HANSARD
Printed and Published by Nova Scotia Hansard Reporting Services
Ms. Maureen MacDonald (Chair)
Mr.Chuck Porter (Vice-Chairman)
Mr. Alfred MacLeod
Mr. Keith Bain
Mr. Graham Steele
Mr. David Wilson (Sackville-Cobequid)
Mr. Keith Colwell
Mr. Stephen McNeil
Ms. Diana Whalen
[Mr. Leo Glavine replaced Mr. Stephen McNeil]
WITNESSES
Office of the Auditor General
Mr. Jacques Lapointe
Auditor General
Ms. Elaine Morash
Acting Deputy Auditor General
Ms. Ann McDonald
Assistant Auditor General
Ms. Dianne Chiasson
Audit Manager
Mr. Scott Messervey
Audit Manager
In Attendance:
Ms. Rhonda Neatt
Legislative Committee Clerk
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HALIFAX, WEDNESDAY, JUNE 13, 2007
STANDING COMMITTEE ON PUBLIC ACCOUNTS
9:00 A.M.
CHAIR
Ms. Maureen MacDonald
VICE-CHAIRMAN
Mr. Chuck Porter
MADAM CHAIR: Good morning. I would like to call the committee to order. Today we have the Auditor General and his staff to talk to us about the latest Auditor General's Report, which was released last week. We will begin in the usual manner of having introductions by the members, and there will be an opportunity for the Auditor General, if he wishes, to make some brief opening comments. We will follow that with a round of questions.
So we'll start with introductions.
[The committee members and witnesses introduced themselves.]
MADAM CHAIR: Good morning and welcome.
Mr. Lapointe, the floor is yours.
MR. JACQUES LAPOINTE: Thank you, Madam Chair, and thank you for this opportunity to discuss our June report with you. I have with me some of the key staff involved in the preparation of this report. You know Elaine Morash on my left - in, I'm sorry to say, her last appearance before the committee, at least in this capacity; on my right is Ann McDonald, Assistant Auditor General for financial audits; Dianne Chiasson, Audit Manager for the Regional Housing Authority audit; and Scott Messervey, Audit Manager for the Maintenance Enforcement Program audit. I'm sorry to say that Alan Horgan had to give his regrets today.
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This is my first report for 2007. In addition, I previously issued my strategic plan, as you know, and issued my opinion on the revenue estimates in the March budget. My next opinion on the government's consolidated financial statements will likely be issued in August.
The report contains 58 recommendations for improvements in the areas audited. It also includes responses received from the audited organizations. The responses, for the most part, indicate acceptance of the recommendations and an intention to take action on them. The report deals with audit work completed by my office in the first half of this year. Its seven chapters include audits completed at the Department of Health and two district health authorities, an outside service contractor, that's EMC, and the Departments of Justice, Community Services, and Finance.
The report reflects the high quality of work done my staff, and I want to acknowledge their dedication, hard work and professionalism. I wish to recognize, as well, the co-operation we received from staff in departments and agencies during the course of our audits.
In addition to the specific findings in each audit area, the report also identifies three common themes that emerged during these particular audits: firstly, internal control deficiencies in financial and computer systems can open the door to financial losses and programs through errors or unauthorized expenditures; unreliable information databases, such as wait lists, can reduce the quality of operational decisions based on that information; and inadequate performance expectations and reporting in programs can make it difficult for program management to assess the effectiveness of the programs they are responsible for, or to monitor the effective delivery of the programs by outside agents.
Madam Chair, I, and my staff, would be pleased to answer your questions.
MADAM CHAIR: Thank you very much. The opening round will begin with the NDP caucus. I will take the opportunity to ask the first questions in the opening round - 20 minutes per caucus, the usual, thank you.
First of all I'd like to say that in my brief time on this committee I've seen many reports from the Auditor General's Office and they've all been handled in a very professional way, but I want to say that this particular report is excellent. It gives us a very important insight into programs that are of real substantive importance to the people of Nova Scotia. I can't think of anything that concerns people more in health care than diagnostics equipment and services, long-term care, and emergency health services. In the other areas, maintenance enforcement is an issue that has such a profound impact on so many families in the province, and housing as well. So I want to start by congratulating the Auditor General and his staff on this report.
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In beginning, my first questions will focus on the section in Health around diagnostic equipment. I must say that I was a little taken aback when I read that the Department of Health doesn't have a formal capital planning process in place, and I understand that the DHAs do have a planning process for their capital equipment, but they have no ability to fund that process - they can't meet their needs because they have inadequate resources.
I want to ask you, from an accounting perspective, what challenges can the DHAs expect without consistent long-term funding from the province for their capital equipment needs? I want to note that we just had an infusion of federal money that has resulted, I think, in MRIs throughout the region. Was that done with any thought to the appropriateness of the location of those MRIs? Was the lack of a plan, did it have any impact on that? So this is the question I have.
MR. LAPOINTE: Thank you, Madam Chair. I think I would ask Elaine to answer that question.
MADAM CHAIR: Certainly.
MS. ELAINE MORASH: Maybe I'll start with the second part of the question first, which had to do with the MRIs. The Department of Health contracted a consultant from New Brunswick, a radiologist, to come in and do a needs analysis for the MRIs. Of the six MRIs, five were recommended as short-term priorities by that needs analysis. The sixth one was not, it was viewed as a longer-term priority, but at the end of the day they decided to acquire six rather than five.
The shortcoming with that process was that the need for MRIs wasn't compared to the needs for other kinds of equipment. So it may be that there are other things, perhaps some specialized scopes, some surgical equipment - I mean there could be any number of other things that are also needs that were not brought together with the need for MRIs, perhaps a greater need for ultrasound machines or a greater need for X-ray machines. So that is the shortcoming with respect to the planning process on a provincial basis, that there is nothing that takes all of the equipment needs together and then prioritizes which are the ones that have the greatest need.
The first part of your question actually asked about health authorities and what impact this last funding has on them. What we saw, particularly at Capital Health, is that the lack of funding leads to old equipment, and that this old equipment doesn't have the same image quality as the newer equipment. There are still CT scanners around, for example, that take just one-slice images, whereas the newest technology now takes 64 slices, which gives a much more detailed image. With MRIs, what it means is that some of the MRIs that were being used could only be used to scan certain body sites, and because of that the booking process became very complicated, because they were always juggling patients and pieces of equipment to see where they could get the best image for the best patient. So, it is inefficiencies that are caused from that process.
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The other thing that we hear anecdotally is that the lack of new equipment, or failure to have the newest equipment, has an impact on the ability to attract physicians. When you're recruiting physicians, particularly surgeons and people involved with diagnostic imaging want to make sure - they've trained on the newest equipment and they want to see the newest equipment in use. So that's another impact.
MADAM CHAIR: Thank you. There doesn't appear to be a capital reserve for aging diagnostic equipment. Is it fiscally prudent to leave more than $130 million in capital equipment funds unfunded?
MS. MORASH: That's a decision that is really policy at the end of the day in terms of whether it is more important to fund operating, whether it's more important to fund capital, how much resources the province has available, and how those get allocated. What we can say is the district health authorities have gone through a thorough process to evaluate their needs - and they have significant equipment needs - we've looked at the process and we think that the list isn't inflated, that they have a process, and their process has come up with a total of $82 million for the Capital District Health Authority and $57 million for Cape Breton. And that's only sort of the tip of the iceberg because there are other health authorities, and the IWK, that also would have equipment needs that aren't met.
MADAM CHAIR: Based on the audit in the two DHAs, can you extrapolate at all what it might mean across the whole province in terms of the cost of the equipment deficit?
MS. MORASH: No, we haven't done any work on the other health authorities.
MADAM CHAIR: Okay, thank you. I'd like to turn my attention now to the questions that were raised around the Maintenance Enforcement Program. We had people from the Department of Justice here in April of last year to talk to us about their program. At that time they told us that probably 85 per cent of the orders were solely for maintenance for children, and even probably 94 per cent of the orders had the needs of children as a fundamental piece of what is being ordered in terms of support. It, again, is very startling to see that $106 million of arrears in outstanding child support payments or maintenance payments, and the kind of findings from your audit on this. I, and my colleagues, have never seen the kinds of concerns that have been raised in terms of the weak controls and the inadequate information that we have, and the lack of the exercising of powers that actually exist in that program.
[9:15 a.m.]
One of the things that I want to ask you about, because it sort of jumped out at me, is this idea that when the orders come from the court to the program, the information as basic as a social insurance number and any information around the employment of the payee is not carried forward. Can you confirm that that is the case and can you tell us why that might be
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the case, given that this program is in the Department of Justice and there is that kind of connection between this program and the courts?
MR. LAPOINTE: Yes, we can confirm that, Madam Chair.
I think I'd like to ask Scott to answer that question.
MADAM CHAIR: Certainly.
MR. SCOTT MESSERVEY: During my work in the area, we discussed with staff at maintenance enforcement, basically asked them the question, what sort of information are you obtaining from the Department of Justice, Court Services? We noted a number of deficiencies, and when we tied that into the rest of our work in testing in why certain enforcement powers weren't being made, the response we got was well, we're missing certain information. We asked the question, why can't you get that from the courts? They said we probably could, but we haven't as of yet. So that is the essence of our recommendation, to basically take steps to start to work with the courts to get the information to improve efficiencies in the enforcement actions.
