the Y2K issue, the health sector would represent, from the point of view of the public sector, somewhere probably over 70 per cent or 75 per cent of the total public sector area, at least that the government has responsibility for. Having said that, we are now moving in to what we refer to as a supply chain analysis because what we want to ensure is that now that we have dealt with the issue of the medical devices, now we are into the supply of literally all the types of equipment and things, the consumables that we would normally use within the system. In any event, the project is moving along and we are feeling comfortable with that.

MR. MACKINNON: Thank you. I don't get as depressed listening to you people as I do to the NDP but that having been said, with regard to the business plan that, again, it was an issue that was persistently raised in the House of Assembly, the fact that the business plan wasn't approved and the impression that I received, again, listening from a negative approach, was that the Department of Health is here, the QE II is on the other side of the room and there is no coordination, there is no synchronized movement for a common goal and so on. As I listened to the QE II representatives who appeared before the committee, they indicated that although the plan wasn't approved in whole, there were various components of the plan

[Page 26]

that were being acted upon in concert with the Department of Health. Is it possible that you could expand a bit on that?

DR. KENNY: Yes, sure. I have to tell you that I probably sounded very NDP in my own department when I asked the question about the business plan, so . . .

MR. MACKINNON: Don't scare me. (Laughter)

DR. KENNY: My questions cross all lines.

MR. MACKINNON: My blood pressure is bad enough.

DR. KENNY: A good question can come from anywhere. I think what I will do is, I think Mr. Lahey is the best one to start with that but if Elaine Sibson wants to comment as well, we will do that. There are a couple of these folks who are trying to keep me apprised of why that wasn't so.

MR. LAHEY: I think, deputy, that maybe Bob, are you . . .

DR. KENNY: Do you want to go first?

MR. ST. LAURENT: A number of issues with regard to the QE II business plan indicated that from Health's perspective, our main concern was the quality of care that was being provided to the patients at the QE II. It was a very difficult time with labour relations and it was determined that it was not an absolute appropriate time to implement some of those initiatives in their business plan.

As Ms. Sibson indicated earlier, when we met with the executive staff at the QE II and they outlined a number of the initiatives that they were going to be putting in place, we agreed, essentially, with some of them, such as reducing the length of stays and moving to more outpatient services and day surgery, which would reduce their costs. I think one of the main concerns was the labour relations that were going on at the time and perhaps, Bill, you might want to comment on that.

[10:30 a.m.]

MR. LAHEY: I guess what I understood from the questions, you are interested in knowing what parts of perhaps the current business plan, maybe it is just the clarification of that.

MR. MACKINNON: Well, if permissible, you can keep it general, just essentially the main components, I mean the critical elements have been acted upon and that the quality of health care has not been sacrificed as the perception has been put forth.

[Page 27]

MR. LAHEY: I guess from that broad a perspective, I personally don't know some of the details of the parts of the business plan associated with Project Quest, for example, that are being implemented. I am aware that generally they are in the area of certain clinical initiatives that have to do with changing the way nurse staffing assignments are done, having to do with - for example, another one that I am aware of is the - changes in the delivery of laundry services. Those sorts of initiatives, some of which were associated with Project Quest, either have been implemented or are in the process of being implemented or they would be part of the current business plan, they would be carried forward.

In the current business plan that is presently being reviewed by the Department of Health and the QE II would plan to be making some further implementations of those elements that have been carried forward across a number of different business plans in the coming fiscal year. Some of those initiatives certainly would have a relationship with the QE II's expectation that it can take its current deficit situation from something in the order of $26 million a year down to $8.5 million in the coming fiscal year.

DR. KENNY: Maybe it is because I don't know all the details yet myself but I would have answered your question in an even more general way. I thought that it was Elaine Sibson's answer that earlier would have answered your concern which is, the budget was approved so the business plan wasn't approved but the budget was approved. Now what I am not completely clear on is what is not included in the budget that would be in the business plan but my understanding is that you were concerned about the direct care of patients and was some of that not taking place because of the failure of approval.

MR. MACKINNON: Doctor, if I may, through you, Mr. Chairman, that was the impression that was being conveyed in the House of Assembly and I personally felt that that was wrong to lead Nova Scotians to believe that. So I wanted some clarification and a comfort level which obviously I have received.

DR. KENNY: What I am saying is that my understanding is that the budget was approved for ordinary activity. I cannot tell you what is in the business plan that is not in the budget and if Elaine can help us now, we have that; if not, that is something we would look at and get back to you on.

MS. SIBSON: I guess one of the things that we sent, where we knew that there was going to be some deferral on the business plan process because of the talk about federal money coming down, we sent a letter to all of the RHBs and NDOs and asked them to maintain their same levels of service, to realize cost savings wherever they could and to defer on any management salary increases until we had a chance to deal with the federal numbers. So clearly the instruction was to not cut services but to obtain efficiencies and savings wherever they could.

[Page 28]

MR. MACKINNON: Thank you. I must ask to be excused, Mr. Chairman, if I could because I have some meetings with some coal miners from Cape Breton on a very pressing issue, as you can appreciate. My colleague, the Minister of the Environment, will ask the rest.

MR. CHAIRMAN: Good luck with your meeting. Mr. Samson.

HON. MICHEL SAMSON: Mr. Chairman, I would like to start off first on a topic that really hasn't been touched on yet this morning but certainly, as a rural member of Nova Scotia, it is one that touches all of us. I guess it is the question of physician recruitment. On March 24th, when I was first elected to the House of Assembly, Richmond County was in a crisis situation, faced with only three doctors left in the county and no regular doctor at our regional hospital, the Strait-Richmond Hospital. Certainly, as my colleague, the Minister of Labour, has alluded to, the perception in the House of Assembly was that physician recruitment was not working, the Department of Health was not actively pursuing it and there was no success being achieved on the issue of physician recruitment.

During my time here, during the last sitting of the House, I think I probably annoyed the Opposition on certain dates, not too many dates, by telling them that in Richmond County we had had four new physicians since the election through the physician recruitment process. I guess I can warn them now, that is going to continue because actually now Richmond County has five new physicians so we have gone from a critical situation of three to a more comfortable situation of eight but by all means, we still identified that there is still a need in several of our communities.

I will ask Derek Dinham, with Insured Programs, if he could give us an idea of where we stand on physician recruitment so that Nova Scotians can have a better idea of the reality of what is going on. In Richmond, we know the reality is five new doctors. I am just curious in the rest of the province where we stand. I understand Springhill has made some large gains and I am wondering if you could just give us the reality of where we stand on that?

MR. DINHAM: I am going to avoid the temptation of getting into specific numbers. Doing that, we get into definitions and a lot of complications but I think your observation of what has gone on in the recent months as far as the Strait-Richmond area is concerned is pretty much similar throughout the province. Over the last 10 years, we have had an average change in the number of physicians, that is the mobility of physicians either coming into the province or leaving the province, in a range of about 3 per cent to 5 per cent. This is the general average. That represents approximately 68 physicians leaving on average. Some years it was a little higher. It has gone as high as about 8 per cent, when we had about 140 physicians leave the province.

I think it is much like the bad news in the health care sector. We hear about it, but we don't hear about the successes. Avoiding getting into specific numbers, over the last four years, we have had a major inflow of physicians within the province. We have had, at times,

[Page 29]

dating back but not too far back, vacancies in small communities in Nova Scotia; there was a terrible problem getting physicians in the Canso area, Guysborough, in many of the small areas throughout the province. Right now we have no vacancies in the real small communities throughout Nova Scotia. This represents approximately 40 small communities. Some of those are more difficult, the implications I guess, where there are hospitals but where there are now small community hospitals, again, there are no vacancies whatsoever.

