Back to top
October 31, 2000
Standing Committees
Economic Development
Meeting topics: 
Economic Development -- Tue., Oct. 31, 2000

[Page 1]

HALIFAX, TUESDAY, OCTOBER 31, 2000

STANDING COMMITTEE ON ECONOMIC DEVELOPMENT

9:00 A.M.

CHAIRMAN

Mr. Brooke Taylor

MR. WILLIAM ESTABROOKS (Chairman): Good morning, committee members. Mr. Taylor obviously is late. It is pretty bad when you know you are late for a meeting but when you hear the chairman on the radio while you are coming in late, you are thinking, well, I can't be late, it can't start without him.

Anyway, good morning to you all. We have in front of us today representatives (Interruption) Yes, I understand the fact that Mr. Reid is here and we will get right to your presentation in just a moment, sir, but first, out of courtesy, could we begin by some introductions.

[The committee members introduced themselves.]

MR. CHAIRMAN: This is Darlene Henry, our Legislative Committee Clerk. I have done my homework, Darlene, I appreciate that. You should know that we received these preliminary books from Darlene. I can't say I read it all but I read the press clippings.

We will turn the floor over to our presenter today. Mr. Reid.

MR. BRIAN REID: My name is Brian Reid, President and CEO of Britech Information Systems Ltd. We are located in Lawrencetown, Annapolis County. I will go through a brief slide show to give you an overview of our company. A couple of my slides reference incentives and potential issues that may involve this committee as far as economic development goes in Nova Scotia, rural Nova Scotia in particular. I understand we will try to keep this to 5 or 10 minutes and then the floor is open for you gentlemen and ladies to ask questions.

1

[Page 2]

MR. CHAIRMAN: You have heard of the "late" Brooke Taylor. This is our Chairman, Mr. Reid, Brooke Taylor.

MR. REID: As you can tell, we are big promoters of Nova Scotia, not only here at meetings in the province but outside of Nova Scotia. This display was actually part of the Bio 2000 in Boston last fall. Britech was one of the companies that participated in that joint effort between Nova Scotia, Industry Canada and the life sciences industry here in Nova Scotia.

From your slides you will be able to follow this, if you like. We are a 100 per cent Canadian-owned company. We are not leveraged. We are privately owned, shareholders sitting here in this room. We have been incorporated since 1993. We have been doing research and development since about 1989 but we incorporated, provincially, in 1993.

The 4GL RAD means that we use fourth generation languages and rapid application development, that is just explained a bit, there. That means we use the leading-edge tools available in the IT industry to produce the software systems that we develop for health care.

All of our staff are made up of IT specialists, information technology people, and particularly from health care. Due to the reform that has been going on in health care in the last few years, we have had a ready supply of people who are coming out of health care with both IT backgrounds and management disciplines within health care, to provide us a steady workforce to develop this private sector. I came from that part of the public sector, having worked in hospitals for about 12 years. When the regionalization of health care came into effect, I had to make a choice as to whether to stay in the public sector or get out. I already had the company while in the public sector and the decision to sell the company and stay in or get out was made back in 1996. My biggest concern at the time, of staying in health care as a Director of Information Technology, was that we would be asked to do everything and not have any money to do it. After seven years of frustration trying to find money to do it in the system, I decided the private sector might be a little easier out for those of us who were ambitious enough to take it on.

Our markets include Nova Scotia. This is our install base here in Nova Scotia, community health centres, large and small community hospitals, regional health boards and facilities and physicians' offices. We are also working in markets in central and western Canada. In the U.S.A. we are targeting New England and Kansas, and in Europe we are looking at Scotland, South West England and Northern Ireland. Recently we met, through the Industry Canada initiative, they had some folks come here from Spain, a company by the name of Soluziona and they are interested in supplying health care information systems to Spanish-speaking countries around the world. We were invited to do a presentation here in Halifax and within a couple of weeks they called us back and said we would really like to partner with you folks in providing these IT solutions in South America and Latin America; so we are working on that relationship as we speak.

[Page 3]

We haven't done any marketing up until recently. For the first four years the company, beginning January 1997 through to about the summer of this year, we generated $2.5 million worth of sales without actually doing any marketing. I think maybe we spent $6,000 on a booth and some brochures and things like that, but it was a pretty good return on our money.

Now we are taking a little more aggressive approach and not only operating out of Lawrencetown, but we have a company by the name of SIC in Scotland that is looking at the market there for us and picking up requests for proposals from Scotland and Taunton, England. We also have an interest in South West England and their health discipline mirrors ours to some extent and we are looking at doing some reference sites there. This summer we also opened an office in Toronto and are looking at the Golden Horseshoe, southern Ontario, and that market is probably five or six times bigger than the Nova Scotia market. Believe it or not, Nova Scotia is much further ahead in its IT solutions in their health care systems than a lot of southern Ontario. Buenos Aires, Argentina, that is actually the office of Soluziona in South America and we are working with a gentleman down there to penetrate that market.

In June as well we entered into a relationship with a company that started out of Nova Scotia called Partner Canada International. They are now operating out of Berne, Switzerland, and our most recent partnership has been brought about by this company, headed by a lady by the name of Joanne Ball - who is also a Nova Scotian - and we are looking at partnering with one of the world's largest software companies, known as SAP. They are big in the financial software systems but they are now trying to get into the health care market.

Belfast, Northern Ireland. We made two trips to Northern Ireland. It is a great place to do business and they are very keen to have Nova Scotians - Canadians in general but Nova Scotians in particular - in doing research and development and generally operating new businesses and bringing some IT activity to their part of the world.

Our current growth rate runs around 75 per cent to 100 per cent. We are on the bleeding edge of growth. It keeps us pretty busy and just managing the growth is a big part of our job. We don't want to be an overnight success that wakes up to a nightmare the next morning, so we are holding on to the reins tight. Part of the reason for not marketing, we were growing so fast without marketing that we weren't really sure what might happen when we actually hit the marketing edge of the spectrum. Our U.S. expansion was targeted for January of this year, particularly because we didn't want to get into the Y2K litigious cycle that might have happened in the U.S. Fortunately, it didn't, but we didn't want to be part of that process. As I mentioned earlier, U.K. expansion into South West England, Scotland and R and D in Belfast.

[Page 4]

Our services, to round out the spectrum here, we do IT planning, information technology planning, and development, so we will help hospitals decide where they need to bring in the software systems. We will actually develop new products, if they need to have them in there and we don't already have them in our suite. We will do the installation, the maintenance and support, and the project management as well.

Our clinical applications, some of this is targeted for some of the technical audiences that we have, but we believe in real-time integration. That means, when the lab test is done in the lab, we want it on the desk of the physician or the nurse immediately, we don't want something to wait until 4:00 o'clock in the afternoon to get sent as a batch to the doctor's office or to the nurse. Our systems are tightly integrated. There are a lot of hospitals in Nova Scotia where as soon as the results are finalized in the laboratory or in X-ray, the nursing stations have access to those reports immediately on their desktop; they don't have to call the lab or call X-ray, the reports and results are right there at the workstation in the nurse's office.

We are currently maintaining central patient index populations in excess of 300,000. We are also involved in a project in western Nova Scotia to bring all 10 facilities' central patient indexes together in one global patient index - that is something that has never been achieved here in Nova Scotia before - so we can actually track the activity of patients throughout the entire region. If they get a prescription in one hospital but an X-ray in another and lab tests in another, we have a system that we are now working with the western region to put into effect that allows you to follow the patient's activities all the way throughout the hospital system.

That is probably something the province has been looking for. We contacted the Premier's Office probably about a year ago. I know they have been looking for something like this, and we said, we are willing to test this in a very large rural geographic area at our expense to show you that Nova Scotians can build this technology; you don't have to import it from the U.S., from California, Atlanta or wherever, we are very capable and talented enough to do that right here in Nova Scotia.