MADAM CHAIR: Thank you. Your audit indicated that almost 12,000 of the arrears cases in fact had a lack of employment information which, to me, would be a fairly obvious piece of information that would be required in order to enforce orders. You need to know where the person works, how you might go about garnisheeing wages if the payee is unprepared to pay. I note in your report you found that there is "significant discretion in the use of enforcement actions and that half the files were in arrears, but there was no evidence of enforcement efforts within the past year." Was this figure surprising to you?
MR. MESSERVEY: Yes, it was very surprising. When we started the planning for the audit, I reviewed the legislation and a lot of the legislation talks about what powers they can use, and then we trace those into the actual policies. One of the more significant items, we believe, is the fact that nothing is a must-do, it is left to the discretion of the individual case worker. So without specific direction in certain areas, you could have inconsistencies within the province due primarily to differences and circumstances per case, which we will acknowledge is a reality. However there is nothing in the policy or legislation that says you will do this or you will do that, it's very discretionary - and with discretionary comes the risk of inconsistencies, and it's harder to audit for compliance as well. That ties into one of the other findings, where we had found there was not a lot of information to support key decisions within each case. For example, if an enforcement action wasn't taken, we couldn't tell why it wasn't taken. So there are certainly some challenges.
MADAM CHAIR: Do you think the size of the caseloads that the workers in the maintenance enforcement unit are carrying may contribute to this as well? I understand, based on what we were told last year, that the individual workers carry more than 700 cases - close to 800, actually.
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MR. MESSERVEY: Yes, we did note those sorts of comments during our audit, however we did not do any work around actual workload and the ability of staff members to handle their workloads.
MADAM CHAIR: Thank you. Can you quantify what a reasonable target for cases in arrears in a program such as this might be?
MR. MESSERVEY: I could not quantify that, we did not do any work in the areas such as that.
MADAM CHAIR: One of the things that the audit finds is the inadequate controls around the trust fund and, in fact, we've seen the alleged fraud that has occurred in this department, and I think the figure lost to the department is roughly $268,000, and most of that I think is from the trust fund, although not solely from the trust fund. I note that in the audit you talk about how there is no reporting, the Department of Justice doesn't report on the status of the trust fund annually, or anything like this. I'm wondering, could you tell us what could go so wrong that one employee could take that much money in this program and not be identified until it is at that level? That is a substantial amount of money.
MR. MESSERVEY: Yes, it is. Our conclusion on this area was a breakdown in internal controls. The internal control framework was deficient in a number of areas - adequate review and approval, segregation of duties were some of the key primary areas. The reason this was able to happen was the fact that one person could initiate a transaction from start to finish and then this person was also responsible for reconciliation processes, which hadn't been completed in almost two years. So there was no policy requiring reconciliation, and there was no policy requiring independent review of such procedures.
MADAM CHAIR: What reasonable assurance do we have that this won't occur in the future?
MR. MESSERVEY: As of the date of our report, there still are a number of significant weaknesses in the internal control structure, and as far as the future goes I really couldn't comment on that.
MADAM CHAIR: So, I guess it is hard to say. I want to go back to the diagnostic area for one second, because I realize there is a question I wanted to ask you around the points you make around the private MRI. There is a private MRI now here in metro, and your report indicates that the ownership of the MRI changed hands relatively recently, within the last year I guess, and that two radiologists who are on the staff of the Capital District Health Authority are now the owners. Your report indicates that you concluded that there was a low risk that the CDHA radiologists were compensated by public funds for work done at the private clinic, however there is a risk that the radiologists hired by the private clinic to read an exam may not be the best qualified in this specific situation, which could impact the patient's diagnosis.
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I think that is a fairly concerning situation. I would like, first of all, if you would elaborate on both of those points: the first point, the low risk, why do you believe that there is low risk; and secondly, why you say there is a risk and what precisely are the features of that risk?
MS. MORASH: With respect to the low risk that the radiologists are being paid by the public system for work that is essentially private work, the reason is because there is a province-wide digital imaging system called PACS, which is in place in all of the district health authorities, and all of the X-rays and diagnostic imaging exams that are taken in public facilities are put on that system, and the radiologists read them from that system and then the billing is also hooked into that as well. At the present time, the private MRI clinic is not hooked into the PACS system, so that means that the radiologists physically have to leave Capital Health and go to Clayton Park, to the private clinic, to read any exams that are done there. So, because of that, they never get entered into Capital District's records, and therefore there would be no potential that the billing would go to the public system. All of the radiologists use information from Capital Health's systems to bill MSI for the work that they do. So this work would never get into Capital Health's records, and therefore would never go into MSI as billings on a fee-for-service basis. So that is why we say there's low risk with respect to that.
The second point that you raise about whether the best-qualified radiologists are reading the exams at the private clinic, this was something that was brought to our attention by a radiologist at Capital Health and he was indicating that this was a concern that he had about how the private clinic functions. What he was saying was that radiologists specialize in various body sites, in various conditions, et cetera, and that the private clinic has made arrangements with certain radiologists to read exams that are done at that clinic. So it's possible that the radiologist that they have made arrangements with would not be the one that is the most specialized in that area, the best one to read that exam.
His concern was that it gets very complicated when, let's say that the patient's condition worsens or is something that requires treatment, then you've got that patient coming across to Capital Health for treatment and you've got one radiologist reading a subsequent exam and coming up with a different diagnosis than the first person, so you get this sort of professional conflict between them. He saw this as a fairly complex clinical issue that was related to this potential for conflict of interest and making sure that the patient is provided with the best service.
MADAM CHAIR: Thank you. I think the time has expired.
I recognize Ms. Whalen for the Liberal caucus.
MS. DIANA WHALEN: Thank you very much, and I welcome you this morning. I'm happy to have a chance to continue our discussion from last week where we began with the latest Auditor General Report. I certainly do agree with our chair in saying that this one was
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very frank and well written - it spelled out a lot of the areas that were of concern to you, and should be of concern to us here in the Legislature. So there are a lot of questions.
I'd like to try and touch on a number of the areas that you had audited, and I thought perhaps we'd start with the Emergency Health Services. In the discussion around the turnaround times, it was said in the report that the delays in HRM and the Capital Health District have increased by, I believe the figure is 254 per cent in three years since 2004, that in 2004, 85 per cent of the cases were going through and the target, which is a 20-minute turnaround, 90 per cent of the time. So it's a great concern to me that in just three years it has changed that much, and the impact, it would appear, is that our ambulances are waiting much longer at the emergency rooms and not available to be out in the community - and I'm sure there's an impact on the patients as well, having to wait for that transfer into the system.
I'm wondering - one of the areas you touched on was that this has the potential or perhaps, in fact, has led to ambulances in the rural areas having to be put into use in the Capital District - are there specific cases that you can point to where that had occurred?
MR. LAPOINTE: I'll ask Elaine to speak to that one.
MS. MORASH: When we started examining this area - and it was an area that was brought to our attention by program management - we expected that there would have been a negative impact on response times for ambulances, but actually we didn't find that. What we found was that there was a lot of juggling going on, that ambulances were being redeployed from rural areas to cover off gaps in the system because metro ambulances were tied up at the emergency departments. We actually didn't notice any instances where ambulances had been delayed or where there was a negative impact on response times. So the potential is there, but in terms of being able to identify specific instances, no.
MS. WHALEN: So you would say that there are no instances in the rural areas where the ambulances have been redeployed to the city? My concern would be that you've moved the ambulances out of, say the Windsor or Hants area and therefore they're not able to respond, and you weren't auditing those areas, were you - or did your audit cover all areas?
MS. MORASH: There were certainly instances where ambulances had been taken from the rural areas and moved into the city, but then there were ambulances taken from other rural areas and moved closer so that they could sort of cover two districts, or whatever. I guess maybe because of luck - I mean it's hard to predict when an ambulance is actually going to be required for an emergency - there were no negative impacts on actual response times, like when there was an emergency the ambulances were able to cover off in the response time that they were required to meet.
MS. WHALEN: I think what you're telling me is that they did some good scrambling, and management kind of tried to make allowances for this, but in fact there is a risk that by
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having so many ambulances taking so long at our emergency rooms in Dartmouth and Halifax, we have created a risk situation.
[9:30 a.m.]
MS. MORASH: That's correct. So what's happened is that there have been, I believe, three ambulances, additional ambulances, deployed to metro in the Spring this year on a trial basis, or for a period of time until this problem gets better. So they have very sophisticated techniques for deploying ambulances, extensive computer models keeping track of where the ambulances are, so you're exactly right, they've been able to cover it off so that there hasn't been an instance - but there could well we be, the risk is there for sure.
MS. WHALEN: I appreciate that. The other issue that was a bit startling in the Emergency Health Services was not the performance bonus, but the retention bonus that was offered to, I believe it is six members of their senior management when the organization was undergoing a change in their CEO. I'm wondering, could you just tell us how that was accounted for? I understand that it was not clearly accounted for - maybe you could just confirm that.