In some areas, from time to time, you almost have to qualify that as of this hour, there are not. Physicians leave the province. They are a very mobile group. The notification we get when physicians leave the province or leave a particular community is usually very short notice. It is usually within weeks or at best a month or so. To recruit a physician for a general practice usually takes, at best, six months for relocation, with the gearing down of one practice and moving into another. For specialists, it probably takes up to a year to get a person in. Again, we are given short notice but over the last four years or five years we have been very successful. This is not to say that there aren't problem areas throughout the province. These have been identified and we are working as vigorously as we can with the physician community in that area as well as boards, as appropriate, and community leaders. We have been very successful.

In specific areas in terms of primary care, we are instigating a number of new programs to try to get physicians to come into the province, and there are problem areas.

The implications, just to expand upon I guess what some of the solutions are to physician recruitment and this is moving into alternative payment mechanisms that are prevalent throughout the province. This is moving from a volume-driven type of practice where a number of financial problems do occur - and I won't get into those - to a non-volume-driven service, whether it is salary, contract arrangements and so forth. This has provided a very stable funding base for individual physicians and groups of physicians.

To let you know the progress that has been made with these initiatives - eight years ago we had less than 5 per cent of physicians being paid on an alternative payment arrangement. As of the last couple of months, we have increased that number to 42 per cent of all physicians in Nova Scotia receiving - leastwise in part if not their entire - reimbursement through alternative payment mechanisms. In terms of the dollar implications, we have moved from less than 5 per cent of our budget to in excess of 40 per cent on alternative payments. That initiative in itself, and particularly in rural Nova Scotia where contracts have been proven to be very effective has worked well in our recruitment initiatives. That is not to say that we can address all problems related to physician recruitment but it goes a long way.

MR. SAMSON: I am sure we are all quite familiar with the incentive program that was established by the Department of Health to try to attract physicians mainly in the rural areas and certainly this has been a great benefit to us in Richmond County and I know it has been for other areas. My understanding was that there was actually a designated number given

[Page 30]

of incentive positions throughout the province and I guess I am just curious if you could give us an update where that program stands. Has it been successful? How many positions have yet to be filled? Where do we stand with that initiative from the department?

MR. DINHAM: There are 23 designated communities that are entitled to incentive programs. These are usually for the smaller areas of three or less positions. All of the positions that have been identified in communities other than any recent changes are totally filled. So it has been a very productive in going to that approach. This is not say, we won't be considering additional incentive programs or alternative funding for smaller communities; we are certainly open to any additions that might prove beneficial in attracting physicians in areas of undersupply.

DR. KENNY: . . . important question. Just a few little things to add to Mr. Dinham's comments. I think the issue about physicians moving, first of all, I am extraordinarily pleased that the question about physicians in the very small communities has been dealt with I think exceedingly well through this activity. But I would caution you that one of the issues about small communities, particularly with the incentives and the way we have packaged this is not going to be getting someone to go to a small community but it is having them stay there. That, you understand, is more than a fiscal issue. That can be, for a physician and his or her family, a socio-economic phenomena; they are willing to do it for a time, they are willing to do it with a young family, they are willing to do it but it winds up being a more difficult issue. So just so you understand, I think this is an important initiative and it is addressing this appropriately with great creativity but this is an issue.

I do understand both personally and from information from the department that some of the next size communities, however, particularly the ones around the regional hospital areas and our urban general practitioners present difficulties of another kind. So, you know, it is as if you fix one area and you have issues emerge on the other.

I would, therefore, say to you just two things so that you do know they are issues that will be focuses for us. The first is this issue about primary care renewal. What is that? What goes into it? How much of that is about physicians and how much of it is about other caregivers? I think that we need to look at that more creatively and I would say to you that it will be a commitment of mine that we, in fact, look at what that really is so that care for Nova Scotians in fact might be done well.

With regard to the alternate funding packages, I am actually proud to be the first person, eight years ago, with the Department of Paediatrics to put this issue on the table - with great opposition, I might add. It became clear, over time I think, that if we do not address the question of funding of physicians in some way that is planned, that is opposed to open envelope related to volume that all kinds of things were not going to happen. This is very vital for specialists in the province but it is extraordinarily important for family practitioners who deal with very complex needs over long periods of time.

[Page 31]

I just asked the question and none of my colleagues here has the answer, but I think if we now have somewhere close to 500 of our 1,800 physicians - the numbers are rough, they are my numbers, not the department's - but if that is the range of individuals who are now paid on these agreed-to plans I don't think there is anyone in the country that has that percentage of their physicians now on a different payment scheme. Now, you understand, not all physicians are happy with this nor might it be appropriate in the long term. But it is actually a Nova Scotia initiative that I think is moving to deal with both providing a better environment for most physicians in the country and a more manageable way of dealing with this area of physician reimbursement. So I think the efforts of the department really are extraordinarily good in an area that is very complex.

MR. SAMSON: My next question I guess both Dr. Kenny and Derek might want to touch on. The perception has been left with Nova Scotians that we are not doing something right, we are not being aggressive enough in our recruitment and there is something wrong with Nova Scotia. I am just curious. Who are we competing against when we are trying to bring these doctors? Is this just a Nova Scotia based problem that we are doing something wrong, the Department of Health here in Nova Scotia is not doing its job? Are we the only ones faced with this sort of situation not only of bringing doctors in but of keeping them? Are we doing something wrong here or who are we competing against when we are trying to get these doctors?

MR. DINHAM: Generally speaking, for primary care family practitioners the competition in the last number of years has been with the United States in the sense that they are moving from a specialty practice to more of a general practice as far as their HMOs are concerned and so forth. Some of the specialists, the competition is with other provinces, for some unique specialties it is such countries such as Saudi Arabia and some of the Middle East countries. That is our competition.

What we are experiencing is not much different than what is going on in other provinces. Some physicians - not a large number - flow from province to province depending on some of the economic fiscal incentives that may be available from time to time. That is a normal course of action. But to answer your question, the U.S. in terms of general practice and I guess the demand for general practitioners is starting to diminish relative to their total physician supply, in actual fact there have been a number of physicians who went down to the U.S., thought the grass was greener and now are starting to appreciate some of the nuances of the Nova Scotia system, particularly as we get into the alternative funding, which is what is provided to these physicians in the U.S. under HMO arrangements.

MR. CHAIRMAN: We will move into a second round, the time is up. Can I just start with one question. Would you clarify with us the numbers of physicians you said who are on a different, that is other than fee-for-service basis? Did you say 500?

[Page 32]

DR. KENNY: I am just checking with the man who knows about the most recent numbers.

MR. DINHAM: Of the numbers that we have and again, we had to be careful in what we determine is a full-time equivalent versus head count, but in any event, in terms of full-time equivalent physicians who are receiving 90 per cent or more of their total income through alternate funding, we have 500 physicians identified.

MR. CHAIRMAN: What puzzles me about this, I wonder if you could just aggregate the number. My recollection is that physicians who practice as psychiatrists or pathologists or radiologists are quite normally on a salary basis. What I think is perhaps of more interest is which physicians who would normally, say, be in regular private practice as GPs or as specialists other than those three areas that I have mentioned have moved to a different mode of remuneration. Do you have that number?