External access. One of the things that might allow us to stand out from other companies is that we are not xenophobic, meaning that we will work with just about anybody in the industry. So, if a hospital already has two or three other vendors, our technology allows us to read and write to their file systems and ours at the same time. When we put a system in, we can integrate to whatever is already there; or if somebody brings something in later, we can tie into it as well.

This is just a short list of some of the applications; we have over 30 of them in the health care industry, but we cover almost all of the clinical spectrum of health care systems.

[Page 5]

Projected growth. Up until this year, the first four blocks actually represent our growth to date. The next two reflect what may happen when we do our marketing. In fact, the market potential that we have seen in the last month in one area alone, which is Switzerland, these numbers may be small for what we are about to penetrate in that market.

The first year that we actually went into active business was January 1997, prior to that there was only myself. In January, we hired one other employee, and to date we have about 26 people; 12 core people, the rest are part-time and contract. In 1996, we did about $40,000 worth of business; in 1997, we did about $300,000; in 1998, $380,000; in 1999, $600,000-some; and in this past year $1.2 million. That has all been just in Nova Scotia.

We are just starting to penetrate the markets outside of Nova Scotia, but the province has been a good base for us to operate from. We like to think that we are actually going to be here for quite a while. I wouldn't say we subsidize the price to Nova Scotia, but we certainly make it easier for Nova Scotia to acquire our products. As soon as we step outside the border of Nova Scotia, our products go up three times and are in U.S. dollars. We are still low in the market place, as far as our pricing.

We have discovered that if we try to sell those kinds of products at those prices in the Nova Scotia market, there wasn't enough money here and a lot of places would probably go without information systems. The payback for us is that we have a culture that we understand, we have staff - 80 per cent of which came from the health care industry here in Nova Scotia - that they can address the needs of those hospitals in Nova Scotia quite well. The payback for us is that we get to test our applications and the whole design is driven by Nova Scotians, and then we export Nova Scotia solutions to Switzerland, to the U.S. and to Ontario. We don't tell Ontario that we are tripling the price and putting it in U.S. dollars, they just think that is the base price.

We haven't targeted the third year, 2003, actually (Interruptions) The reality is you are not taken seriously if the prices aren't extremely high. Unfortunately, with the technology we are using, the cost of development is quite a bit lower than the big American firms that have a lot of legacy systems in place, and to change one screen might cost them $0.25 million, where we could probably change it in an hour and have it redistributed within two days. Our costs are much lower than if you had a big multimillion dollar company sitting in the U.S. That is why we can keep our costs down. We might feel a little guilty putting up a lab system that we typically sell for $100,000 or $200,000, that would be maybe $1.5 million in the U.S. For us to charge $1.5 million for the same system, I am not sure how we get our head around that because it doesn't cost us anywhere near that to put that product in place.

Nova Scotia incentives. Why are we here? Number one, we like to live here. Quality of life - we don't want to beat that to death - is certainly something that attracts people from outside of Nova Scotia. We are in the process of repatriating some of that brain drain from Toronto, from the U.S., back to Nova Scotia and back to the Annapolis Valley in particular.

[Page 6]

We do have people who work from Halifax, but I poured too much concrete in Annapolis County to even consider moving out of there now. I think that is where our international head office will be in the foreseeable future.

Trained workforce. Again, a lot of IT companies have a problem getting information technology people. That hasn't been a problem for us. Typically we turn our head to health care; with the downsizing that we have experienced, there are a lot of very talented people looking for a way to stay in Nova Scotia. Hopefully, for a good number of them, we are able to provide them that opportunity.

The other side is that the young people graduating from our institutions in Nova Scotia would like to work here but a lot of them actually have to leave Nova Scotia to find opportunities. What we find is that the young ones will go to New York, go to Toronto, go to Phoenix or wherever, and within a year or two they start migrating back home and then we start getting the résumés back. We interview them when they are leaving so they know we are here. We are now working on a partnership with the Nova Scotia Community College to make sure that these people know when they are in the course that there are opportunities here in Nova Scotia, so they don't actually have to leave the province.

R and D tax credits. Those are very effective for small start-up companies. The biggest shock that came to us was when we left the small business tax structure this past year, and suddenly realized we are in the 50 per cent tax bracket now. That was pretty painful to accept initially, because our staff put in a huge amount of effort to generate the revenue we did, and all of a sudden, bang, we saw 50 cents of every dollar we were making going back out in taxes. The R and D tax credit system, once you get past that small company stage into a larger growing company, it is a pretty heavy wallop to take, to go from 18 per cent or 20 per cent tax to a 50 per cent tax all of a sudden. We are right in the area where we are not making millions and millions of dollars, but $400,000 in tax to a company making $1.2 million is a big chunk of money.

We have to be smarter about how we grow the company but there is obviously not a lot of incentive there to do really well, really quick, because a lot of it will go back in taxes. As a Nova Scotian taxpayer, I think it is proper that we are paying those taxes but to try and grow a small IT company to the size that you would hear of in the media in the U.S. and places like that, we do have some issues there, in terms of how fast we grow and where the margins are, in terms of our growth.

University linkages are excellent not only in the IT community but the life sciences community. We also have three other companies besides Britech, particularly oriented toward the bio-tech industry. The linkages with those are excellent in Nova Scotia. I don't know of any other place where you could work so closely with such talented people as here in Nova Scotia.

[Page 7]

Our proximity to Europe, the time zone is great. In four hours, we can still do business with Europe where we are here on the Atlantic Coast. It means that our people may only have to stay until 8:00 p.m. or 9:00 p.m. to cover off the entire shift on the West Coast but we just have to get up a little earlier to deal with Switzerland and the U.K. The time zone allows us to be pretty flexible in which part of the market we are dealing with; either the West Coast or as far east as Europe. Our proximity to New England, the cultures are very similar and with the help of the Nova Scotia Department of Economic Development and Industry Canada, we are able to get in and penetrate those markets as well.

I put Industry Canada down here because, along with the Nova Scotia Department of Economic Development, Industry Canada has been a real leader in pushing the IT and life sciences community here in Nova Scotia. Helen Ferguson, from Industry Canada, was kind enough to join us here today. Having someone like Helen available to us is like having four marketing people on staff. She has tremendous energy and I will thank you publicly, Helen. This has been tremendous, giving us exposure around the world. She doesn't miss an opportunity. When we came back from Bio-2000 last fall, we were exhausted and Helen browbeat me into coming back to Halifax to attend this meeting with people from Spain. It turned out to be an excellent opportunity. Seeing those opportunities of bringing Nova Scotia companies to bear on those opportunities, that has been really, truly effective for us.

I think the Industry Canada office here in Halifax has done a tremendous job, on behalf of other life science companies as well. Buy Nova Scotia. While we cannot grow this company entirely from Nova Scotia, I think it is important for those start-up companies like ours, initially, and other companies that we are trying to help incubate as well, that they get a good footing here in Nova Scotia. It is very hard to sell yourself abroad when you haven't got something here working for you in Nova Scotia.

I think what you will find - and, certainly, I found - for the companies in Nova Scotia, is they are willing to accommodate the needs of the industry, whether it is health care or whatever sector of the life sciences industry. That gives you a better product in the end if you are buying from Nova Scotia. They cannot run away. They are not in California, four hours away. You call up and you cannot get anybody to answer. The people in Nova Scotia who are trying to provide those services and start those new companies are right here. They cannot run away from you so you are going to get excellent service anyway. I think it is just that little boost that they need to have local governments and local ministries supporting them, certainly in the initial stages. We have been very successful. The hospitals in Nova Scotia have treated us very well over the years.