MS. MORASH: Yes, I could confirm that. From our perspective, we think that it makes sense for all components of salary, management salaries, to be recorded together. What happened on the financial statements, was that the regular management salaries were treated as overhead on the financial statements. They have two big categories of expenses, one is overhead and the other one is ambulance operations, so the regular management salaries were treated as overhead, but the retention bonuses were put into ambulance operations under a specific line item called other operating expenses.
What happened was that the two components of management salary were treated very differently on the financial statements, so anyone who was doing any analysis on the financial statements, comparisons of one year's expenses to the other, for example, would not have noticed that there was an increase in management salaries of that magnitude.
MS. WHALEN: And it is true that the Department of Health was unaware of that practice that was put into play to actually offer a retention bonus?
MS. MORASH: They had been notified that there would be retention bonuses paid. They assumed that they would be paid entirely from EMC funds, and they were not aware of the amounts, and I think it is fair to say that they were quite surprised when they became aware of the amounts.
MS. WHALEN: I note that the management now has said they will change the way they are accounting for that, so they're going to now absorb it from their profits - I guess would be the word for their operations - so it will no longer come directly from any of the
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Department of Health funds that would otherwise have been returned to the Department of Health.
MS. MORASH: That's correct. In the initial accounting, 40 per cent of the bonuses were charged to the Department of Health, 60 per cent was absorbed by EMC, and the 40 per cent has been, or will be, repaid. I'm not sure exactly what the . . .
MS. WHALEN: Can you tell us the total amount of those bonuses that urged people to stay on for 20 months in their current jobs?
MS. MORASH: The total amount was approximately $180,000.
MS. WHALEN: Is there any precedent within a public service organization to do that?
MS. MORASH: Not that I'm aware.
MS. WHALEN: I think it is fairly unprecedented. Maybe in certain commercial environments it is done, but it seemed to me to be an unnecessary expense for the organization.
On long-term care, there was an issue of considerable concern to me as a MLA, and I know that others share that concern, and that is that you had sampled fifteen cases of the admissions from the very huge waiting list - which I gather is over 1,700 people waiting on our list now for a placement in long-term care - and of your sample of fifteen people who were placed, you found two who were placed out of sequence. We, as MLAs, have been told, and I know the public has been told and reassured and told to be trusting and confident that the system is purely based on when you are assessed and when your name enters that list of people in the queue, essentially, so we see two people accepted out of a small sample of fifteen who were not at the top of the list. I'm wondering if you can comment on that, and your sense of how widespread this would be - is this something that we should be auditing further to see, because it has completely undermined my confidence in the system?
MS. MORASH: I guess first of all I'd like to say that the sample was not representative, so we can't extrapolate those results. So when we say we found four instances where there were issues out of fifteen, we can't say that that proportion runs throughout the people who were placed during that period of time. We don't know the answer to that.
In these cases, we asked for explanations, and there were no explanations that could be provided to us after the fact. There are a lot of people who are placed in the run of a year. The workers see a lot of files, they deal with a lot of individual cases and it is very difficult for them after the fact to offer a reasonable explanation for decisions that were made during the year.
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Our approach has been that in the future what we would like to see happen is that if there are exceptions from policy, if the person is not the number- one person on the wait list at that priority level, and there may be a medical reason why they have to be placed sooner than others or something may have happened to their condition or to their family situation, if that is the case we believe that the rationale should be explicitly documented and approved by management, and we think that is workable for the future. I believe that the Department of Health agrees with that.
With respect to other cases, I can't comment on how rampant this is in the system. All we can do is say we looked at fifteen cases and there were issues with four of them.
MS. WHALEN: Certainly, though, two cases, and in fact four had issues - two were to do with the queue and the place on the list, in fact when they should be placed - is that not a major red flag for you, as an auditor, when you go in, and perhaps a suggestion that we should look at a wider sample to regain trust in this process?
MS. MORASH: That's always a decision that we struggle with in terms of when to leave and when to extend the sample. You're right that if we wanted more assurance on this that we would have to go and extend the sample and look at more cases.
It's a very time-consuming process because the wait lists have to be recreated. What we did was get access to a huge electronic file that had all of the data for all of the clients who had been looked at for a year and we had to do an analysis to recreate the wait lists for individual facilities. It's not like you can just pick a sample and just go through them very quickly. It's a matter of going through the wait list, recreating it and then looking at the files of the individuals who were at the top of the wait list at that point in time.
It's always something that we could consider, I guess, in terms of our desire to go back in and to get more assurance on this area. The Department of Health appears to have taken the issue and the recommendations quite seriously, so I hope that they will act on them.
MS. WHALEN: Should they introduce what you suggest and actually have management approval, at least there would be an audit trail for you to see what was done, what the thought process was, so that might answer our question.
I'm wondering if you see any evidence that there could be political interference on that list of placement, you know, as people are placed in nursing homes?
MS. MORASH: It's impossible for us to tell. We were looking at client files where all you have is information about the client, not about how the client is politically connected or who their family is . . .
MS. WHALEN: . . . or what riding they come from . . .
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MS. MORASH: . . . or where any pressure is coming from, so we had no evidence of that at all, but it's not documented in the files.
MS. WHALEN: I think that is one of the concerns, so as soon as there's an ability to change and alter that list, it is open to abuse and no longer considered fair by the people who are relying on it, and that's my big concern.
I was very surprised as well on the licensing and funding of the nursing homes, that we have a program that's costing us $286 million a year and we're not doing the kind of scrutiny on the individual homes that we do, for example, for daycares. One of the specific criteria would be licensing the staffing component in your nursing homes.
I know from daycares in my area that there's a very careful, rigid adherence to the need for a certain number of qualified early childhood educators to the number of children. The same would apply in our standards for nursing homes, the number of nurses and so on that you need, yet the inspectors are not looking at that as one of the factors that they would even tick off on a checklist of requirements. Can you comment on that aspect? That's a very key part of quality of the service.
MS. MORASH: Yes, the situation is exactly as you describe it. When homes are funded, they are funded for certain numbers of RNs, for example, and LPNs. There is no one who goes in to check after the fact to make sure that the staffing levels that are in place are actually the ones that were funded.
MS. WHALEN: Have they agreed to change that in future? Is that one of your recommendations that will be adopted?
MS. MORASH: What we have indicated to them is that we think there's a need to formalize the inspection process, to use checklists. We have indicated that staffing should be one of the items that is on the checklist, so we're optimistic that they will be able to move forward with that recommendation.
MS. WHALEN: Another issue around the funding for the individual homes seems to be that there is no formula, no standard that is set in place to determine how much one home would get as opposed to another nursing home. To me that indicates that we have a wide range of disparity in terms of how each of those individual, either profit or non-profit, organizations are going to be reimbursed. Can you give some sense of that range that would be out there? Is it quite an enormous range between different homes?
MS. MORASH: These are historical differences, I guess, that have arisen over the years. You have old homes, you have new homes, some of them have different requirements because of age and that kind of thing. So the funding has also been impacted due to lack of fiscal resources and the ability - I guess there's always the feeling that if you move into a funding-formula situation that all will rise to the level of the home that's the most funded.
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I understand that's been part of the reluctance to bring in a funding formula, that the money may not be there to fund all of them to the level at which perhaps they should be funded.
There's been some progress made during the years to try to eliminate some of those discrepancies, so I guess the short answer is that the discrepancies are not as big as they once were, but I can't quantify in terms of what exactly those discrepancies would be at this point in time.
MS. WHALEN: So, in terms of how big a gap there might be between them?
MS. MORASH: That's correct.
MS. WHALEN: Is there any evidence that the operators of the nursing homes have raised this flag as a question of inequity in the system?
MS. MORASH: I haven't seen any of that; I'm not aware of any of it but there may well be, I just don't have the answer to your question.
MS. WHALEN: It didn't appear during any of your audits - no complaints?
MS. MORASH: That's correct, but we didn't do any work at the homes either. We had no contact with the homes themselves.
MS. WHALEN: On the maintenance enforcement, if I could go there - I have a few minutes left - the department or that Maintenance Enforcement Program seems to have only indicated that they have one measure of success in terms of what they're tracking and that was their collections, the percentage of collections. If I'm not mistaken, it was around 78 per cent - I'm going from memory from last week. In the report you say clearly that that is not reliable. I forget your exact words but you stated very clearly that you wouldn't really believe that necessarily, it doesn't seem to be substantiated. Can you comment on that and comment on the kind of measures that they should have in place?
MR. LAPOINTE: I'll ask Scott to answer that question.
MR. MESSERVEY: What we found during the audit was a collection rate being provided to us which indicated 78 per cent. That number included both pay-to and flow-through. Essentially what the flow-through is, basically they take the postdated cheques and send them right in to the actual recipient. What we found were problems with the data integrity. We noted cases where the arrears, for example, were continuing to accrue, even though the case was no longer being enforced by maintenance enforcement, so that adds to the number that is being used to calculate that 78 per cent.
So again, without reliable data the statistic that you're pulling out as a collection rate really doesn't tell you very much. As far as some of the statistics that could be used, we made
[Page 14]
reference to the report from Statistics Canada that indicated that a number of measures of performance that we felt could be appropriate for the Maintenance Enforcement Program in Nova Scotia.