MR. DINHAM: We have all the numbers, it is broken down in a fair amount of detail and I could go through this. There are very few physicians who are under the employer/employee relationship, that is to say, what we call a salary. There are a lot of reasons for that, some of which is taxation, some of which is overhead and so forth. The primary arrangement that we do have is a contract either with a group of physicians, that is block funding that provides a general service such as what Dr. Kenny has referred to as one of the first big ones in the country, the IWK block funding. That included 40-some-odd physicians. But there all sorts of contracts out there with individuals under uniform conditions.

I will just reiterate the number, 800 physicians receive a portion of their income through alternative arrangements. This is 800 of a total of approximately 1,850. Of that 800, approximately 500 receive over 90 per cent of their income through alternative arrangements. Again, we can provide numbers to you to outline the details of that but that is generally the numbers.

MR. CHAIRMAN: It would be useful if you would. Ms. Godin.

MS. GODIN: If I could just return for a minute to the Pharmacare issue. I want to thank Mr. Dinham for his very thorough answer last time. When that working committee was set up last June, I believe it was, the Working Committee on Pharmacare, I think there was a lot of hope raised among the seniors, especially the low income seniors, that they may not have to bear as much of the cost for their rising health care costs but last week, when this announcement of the changes was made, I don't think - I may be wrong - but I don't really think there was anything there for low income seniors that would help them out in any way. I sort of felt that by not doing this, it sort of widens the gap in what is already the existing levels of care between the wealthy and the poor because what we have is anyone who has a

[Page 33]

private insurer does get more coverage than the province can give them. This is especially true when it comes to seniors.

For example, I have a case of a 79 year old woman who fell and hurt her back but any medical aid such as something very simple, such as an Obus form, she has to pay for herself to make the quality of her life a little bit better and to make her more comfortable. She was very disappointed about this because she is on a very low income and she can't afford that kind of thing. I am wondering what analysis the department has done on the Pharmacare situation and what the effect is on low income seniors and if there is anything in the future that might be able to help them?

MR. DINHAM: Certainly the questions you have raised are what many of the working group did review. When it was given the task to look at the cost of the Pharamcare Program and alternatives, it was under strict guidelines that it had to be within the context of existing funding percentages and what that group tried to do was to look at alternatives within the overall pile of money to try to accommodate this. One of the areas that we have to keep in mind when we look at low income, and all seniors for that matter, is that despite the continued cost of inflation of drugs in general, which you discount the new seniors coming in and the financial implications of that, is rising at about 10 per cent per year. This is in terms of benefits to individuals.

We also have to keep in mind that over the last five years, the premium nor the co-pay percentage didn't increase at all. The premium was established when the program started, the new program, at $215. If, indeed, we had applied the normal inflation to that for that part of it, the cost would have been close to $300 in today's terms. The same thing with the co-pay, it would have gone up from the current maximum of $200 to $271. So by the government absorbing the inflationary cost related to those two items, amounts to approximately $6 million to $7 million a year that was not passed on to seniors.

The Seniors' Pharmacare board and the special working group were looking at a wide range of alternatives here. Certainly if you ask any of the group or persons sitting on this, they were mesmerized with the number of choices that could be made. The idea here is to try to protect the interest of individuals, that is the lower income group, and certainly with these changes there have been minimal changes to the lower income group, and try to produce a program in the long term that could be sustainable. It felt in the first cut of this it couldn't be done because we do need a lot of public input, whether it is seniors or other groups that could be negatively impacted because of a lack of access to good drug therapy and over the next eight months to 10 months, that working group will be going out to the communities and seeking input from a wide variety of groups to get a better understanding of the real needs of individuals and they may not only be restricted to seniors. There may be others that are similarly disenfranchised.

[Page 34]

DR. KENNY: If I may just comment. I had not read that report. The concern that you have that low income seniors might be particularly disadvantaged even while the department was attempting to advantage seniors as a whole, is of particular concern to me. So I will promise you that that is the kind of value-laden issue where you identify priorities and if that, in fact, has happened, then I will do everything I can to see how we can deal with that issue. I want you to know that my concern about this posited in a larger issue which is the awareness that if you look over the last 10 years in general, right across the country, about health care expenditure, we really have tried to maintain, control, put the lid on all kinds of things but drug costs are the one that just keep going up. I am one of the members of the National Forum on Health who was highly supportive of pharmacy being in fact part of our health care system. The decision was not to go that way. My belief was that until drugs were part of the entire package of care, that in fact it couldn't be controlled and therefore other kinds of issues were in place.

So in general, I am concerned about this issue. For the specific recommendations that were made here, I trust that the way Derek has provided you that information is the way it went but if you are identifying a real concern that in whatever decision was made that there may be a particular disadvantage to low income senior citizens, I would actually mark that for myself as something that I would not want to see because it does not - if that has happened, then there has to be some clear justification that would make that compelling to make that circumstance pertain.

MR. CHAIRMAN: Mr. Dexter.

MR. DEXTER: Just with a comment because when regionalization took place, I was a serving member of the Dartmouth General Hospital board at that time and I don't know what consultation took place in terms of setting up the regional health boards at the time but I don't recall us ever being consulted and I don't recall the municipality and the municipal government ever being consulted about who was going to go into the regional health board make-up. So when my colleague, Mr. Leefe, points out that there was an accountability structure to the community that was built into those boards, I don't think there is any question about that and people do feel tremendously disconnected from the regional boards and it is a just a problem that has to be dealt with at some point in terms of restoring faith in that system if that is the one we are going to choose, if that is the road we continue to go down.

We talked a little bit about the budget versus the business plan and what is in the business plan that is not in the budget and there are a number of things in the business plan that concern, I think, a lot of people. I was just reviewing it as you were giving some other answers and, for example, under the clinical initiative section of the business plan, they talk about the fact that 29 per cent of the QE II patients could receive more appropriate care in another setting. They talk about the fact that nurses spend 12 per cent of their time on non-patient-care-related activities. They talk about 30 per cent to 50 per cent of the nursing staff time is spent doing tasks that do not require their expertise or level of licensure. These are all

[Page 35]

comments that are being made. Then they talk about human resources and they say that staff reductions and expense savings will be realized following the implementation of new human resources information system and related changes to the human resource processes.

[11:00 a.m.]

Well, you see those things are seen as being connected. So, when you look at that facility and you say, well, is what they are telling us here that there are going to be fewer nurses, that the standards in those hospitals are going to be ratcheted down? You can argue that, well, maybe there are other appropriate standards, that this job can be done by somebody else and that the quality of the care that is being received is still of sufficient quality based on the values that we decide on but that is not the way people see it. If you are going to lay off nurses and if you are going to reduce the standards in those institutions then you undermine the quality and you undermine the confidence that people have both in the system and in the institution and that is why we are concerned about what is in the business plan as opposed to what is in the budget.

To give my own kind of brief example of this, I serve as well on the board of the Dartmouth branch of the VON. We often say that the VON provided home care before it was cool. We did that way back for 100 years. When billings go into the Department of Health, we decide that a registered nurse should go out, they say, no, no, an LPN can do this job and they only pay for an LPN. They don't care who we send, they pay on the scale that they decide independently. So there is a big debate going on around what is the appropriate standard that should be applied. I think the fear that we have had, and the government talks about the negativity of our Party and the negativity of the Opposition, but it is grounded in the fact that we see this happening and when you talk about sounding like the NDP when you address your business plan, we hear more and more, whenever that happens, when people are talking good sense. So we don't take any offence to that at all. Anyway, I realize that is a very long preamble but I think that sets the stage for what you see happening in the debate.