Potential limiters. I sat down a few days ago and thought about this. We don't let anything get in our way. We are pretty aggressive in our approach. I can tell you that for those Nova Scotians who are starting out small companies, we are not known to be great promoters of our own talents and skill sets. I mean, that is a disadvantage to Nova Scotians and I think that is why they need the provincial government and the federal government promoting Nova

[Page 8]

Scotia, more so than, maybe, somebody working out of New York. We tend to be fairly modest about our achievements and that really works against us in the international market. We don't want to be really aggressive and pushy, so we don't actually demonstrate any of those tendencies in the market place. I think, promoting leadership or the leadership in promoting Nova Scotia is very important. We have Innovacorp, which does a great job; Industry Canada and the Nova Scotia Department of Economic Development have as well. But who gets in front of a camera more than the politicians in Nova Scotia?

If you can at least say something when you have the opportunity to promote Nova Scotia technology or life sciences - and I know there have been initiatives to do that. When we look across Canada at provinces that have promoted their own business sectors, every meeting I have been to, everybody says, where are the Frank McKennas, to come out there and just pretty well browbeat the market to say, Nova Scotians can do this job and do it well. It doesn't cost a lot for a minister, a Premier or a member of the Legislature to promote Nova Scotia economy or Nova Scotia businesses whenever the opportunity arises. I am sure that a lot of that can happen behind closed doors as well in inter-provincial meetings. It is not a criticism. I am just saying there is an opportunity there for politicians to promote Nova Scotia companies, because they are in front of the camera, a lot more often than most of us.

Private versus Workers' Compensation Board. This is an item that became fairly heated about a year ago when there was some talk about universal application of workers' compensation. I understand the sentiment behind that, but in our world, in the IT sector, we have Ontario who is promoting the fact that IT industry in Ontario does not have to participate in their Workers' Compensation Board. Because we are in IT we are typically grouped into the financial, the professional businesses and therefore those groups typically purchase private insurance. At the moment that is how we cover our employees, with private insurance. We do not mind paying the premiums. It is experience rated. If our industry has a low experience and use of that kind of insurance, then we benefit from the premiums.

WCB has a significant unfunded liability, as probably most people know, and for the province to ever enforce participation by the IT industry into the WCB program, there might be a significant exodus to markets or provinces where they are flogging that they do not really require them to participate in that. They are quite happy if they buy their own private insurance. It is not a big issue for us because I think we have beat that dragon, but I think in case it rears its ugly head again, someone should be aware of the impact it may have on the IT sector in Nova Scotia.

Personal tax levels. I do not see them as an issue right now, but I think one of the problems we are going to be faced with, and this is a big concern to me in attracting people, is if Alberta and Ontario get their fiscal house in order and are able to offer those tax incentives, we are going to be at a serious disadvantage because I already have employees who I fly to Toronto for two weeks and fly back and they are working with people who are likely to end up with less personal tax than what I have to take from them here in Nova

[Page 9]

Scotia. So right now it is not an issue, but three, four, five years, if we do not get our fiscal gears in order, I can see that as being a real problem for employers trying to attract people. If you can do the same job in one province or another and you get a 5 per cent or 10 per cent break in your taxes, it is not hard to see what will be sitting in front of me as an employer down the road.

Corporate tax levels. Once you go over the $200,000 in profit, it is a big bang; 50 per cent is a lot to take on a small company operation, but we aren't faced with that. We are not dealing with just Nova Scotia and just Ontario now. We have northern Ireland, they would love to have our research and development. We have Phoenix, they would love to have our research and development. Switzerland, I recently came back from Switzerland and the Swiss Government was very happy to have us there. It picked up all my expenses while I was there and treated me very well. There are a lot of countries out there very anxious to have the brains, sitting in this province, in their territory because they are very high-paying jobs and they bring a good tax base and expand businesses beyond that.

Subsidies to foreign corporations. As a Nova Scotia company all I want is a level playing field. I do not need an American company coming in here and being subsidized $15,000 in every one of their salaries, because I am paying the full kit and caboodle on all my employees, plus I am paying taxes, and I am seeing those taxes being used to subsidize my competition. So as a Nova Scotia company, I have spent some time bending some ears when I see some - I am not picking on American companies, but to get that investment in here there has to be other ways, if you are looking to do that, than to subsidize those salaries because they are competing directly with us, with our own tax dollars.

Health and education - attracting employees. Again, when we are talking to six figure IT people out of Toronto or out of Phoenix or out of New York - New York might be at good advantage to coming to Nova Scotia in terms of health and education - we want to make sure we are competitive and I think maintaining those services is certainly part of what our employees or our potential employees are going to be looking for. For those of you who do not have a familiarization of where we are in Nova Scotia, I know that because we have not marketed ourselves, promoted ourselves and even people within our own county sometimes do not even know what we are up to, Frank would be the exception to this point, we have not gone out and told people where we are at. We did not run ATV or CBC banners to say we are in 20 facilities in Nova Scotia. Over the last few years we have managed to penetrate the market with the exception of industrial Cape Breton and, again, we have just come back from there in the last couple of months. We were very well received in industrial Cape Breton, but that is probably the last piece of the geography that we have not actually penetrated the market in.

[Page 10]

[9:30 a.m.]

The little blue dot down here in "Western" is actually our head office. So naturally we targeted those areas first because they were closer, but we are in eight of the nine regional hospitals in Nova Scotia and most of the government does not even realize that we are there, but it is Nova Scotia systems running Nova Scotia hospitals here in Nova Scotia. We are the largest supplier of information systems to Nova Scotia, but we do not brag about it and we do not tell people about it, and I thank you for the opportunity to come here and tell you about it today. I think I probably went over five minutes. I apologize.

MR. CHAIRMAN: That is good, Brian. Why don't you just flip those lights on there so we can make a little eye contact? Our usual format is pretty informal. We have people I know, who have been making some notes, here with questions, so who would like to go first? Yes, Mr. Hendsbee.

MR. DAVID HENDSBEE: Mr. Reid, I was very interested in your presentation. The biggest thing I was curious about when I was reading through the documentation was the compatibility issue in regard to all the information systems, and all the various hospitals are trying to update their systems across the province. When you came across your slide presentation about the compatibility of the various programs, could you tell us what your experience is in regard to the state of readiness that you could say our hospitals are in with our information services? You know we have just gone through the Y2K situation, and they have updated stuff. Could you tell us the state of readiness our hospitals are in and what kind of compatibility or what kind of infrastructure, infusion they would require to get more of the Britech Information Systems on line if it was to be a universal application?

MR. REID: Well I think the readiness I guess depends on your perspective. In terms of other countries such as the U.S., Nova Scotia is further ahead than most in the U.S. states. It came as a surprise to us that Switzerland, with 519 hospitals, only has about 10 per cent of them with information systems. So we are probably covered in Nova Scotia with IT, I would argue, up around 80 per cent.

I think the costs of filling the rest of the void, with our systems again, the order of magnitude of the expense in our systems is quite a bit different than importing an American solution. Typically, for every three hospitals we would implement systems in, the tax return alone to government would pay for a fourth hospital. So we are looking usually around $400,000 per site. That would be your hospital that had nothing, and that is not the case in Nova Scotia. I think nearly every hospital in Nova Scotia now has some level of automation and the wide area network infrastructure that is in place now is probably way beyond what most provinces have.

[Page 11]

I do not think the province has to go a lot further. If they are going to replace everything, if somebody in government decides, okay, we want vendor x from Atlanta or from Boston to come in, you are going to spend probably $200 million or more to revamp everything. If you are trying to fill the gaps, you are probably looking at something in the order of magnitude of $10 million to $30 million. Again, that is to achieve the ultimate electronic health record, and that is a real rat hole because everybody has a different idea of what an electronic health record is. I think the federal government is looking to put money into that and I suspect that it is 10 years, or 15 years, away for them to achieve anything like that.

MR. HENDSBEE: There is a report in the binder we have here that back in 1995, the state of health care information systems - and technology and innovation has probably grown a few generations since that time - in regard to all that, how do you find trying to keep ahead, or keeping up with all these innovations? Is it an expensive proposition or does it require just a simple allocation of the software programming versus actually hard drive acquisitions?