MS. WHALEN: We seem to be unable to determine the percentage of their cases that are actually in arrears. We were given a figure of around 19,500 cases are active, but it was listed as something like 11,000 that didn't have enough adequate information. It would indicate that more than 50 per cent of them are not up to date. Have you got any figure yourself, as the auditor who was most involved?
[9:45 a.m.]
MR. MESSERVEY: Well we did some statistical analysis using computer-assisted
audit techniques and we found statistics that were comparable around the 78 per cent - employment records, for example, that did not have the employment information confirmed. So depending on what area you did analysis on, you could get in the ballpark of the information they were presenting. However, there were obviously differences and we did not pursue the analysis of the data any further than we did simply because of our concerns over the integrity of the data - we felt it wouldn't add value.
MS. WHALEN: So even trying to manipulate the data they had you felt would not be reliable, just because what they've recorded is not reliable.
MR. MESSERVEY: Exactly.
MS. WHALEN: I wonder if I could ask Mr. Lapointe how this particular audit of the Maintenance Enforcement Program stacks up against other audits you've done in terms of the large number of deficiencies that were pointed out - it seems to be, and I think the word was used "a real mess".
MR. LAPOINTE: What I've noticed in this particular one is that there are a lot of recommendations we're making, there are significant weaknesses in this program, so a very large part of the program needs to be examined and needs to have work done to it in order to function effectively. It's not a particular piece of the program here or there, I would say that the entire program needs to be looked at in depth.
MS. WHALEN: And certainly it needs to be properly resourced. It doesn't seem to be resourced correctly in terms of staffing and ability to handle this job.
MR. LAPOINTE: We particularly made the point that the leadership of the program seemed to be under-resourced, that it could use some full-time direction and greater expertise to make sure that it is functioning properly.
[Page 15]
MS. WHALEN: Certainly, from cases in my office, there have been instances where people are not being served, so I think it is clear there are thousands of families not being served.
MADAM CHAIR: Thank you, order. The time has expired.
Mr. Porter from the PC caucus. You have 20 minutes.
MR. CHUCK PORTER: Thank you, Madam Chair, and again thanks to Mr. Lapointe and all of your staff for a good report.
A few questions in a variety of different areas this morning. I kind of want to pick up where Ms. Whalen just left off, a little bit with the Maintenance Enforcement Program. I guess even saying if the 78 per cent is somewhat accurate, it still shows there is a deficiency, no question.
How is the collection process - I realize the families go to court, the judge makes his order and everything is put in place, but when there's a default is there something in place? Is the government collection agency out there trying to get these? How is this collection agency trying to get this money for these needy families different than, say, someone who has defaulted on a car loan? It goes to a collection agency, they call you up. I know they hound you steadily, from what I've been told, calling you to do this and do that. Just to follow up on that, Mr. Lapointe, are there other options? If I'm - Heaven forbid - the father who is out there, and I'll use me, in fairness, just as an example of a person who has lost my job and I can't pay, and I'm not defending, I want that to be clear, but are there other options out there? The judge set it at $300 a month or something, or whatever the order was, are there other arrangements that can be made so that people can pay, or are those people offered that, or are they just, you know when you're audited, they're just sort of thank you very much, you either can pay this or you can't do any - and I know that's a long question.
MR. LAPOINTE: Thank you, Mr. Porter. Again I think Scott can best speak to that.
MR. MESSERVEY: In response to your first question, the powers of the Maintenance Enforcement Program are significantly stronger than most collection agencies out there. Under the legislation they are given powers to collect pension funds, seize assets, et cetera. So what we found was a significant ability to take very powerful enforcement actions.
With regard to your second question, if an individual is unable to meet his obligations under the court order it is that individual's responsibility to go back to the court to have the court alter the payment amount, or they can also work with the Maintenance Enforcement Program to try to pay what they can. But, ultimately, the amount that is owed under the court order is the responsibility of the Maintenance Enforcement Program to collect.
[Page 16]
MR. PORTER: Okay, so I guess having said that, and I was kind of assuming your answer might be close, about the seizing of assets - in your audit at all was there any idea of how often that actually happens?
MR. MESSERVEY: The seizing of assets?
MR. PORTER: Yes, do we go out there, every single case where there's been a default of maintenance payment, and do we take somebody's car or their home or whatever their assets may be - is the data there to show that?
MR. MESSERVEY: In our testing, in our analysis of the data, we found the enforcement powers of the Maintenance Enforcement Program did not appear to be used as often as they possibly could have been. However, due to a lack of documentation in the files, we were unable to tell whether or not that was an appropriate decision and an appropriate enforcement action. So key decisions weren't documented.
MR. PORTER: So no way of really telling whether it was appropriate to do or not.
MR. MESSERVEY: Exactly.
MR. PORTER: Okay. I guess I know this is a very significant issue, this is a big issue, the numbers are very high, no question - surprising, actually, when I read it, I mean, you always hear about these things and read about these cases, but I wasn't aware, until I read your report, that the numbers were quite that high, and that's a very significant figure.
I'll stay on this topic for a second. Do all the other provinces - and I'm not sure, at least in this country, is there some consistency with how this maintenance program works across the country? Do all other provinces, some other provinces, work similar to Nova Scotia?
MR. MESSERVEY: We did not specifically analyze and do a comparison to other jurisdictions, but during our brief research and our review of other reports, there appears to be a fair amount of consistency in what happens across the jurisdictions.
MR. PORTER: In a program with such deficiencies, and a recommendation obviously coming from the Auditor General's Office, I would think that we would probably look fairly close at what other provinces do, or how the country, itself, whatever jurisdiction, especially if there's one that may be successful. When making a recommendation, I know you talk a lot about controls and so on, I would think it would be an area where we might want to spend an awful lot of time in the future before making a recommendation. The recommendation is fine, but there may be more that could be added to the recommendation to help us, I think, overcome some of those issues.
[Page 17]
MR. MESSERVEY: Within our report, we did reference the Statistics Canada report, which does do a comparative to other jurisdictions on a number of areas.
MR. PORTER: The MRIs, I have a couple of quick questions on that, too. You stated, I think, Ms. Morash, that someone from New Brunswick did your needs analysis? The qualifications of that person, was this a radiologist, a medical person?
MS. MORASH: It was Dr. Michael Barry, who works at Saint John Regional Hospital. I believe he's the head of radiology there, and he did it for the Department of Health., Specifically what he was asked to do was to look at the rural areas in Nova Scotia and decide where the MRIs should be placed - how many, what was the need in the rural areas, and where the machines should be placed. So that was done prior to going out to the request for proposals process for the MRIs.
MR. PORTER: Have there been any new machines put in Nova Scotia?
MS. MORASH: Yes, there were six that were decided on by this committee, and there's been one opened in Yarmouth, one in New Glasgow, and there are two at Capital Health that I think are almost ready, and then there are another couple.
MR. PORTER: Thank you. I guess I just want to make sure that I word this correctly, not to take anything away from the doctor who did the analysis - but would the analysis appear skewed at all by anyone, having another radiologist coming in and saying I think you should have a machine that I could work with, you know what I mean, I'm in this field. I just wonder, I want to use the word "fairness", if we are comfortable that with another medical person coming in who uses these machines, who sees the benefits of these machines - and I don't know whether there is somebody else who could have done that or not, or a second opinion, but you have a radiologist coming in to say you should have, because they're the people who promote these things, in all honesty they're the people who sell and promote, et cetera, and I'm just wondering, are you comfortable with the data that he has provided, and that the needs analysis done is accurate?
MS. MORASH: Our cursory review indicated that it had credibility, it was a good analysis. He's an expert in the field, and is regarded as an expert. The one shortcoming that we saw was the one that we discussed earlier, which is when the decision is made to go ahead with MRIs, are MRIs the most pressing need or are there more pressing needs for other pieces of equipment? The scope of his review is very narrow in terms of - he was asked to look at, if Nova Scotia buys MRIs, how many should it buy and where should they be located?
MR. PORTER: I'm sure his credibility is A-1, I would never doubt the credibility of the physician, or the radiologist, and I think that's good.
[Page 18]
You know, you talked about a long-term need in this needs analysis, how long does a machine last? Obviously there must have been an answer there.
MS. MORASH: We indicate in our report that there hasn't been a lot of work done on how long medical equipment - the technology is changing so fast - on how long a piece of medical equipment should last. However, we did find one study that said if your machines are over ten years, then you should look at them quite seriously. So ten years appears to be the longer end of the life range for medical equipment as a whole, but that study wasn't specific to MRIs.
MR. PORTER: Yes, and I realize, especially in the medical field, technology is changing almost by the week right now; there's somebody new coming out with a new machine. Was there anything in that audit that says the number of times the machine was used - on the HRM, higher population, you're going to do more versus maybe at Yarmouth, you're going to do less, is the expectation that we will get more years out of Yarmouth than we would the HRM, or maybe Sydney, for example?
MS. MORASH: We didn't look at that, and I personally don't know enough about the equipment to know if the useful life is impacted by the number of exams that you do. One interesting anecdote, the machine has to be on all the time, the magnet has to be on all the time. If it's turned off, it costs $100,000 to turn it back on. So it is very sophisticated, expensive equipment, and that's what we were told, that there's a significant cost once you turn it off to turn it back on again, to power it up.