DR. KENNY: Let me just make two general comments, then if any of the folks have the more detailed information - the first is, that business plan wasn't approved. That was the first part of the question, why wasn't it? Well, it wasn't, so some of those cautionary things are still on the table. So that should be reassuring.

With the issue about nursing, I have not read that business plan yet. If we look at nursing, I would say to you that nursing and planning for the nurses that we need in this province appropriately using them with regard to their talent and expertise, supporting them, remunerating them, that is a major concern. My sense would be that in recent times, because we have been so concerned by my colleagues in medicine that perhaps nurses have fallen behind in our kind of world view of concern. I will tell you that that is not so now within the department. There is a major study underway right now which is of great concern to me, looking at the question of nursing personnel, nursing functions, et cetera.

[Page 36]

I think that your experience would be mine which is that we do need high quality physicians, paid fairly, but at the same time, the care that individuals count on day to day, sometimes minute to minute, is that of nurses and we do not have, I think, a handle yet on these questions. I am looking forward as an urgent - to come to me as soon as it is completed - major study that is looking at the issue of nursing. So the good news, in that sense, is that that business plan has not been approved because cautionary areas like that will be brought to my attention and nursing, you are absolutely right, is an area that we need now to spend considerable time on.

MR. DEXTER: How much time do I have?

MR. CHAIRMAN: Another five minutes.

MR. DEXTER: Okay, good. Mr. Fage talked earlier about looking at the health care budget in some realistic terms. He noted, and I think quite rightly, that the overall envelope for the Department of Health has continued to increase and yet the language that we talk about is the language of cutbacks and reduction of program delivery. Does this all flow out of regionalization and new home care initiatives? Why do we have this juxtaposition? I know that we have all asked this question and we heard different opinions but I would certainly like to hear yours about it.

MS. SIBSON: Dr. Kenny, I will give you the numbers.

DR. KENNY: She will give me the numbers.

MS. SIBSON: I had prepared a summary of what the actual expenditures were within the department areas in 1992-93 to where the budget is for this year 1998-99. I think that gives you some idea of what has happened over time with the ups and downs. Basically there were some big cuts and then they have crept back up again. So you have seen a little bit of growth in the last couple of years but if you compare the total budget for the Department of Health, in 1992-93, it was $1.3 billion and the budget for 1998-99 is $1.455 billion. So that is about a 9.3 per cent increase over that time with some significant wage increases, drug increases. So the fat has been taken out of the system and the system, within a 10 per cent growth rate, accommodated a lot of the cost pressures.

Within that, the two areas where there have been significant increases are: long-term care, which went from about $60 million in 1992-93 to $133 million, so it has more than doubled; the other area being home care, which has gone from $12 million in 1992-93 to about $69 million in the current budget. The hospitals, interestingly enough, were at $693 million in 1992-93 and the budget for 1998-99 is $689 million. So those are the major components. Medical payments, I guess, would be the other one. It was $268 million in 1992-93 and it is $307 million in the 1998-99 budget.

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MR. DEXTER: Are we getting into a position to be able to do some analysis of the cost of institutional care as opposed to the cost of home care? I realize that takes out of the equation the whole question of desirability and that is a different issue.

MS. SIBSON: That is the goal of our long-term planning. That is the goal of the three year planning. Every institution that we went to, every RHB and NDO, with the exception of the IWK-Grace which is in the same role, said we have people in our beds that should not be in our beds. They should be in home care, they should be in long-term care. We need a better access to those forms of care and the work we have done, the analysis we have done is to try to identify how much cost can be saved by moving out of the high cost acute care into the other alternatives.

MR. DEXTER: It is hard to understand because a nurse on a floor can visit a lot more patients than a nurse out in the community who has to travel x number of miles to get from person to person and the wage rates don't differ.

DR. KENNY: I think your question about the experience of downsize, cutback, not even the language that we use in the system is downsize, cutback. Again I go back to the vast majority of experiences of care for the vast majority of Nova Scotians is this incredible good stuff and yet I think that it is particularly because of the importance of a health care encounter that it goes well for you and a loved one. It is because of the fear and other kinds of things that surround that encounter, that the bad ones are writ large on our conscience. But I would say to you that before Ms. Sibson gave us the actual numbers from within the system, the technology and care it cost is phenomenal. I think one of the major areas is - and this is truly an ethical reflection with regard to everyone - how do we deal with the increasing cost of technology and these high-tech interventions, particularly when it is extraordinarily high-cost benefit for very few? In what way do we balance that because the cost of technology and its rapidity of expansion and improvement is exponential. It isn't something we can sit on.

I appreciate well the concern about if we have 1955 pieces of equipment, that is unacceptable but even with a 1998 piece of equipment purchased in December, there are already concerns that that should be replaced. So technology is just expanding enormously. How do we deal with a system that analyzes the benefit to persons of those technologies over against the actual cost? What do you not buy, if you buy a $2 million machine?

Wages was already referred to. It has become extremely costly. I mean, wages are the biggest component of this.

With regard to long-term care and home care, it is surely so that in the hospitals - I know this from my own IWK experience - I was on service in December, the last time I did clinical care. The patients that are now in the IWK-Grace, the children, compared to 10 years ago, they are not the same children at all.

[Page 38]

Ten years ago, we had three or four general paediatric units, each with roughly 20 to 25 children but half of those 25 were not very sick. They were wheezing a little bit; they had a little bit of gastroenteritis; they had fevers that, in fact, were a little bit unexplained, but they were half the beds. When I was there as the attending paediatrician and I had 20 to 25 children, you could deal with them because, then, the 5 to 10 really sick children could use all your time.

When I was on service there in December - we have now got one general paediatric team. You're it. There were upwards of 30 to 35 kids and not one of them was not complicated. Easily, half a dozen of the ones that I had in December were so complicated that 10 years ago - I mean, they would have been transferred to one of our subspecialty paediatricians immediately. Their acuity has gone up because, now, they have children post-bone marrow transplant; they have children that are waiting for organ transplants.

I guess what I am trying to describe is that it is like a compacted world view in acute health care so that even though length of stay and all those things look down, what's there is this high level, very high expectation care.

Then we move patients - those children that would have been in hospital, they are now in some other part of the continuum. We have moved them out and now have to learn to pick up that cost.

Because there is not enough - I think, particularly, in home care - to have picked up the need and the level is not clear - what level or standard is appropriate when it is home care - the acute care feels crunched because it has now got nothing that gives it any breathing room. The home care feels crunched because it was asked to do a task that has not yet been properly resourced for. This is more a personal insider's view of what that experience of downsizing is, if it helps.

MR. CHAIRMAN: Mr. Leefe.

MR. LEEFE: Thank you, Mr. Chairman. Any one of you may be able to answer this question for me. I am assuming somebody will. What is the top salary for a deputy minister in the Province of Nova Scotia? I am not asking what this minister's salary is, but what is the top for a deputy minister?

DR. KENNY: I don't know what deputy ministers get. I am getting the exact same salary I was paid at Dalhousie because I am secondment.

MR. LEEFE: Hundreds?

[Page 39]

MR. LAHEY: It would be in the vicinity of $100,000. That would be the top. I am not sure whether that includes the automobile allowance, or not, but that's . . .

MR. LEEFE: No, but that is the salary.


MR. LEEFE: Perhaps somebody cannot answer this question. Are there any persons in the Department of Health who are earning in excess of the salary of the deputy minister?