MR. REID: For us, in terms of the company, it is not a problem because we are usually a few years ahead of where the industry can get to because of the financial impact of redoing the systems, but I do not think that Nova Scotia is in a situation where they have to overhaul too much. There was a lot of investment during Y2K with infrastructure; the Novell and NT networks that are in place now will probably serve them fairly well. I think if there is a shortage, it is probably in the IT personnel that are operating within the hospitals, particularly within the rural parts of Nova Scotia.

Bringing a new technology in place has not been a problem because most places have gone Windows-based and a lot of the newest technology just fits into that mold. A lot of the big American companies that we compete with - and, typically, that is our competition; there are not a lot of Canadian companies that we go head to head with - they have some legacy systems which require different types of infrastructure, like huge mainframe-type environments. What we have found is that using the PC-based network, which most of the province has adopted, allows you to do things incrementally and you don't get walloped with a big $30 million, $40 million hit all at once; over time, you can invest your monies into the technology and bring about the same solution without a whole lot of pain.

MR. HENDSBEE: Now, with the real time application stuff, do you anticipate any problems that the hospitals or the various sites across the province would have with interfacing each other? Would there be incompatibilities with the equipment they presently have or has there basically been uniformity in the applications of equipment across the province?

MR. REID: I think there is enough uniformity that if the vendors that are already there want to integrate the existing systems, that it is certainly doable. Again, we will talk with anybody and integrate anything up to a toaster oven, that is not the issue for us, but you may

[Page 12]

find some companies that are unwilling to integrate their systems with someone else because they want the market that you are already in. So, if they agree to integrate, that means that you are the incumbent, you stay there. So, if the province hires or buys systems from companies that are not willing to integrate with existing players, then you are basically handicapping yourself because you really want to participate with people who will willingly integrate their systems with whatever direction Nova Scotia takes.

MR. HENDSBEE: Well, Mr. Chairman, I would like to thank Mr. Reid for coming in. It was very informative, the presentation. I am just hoping that the transcripts of the presentation today will be given to the Department of Health officials as well as the Department of Economic Development, the IT sector, in regard to these thoughts and comments he has made. I think it would be beneficial to both departments to have the benefit of his knowledge and experience.

MR. CHAIRMAN: The point is noted. Mr. Chipman.

MR. FRANK CHIPMAN: You have probably already answered the question, Brian, but I guess I was going to ask, can you supply goods at comparable prices that the province could purchase outside of the province? I believe you already said that in the U.S. and Ontario you are much cheaper to work with.

Synova, the new company that is apparently under construction here now, do you deal with genomics?

MR. REID: Actually, Britech did rather well in the last few years and we are looking for an opportunity to allow our employees to move laterally, if they ever got tired of IT. We wanted to keep these people and life sciences is part of what most of our employees are in, whether it is research and health care or research and laboratory, and we formed Synova Bioscience and Synova Bioresearch to explore the biotech industry and to get involved in the genomics research, particularly in plant transgenics and microbial genetics.

My background is not only in IT, but molecular biology and microbiology and a number of our employees are also interested in those fields. Aside from that, we have a huge resource in the Annapolis Valley of semi-retired Ph.D.s in immunology and pathology here in Nova Scotia who would like to participate in that part of microbial genetics and genomics in general and we just want to give them an opportunity to do that. The monies that we generate through Britech, we are reinvesting back into the biotech sector as well as Britech's expansion globally, but we also see an opportunity to spin off some biotech initiatives in Nova Scotia, Annapolis County in particular, and we are collaborating with Acadia, Dalhousie and the Agricultural College in Truro, the Kentville Research Station and the Plant Biotech Institute in Saskatoon.

[Page 13]

We are very capable of playing in that market and participating there. The chap who actually did the canola thing, which is very big in Canada obviously, came from the Annapolis Valley, so we have a heritage there for working in that field.

MR. CHIPMAN: I noticed what you said about the tax situation. One of the Opposition Parties is always saying corporations aren't taxed enough but I certainly wouldn't agree with it in this instance. I think if you are taxed fairly high - I mean, there is not an incentive there.

MR. REID: Fifty cents on a dollar is pretty high for a company. Again, our revenues are $1.2 million. It is quite a wallop.

MR. CHIPMAN: Just one more question, Mr. Chairman, if I could. Where do you see your company in five years? You are continually developing new products and systems. Have you identified new markets for your product?

MR. REID: Our growth is pretty steep. I am not sure I can see that far out. The numbers get really scary when I go out two or three years. Initially, I was going to be quite happy to have a company with 50 employees. My Vice-President of Corporate Services said, no, no, we want a company with 200 employees. About a year or two ago I said, yeah, you're right, maybe we should have 200 or 300 employees. Now, he's afraid of the growth of the company and that the impact will be quite significant. (Laughter)

This year, we are bringing on at least six more professionals. We are targeting 12 more in the following year and 20 more in the year after that. That is assuming our growth rate, as we know it. We don't understand what happens when we market because we haven't done it.

The accountants that we hire to do our business projections and plans are telling us that revenue is not a problem for this particular company, that structuring the resources to carry it off and building this new research facility, which is targeted for Lawrencetown is part of that. We pretty much have to hang people on coat hooks and put lap tops around their neck at this point.

MR. CHIPMAN: Just one further point. Would you consider going public in the future or will you be able to maintain that private corporation?

MR. REID: We have a lot of people wanting to invest in us right now. We have had a couple of people pursue acquisition of our company. We gave it some consideration. I grew up in Truro and I lived on a farm. If somebody waves $6 million or $7 million in front of you, you sit back and take notice for a few minutes. We had the company valued. It is certainly worth more than that and we are in it for the long haul. If we go public, it will be so that other Nova Scotians can participate in our success. I think that is what we have, a lot of people

[Page 14]

interested in participating privately and we want to give them that option, particularly our employees.

I am quite comfortable doing what I do. I have been a capitalist first and foremost but I think the community colleges and people around me are turning me into a social entrepreneur. I have taken on some responsibility locally in the economic development of Annapolis County and in Nova Scotia, in general, I guess. I take that invitation seriously and I can't overstate how proud we are of this heritage here in Nova Scotia. We fly that flag every chance we get abroad. We are really pleased that we can produce quality systems here in Nova Scotia.

MR. CHIPMAN: Thanks.

MR. CHAIRMAN: The list of speakers is growing here. It is a reflection, I believe, on the interest level you sparked, Mr. Reid. Mr. Boudreau.

MR. BRIAN BOUDREAU: Thank you, Mr. Chairman. In 1999, the Health Minister at that time, Jim Smith, announced the $75 million management system. Your company, in particular, must have been disappointed to see the present government eliminate that program?

MR. REID: Well, I think, knowing what we knew about where the industry was at the time and knowing that, potentially, there was an American company targeted for that, there was no particular RFP in place for us to respond to on that. We are not sure where that was going.

Our company has typically done better in times of restraint than when there is a lot of money around to spend. Any initiative by any government that allows us to participate, we are quite willing to support and, obviously, we would have a good reason to support. The initiative here in Nova Scotia to invest in IT is, certainly welcomed by us, regardless of what level.

MR. BOUDREAU: In your opinion, would such a system save the provincial government money?

MR. REID: I will word this carefully because other IT companies might not respond the way I am going to respond. As a taxpayer of Nova Scotia, I think that, in terms of the money that can be saved from IT today, it has more to do with monitoring the utilization of our resources, as opposed to actually saving inefficiencies out of introducing the systems. There are certainly some hospitals in Nova Scotia that don't have integrated systems and, as a result, they send 25 or 30 trays to rooms that patients aren't even in because the admitting system doesn't talk to the dietary system and therefore we could save a fair amount in a situation like that.

[Page 15]

I think that monitoring the utilization of the services that are being supplied is critical. Our systems monitor this in the background. There are very few sites that actually utilize this function of our systems, but we can tell you what percentage of all the lab results ordered that are normal, we can tell you the utilization by physician, compare physician practices. That tool that we have imbedded in our system, which is not even being utilized at this point, that kind of tool in the IT investment would allow administrators and maybe the Department of Health itself to say, why are we spending $400,000 in this facility doing the cholesterol and triglycerides or lipid profiles on patients who don't even need them?