MR. PORTER: For sure. Thank you for that. Just a couple of questions with regard to the placements in nursing homes. I know that some of the data was maybe not quite as accurate as you would have liked to have had there. When you talk about, I'll use the term "jumping the queue", that prioritization, I am wondering, as auditors, how will you ever get a really defined, accurate report, because of the variables - and having a long background in health care, I know the variables that come with this sort of thing. Every person is different - if you're talking age, you're talking frailty. The priorities, is there anything there? There must be something that outlines the priorities for placement.
MS. MORASH: The way that the system works is that there are just three priorities: the first one, priority one, most urgent, is only for adult protection clients, so these are clients who can't look after themselves; the second priority is for what they call special placement needs, and these are people who need to be placed in a particular home, perhaps because their spouse is already in that home or because they have special needs, such as dialysis, I believe, is one of them; and then everyone else falls into the third category, so priority three has by far the vast majority of the individuals who have applied in it.
So when we come in, what we see is that a huge percentage of the population has been categorized as priority three. So that's part of the issue that we have when we go in to recreate the wait list - okay, was there a priority-one client and was that person placed first?
[Page 19]
Then was there a priority-two client, and was that person placed first? Then all of the rest are priority three.
I think the point you allude to is absolutely right, that not all priority threes are exactly the same, they have different personal situations, they have different living arrangements, they have different medical conditions, their condition may be very acute at this point in time, but all of those things are not supposed to come into play. Once they are categorized as priority three, the policy says that the first one on the wait list, according to the reference date, is the one who is supposed to go into the home.
So I think that we all realize that there would be cases when exceptions have to be made, and our point is that if there are exceptions, then those should be identified and specifically approved and documented. So the prioritization system places by far the vast majority of the individuals into this priority- three classification, so the individual differences that you allude to are not supposed to impact.
[10:00 a.m.]
MR. PORTER: With the number of placements, or maybe I should say with the number fitting into category three, this changes on a daily basis - you could be a priority three today, registering and making application and next week you could be a priority one. How will you ever write a policy to match that? I know you talked a little bit about maybe you can't write a policy, but there has to be something in place. Is that possible? How much detail, from an auditor's perspective, what actually needs to be there, because this is not going to go away, the population aging, the placements in nursing homes and long-term care facilities, this is going to go on for a long, long time.
MS. MORASH: There are cases, yes, where a priority three would move to another priority, but they're not as widespread as you might think, and the reason is because priority one and two are so very specific. So just because a person's condition gets worse, if they don't require adult protection and they don't have one of these very unique situations that would put them in category two, they're still a priority three.
The assessments are done using a tool that is sort of nationally accepted as a clinical tool for assessing functionality and needs of a senior population. So that part of it we didn't get into in terms of what specifically is on the tool - I mean, it is a medical tool and it is filled out by medical professionals. However we do know that as a person moves up on the waiting list there is a requirement that they be reassessed. I don't remember the specifics in terms of exactly at what point they are reassessed and how frequently that reassessment takes place, but there is a process there to take account of changes in condition. Also the onus is on the medical professionals who are dealing with that individual. For example, their family physician, if there is a change in condition or in living arrangement or whatever that impacts that person's needs, there is an onus on the professionals who are dealing with that person to bring that to the attention of the Department of Health.
[Page 20]
The policy is written so generally that it says specifically if you are in priority three and you are the number- one person on the list, you should be placed, and I guess, practically, we realize that there are exceptions that would arise because people's conditions change, et cetera.
MR. PORTER: Any idea, in this policy, after people are assessed the first time and while they wait, is there a time frame for reassessment?
MS. MORASH: There is, and I know that it was changed during the course of the audit, and I can't recall what it was changed to. I think what it said, and I may be off on this one, but I'll tell you to the best of my recollection that it used to be that individuals were assessed periodically when they were on the list. I can't remember if it was every three months or what the time frame was, but the policy was changed so that only those people who were nearing the top of the wait list would be reassessed periodically, those who were closer to the bottom of the wait list would not be reassessed as often. That was sort of the gist of the change that was made, but I can't remember the specifics.
MR. PORTER: You did talk about a couple of cases, that four, but maybe two, were pertinent, where there appeared to be some jumping - but in those cases specifically, there's nothing to say why? There's no medical documentation from physicians, there's nothing?
MS. MORASH: There are detailed files that support each one of these clients, and there are long medical histories and the results of assessments and that kind of thing. There was nothing that we could identify that indicated why these individuals were placed ahead of others. Then we went back to the Department of Health, we asked people at the centre, at the Department of Health in Halifax, and then those management people went out to the people in the field and they gave them the case numbers, asked them to go through the files again, and basically, as a result of that process, there was no information that came forward to us that would specifically explain why those two individuals were placed ahead of others. They were individuals who were very close to the top of the wait list, but we could not specifically pinpoint the reason why they were placed ahead of others.
I think the Department of Health was acting in good faith when they were discussing these cases with us, and that it was just an innocent sort of "after the fact", trying to recreate information that nobody actually remembered that at the time - you know, there probably was a reason but it just wasn't documented, and after the fact they just couldn't recall the details of the specific case and couldn't tell us exactly why.
MR. PORTER: So in not recalling those details, could they also not recall where the original assessment was?
MS. MORASH: No, the original assessments were all documented. There was medical information for each one of these people, they had been appropriately placed on the wait list as a result of an assessment, but the very last thing, when they were placed, it
[Page 21]
appeared that they were placed ahead of other people in the same priority category. So these were priority- three individuals placed ahead of other priority-three individuals without a clear documentation of why that had happened.
MR. PORTER: Okay, thank you for that. I think it's going to be a difficult one to get our head around, to try to make sure that a policy is in place. A policy is going to be very hard to write in that field, I guess, having some experience there. It's going to be very difficult to capture each and every thing. I'm glad to see, though, that those things were picked up along the way and that some time is going to need to be spent there.
I find it interesting that people can move others along and not have documentation in place. I only say that because you look at doctors, nurses, medics, whatever they are, professionals in the health care business document everything in detail. If you give someone a medication, you document it, and if you move someone from A to B, it is documented. Those are all forms that are in place, so I guess I'm just struggling to understand why things were misplaced or were things just not done and, if so, what will come of that.
I think my time, Madam Chair, may be up. Thank you.
MADAM CHAIR: The second round of questioning will be 15 minutes per caucus.
Mr. Steele for the NDP caucus.
MR. GRAHAM STEELE: Thank you very much. I'd like to go back to this issue of the executive retention bonuses at EMC. This is obviously a cause for a great deal of concern. If I understand things correctly, when the CEO of EMC left they decided that in order to make sure that the other senior executives stayed they would pay them a substantial bonus, what they call a retention bonus. The total across six people is $180,000, or an average of $30,000 apiece.
Now EMC is a private company, they can do whatever they want with their profits; however the problem here is that the way they accounted for it meant that the Department of Health was subsidizing that bonus to the tune of 40 per cent, without even realizing it.
I'm not going to say whether the retention bonus is or is not a good thing - that's a debate for another place - I want to focus on the accounting treatment. Now I don't think I want to say that they did it on purpose, but what I do want to say is that their decision about accounting had the effect of having the taxpayers of Nova Scotia subsidize a highly unusual and lucrative bonus arrangement - it had that effect. From your audit, do you know who made the decision to account for that money in that way?
MR. LAPOINTE: Thank you, Mr. Steele. I'm going to ask Elaine to answer your question.
[Page 22]
MS. MORASH: I don't specifically. There were signed agreements in place between Medavie and each of the individuals, so we know who approved the bonuses, but I do not know who specifically decided on the accounting treatment. I would assume that it was the chief financial officer, but I don't know the answer to that for a fact.
MR. STEELE: The chief financial officer would have been one of the people getting those bonuses, wouldn't he?
MS. MORASH: That's correct.
MR. STEELE: Are you aware of whether these bonuses were approved by EMC's board of directors
MS. MORASH: I believe that they were - I'd have to look at exactly who sits on the board, but the signed agreement was signed by the CEO of Medavie who, I believe, sits on the board, but we didn't look at EMC's board minutes. I believe that the EMC board would have been aware of them, but I don't know that for an absolute fact.
MR. STEELE: According to the audit report, these bonuses were approved by the CEO of Medavie Blue Cross, which is the non-profit parent company, and also the departing CEO of EMC. This comes as a surprise to me because I would expect these kinds of large, unusual bonuses would have to be approved by the full board of directors. Do you have any information that these bonuses were approved by the full board of either Medavie Blue Cross, the parent company, or of EMC?
MS. MORASH: I believe the answer to that is no. I don't think that we specifically asked that question in that way. What we asked for: Was there an approval in place? And we were given an approval for each of the six, which was a signed contract and it was signed by the two individuals that you note, the CEO of Medavie - but I believe that the CEO of Medavie also sits on the board of EMC, but I'd have to check for sure, I just don't recall.
MR. STEELE: Then when you did your audit and this accounting treatment came to light and was brought to the attention of the Department of Health, it is my understanding that EMC then volunteered to pay the money back to the Department of Health - correct?
MS. MORASH: That's correct.