DR. KENNY: My secondment from Dalhousie is at $120,000 a year and that is exactly what I was paid at Dalhousie.

MR. LEEFE: Are there any others in the department who would be earning as much or in excess of the deputy minister?

DR. KENNY: There are one or two contracts - maybe there are more - positions that I know, with physicians. If they gave the maximum time it would be in the area of $120,000.

MR. LEEFE: Who would those contracts be with?

DR. KENNY: Am I supposed to be able to tell you that?

MR. LEEFE: Somebody should. Well, I would assume that . . .

DR. KENNY: No, I mean, the name or the position - all I am asking now is, is this a confidentiality question? I don't know the protocol for this.

MR. CHAIRMAN: I think, normally, the salaries of people who are hired through the Civil Service, including on secondment and contract, are public, if required, but you can certainly offer the position if you are aware of it.

MR. FAGE: They are published every year, salaries.

DR. KENNY: Okay, thanks. You see, he knew that and I don't know it.

I believe that there is a physician advisor position in the Department of Health occupied by Dr. Dan Reid. I think his arrangement is in the range of $118,000 to $120,000. Dr. Michael Murphy functions as the Executive Director for Emergency Health Services. He has a contract which is on an hourly basis but the maximal number of hours, the contract I believe has an upper limit, that is in the range of $145,000, but that is only if he billed up to that maximum period of time, he bills per hour.

[Page 40]

MR. LEEFE: Thank you for the response. A few moments ago, deputy, you had expressed concern with respect to critical vacancies in the department and the difficulty that your department, as any government would have, in finding the additional financial resources required to fill those vacancies. Are any of those vacancies so acute that given no other choices either Dr. Reid or Dr. Murphy might have their contracts terminated in order to ensure that we have available in the department civil servants who can fill those positions which are vacant?

DR. KENNY: I don't think the proper response would be to do trades. That doesn't make sense to me. I think the issue for me right now is to get a sense of what each executive director is doing. Dr. Murphy is an Executive Director position in Emergency Health Services. That is one that is brand new.

MR. LEEFE: Did he compete for that position?

DR. KENNY: I don't know that.

MR. LEEFE: Was there a competition?

DR. KENNY: Does anybody know? I don't know that answer. I haven't met with Dr. Murphy in this position yet so I don't know. I honestly don't know.

MR. LEEFE: It will be a treat I can assure you.

DR. KENNY: I know Dr. Murphy, I just haven't met with him in this position.

MR. LAHEY: I guess the physicians that are on staff in the Department of Health generally make more than the dollar amount that you indicated. I guess one of the difficulties with respect to other, if I can describe it as more normal, Civil Service positions is that there is the pay grid that applies across the system and other departments would also have people, for example, in the chief financial officer role or it may not be called that but it would be very comparable. So that as much as the availability of the money is one of the challenges that the department has in recruiting for that particular position.

The utilization of the department of physicians is something that's, for obvious reasons, quite unique to the Department of Health and those would not be positions that would in the same way be provided for across the system Civil Service pay plan.

MR. LEEFE: Again, I will just pose the question, there still may not be an answer with respect for the recruitment of these two individuals who are under contract. Was that recruitment done through a public process or were they simply hired? Was that a competitive process or were they just hired?

[Page 41]

MR. LAHEY: I guess no one here today has that information and we can make that information available.

MR. LEEFE: Thank you, that would be helpful.

MR. CHAIRMAN: That is certainly one of the ways in which we normally proceed, which is that if a question can't be answered immediately we would request a follow-up letter afterwards.

MR. LEEFE: I have one more question and I am sure the answer won't be able to be provided to me today but I would really like to see the paper which would answer the question. It is with respect to Emergency Health Services. I would like to have from the department for the committee's edification the documentary commitment, the written commitment, made by Dr. Murphy to Star Industries with respect to the purchase of new ambulances, the new ambulance arrangements. Also the document which provided Dr. Murphy government approval to enter into that arrangement.

MR. CHAIRMAN: You will be provided with a transcript after this and we can confirm in writing the requests that come.

MR. LAHEY: I would just like to say for the record, I guess, I am not sure what issues we may have in terms of contractual documents and any kind of confidentiality requirements that apply to that. To pick up on what the deputy said, I am not sure exactly how that relates to the mandate of this committee.

MR. LEEFE: You are welcome to black out amounts that may be private business information.

MR. LAHEY: Sure. I just wanted to make sure that . . .

MR. LEEFE: But I would like to see the context of the letter and the dates.

MR. CHAIRMAN: I think this committee has the fullest ambit to require information and answers to its questions, but we can discuss this separately if you have a concern that arises when you actually look at the documents.

MR. LAHEY: Sure.

DR. KENNY: When I said I don't know, it is true because I don't. But you need to know that the question for me about if clarity, consistency and communication matter and I tell you they do to me, so does fairness. Fairness doesn't mean everybody is treated exactly the same but, boy, you have to know why someone is not being treated the same if you are committed to fairness. So from my position you need to know that I have lots of questions

[Page 42]

about how do things get done and I understand well that there are political issues both within the government and forces from without, quite frankly. But one of the issues for me leading the Department of Health now is to be perfectly clear about how the organization ought to be structured and how communication should flow so that, in fact, there aren't ways of communicating that are not clear and consistent to the rest of the team. So, I apologize for not having that information but I assure you within the next week or so I am going to have it for other reasons.

MR. LEEFE: No apology is required, I am comforted by your words.


MR. FAGE: Mr. Chairman, just a couple of observations from some of the other questions. Some of the statements appear to be a little misleading coming from other members of the committee in regard to two sections and one was Y2K. I would ask that you read the document published in October on Y2K readiness. That's why a number of questions would have been generated in the House. It shows that in the Department of Health: long-term care, priority high, which is the highest, 5 per cent complete in readiness; MSI, public, 5 per cent; it shows administration, high, 43 per cent; mental health, high, 15 per cent; home care, high, 5 per cent; health care organizations, zero preparedness; and the last five have no date for completion. So those are why some Nova Scotians and parliamentarians are concerned about Y2K. No question or answer is required there but an observation. That is a government document by the way.

Secondly, in the issue of physician recruitment. I think the department does an admirable job in many ways and the salary portion of a lot of the occupations, anaesthesiologist, various ones have been in place for 10 or 15 years and that is appropriate and right for the size of Nova Scotia. I think some members of the Legislature have problems fully understanding the problem of doctors to rural communities and the significance of the rural recruitment policies is the one that comes under scrutiny at times in the House for clarification. That one we see where a doctor may leave one rural constituency, receive a provincial guarantee under the rural program to go to another area of the province. All I can tell you from my years with trade, one subsidy begets another subsidy when you do it internally to yourself. It may solve a shortage in one rural community for this afternoon but you created another one in an opposite rural community for tomorrow morning. That is the concern being raised, not that every effort isn't being made to do it but it is a short-term cure for a long-term problem.

One member used the example of Springhill. I clearly remember there were eight doctors there two years ago. There were zero doctors and a rural incentive program that put 2.5 positions funded, and 3 doctors in there isn't a cure, there is still a huge unutilized area there with no family physician. It also causes problems for bigger centres. I represent the area of Amherst. There have been 7,000 people without a family physician there for over 18

[Page 43]

months. The issue has not been addressed and part of the problem is the rural incentive because the physician will live in the Amherst community because there are more amenities there and the family that you talked about is key to keeping a physician in a rural area and that is why they come there. But they take their guarantee and practice and drive to work in another area. Those are short-term problems, we need long-term solutions. I lay that out just evenly with no malice or anything in intent but we have to work on that situation.