I think there is a lot more money to be saved in looking at the utilization of the services in Nova Scotia, through information technology, than necessarily just putting the information technology into health-produced reports and things like that.

MR. BOUDREAU: How can the provincial government help companies like yours?

MR. REID: I think promoting Nova Scotia first, and I don't mean buying Nova Scotia because of Nova Scotia, I think we build quality systems. I think promoting Nova Scotia solutions is a good way. I think that realizing that going to market doesn't mean you have to accept whatever is in the market place to solve your particular IT problem. I think coming to companies like ours and saying, this is our problem, what kind of solution can we build to solve this is a better approach. You can't always force a foreign product into the market; you can't fit a square peg in a round hole, and sometimes you are forced to if you don't actually engage the industry like ours and say, what kind of solution can you provide? You want to be sure that the time line is useful for the province. I think engaging the industry that way would give a better solution in the long run.

MR. CHAIRMAN: Mr. Corbett.

MR. FRANK CORBETT: I would like to make a comment first to Mr. Chipman, at times we say some companies are undertaxed, and I suspect then that he is kind of leaking his government's budget for the spring and there will be a tax reduction forthcoming for you, Mr. Reid. His government does hold the purse strings.

I have a couple of questions, pretty much around the horn on a lot of this stuff. The integration from hospitals and physicians' offices, how do you see it done? Will they buy one piece of software from you, and then have to go out and try to sell it to a physician's office, or is that one large package sold at once?

MR. REID: I think that the role here is probably for the province to set a standard for the integration of these products. Let the industry respond to it, because if you buy into a particular package, whether it is ours or another vendor's, you are married to that. A typical example is what happened in England, prior to Y2K; they licensed all their systems or most of their federal systems, national systems, to a particular vendor. Once that vendor had the

[Page 16]

market, there was no incentive for them to innovate and bring new features and functionality to the product. I think in terms of the government's role, setting the standard of communications, what they want delivered, let the private sector respond to that.

We have systems in physicians' offices now. We are actually participating with one of their regional health boards and MTT to trial just this, bringing those clinical data systems right into the office of the physician. We can do that tomorrow. We did that four or five years ago. We actually had physicians' offices who could get the lab results for the person in emergency before they even got through the emergency department. Demonstrating that technology is fairly straightforward.

I think the technology is there, it is just a function of establishing a ways and means to go about it. When you are dealing with physicians, it is always a question, who is going to pay? We can build a system, but typically physicians' offices are not really keen to spend large amounts of money because they see themselves as a company and they have budgets to deal with themselves.

We came up with a solution, between MTT, ourselves and one of the regional health boards. At the end of the day, we said, okay, this technology will work, we can hook all these people together, but who is going to pay? We are sitting there with a solution, not knowing who is actually going to pick up the tab. It may not be an extraordinary tab, it may be $50 a month for the physician's office. The infrastructure, for the most part, is there. The question is, who pays that per office cost?

The Medical Society, again, I know exactly what the picture will look like as soon as it is put on the table. At the end of the day, somebody has to pay the private sector to provide that kind of product or service.

MR. CORBETT: Especially when we are talking about medical information, and it seems that so many eyes and hands have access to it, the big question becomes privacy. How secure are your systems?

MR. REID: I think our systems are very secure, to the point sometimes of being annoying. People don't like to log into certain applications when they leave. We force audit trails so that we know. We have a product called NIRS, which stands for Nursing Information Resource System. It is basically an open filing cabinet at the nursing station and, every time somebody touches a button or looks at a record, it records it. We go into the system, and say nurse x looked at all these records from this desk, at this hospital, at this time, here is what they looked at, or we can say patient Joe Blow, who looked at his records. We can go at it both ways. If a patient feels that somebody saw or had access to some information they shouldn't have, on our system all you have to do is go find that patient and there is a record of every time somebody looked at or viewed those records.

[Page 17]

We are cognizant of that. Again, 80 per cent of our staff came from health care. We are all very cognizant of the issues surrounding privacy. Probably that is part of the issue that physicians will have in mind as well. The real cost to bringing physicians into that link with acute care, particularly the data repositories, is the security. It is the encryption costs that the private sector ask: who is going to bear the burden for that? There is lots of encryption technology out there that allows you to do that even through the Internet, so that it is secure. It basically becomes a private, virtual network as opposed to the Internet, where you go browse Yahoo and things like that. Security is, obviously, first and foremost in everybody's mind.

MR. CORBETT: On one your slides, you had R & D being done in Belfast?

MR. REID: Belfast would really like us to put an R & D office there. Again, they have some health issues in Northern Ireland. Here in Nova Scotia, sometimes we worry about the waiting lists being long, but to have an x-ray done in Northern Ireland, in some of the hospitals there, you may be six weeks before you get the report back. They don't have the IT infrastructure to do it. I don't think that is ever the case in Nova Scotia. They need some R & D work done there for their own market but, by the same token, we have to also be aware that some of the R & D we are doing here, if it starts to cost too much, we may have to ship it offshore to have it done. Having access to that particular part of the picture is important to us.

MR. CORBETT: One final question before I move on. You talked before about the systems and the cost of systems that you probably get when you sell them outside of the province, sometimes they go tenfold. Why is it so expensive? The IT sector, obviously, in the United States is an extremely competitive industry. Why can you down in the Annapolis Valley, do this so much cheaper than, say, Phoenix? I say that, and you can answer it a couple of ways, because you talked about the negative pressures on you here, the possibility of WCB premiums or the fact of taxation and so on. How do you weight that out?

MR. REID: A couple of things. One, the technology we are using is inexpensive. We don't pay royalties on the technology that we use. It is very new technology; it is only five or ten years old. Typically, a lot of the American systems are using stuff that is 20 years old, so they have a huge investment in that technology and it costs a lot of money to maintain it. Again, we are also a small company. We can reinvent ourselves in five or six months if we have to; you can't take a huge multinational and do that. It is like IBM or some of those big companies.

The other part of it, typically in the U.S., is it is a very litigious society. A lot of that money goes into keeping lawyers on retainers because, if somebody gets a hangnail in a U.S. hospital, they name everybody. Even as a software vendor, you end up defending yourself despite whether you had anything to do with it or not.

[Page 18]

Our software systems are non-invasive. They don't deal directly with the patients, so typically they don't require FDA approval or things like that. It is the nature of the market you are in that sometimes dictates the pricing. In the U.S., if we bought errors and omissions insurance just to cover us in case we made a mistake in some hospital in the U.S., it is about $20,000 a year premium, and the deductible is $250,000 before you get any kind of coverage. So you are already out of pocket $270,000 for anything that happens in the U.S.

In Canada, that is not the environment; in Europe, that is not the environment; and in the U.K., that is the not the environment. Typically, we are not over-insuring ourselves for a potential that is not real.

I think the other thing is that a lot of that expense in those larger firms is actually marketing, something we haven't been involved in. So marketing in our industry can get fairly expensive. We are not involved in that so our overhead is fairly low. We probably should have come out with a central patient index that was $120,000 and we would have sold a whole lot more of them. At one time we sold this little package, about six years ago, for $300. No one took it seriously. It did the exact same thing that the $30,000 or $40,000 systems did. So we immediately cranked the price up to $15,000 and we sold 10 times as many as we sold when they were at $300 and we will do the same thing again in the U.S. market. We tripled the prices, put them in U.S. dollars on the European market, and they didn't even flinch when we introduced the product pricing to them.

I think our costs are lower, our approach to market is lower. We don't need the big Toronto Generals, necessarily, to provide our ways and means of being a success. We can target the small, medium and regional size hospitals and do it very effectively. The only way to approach those markets is to make sure you don't have a price tag that is so high that they can't afford it.