MR. STEELE: Now, to the lay person, a fair assumption would be that they got caught - do you think that's a fair characterization of what went on here, they tried to slip something by and they got caught?
MS. MORASH: I don't know. That's certainly an interpretation that you could take.
[Page 23]
MR. STEELE: How do we stop this from happening again? Now when I say "this" I'm not referring to retention bonuses - that's their decision about what to do with their profits - it's about the accounting treatment not in accordance with Generally Accepted Accounting Principles that had the effect of taking taxpayers' money to pay for these bonuses, how do we stop this from happening again?
MS. MORASH: I think it's more proactive auditing. We have a couple of comments with respect to that in the report, that the Department of Health has audit rights at Medavie but that they hadn't done any auditing since the year 2000. As we noted in the report, the Office of the Auditor General does not have specific audit rights in this situation, EMC voluntarily let us do the audit, but it's making sure that in these situations, that there are strong audit provisions built into the contracts.
MR. STEELE: But there already are audit provisions built in the contract, and as you point out in your audit report, the Department of Health simply doesn't exercise those rights.
MS. MORASH: That's correct. I believe that part of that - the last audit that was done was done at the time when the Department of Health had its own internal audit staff. When internal audit was centralized, the departments lost some of the specific audit services they had control over in the past, and because they don't have assigned internal audit staff I believe that's why the lack of auditing happened, they don't have the assigned staff at the Department of Health to do the audits any more.
MR. STEELE: Now it seems to me that in order to make sure this kind of thing doesn't happen again that a very clear message needs to go out to EMC, to the Department of Health, to everybody who might be in a position to do this again, that if you do this you will get caught and there will be sanctions.
Now what disturbs me about this is that the way the whole thing has unfolded - they got caught by the audit done by the Office of the Auditor General, but the only sanction is that EMC, as a corporate entity, is going to pay back to the Department of Health the amount of the 40 per cent subsidy of these $180,000. There seems to be no sanction for the individuals involved, at least one of whom made a deliberate decision to account for this in an inappropriate way that would make it not apparent to the reader of the financial statements that this had gone on.
So, Mr. Lapointe, my question for you is what are your views on how to deal with sanctions for this kind of thing?
MR. LAPOINTE: My views on this are to - as we talked about in the report - first make sure that it can't happen again, and that is by making sure that, firstly, the department's current audit rights are in fact used. So these situations can be prevented by simply employing greater monitoring and consistent monitoring of the situation and ensuring that the department knows what is happening in EMC.
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As for what sanctions should be employed, I think that depends on the policy decision of the Department of Health. If they have the information and they are seeing what is occurring, then the department can determine what is appropriate in a contract and what is not, and if something is done that is not appropriate, then they have a right to determine if sanctions are appropriate. I wouldn't want to say what sanctions should be done.
[10:15 a.m.]
MR. STEELE: Thank you for that. I'd like to turn now to the question of wait lists, which has been canvassed a little bit by my colleagues down the row here, but I'd like to go back to it because I think it is important. As the member for Halifax Clayton Park has said, we in our offices get calls on wait lists. It is a very, very emotional time for all the families involved when a loved one is on the waiting list waiting to get into a nursing home, a very emotional and difficult time, and the only thing that keeps the lid on the cauldron, the lid on the pressure that builds up, is the idea that we convey to our constituents that there is integrity in the wait list, that when it is your loved one's turn to go into a nursing home nothing will change their placement on the list.
It is disconcerting for all of us here to see in your audit report that out of a sample of fifteen, four placements did not apparently follow the type of care or the placement on the list; two of the fifteen seemed to have been placed out of order. If this can be extrapolated to the longer list, we have a very serious problem here.
I don't want to believe that anything untoward is going on here - I really don't want to because it raises a spectre that none of us wants to deal with. Yet last Wednesday, Mr. Lapointe, when you released your report and I related this finding to several different people, they all had the same response, and this being Nova Scotia, the response was "they knew somebody".
Now, Ms. Morash, in your answers today you said you have no information that these people were placed out of turn because of any untoward influence, but yet I'm sure you'd agree with me that you also don't have any evidence that that didn't happen.
MS. MORASH: That's correct. It's a very difficult issue to get to the bottom of. We don't know relationships between individuals and there's nothing that would be documented in a file - the files deal with medical assessments and financial assessments, they don't deal with pressure that's put on. So there is no way for us to get at that issue.
MR. STEELE: And, as you identify in your audit report, the problem here is not the lack of policy, it is the lack of documentation. There may have been a good reason why these people were placed out of turn, or apparently placed out of turn, but you and the Department of Health simply don't know what that was, with time having passed.
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Why, in your audit report then, specifically in Paragraph 4.61, do you - I shouldn't say you, it's not you specifically who is writing this - why does the Office of the Auditor General say that there may have been extenuating circumstances when the opposite conclusion is equally valid, which is that there may not? Why do you seem to be bending over backwards to say well, it was probably okay, we just can't prove it?
MS. MORASH: As a result of the discussions that we've had with management, we believe that they're taking this issue very seriously. We also believe that this priority- three category is so wide that it would be naive to expect that all of these people would be in exactly the same situation. I'm not sure what the percentage is, but it would be far in excess of 90 per cent of the individuals being placed in one category - and to assume that their needs are all the same, I think, is naive.
So it's that spin that was conveyed to us and that at the end of the day it was our judgment that that made sense, that there could well be extenuating circumstances that would have caused professionals to make a decision that in this particular case this individual had a greater need than the one who was on the wait list ahead of them.
MR. STEELE: And my plea to the Department of Health, if they're listening to this today or read a transcript, is they must take this very, very seriously.
Elsewhere in the same chapter there's a reference to the fact that one nursing home is under threat of imminent closure because of fire and safety deficiencies, and that the fire marshal is going to recommend that that particular nursing home be closed. Which home is that?
MS. MORASH: I knew you were going to ask me that question and I don't have the name. I believe it's in Yarmouth. We can bring the name, it's in the files. I just don't want to indicate a name. I think I know what it is, but I'm not sure and I need to check my files first.
MR. STEELE: As of today, is that home still under threat of imminent closure?
MS. MORASH: There has been some action taken, but I wouldn't know the situation as of today.
MR. STEELE: The other finding in your report which troubles me greatly is the finding that the current policy on long-term care is no longer in compliance with the legislation. This happens far too often in our Legislature, where the government, for good reasons, will change a policy, will change a program, and sort of leave the legislation behind so that they are no longer following the law as it is written. Essentially, they skip the Legislature as an essential part of the process. As you point out in your report, the current program does not comply with the Homes for Special Care Act. It's as if the law doesn't matter; it's as if the Legislature doesn't matter. The government just does what it wants
[Page 26]
without regard to the fact that it needs a legislative foundation. That disturbs me as a lawyer - the disrespect for the law as a legislator, disrespect for the Legislature as a citizen, that the government feels it doesn't have to comply with its own laws. What are the risks that we are running by having such as important program in non-compliance with its governing legislation?
MS. MORASH: Probably the most significant risk right now has to do with the Cost of Care Initiative, and that is that the legislation was written when the only funding that went to the homes was based on subsidized individuals, so individuals were entirely responsible for their cost of care, and if they fell into certain financial parameters then their cost of care was subsidized. Well, that has completely changed now. About 74 per cent of the Department of Health's funding to long-term care facilities is based on health costs, which are completely funded by the Department of Health, and those health costs are paid directly to the homes. So it is that kind of a risk, that the payments essentially do not comply with the legislation.
There are also other provisions such as, for example, the need for a second inspection visit during the year. As long as I have been involved in audits of long-term care, which has been a long time, this issue of the need for a second visit and whether that is really the intent - that there just be one visit a year or that inspectors visit the homes and document inspections twice a year. So that poses a risk to quality of care of the residents inside the homes, whether the facilities are actually to be inspected once a year or to be inspected twice a year. So those are a couple of examples of the kinds of risks that are run.
MADAM CHAIR: Order, please. The time has now expired for the NDP caucus.
I recognize Ms. Whalen.
MS. WHALEN: Thank you very much. I would like carry on on the maintenance enforcement area to ask a few questions which I hadn't had a chance to address. In your report to us last week, on the slides that we were given, it actually stressed that this area has no financial statements, audit or accountability reports - that was one of the slides. That means, really, they're not accounting for the funds that they're handling and they're not keeping records and they're not making any financial statements available that could be looked at by management. I think that indicates such a major deficiency in this area that it needs to be highlighted.
In advance of your arriving to do your audit there, the fraud was uncovered because somebody realized that after about 11 years of operation, where they have never been audited, suddenly a microscope was going to be put on the program and there would be a chance of being discovered. So, really, I understood you to say that the fact that you were coming to audit really lead to the discovery of the fraud, would that be correct?
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MR. LAPOINTE: Yes, that's correct. The realization that internal audit was intending to look at this brought this person forward, and that's how it was uncovered.
MS. WHALEN: I think it does show, again, the need for regular auditing and regular scrutiny of all government departments and programs. What I want to know in addition - in the report we're talking about computer access rights that were too broad, lack of segregation of duties, as we say in accounting, which simply means the same person can write cheques and disperse them to people, not having the checks and balances in place, and I would like to know whether we can have any assurance that today that has been corrected, that we can rest assured that today these risks have been mitigated?