Those ones require no answers but what I do want to move to though is documents related to the Department of Health with actual numbers connected with them. When I look at emergency health care, I am quite concerned because we have moved from a budget of several years ago in emergency care of approximately $13.6 million and currently we are on track for $38 million, I believe, for next year's budget. I mean, an unbelievable increase. I am certainly aware that the standards of the people maintaining those ambulances have improved their credentials. There are less of them. There are some problems in occasionally finding the residence where they are supposed to go to with the dispatch system but that is a huge increase from one system to another. I think that analysis for where I represent of an urban system being applied to a rural situation needs some more fine tuning maybe and they are significant dollars. My concern would be to note to see how high that has risen. It is major dollars.

MR. LAHEY: It certainly is a major increase and it wasn't mentioned earlier when Elaine was summarizing the major areas where there has been significant increase in health care expenditure. I think it is important to put this increase in expenditure in context and in your question or your lead into your question, you alluded to the improvement in quality. We have moved from a system where there was a number of contracts, more than 50, that didn't deal with the quality of care aspect of providing ambulance services at all and we have moved to an arrangement where the quality of care is the centrepiece of the relationship with the service provider in two key areas. The speed with which the ambulance arrives at the scene and the sophistication of the medical intervention that can be made when the ambulance does arrive. The quality of the ambulances, they are better. There were some very good ambulances and very good operations in the system previously but there is now more consistency across the system. Our current arrangement will, hopefully, and it is intended to achieve continuing improvement, maintenance of quality in terms of ambulance but the continuing improvement, particularly in the response times and in the qualifications of the paramedics.

MR. FAGE: Just in regard to that increase, does that account for capital investment, too, of those ambulances? Is the capital cost of those ambulances covered by the province even though the company that is running it is not an arm of government?

MR. LAHEY: Elaine, do you want to talk to the financing aspect of it?

[Page 44]

MS. SIBSON: The $39 million includes the ongoing cost of acquiring the ambulances. It didn't include the cost of actually acquiring the territories.

MR. FAGE: But it does include the capital cost of the purchase of that vehicle?

MS. SIBSON: Which range about between $3 million to $5 million a year, depending on what needs to be replaced.

MR. FAGE: So can you see a decrease now that there has been that capitalization of brand new vehicles? I mean obviously they are all close to the same age and there would be some need to space them out, but can we see a curtailing of that cost instead of an escalation?

MS. SIBSON: It should be fairly regular. They brought them onstream. There were about 63 brought on the first year and they replace them every three years. So it should be a fairly steady . . .

MR. LAHEY: You made one comment about the differences between the rural areas and the urban areas. I wanted to follow up on that. That is a challenge with creating a province-wide system because the circumstances are very different. On the other hand, one of the main reasons for a province-wide system was to get at the inconsistency in quality and level of service particularly between different rural areas. Having said that, one of the things that the department and the supplier has to continue to work on in their relationship is what are the appropriate standards and expectations for rural areas, what is realistic in those areas because one of the issues that ambulance operations in all jurisdictions struggle with is that issue of the quality of care in the rural areas.

MR. FAGE: The one comment I would make in that regard, too, that I think would maybe help with that response time and those situations as they arise, is the first responder that the government, with volunteer fire departments, has to come up with some money and a policy to finish the situation. That would probably be my comment to help in that situation.

[11:30 a.m.]

The next question, though, I would like to move on to is the one with Pharmacare in conjunction with Ms. Godin's request. I would like to ask a question but it only requires a yes or a no. I have had six seniors into my office in the last two days and the one question they are absolutely concerned about is, can they continue to be covered by Pharmacare even if their private plan is first payer? I think that is critical because as long as they know they have the underside coverage you will save them money but if they do not have the coverage of Pharmacare, all you have done is made every one of those individuals vulnerable. When I read those private insurance plans, and we have all seen them, there is a ceiling, there is a limit and there is an out clause. So that has to be handled very carefully and I am really concerned when I read that letter that went out and it is basically saying you are out of the plan. I would have

[Page 45]

grave reservations if that is your intention. I think you are making them vulnerable instead of saving yourself money or covering the system. Are they covered?

MR. DINHAM: I would like to give you a yes or no answer to that but as you can probably expect, there is difficulty in doing that. I guess what we are suggesting in terms of direct response is that the private insurer will pay the first dollar coverage. Now most of the plans that would be impacted are large plans that would have a limited capacity to change benefits. That is not to say they won't over time, whether in terms, as you say, coverage, maximums or getting out of certain businesses itself. In the regulations related to the changes in the program, there is a provision to provide a system that you wouldn't be any worse off by being covered by the new plan than you would under the old seniors' plan.

MR. FAGE: So I can assure those seniors if they fill that in, they don't send in their co-pay and if their private plan as changer is not of equal merit to the provincial plan, that they will be automatically intake back into the system. I can assure them.

MR. DINHAM: There won't be an automatic but there would be a provision that they can access the provisions of the new plan.

MR. FAGE: But it would not be difficult to be . . .

MR. DINHAM: It would not be difficult, no, and we don't anticipate a large number of occurrences but as I said in my earlier responses, we had to be careful of people falling through the cracks either because of change in coverage or initiative of some of the national plans. So the answer is yes, there is that opportunity.

MR. FAGE: Okay, perfect. I think that is very important to be able to reassure them.

Another question deals with private health caregivers and organizations. As private companies come and would want to contract or do work on behalf of the Department of Health, whether it is home care providers, and that would be the usual spot that they would impact, there doesn't seem to be any system for them to tender at this point. I think that has to be a policy directive and issue and made very clear that the department should take a lead in that rather than those companies or individuals coming forward and not being handled properly or an avenue to do it.

The other thing I would suggest in my investigation with some work with those people and I ask that question, why is there no regulation, no policy that would regulate that industry out there right now? I come across in my research that there is no body with the Department of Health that would regulate or license a private caregiver in the sense that if somebody was going to provide home care services or go into somebody's home, I don't find anything there. It concerns me that that protection isn't for liability, for the citizen and for that

[Page 46]

company, that whole thing seems to be wide open. Ron, if you didn't mind answering that one, I am concerned about that.

MR. ST. LAURENT: Certainly, Mr. Fage. Thank you. Home care contracts with the VON to provide nursing services, as you are aware throughout the province, has agreements with home support agencies to provide home support. In those areas of the province where the workload or the caseload would increase, there is an opportunity for the department to go out to overflow services from private agencies. With regard to the regulation of those private agencies, the Home Care Program has very stringent standards of quality of service and quality of care that must be met. As an example, in the metro area where there are contracted home support agencies providing service to home care, they must meet those standards before they are awarded the contract. So that is the check and balance in assuring the department that the services and the quality of care that is provided to the home care clients is at a high standard.

MR. CHAIRMAN: Mr. Fage, I am sorry, we are over our time. Sorry to interrupt you. Mr. Samson.

MR. SAMSON: Thank you, Mr. Chairman. I guess I am going to start off with a few of my comments like Mr. Fage has done.

Dr. Kenny, I personally wish you good luck in your endeavours with this department. What you have seen today, basically, is a fundamental conflict in the messages you have received. On the one hand, my Opposition colleagues here have indicated to you, no deficit, you are overspending, cut back your spending. On the other hand, they have condemned you for lack of service, cutbacks and lack of quality in your department which they are saying, hire more people, get more staff.