MR. CHAIRMAN: Before I recognize a couple of other speakers who have already spoken, does anybody else who hasn't had a question want to ask one? Oh, good, my lead in.

I used to be in the education business, Mr. Reid, and I am intrigued with the fact that your 26 employees, you said in their backgrounds and so on, I would assume that most of them, or all, or whatever, a percentage are educated in Nova Scotia?

MR. REID: I believe, if not all, then probably 95 per cent of them are.

MR. CHAIRMAN: You pointed out and your Britech bulletins are, I congratulate you on, for example, focusing on this young man, Darrell Crooks. A thumbnail sketch of your staff is what I am aiming for. These people, I assume, all live very close or in the vicinity of Lawrencetown. They are young people, I would assume, in this business. The average age, I suppose, is my question.

[Page 19]

MR. REID: I suppose the average age is probably between 25 and 40. At one time I was the youngest person in the company. That is not the case anymore. I think a lot of the analysts that we are bringing in now are 25 to 30, somewhere in that area. Senior management, typically, tend to be in their late 30's or early 40's. Some of them have usually had one or two careers prior to coming to us.

MR. CHAIRMAN: How many of them had to go the proverbial down the road route before they rediscovered the fact that they should stay here in Nova Scotia?

MR. REID: I would argue probably most of them went outside Nova Scotia and then came back.

MR. CHAIRMAN: Mr. Hendsbee.

MR. HENDSBEE: Mr. Chairman, just a couple of other questions. In regard to the telecommunication infrastructure we have in this province, we talk about band width and speed of technology and stuff, we have telephone lines, coaxial cable, fibre optics, now we are getting into wireless communications and satellites. What kind of investment do you think the province, or the industry or the communities should do in regard to trying to facilitate this type of communication infrastructure to facilitate the information data, a system similar to yours? What is required out there?

MR. REID: I think we have a pretty good head start with the wide area network that is in place now, DSL, which is the new, high speed Internet access, in making that available to rural Nova Scotia which will allow the rural physicians and rural facilities to get a lot quicker access to this completely integrated system. I couldn't speak to what kind of an investment that would take although we do work with MTT in some regard to address this. I think compared to the rest of Canada and compared to the rest of the global market that we are involved in, Nova Scotia is doing pretty good. I think we are moving along in the right direction. We all want more speed and we all want more band width just because the solutions we can provide are much different the better access we have. If I had to paint a picture about where we are in Nova Scotia, I would say we are doing pretty good compared to the rest of the countries that I have been involved with.

[10:00 a.m.]

There are other issues outside of IT that obviously concern me but I don't know how far you can push because we still have to remember that we are 900,000 people or so and the tax base to support some of our initiatives, sometimes we take on Toronto metro solutions with only 900,000 people to pay the bill. So I think that part of the difficulty for a company like MTT, is that they still have to get a return on their investment, if it is a private company like MTT or Rogers or whatever. Demographically, the concentration of people isn't that high.

[Page 20]

I went to the U.K. and found they had surpluses in hospital budgets. I haven't seen surpluses in any hospital budget ever in this area. So it is a different animal in different places. They can afford these IT advancements maybe a little quicker than we can. The reality of it, however, is that they don't invest in them or they are much slower than we are to adopt them. I am not sure why that is. Nova Scotia has always been ahead of the rest of this country in its adoption of the Internet and IT solutions.

MR. HENDSBEE: I have a couple of questions in regard to competitiveness or competitors. Could you tell us, on the vendor side, who are some of your major competitors that you deal with directly, head to head, in regard to this information systems for health care?

MR. REID: Well, certainly Medi-tech out of Boston is one that we have gone head to head with. HBOC is a prominent player here in metro but I don't know that we have actually gone head to head with them. They are known as an integrator as well so I don't think we have ever had a problem dealing with them. There are a couple of companies in Canada, MediSolution Ltd., but we are more likely to partner with them than compete with them and I think there is another one called Triple G Systems Group, Inc. in Ontario and there may be one out West. There are only a handful of companies like ours in Canada. There is no company like ours this side of Montreal that is based in Canada. There may be some international companies that have an office here.

MR. HENDSBEE: In regard to competition elsewhere, we have the Kanata area in Ontario, we have San Jose in California and Charlotte, North Carolina, there are technical silicon areas. You from the Annapolis Valley, you can try and make yourself your own Silicon Valley but my only concern would be how do you see our province trying to advance the IT sector in regard to what is going to be required in taxes and for allowing the reinvestment of retained earnings without capitalization on the taxes on that or the capital gains requirements? What do you think is going to be required for us to make it to the point where you don't have to go elsewhere because of the taxation rules because basically I think your loyalty to the province and to the area is commendable but the almighty dollar is going to sometimes dictate some management decisions. At what point do you think is going to be a threshhold where you are going to have to say yes or no, I am sorry Nova Scotia, I would love to stay here but the problem is these incentives are just too great to ignore?

MR. REID: The incentives are pretty good in other places. I think if I had to pick one out of the menu of things that we could do, it would be allow us to reinvest our profits back into the company. Despite what the big, bad corporate image is, that we don't pay any tax and things like that, we are not looking to head to the Caribbean with all of our profits. I think that if we are able to take some of the profits and reinvest them back into the company, I think that serves the province. It certainly serves the interests of the community that are supporting that initiative. I haven't explored it to the extent to know whether there is anything that we can act on but I know just this past year, if we were able to reinvest a significant

[Page 21]

portion of what effectively goes to Ottawa or wherever, then we don't have to try to claw it back out of the system through some kind of grant process or R and D tax credit process. Let us fund our own reinvestment.

We have portfolio managers from Scotia McLeod and other organizations who come to say, you know, let us set up - they know we are successful - let us set up opportunities for you to invest your money and we are saying we can get a better return investing our money back into our own company than we do giving it to somebody else to do. So we want to put the money back into our own company. I think whatever kind of formula allows us to do that, regardless of what incentives are elsewhere, because we want to be here, I think that alone would certainly turn the tide on anybody participating in any kind of brain drain outside of Nova Scotia.

MR. HENDSBEE: My last question is in regard to taxation incentives. Just out of curiosity, what would be the salary range of your employees in regard to, you know, just to get an appreciation of how many people you have on staff and the average salaries you are paying, the income taxes? They are paying through the payroll versus how you have to pay on your corporation taxes.

MR. REID: From our junior analysts who are just around $30,000 to over $100,000 for senior analysts and senior managers. Attracting senior managers in our business is very expensive. I know I have interviewed one operations person six times now. The starting salary is $115,000 a year plus bonuses. So that is where we are at in this business and if I want those analysts with 10 or 12 years experience, that is what I have to pay.

MR. HENDSBEE: Out of curiosity, what is your global payroll right now?

MR. REID: I think we are somewhere around $0.75 million.

MR. HENDSBEE: For how many employees?

MR. REID: We have 12 core people plus another 12 to 15 contract people.

MR. CHAIRMAN: It is a really touchy topic, you know, salaries. I do not know if you have been following (Interruptions) Anybody here from the media who wants to deal with this one? Okay, Mr. Chipman and then Mr. Boudreau.

MR. CHIPMAN: I just have a couple of brief questions, Mr. Chairman. Brian, your new facility, I notice it says here you are presently under construction. What is the value of the new 12,000 square foot building?

[Page 22]

MR. REID: The empty building is somewhere between a $1.5 million to $2 million facility. It is also part of the Smart Community Project which the Western Valley Development Agency won the competition federally. There are 12 communities around Canada that actually are participating in that. They have actually asked if they could participate in that to the extent of helping bring the high speed lines into that new research facility, but in terms of investment it is about a $2 million investment in Annapolis County.