MR. LAPOINTE: I don't think we can speak to what is happening exactly today, since the audit, but I know that the department has indicated an intention to act on our recommendations, but they certainly have not implemented them all at this point, but they have indicated that they intend to.
MS. WHALEN: I think that is of concern that this is allowed to continue, and I know that you do go back and ask departments and programs to say how they're doing on their progress, but this really leaves a door open to some continued abuse.
MR. LAPOINTE: We're not aware at this point of any changes that have been made as a result of this fraud. I don't know if Scott has any more current information.
MR. MESSERVEY: During our audit we did identify certain control weaknesses that were corrected - for example, people had an ability to change certain fields in the system, which they did take immediate action to address. However, there were also a number of areas that could have been addressed immediately and, as of the date of our completion of the audit field work, had not been. But as of today I do not know the status of our recommendations.
MS. WHALEN: Thank you, that does point out some of the deficiencies there. The Maintenance Enforcement Program has the authority to do certain things in collections like garnisheeing wages; asking for federal intercepts, which I gather is the term to get people's income tax rebates or transfers from the federal government; and withholding drivers' licences. It was found in your audit that 6,081 of the cases that are in arrears had no collection action taken whatsoever. Is there any excuse, really, for why none of the tools would be used to try to collect the money that was owed? We have a responsibility to these families to collect the money. I'm astonished that 6,000 cases would not have had any action taken.
MADAM CHAIR: Mr. Messervey.
MR. MESSERVEY: The 6,081 cases, that was the number provided to us. We did not specifically audit the reasons why an intercept was not applied on these specific cases; however, our testing of the cases in general noticed a lack of documentation to support key
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decisions. Some information that was provided to us basically indicated certain actions may or may not have been taken due to a lack of certain information like SIN numbers that would be required to apply a federal intercept. Specifically, we did not test the reasons why these 6,000 were not.
MS. WHALEN: My point being that these are special tools that are given to that program and they're not utilizing them at all to their full effect - would you agree with that?
MR. MESSERVEY: Our impression was the enforcement actions that were taken seemed possibly to be lacking based on the evidence that we had seen.
MS. WHALEN: I would imagine they could get something like a social insurance number from a spouse quite easily, so it seems very weak to say that they couldn't bother to fill in the missing information to take that next step. I'm very concerned on behalf of the many people who are waiting for their help to arrive, for the financial assistance which they are entitled to through the courts. It's again a signal that this whole program has to become responsive to the responsibility that they have been entrusted with.
We saw 48 per cent of the cases in arrears with no collection whatsoever, that was the figure given - is that a reliable figure?
MR. MESSERVEY: All figures presented in this information have some question marks around them simply because of data integrity concerns, and we highlighted that point in our report.
MS. WHALEN: I think that is really pathetic that there's nothing, even in the figures you've given - and it's no criticism for you in that you did not provide or create that original database, so it's not that, it's just a terrible indictment that there is an entire program collecting and dealing with millions of dollars every year that has no record keeping and no reliable data. I think that is a point that needs to be made. On the $106 million that has not been collected, that was seen to be outstanding from the very inception of the program, can you have any indication of how many people are affected by that or how many cases are reflected within that $106 million? It's a figure that has been quoted quite a bit this week.
MR. MESSERVEY: I don't have that figure with me, but I could get it for you.
MS. WHALEN: I think that would be of interest to the committee if we could have that as soon as possible.
Was there any indication that the staff who are managing this program don't have adequate training to do what they're required to do? Would that have been something you might have had any indication of?
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[10:30 a.m.]
MR. MESSERVEY: Based on discussions with staff we didn't feel that that was a significant issue. Staff appeared to know their job responsibilities and appeared to have the skills to deal with and fulfill those duties.
MS. WHALEN: Your report indicates that the collection powers of the Maintenance Enforcement Program exceed what Service Nova Scotia and Municipal Relations has as some of the tools they can use and Service Nova Scotia and Municipal Relations does the collections for all of the other government programs. I just feel that there could be a need here for proper training so that they can actually use the tools they've been given. So you didn't have any indication of that, I won't pursue that right now. The last quick question I'd like to ask is, it indicates in the report that $300,000 in fees were collected in the period you looked at, I guess, in a one-year period. It was from the payers for things like being in default. Do those fees stay with the program, are they seen as some sort of profit or income for the program?
MR. MESSERVEY: It actually gets transferred over to the province and gets deposited to the consolidated fund of the province as revenue of the department.
MS. WHALEN: Do you think that is standard procedure in other maintenance enforcement programs?
MR. MESSERVEY: I would not be able to answer that.
MS. WHALEN: My question there is really that this program exists to transfer monies that are owing to the families that are entitled to it. The $300,000, if that's a payment or a penalty for being late or being in arrears, that money should be flowing through to the families who have waited months and months for the payment to come through. I think it suggests that we should examine that further to see if that's an appropriate way for it to be looked at. I'd like to share my time with my colleague, Mr. Glavine.
MADAM CHAIR: Mr. Glavine, you have until 10:38 a.m.
MR. LEO GLAVINE: Thank you, very much. I am going to follow along the same theme here for a little bit on the Maintenance Enforcement Program. It is one that certainly in my area I would say monthly touches my office and as the statistics point out, it has in all cases been women that have come to my office, since 96 per cent of those affected are women with children. I'm wondering, in your audit, did you identify any offices that seemed to have weaker compliance and greater challenges because of the number of cases that they were handling per caseworker?
MADAM CHAIR: Mr. Messervey.
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MR. MESSERVEY: Our work did not specifically identify those sorts of differences, area by area. We took the overall approach to the Maintenance Enforcement Program and our samples were randomly selected.
MR. GLAVINE: I ask that question because during the period in which there was some structural change between the Yarmouth office and the Kentville office, I had to deal with a caseworker in Sydney. It so happened (Interruption) that's right, I found that pretty surprising as well, but I found that in working with him over the course of a month I had, whether by accident, but I would say with the kind of work that he was doing, he said, I will review the case. He got back to me and said, here is the nature of this case, here are the three things that I'm going to do.
Although you didn't elaborate to any great extent on a question from my colleague, I'm wondering about the training and the number of cases that some offices have to deal with, that it just simply leads to inadequate drilling down detailed information and then the kind of follow up that is needed in those cases? I know that in dealing with them, if I don't stay on it and go back, go back, I don't seem to get good results, but also, as I have pointed out, when dealing with the Sydney office for cases in the Annapolis Valley I had tremendous results. I'm wondering why that area, perhaps it wasn't identified as strongly?
MR. MESSERVEY: The comment that was provided to us, although we did not look specifically at caseloads per enforcement officer, was what typically happens is it's the squeaky wheel that gets the grease. That would certainly explain why your follow-up got the attention that it did. However, we did not identify best practices from region to region. Based on our conversations and our work people knew what their roles and responsibilities were and what seemed to come back to us a lot is large caseloads.
MR. GLAVINE: That is certainly what I'm finding out in our area, are, indeed, the number of cases that each of the workers have to deal with. At the same time, when we have 48 per cent in arrears and money is not being collected for families, the end result is then the emergency work that my office has to come in with and that is sending them off to Community Services and, in fact, some cases being of the desperate nature where you have to ask them to overlook the six week waiting period before they would get any help for their children. It seems to me here that not all of the measures that they have at their disposal are being used, but perhaps leadership is a question here. I'm just wondering about a comment in that regard.
MR. MESSERVEY: I really couldn't comment on the leadership unless Jacques would like to?
MADAM CHAIR: Mr. Lapointe.
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MR. LAPOINTE: My only comment on leadership would be that in this case I believe leadership is needed from the department to go into this program and do considerable work to improve it.
MR. GLAVINE: In essence then, you would be saying that this is a department - not to put any words in where you're going here - that needs a major overhaul in order to work more effectively and efficiently for nearly 20,000 maintenance orders, which is a considerable number of families, therefore, impacted if inadequate or sloppy work is being done.
MR. LAPOINTE: I'd say that's a fairly accurate assessment. There is significant work that needs to be done in this program for it to be effective.
MR. GLAVINE: I was wondering if you also found, in terms of the structure of this department, are there adequate offices across Nova Scotia or from the top level administration throughout the province? Was there anything about the structural nature of the Maintenance Enforcement Section that could possibly change to become more effective in its day-to-day work?
MR. LAPOINTE: That wasn't really part of what we looked at. I don't think I would be able to make any comments on their structure or their organization. That was kind of outside the scope of our audit.
MADAM CHAIR: Order, please. Thank you.
Mr. Porter.
MR. PORTER: Madam Chair, just maybe picking up where Mr. Glavine left, a question still in the maintenance area. The ratio, roughly 20,000 cases, what is the ratio of staff to workload? How many clients? Can you speak to that?
MADAM CHAIR: Mr. Messervey.
MR. MESSERVEY: I do not have the number of clients related to that. Some of the figures we took in general as cases, rather than specific individuals attached to a case.
MR. PORTER: Did you do anything on the actual individuals, the workers themselves, the caseworkers? Do their backgrounds suffice? Are they educated? Are they professional people? Is there a certain qualification that must be met and are we meeting it?