Two weeks ago, we had the QE II representatives in and we talked about their business plan. In essence, the CEO told us that this business plan, for a number of reasons, was rejected by the Department of Health; one of those reasons being its suggestion of a massive cut in staff. The Department of Health rejected that; this government rejected that. Dr. Hamm later went on to condemn us for costing $83 million to this province, regardless of the fact that we said no to massive cuts.

Then, today, we have been presented with a new plan by Mr. Leefe which you could, maybe, cut some of your staff that he has a personal gripe with and then put that towards other staff. That is the other plan you have received.

I want to go to quality and that is the question we are all concerned with here. That is the question that in almost all of your answers you have touched on, the quality of health care. We heard from the QE II that we have top quality health care here in Nova Scotia and

[Page 47]

the QE II is one of the leading institutions in Canada, both in teaching quality health care and in providing quality health care.

Mr. Fage brought up the cost of the increase in emergency health services with ambulances.

Now what I would ask you, Dr. Kenny, and your staff , I would like you to compare for us what our ambulance system was 10 years ago and what it is today; how does that compare and why is there this increased cost? What kind of quality care do we now have with our ambulance service today in Nova Scotia because of the changes that have been made by the Department of Health?

DR. KENNY: Well, let me tell you what I know. I think that it is absolutely correct that if we compare the ambulance service today from 10 years ago, it has vastly improved. The equipment is high quality. There appears to be much more consistency in protocols and, definitely, the quality of the individuals who ride on those ambulances is better. I do think that there is a fair amount of anecdotal comment across the province from the regional health emergency departments and the local ones. It is anecdote but it is, nevertheless, important, I think, that the general status of the patients on arrival - those that need ambulance transport - is better. I can tell you, as a doctor, it really matters, the quality of care in transport, in terms of what happens with the patient.

Having said that, I will say to you that I think it is very legitimate and it is a concern of mine to look at what has been spent to accomplish this. I have no problem with saying that there have been improvements. It may be that the improvements were worth the money that was spent. My job, coming in new, is to look at every single thing that we do and to try to get a sense of whether or not it was done as well as it might.

You know from my own declaration, what I told the Deputy Minister of Policy and Planning when she asked me if I would do this job. I didn't have to make any money doing this but, boy, is it an interruption of my life; $120,000, full-time senior professor at my status, with what I have done, I am the cheapest senior doctor they have at Dalhousie. You need to know that. I am doing this for a reason. What you need to know is, when I look at expenditure I may, in fact, be criticized - sometimes quite rightly - for not spending enough on things because personal earnings are not an incentive for me.

My focus will be - and I will take advice from these folks - I am not saying that that has been overspent or underspent. I am saying the quality has improved but I am saying that I cannot answer you today on whether or not everything that has been done or will be done as it is projected is the way that I think it should be done in relation to the whole set of priorities for the department. The quality, there is no question that it has improved.

[Page 48]

MR. SAMSON: Now back to Project Quest and the business plan, and I realize that you are new on the job and maybe your other staff are more familiar with this whole concern, and we have heard labour concerns with this amalgamation and everything else, but in essence, what was the view of the Department of Health with regard to staff cuts that were being proposed as part of the business plan?

DR. KENNY: Why don't I tell you what they told me when I asked that very question because that was a big question for me. Coming in from the outside, I had a take already that somebody had interfered with a good decision. That was my take. My take was they had to deal with a budget that was escalating. Amalgamation had cost way more than anybody thought and I still don't understand all of why but in trying to be more fiscally responsible, which was again a value that we would all say this is a very important issue for everyone in political life who serves the public.

One of the things you would look for is where are your big costs. Your big costs are in people. You had a number of institutions amalgamating into one. Surely you must have some redundancy. Look, using just first principles of problem solving seemed to make sense to me that you then look at the question of could you reduce the number of persons that you had. Then I hear, well, then they weren't allowed to do that because there was interference. I think political interference happens, right? So my take on it was, oh-oh, not good, look what they did. They stopped something that was good and now we are going to pick up the cost. I believe, actually, that is the perception of most people who read the paper attentively and who are concerned about the province.

When I ask that question directly, I get a different answer. The answer I got from these people, directly on this question is this, and it is what Mr. Lahey said before but I will say it as I understand it. They could have, at the QE II, saved a large amount of money if they had proceeded with some fairly massive cuts. At the same time that those cuts would have had to have been made, they were dealing with a demoralized group across the amalgamation, people still not recognizing how much of an identity as an organization people have. That is why the community hospitals and the regional hospitals feel as they do.

The IWK was the IWK and we have merged with the Grace. It is another organization. That doesn't mean it is not going to be a good one but you don't take years of history and working together. No one estimated the morale consequences of that merger so you have that problem. You then have a negotiation with unions occurring at the same time. It is now my understanding that what happened was the decision was we could move on the value of fiscal accountability and cut lots of money if we do these massive strikes but if we do that, then all of these issues about morale and trust and forging some kind of new identity as the QE II would be sacrificed, irretrievably. I was not there when that judgement was made but if that is the kind of balance we were making, then I think in the short term the judgement that you needed to save some kind of sense of responsibility for these people and morale, needed to be put ahead in that particular time of fiscal accountability.

[Page 49]

Whether or not there could have been modifications, whether or not there was some other way to deal with some of it, I don't know. I also would say to you that even when you make that kind of decision, you then revisit it. It is not a given. All right, we did that now nothing ever changes but I am trusting that that is the interpretation of these people of the way the decision was made and I understand that differently now than I did before but we are then committed, having privileged the issue of the trust, compassion, development of morale, human resource question over fiscal accountability, very rapidly, then, we are obliged to put these back in line better.

MR. SAMSON: Is it safe to say that your concerns over morale of staff, that goes right to the very core of quality and quality of health care which is the number one concern of your department and of this government?

DR. KENNY: Absolutely.

MR. SAMSON: Now, Dr. Kenny, Mr. Fage has again raised the concerns of the Y2K problem. We had Bob Smith in there from the QE II who told us clearly, and without reservation, that the QE II would be prepared for the Year 2000 and would not have any concerns and they were confident that they would meet that target. I think one of the concerns, in fact, one of the pleas that came from the CEO was a request for people to stop fear-mongering which was affecting their patients, which was affecting their staff and was affecting the quality of the health care of Nova Scotians being provided by the QE II due to these fears being raised that they would not be meeting the standard when they have clearly indicated to us and to this House that they would meet that standard. I am just wondering if you could go through for us, through the different levels that your department administers, where do we stand on the Y2K issue, regardless of a report that was done six months ago or four months ago, where do we stand today on this question and where are we going to stand on January 1, 2000?

DR. KENNY: Well, I thought we had done that in general before but if Mr. McKee will do it again. Just let me say something here. Y2K fear-mongering is going to be a preoccupation of the civilized world until the next millennium. We have to put some things in context. So that does mean that for all of us who are dealing with responsible decisions, we have to say wait a minute. Hoarding and proclamations of the end of the world and all of this, that is large around us and careful, responsible, thoughtful, rational people have to be identifying real issues particularly in terms of public safety and care but recognizing that the tendency for all of us to kind of feed into that other thing is bigger than all of us.

If we recognize, even if we are desperately committed to being rational and thoughtful and compassionate as we approach this question, all the time there is going to be provocation from without to put hands up because that is the way a lot of folk are approaching the issue. I actually think clocks are going to turn forward the next day even if I have to use my wind one. Mr. McKee.