MR. CHIPMAN: I read an interesting article the other day. It was in the October 23rd edition of Maclean's Magazine and not to point questions at my colleague across the table from the NDP, but in Saskatchewan they have closed 58 hospitals. Six years later they did a survey and they found that 85 per cent of the people were very satisfied with the health care system, but the unique thing that was there, what was very interesting about it was that the people were healthier in the communities now that did not have hospitals than when they did have them. Anyway I guess my question is, which I am leading up to, do you see where efficiencies could be achieved to save money in the health care system in Nova Scotia?

MR. REID: I am not going to carry that one out the door. As I mentioned earlier, I think that we are 900,000 people trying to provide as much service as we can for those people there. Boy, I tell you I could probably make more money in the public sector if I knew the answer to that one.

MR. CHIPMAN: I am not asking you to point anything out in particular, just do you see inefficiencies that could become more efficient?

MR. REID: I think utilization. I am not saying too many people are going to emergency or that type of utilization. I think that we spend a lot of money in diagnostics and technology and, again, that is why I say some other IT companies might frown on me even saying that. As a Nova Scotian it matters not to me whether I have got a nice looking x-ray report so much as whether there are enough nurses there to deal with the issues at hand, but by the same token I think that we can use the IT infrastructure that we have in place to look at how we are utilizing the services. It would take a serious shift in our approach to health care to change the way we utilize those services.

For the most part I think our services are physician driven. So if a physician is doing the ordering and no administrator can tell a physician how to practice, which may be appropriate, then you have to get a handle on how those services are utilized I think and software like ours can actually tell you where it is being utilized and how it is being utilized. We can ask our systems, give me a list of all the females between 35 and 45 who have cholesterol greater than such and such and let's follow that. I think the outcome measurement is a piece of the IT picture that this province probably wants to pursue, the federal government, certainly is seeing an opportunity there. It is an accountability. Is the patient actually better when they leave?

[Page 23]

As I mentioned in Saskatchewan, somebody has taken the time to go back and find out what was the outcome of the way these people were treated and I think right now we have a system called CIHI where we send abstract information to Ottawa. They come back and tell us, yes, this patient had a heart attack, took five days in the hospital and cost x number of dollars. Well, that does not tell us how many weeks the patient spent at home in agony because of a post-op infection, or whatever, and was not useful to their employer, to their local community or whatever. So I think measuring the real outcome of the treatment we are giving patients has some value and I think the IT part of that is important, that you need those kind of solutions to actually track the outcome of these people.

We are engaged with a number of organizations and specialists in Nova Scotia to do just that. We are trying to get ahead of the market. We are producing products now that will meet those kinds of needs when governments and health facilities start asking those questions. For the most part they are in place.

MR. CHIPMAN: I guess we have to have a lot of faith in what we read, but it is my understanding that B.C., Ontario and then Nova Scotia, that we are third; we have the third highest paid positions in the country and yet also what we read, we have the lowest per patient funding of any province in the country. I think we are $20 and there is a very little variation. I think the highest is $200 per patient and we are at the bottom, $20 less per year than we will say Prince Edward Island, but you talk about Ontario and places having a surplus in their budget and it is the first you have ever seen that. Any idea how you could explain that because I know you were in administration or you were with the hospital in Middleton at one time. Here is Ontario, we will say, that has a surplus in their health care budget. We spend less per patient and we have the third highest paid positions. Where has the money gone? Where does it go? Don't be specific because I do not want to put you on the spot here.

AN HON. MEMBER: Please do.

MR. REID: I do not know. I went through 12 years in the health care industry, particularly in the public sector. It went through cuts from probably 1986-87 through to until I left in 1996 I guess. I think getting towards the end of the 1990s, I could not see possibly where any more cuts, I just could not visually see where you could cut back any more without really hampering the service to patients. The patients in Nova Scotia I think were really protected by the level of - how will I put this? I think the commitment that the staff in health care has is way beyond what you might find in the private sector. So they compensated for a lot of the cutbacks.

Where you can go from here, I honestly do not know. I know there are other initiatives in Ontario. At one time they were allowed to keep their surpluses which there is no incentive for a hospital in Nova Scotia to, necessarily; I am not saying this because they do not do this, but if you do not have an incentive for people to move in a particular

[Page 24]

direction, physically they do not. I do not think in the U.K. it is so much that they are incented to spend less money or be efficient in the way they deliver health care, they have a huge tax base. They have millions of people in a very small geographic area and they have the money to do it with. So I do not know that we have an easy answer and with whatever our debt load is, paying interest on that, we could probably run three-quarters of the hospitals in Nova Scotia with what we pay in interest.

MR. CHIPMAN: Exactly. It is similar to, and I am assuming it is part of the same situation with the health system; the Department of Transportation for years had a budget and it was either use it or lose it. There was no incentive to economize. When the end of the year came, if you did not use that budget up, they would cut whatever, if you had any extra, you would get cut that amount next year and that is not an incentive.

MR. REID: Right, and I do not know what the happy medium is. I am not a big supporter of HMOs in the U.S. either.

MR. CHAIRMAN: I will go to Mr. Boudreau and recognize him as the last questioner.

Is it agreed?

It is agreed.

Brian.

MR. BOUDREAU: Mr. Chairman, I just want to understand your reply. When I asked you about when the Health Minister, who at that time was Jim Smith, announced $75 million for the management system, I believe you indicated that it was designated for an American firm? Is that correct?

MR. REID: The perception within the industry was that it had been targeted for a specific company. Now, no one is ever going to tell me that that was the case but, again, there isn't too much that happens in the province that we do not find out about or know about and there was certainly some support for an American solution at the time. We do not object to someone bringing in a solution as long as they are bringing in a solution provider that is willing to integrate or work with the companies that are already here. Our perception of that particular company is that they were one that weren't really willing to integrate or participate with other companies. While we certainly support the initiative to improve the management information systems, it put the fear of God into us in that basically here comes a big American company and we may as well move our operation offshore somewhere else because they are known not to necessarily cooperate with existing companies. So, yes, it concerned us.

[Page 25]

MR. BOUDREAU: Isn't it true that Dr. Smith used your system? I know he did in Cape Breton, is that not correct? Wasn't your company involved in the management system in Cape Breton?

MR. REID: No, the only systems we have are in the western part of the Island, the Inverness part of the Island. We would love to participate in regional (Interruptions)

MR. BOUDREAU: When your company was formed, did you receive any government assistance?

MR. REID: We received some ACOA money to help put our first facility up. That was, I believe, in 1997.

MR. BOUDREAU: If I understand your comments correctly here today, and I just want to be straight on this, didn't you indicate that you were against subsidies to business?

MR. REID: These are repayable loans and as long as the playing field is level, I have no problem with that.

MR. CHAIRMAN: Mr. Reid, on behalf of the committee I would like to thank you for your time. If you have a few wrap-up comments, please go ahead.

MR. REID: I thank you for the invitation and the opportunity to tell folks a little bit about our company. Again, to let you know that we are still waving the Nova Scotia flag when we are abroad. We are pleased with our presence here in Nova Scotia. We would like to see our presence here continue and we would like to grow our company out of Nova Scotia. That is not necessarily just the Annapolis Valley. We have considered an office, actually, in Cape Breton. We have made a couple of trips up there. We look forward to continuing working here in Nova Scotia.

MR. CHAIRMAN: Again, congratulations on your initiative and best of luck to your company in the future. Keep in touch with us, please.

MR. REID: Certainly, thank you very much.

MR. CHAIRMAN: Thank you. Perhaps we could just take a moment and I could have the Chairman come to his appropriate spot and we could finish off the rest of the agenda.

[Mr. Brooke Taylor took the Chair.]

[Page 26]

MR. CHAIRMAN: I wonder if I could bring a couple of things to the committee's attention, just a couple of loose ends perhaps we should tie up. I possibly should begin by thanking Mr. William Estabrooks for chairing the previous meeting and as far as I am concerned did a great job.

Darlene has graciously sent out our annual report. Do committee members have any amendments or corrections or things they would like to see included in the report that isn't there and if you do, could you please let us know.

MR. BOUDREAU: Is that right now?