MR. MESSERVEY: Basically what we did was we looked at the roles and responsibilities and discussed the roles and responsibilities with staff to make sure they understood what they were required to do, what the roles and responsibilities were. As well, we questioned them whether or not they felt there was a need for additional training. The
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results of our interviews and discussions with them indicated that they did understand what they were doing and training was not an issue.
MR. PORTER: I want to talk a little bit again about that placement in the nursing home just for a moment. You mentioned, as an example, the radiologist expressed to you his concern about the reading of exams at the private clinic. In your audit around the long-term care, did any professionals express to you concerns about undue pressure being applied to them by families or others?
MADAM CHAIR: Ms. Morash.
MS. MORASH: No, however, our discussions were limited to mainly Department of Health staff in Halifax, so we weren't talking to the people out in the field except in very specific situations where we had particular questions that we were asking them. The short answer to your question is no, no one indicated any political interference or anything like that.
MR. PORTER: I guess I was just kind of curious, we really focused on a couple of folks here today and in your report about being potentially moved with no justification, no documentation. I would think we maybe in the future want to look back as well. It's nice to talk to the high level and maybe just in Halifax, but it's a big province, it's scattered and there is a lot of middle management, I think, that is probably more responsible for those placements perhaps than maybe senior level folks which your audit might have been done at, I'm not sure. Anyway, I was just kind of curious about that. Thank you for that.
I want to talk a little bit about the EHS system. Ms. Morash you talked about I think the word was risk. Define some of that risk. The system that is in place, you talked about the HRM, some long wait times with ambulances at the Q, Halifax Infirmary, whatever we want to call it these days and then moving other vehicles around. What's the name of that program, that model?
MS. MORASH: The ambulance deployment system and I know that it has a specific name, but it escapes me right now. It may well be in here. I think it's system status plan, SSP.
MR. PORTER: How was that put in place?
MS. MORASH: It was put in place under the contract when EMC took over responsibility for the ambulance system. They have this sophisticated computer modelling system where they keep track of all the ambulances and they move them around where there are gaps in the system and that kind of thing. It was put in place under the contract.
MR. PORTER: For a little more clarity on that question, was there research done before EMC and the contract EHS went out and put such a system in place to minimize a
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risk? Is there research out there that will show you anything to do with the levels of risk for such a system?
MS. MORASH: We didn't specifically ask that question in terms of what the research was that was done before the system was put into place. However, I think it is generally acknowledged that EMC is a leader in providing ground ambulance services, it's well accredited, it's well thought of and it's a very sophisticated system. I am confident that they understand the risks and that they incorporate those risks in their modelling, and that they have been able to juggle the ambulances to achieve optimum coverage. We haven't, as I indicated earlier, found any instances where there were especially slow response times because of this issue. However, it has been recognized at the highest levels at Capital Health, at EMC and at the Department of Health that these response times have the potential to be negatively affected by the delays at the emergency department, and that the documentation of the delays is that they are quite significant.
MR. PORTER: They are. Just on that, again, I want to keep coming back to that word risk and I want to ask you, how is the risk being mitigated? We talked about three extra ambulances being put on in the HRM. We talked about response times not being affected, they're meeting those contracts without any issues and problems, and have for some time. You used the word risk and I want you to explain to me where the word risk comes from in your opinion?
MS. MORASH: The risk would be if there were, let's say, concurrent emergencies. Part of what has happened to date, the good response times, may be due to good luck as well as good management, so that is where the risk comes in. If the demands on the system were such that you had a gap that hadn't been filled in adequately, that the response time in a specific situation which has yet to occur, could be worse than it should be.
MR. PORTER: There are always risks, no question. If we look back at the system itself there are numerous things in place to help mitigate that risk. Obviously, there's the First Response Model in this province which is second to none, it's top-notch. Did you go back and look at how many years this has been in place, the demand on the system, the time of day, call volume? I guess what I'm getting to is the fact that I think that the mitigation out there is very good because there has been a lot of study go into it. It's not just simply saying, well, there's a risk, it's not a matter of luck. This is a defined science that has been put in place. I'm wondering if your audit determined that, how deep did you go in the system? It's easy to say there's risk and it's easy to use the word luck, I'm just kind of curious, how deep did you go in the audit when you looked at it?
MS. MORASH: We did not go back into the past and do a detailed analysis of response times or anything like that. We looked at the system that's in place now for deployment of ambulances and we discussed with individuals who are knowledgeable in this area what the impact of these delays are. Certainly, there's agreement among those who know, the Deputy Minister of Health, the CEO of Capital District, and the CEO of EMC.
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There is agreement among those in the know that this poses a risk and that it has to be dealt with, and they've been deploying high level resources toward achieving a solution to the issue.
MR. PORTER: Is there an issue from an audit perspective with the system status plan, the management plan itself, with regard to movement from Windsor, we'll say, to the HRM to do coverage and whatever subsequent moves occur because of that?
MS. MORASH: No, there's no issue with it at all, it seems to be well under control. The one issue is these delays at the emergency room which are outside of EMC's control. This is an issue that affects EMC and the response times, but it's one that they don't have the power to deal with individually.
MR. PORTER: Affect it very much so, unfortunately. Thank you, very much. I'm going to pass my time to Mr. Bain.
MADAM CHAIR: Mr. Bain, you have until 10:53.
MR. KEITH BAIN: Thank you, Madam Chair and thank you to my colleague. The meal and travel policy inconsistencies at EMC. Can you explain what that's all about and why you suggest strengthening the policies?
MS. MORASH: When we went into EMC we tried to identify areas where we thought there might be a little bit of risk with respect to lack of due regard for economy and efficiency. We identified as one of those issues their travel policy. We wanted to look at it and make sure that it was a tight travel policy because the travel expenses get charged to the Department of Health, or 40 per cent of them do anyway at the end of the day.
When we looked at the policy we felt that there were some areas where it should be tightened up. For example, we noted that there were no per diem amounts that were specified for meals, that rather it talked about reasonable amounts for meals. We believe that it would be better controlled to make the policy more specific in that area. There was no requirement for the CEO's travel expenses to be approved by anyone else. We think that it's a good policy in any situation for everyone's travel expenses to be approved by a third party, so that was the rationale behind looking at the area and the kinds of things that we found. These were areas where we thought that the policy should be tightened up to minimize the risk of lack of due regard for economy and efficiency in travel expenses.
MR. BAIN: Mr. Lapointe, the last time you reported to us your office indicated there were some issues with access to information. I'm just wondering if you experienced that problem this time when preparing your report?
MADAM CHAIR: Mr. Lapointe.
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MR. LAPOINTE: I would say that you're right, I reported last time that there were significant problems in dealing with access to information. In this case, I'm actually reporting in this report that there have been some considerable improvements in that situation since then. There have been improvements in the review of the revenue estimates in which we were able to get access to the information we needed and we were able to eliminate most of our qualification related to that. There are so far no problems that we've experienced in our audit of the consolidated financial statements, but it's early days yet and we'll have to wait and see how that works out. I have had a lot of discussions with senior management on this issue. I've had discussions with, for instance, the Department of Justice; that was on my access to documents which are subject to client-solicitor privilege. I have to say that the department and I do not see eye to eye on that issue and my discussions with the Department of Justice are right now at an impasse. They feel I do not, as Auditor General, have access to client-solicitor documents.
At this point I think what I'm going to do is wait and see what transpires and when an occasions arises, as no doubt it will, I will deal with it at that time. I am, however, still involved in discussions with Treasury and Policy Board and those discussions are going well, if a little slowly. I'm still hopeful we can reach agreements on the principles involved here to do with Cabinet documents, but again, I don't want to predict at this point how it will turn out because I'm still in discussions with them. So that's the kind of current status of where we are with that. Significant progress, but to my mind, still a lot to be done.
MR. BAIN: My final question would be, how would you characterize the government's progress in financial reporting?
MR. LAPOINTE: In financial reporting, in our report I commended the Department of Finance and other staff for the improvements that they have made subsequent to our report on putting in our recommendations and on improving the quality of financial reporting, specifically in the revenue estimates and in the Public Accounts, in bringing them closer to Generally Accepted Accounting Principles. They have taken it quite far and they have acted seriously on our recommendations, which is what I like to see.
MR. BAIN: So you feel quite satisfied with the progress that is being made.
MR. LAPOINTE: We made very good progress and yes, at this point I'd say I am.
MR. BAIN: That's it for me, Madam Chair.
MADAM CHAIR: That concludes the rounds of questions. At this time I would ask Mr. Lapointe if he would like to make some closing comments.
MR. LAPOINTE: Madam Chair, I just want to say in closing that I thank the committee for the opportunity again to come and discuss our June report with you. I do want to again thank my staff for their dedicated and professional work on this report. I am, of
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course, available to any of the members at any time, should you have any questions or concerns.
MADAM CHAIR: Thank you, very much. On behalf of the committee I would like to thank you and your staff for being here today and, in particular, I think we all want to extend a big thank you to Elaine Morash for your superb service to the Auditor General's Office over your time in that office, and we wish you the very best in your new position with Treasury and Policy Board. Thank you, very much. With that we stand adjourned.
[The committee adjourned at 10:54 a.m.]