[Page 50]

MR. MCKEE: Yes, earlier I had just on an overview as to what the status of Y2K was with respect to the health sector and if I may reference a report that is identified off of the government's website that is called the Year 2000 from the Technology and Science Secretariat and it was posted on January 29th and it is based on December 31, 1998 data.

DR. KENNY: That is less than two months after . . .

MR. MCKEE: Yes. When I referenced that particular report, and obviously there is a whole section on the health care sector, including the department and all the regional boards and the NDOs. What it is identifying is the target date for completion is November 30, 1999. As was identified with respect to the QE II and their reference, it is our sense, and without repeating myself but I think it is important to realize that we have a sense in the department and our confidence is the fact that those critical, non-compliant medical devices are being dealt with and that we do have contingency plans in place. I did reference earlier about the numbers of equipment that would be impacted. As we have seen, there has been quite a drop in the percentage, from 25 per cent down to roughly 4 per cent.

I think it is important to realize that as we start to look at percentages that are identified in the actual strategy plan, in some cases it may not look like we are actually proceeding at a very fast pace and some of that reasoning is the fact that if you look at the steps that we go through when we do the evaluations with respect to our Y2K project, we have to go through an assessment and we have to identify what is the problem, what are the areas that we should actually be addressing. We then go into a planning stage. In other words, is this identifying what is our strategy to actually deal with the problem? Then we go into a critical area which is really our risk assessment where we actually get into testing and identification of equipment and so on. It is our thought that probably by the end of March that we should have those risk assessments done so that we are in a much better position to know how big the issue is and what are some of the areas that we face. Then obviously, we do the follow-ups and audits.

If there is slippage with respect to some of the dates, it is not going to be slippage from our perspective from the point of view of the critical, life-threatening equipment. Those slippages could be in the areas of some of the actual facility areas. It could be related to parking access, things of that nature. What we have attempted to do is identify very clearly those things that are critical, those things that are important. As I mentioned, as we go from the critical equipment, now we are moving in to supply chain and then we will move into the next category and so on and work our way down our priority listing. That is quite consistent, the way in which all the government programs are being administered and in particular with the health sector.

DR. KENNY: Could you reply to the question specifically, Bill, from information systems because the linkage of the health information systems for patients and for caregivers is important. So what do you think that status is? The other is the issue that you alluded to

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before which is the actual ordering of supplies and equipment because one of the fear-mongering things that we have to judge how accurate is this one, are the people who are going to hoard supplies early and therefore not have accessible to people who are ordering in a more normal way. So I think informations, because they relate to patient care, and supplies ordering in a more normal way, so I think informations, because they relate to patient care, and supplies ordering - again, because it is directly related to patient care - if you give a comment, I think that would be helpful.

MR. MCKEE: Yes. One of the things, when we take a look at the way in which we have actually structured our particular project, our spreadsheets, is, we would look at assessment. Then we move, as I mentioned, into the other phases. The deputy minister is quite correct, we have the medical devices. Then we go into the information systems because, obviously, the concern is that you want to be able to maintain the control of the patient within the system and that we do not lose that.

The other thing we are interested in, obviously, is the fact that as we start to look at information systems, is our ability to be able to deal with things provincially. Those are some of the things that I think will probably be coming out of Y2K.

We have had sessions that have been informative sessions, not only for the house sector but we have also opened it up for other areas. Again, those sessions are dealing with vendors, are dealing with a lot of the suppliers to the health sector and attempting to ensure that, as the deputy minister indicated, it may not necessarily be a Y2K problem. It may be an anticipation of a problem that we end up starting to stockpile and actually create a problem that really wasn't one. I think that is a common approach that is happening in many other sectors.

MR. SAMSON: Dr. Kenny, one of the last questions I have, you raised a concern about vacancies in a number of key areas that you have raised. You now oversee a $1.4 billion corporation, let's say. I am just curious, in regard to salaries for some of these positions - including your own - which I will be the first to say, I don't think it is extravagant, to say the least.

Second of all, how many private corporations are you aware of with a $1.4 billion salary, that pay their CEO $120,000 and is salaries one of the stumbling blocks in you being able to actually find qualified candidates for these necessary positions?

DR. KENNY: I kind of indirectly referred to this before but I think the issue of high-quality people with expertise and the issue of kind of Civil Service rates, I have seen this in-depth in my activity at the federal level at the Science Advisory Board. It is not just Nova Scotians. It has to do with the nature of Civil Service, payments, ranks and the priorities. This is a very hierarchial structure. As most of you know, in my personal life, I am religious. Let

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me tell you, the Church is an egalitarian society compared to the Civil Service, from what I can tell. (Laughter)

I think that it is a serious issue in that if we really want to take all of the good people that we have and have them feel comfortable that they are doing their job well. We also have to have the spots that are vacant filled and filled with quality people. In fact, when you do have a question - and I don't care where the question comes from, if it is a legitimate question that comes to us - that we have an answer that you can rely on, that I have an answer that I can rely on, that I know, in fact, there is not this gap of knowledge.

Your question really points to the thing that is, right now, not even a week in this position, of most concern to me; namely, can we, at the level of expertise that we need to lead this particular area of government, get people. I think, generally, within the Civil Service, we can do reasonably well but not lavish by any means.

For some key positions that require higher level expertise, I think we are going to have to find new ways to do this but without it being some kind of a way - because fairness really matters to me so I don't want it to be some kind of a way that people can get - it sounds terrible to use the word, deals, but I think, in the public, when you critique things, that is the language you might use; it has to be clear as to why certain kinds of expertise might, in fact, require special consideration.

The issue for me is, I think, the one that even came in your questions, it is transparency. If you know and can have a good, clear and truthful explanation for why an exception might be made, as long as transparency is there, I think all reasonable persons will respect it. I think this is an issue that is of concern to me that we are addressing. As I said, within this week I am having a major meeting about our key vacancies and I think that is one that will require really immediate and some creative attention.

MR. CHAIRMAN: Mr. Fage, go ahead.

MR. FAGE: Just a comment from myself. I admire the challenges that you have prepared yourself to face and a bit of my shaking of the head in regard to your response on why $13.3 million was given to stop a business plan was not that those reasons may not have been plausible. You were not there. I am sure everybody who was there can come up with the reasons. The net problem is for all of us, though, legislators, citizens of Nova Scotia, administrators of the Department of Health is, in my rough bookkeeping, it is $200 million debt between Cape Breton, between the QE II. All those decisions that now you, as deputy, as chief administrative officer for the Department of Health, have to find that besides the operating budget, that is the danger of escalation and points of time. I mean, obviously, if that was the strategy to move us ahead to the budget and we received more health care dollars and hopefully we can pick that up, so be it, but the important thing is we are in a situation we

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can't put off yesterday until tomorrow for very long and that is quite obviously your job to manage that. It was a pleasure being here today.

MR. CHAIRMAN: It sounds as if we have finished our round of questioning for this morning. Dr. Kenny, I hope you didn't think there was even any remote implication by any of the questioning that we could have acquired, in Nova Scotia, a better deputy minister if only we had been prepared to pay more. I don't think anyone was meaning to say that and we are, I think, all very happy to have to take the position and we wish you well in a very difficult task. Thank you and your team for coming to meet with us this morning.

Before we stand adjourned, let me just announce that, of course, we meet two weeks from today to review the Auditor General's Report. We will start at 8:30 a.m. and go until 11:00 a.m. and the review will be of the Auditor General's Report and it will be in this Chamber.

With that said, we do stand adjourned. Thank you all very much.

[The committee adjourned at 11:58 a.m.]