MR. CHAIRMAN: That is right now.

MR. HENDSBEE: Well, I haven't seen it. I am a substitute member.

MR. CHAIRMAN: What I am getting at, if committee members have had a chance to review the annual report and you don't have any amendments, there is a statement of submission where we can sign it off as committee members.

MR. BOUDREAU: Mr. Chairman, just on a point. In all fairness, I have only attended a couple of meetings. I did see the annual report. I have read it. I, personally, don't have any problem with the report. However, because I was not a member of this committee, I have asked staff of the previous committee member to analyse the report and to provide comment to me. To my knowledge, I did not receive that comment. I guess what I am trying to do is buy some time. If we could do this next month, or at the next meeting, that would probably be more beneficial to me, as a member of this committee.

MR. CHAIRMAN: That seems reasonable, Brian. I don't think anybody would have any problem with that. I don't have any problem. In fact, I would again like to commend Darlene for working up the report and congratulate all committee members for putting in a good effort. Again, I didn't realize how active, productive and busy, we were. Anyway, when you get an opportunity, committee members, I am certainly going to sign the submission because I think it is a good report and maybe we can pass it around and those who are ready can sign and those who aren't can defer signing until they are satisfied.

Our next meeting is on November 21st from 9:00 a.m. until 11:00 a.m. and the witness is the Information Technology Industry Alliance of Nova Scotia, Mr. Mario Demello is the Chairman and I understand he is going to come in and make a presentation. The meeting after that, that is scheduled, will be with MacTara Limited, the largest sawmill producer in Nova Scotia and perhaps Eastern Canada and I see Mr. Allan Rees has agreed to come in on behalf of MacTara.

MR. HENDSBEE: From the beautiful Musquodoboit Valley.

[Page 27]

MR. CHAIRMAN: Yes, from the beautiful Musquodoboit Valley. They employ approximately 400 people so I know we will have some interesting questions for Mr. Rees.

Something that concerns me, and it is probably as much my fault as anybody's is the length of presentations - this is no offence or disrespect to the presenter we had today - but we have to, if possible, I know Darlene does a good job of sending out information outlining the schedule relative to the hearings but we all have very busy agendas and I don't think any individual's schedule is any busier than the other's. I am hoping that somehow, and we don't want to be impolite to our guests, because we really appreciate them coming in, but I would open this up for discussion, what do the committee members feel? Do you feel it is okay the way we are doing things or should we be a little more regimental, so to speak? What are your thoughts, Mr. Estabrooks?

MR. ESTABROOKS: For example, with Mr. Reid here today, it works quite well because there is one presenter, one spokesman on behalf of whatever witness group is here but if you have, and we have had in the past, three or four people and we allow them all to speak, not that we want to shorten it but the key part of these exchanges are the questions and the answers and as much time as is available has to be assigned to that. If you have four presenters here - and I don't know how Darlene presents that - if they all want to speak or we would only like to have a couple of them speak, how can you say no if they all want to speak, but then again it has to be made very clear that the key part of this exchange is, of course, the question and answer part.

MRS. HENRY: I do tell them that in the exchange, in the letters and the phone calls, to have the one spokesperson but if they want to bring staff with them they can answer backup questions. However, when you do tell them to keep it to a certain time-frame, of course they go over. They are here and they are speaking and they have your attention. At the last minute things do happen, whereas do you mind if somebody has a word or two and whatnot during the presentation. So even during the phone calls and the letters and stuff, we do give them an outline as to what they are supposed to do. It never gets followed to the letter exactly, with the one exception of the Nova Scotia Cultural Network that we had in here one time. Otherwise, you can only do so much.

MR. BOUDREAU: Mr. Chairman, again I am a new member of the committee but from what I have seen, I will refer to today. I thought it was a very informative meeting and I, personally, learned quite a bit. I support the system that you now have in place.

I believe that some of the questions you are asking are really at the discretion of the Chair. I feel that we have a very reasonable Chairman on this particular committee - and Vice-Chairman, I may add - I support the way we do business here today.

MR. CHAIRMAN: Thank you, Brian.

[Page 28]

MR. FRANK CORBETT: Mr. Chairman, I agree with you. I think we get more information out of these hearings when we have a more informal setting. I think maybe we should be cutting back on the presenters and tell them, you know if we want to give them 20 minutes, tell them 10 and then they may hit the 20-minute target. (Laughter)

MRS. DARLENE HENRY (Legislative Committee Clerk): That is what they get. We tell them 5 or 10 minutes.

MR. CORBETT: Yes, which is what we need, because while we do get information from them, which is appreciated, I think I appreciate even more the Clerk's position, where she is always giving us ample information that, if we read it beforehand, a lot of this is already plowed ground. I think, as Mr. Estabrooks said, it is important that we get our questions in because that is what a lot of it is here for, for constituents and so on, that we may have said, well, you know, Britech, who are they and we get some questions on it.

I think, without going on too long here, generally this works really well, with the exception of when we come in with partners. You will see three or four groups about one business concern, where they each want to bring in their own dog and pony show so it takes up too much time. Ordinarily, it works really well. Thank you, Mr. Chair.

MR. CHAIRMAN: Thank you, Frank. Any other comments? Mr. Hendsbee.

MR. HENDSBEE: Mr. Chairman, not being a regular member of the committee, but a substitute a number of times, I do appreciate the context and the format you are presently using. I think it depends on the nature of the presenter in regard to what the topic of the day is going to be. For instance, today's topic, the information that was in the binder is quite informative but the timeliness of the information is another thing. You had one report from the Department of Health that was 1995 and you had a very limited Hansard area, because this is the new field of new technology and there is not much information or discussion that has been held in the public forum about this. I think giving the latitude to the presenter today was very informative for us in regard to other topics we have had on this committee.

Some of it has been rather extensive information; for instance the background on the gypsum exploration and mining that we had. There was quite a bit of information on that. We had the benefit of the doubt of having three presenters that day and a lot of questions answered, so I don't see any difficulty in the format you are presently exercising. I would encourage you to continue it.

MR. CHAIRMAN: How about you, Kerry? You are a regular committee member.

MR. KERRY MORASH: I am a regular committee member, and I have not seen many problems with the way we have been going. I agree that when you have three presenters and everybody is trying to get their points in it, sometimes that drags things along a bit.

[Page 29]

There always does seem to be ample time for questions. As today, the information is new, as Mr. Hendsbee says, so it was important to get an overview and it was, certainly, informative. I believe that the presentation length today was right on the money and the question and answer was the same, so I have no problems with the way things are going. I guess we try to keep things going the way we are, but I am not sure that it is an advantage to get more regimented, as you said, just for fear that people prepare and put a lot of work into these presentations, and we certainly want to allow them to speak their piece when they get here and not feel hampered in any way. I think the way we have been going has been very good.

MR. CHAIRMAN: Okay. I certainly appreciate the comments of committee members. I was concerned a little bit that we may have been or, in fact I might have been, straying a little bit from the unwritten protocol of this committee. Some committee members have expressed to me - frankly, a number have - that they appreciate how informative the committee hearings are, but they feel sometimes that the presenters do go on a little bit too long. Likewise, I had it expressed to me this morning that a few of the questioners - and I am as guilty as anybody - perhaps, are not, I don't know if you would say conscious enough or cognizant enough of their fellow colleagues who might want to get a question in. You know, some questioners may ask three, four, five, and we do try to be as courteous as we can to each member because everybody has something they want to contribute to any given hearing.

Maybe we can continue as we have and, if anybody has any concerns, bring it to my attention or to Bill's attention, as the Vice-Chair, and we will certainly try to address those concerns. Anyway, we meet November 21st, 9:00 a.m. to 11:00 a.m. and carry on as per usual.

Do we have a motion to adjourn?

MR. CORBETT: I so move.

MR. ESTABROOKS: Seconded.

MR. CHAIRMAN: The meeting is adjourned.

[The committee adjourned at 10:31 a.m.]