Thursday 19 November 1992

Review of special audit on Toronto General Division of the Toronto Hospital

Toronto Hospital

Fraser M. Fell, chairman, board of trustees

Dr Alan Hudson, president and chief executive officer

Denise Arsenault, chief financial officer

Committee business


*Chair / Président: Mancini, Remo (Essex South/-Sud L)

*Vice-Chair / Vice-Président: Cordiano, Joseph (Lawrence L)

Callahan, Robert V. (Brampton South/-Sud L)

*Cousens, W. Donald (Markham PC)

*Duignan, Noel (Halton North/-Nord ND)

*Frankford, Robert (Scarborough East/-Est ND)

Haeck, Christel (St Catharines-Brock ND)

*Hayes, Pat (Essex-Kent ND)

Johnson, Paul R. (Prince Edward-Lennox-South Hastings/Prince Edward-Lennox-Hastings-Sud ND)

*O'Connor, Larry (Durham-York ND)

Sorbara, Gregory S. (York Centre L)

*Tilson, David (Dufferin-Peel PC)

Substitutions / Membres remplaçants:

*Wessenger, Paul (Simcoe Centre ND) for Ms Haeck

*In attendance / présents

Also taking part / Autres participants et participantes:

Mischenko, Nick, director, special assignments branch, Office of Provincial Auditor

Otterman, Jim, Assistant Provincial Auditor

Clerk / Greffiére: Manikel, Tannis

Staff / Personnel: McLellan, Ray, research officer, Legislative Research Service

The committee met at 1006 in room 151.


The Chair (Mr Remo Mancini): The standing committee on public accounts is called to order. The members of the committee would like to give a warm welcome to some visitors from the state of Victoria in Australia. The delegation that has joined us this morning is part of an audit team, and the leader of the delegation is Mr David Sturgess. We want to warmly welcome everyone here. We hope the work of the committee is of interest and also very informative to our guests.

As members will recall, last week we continued to review the auditor's report regarding the inspection audit of the Toronto General division of the Toronto Hospital. We're very pleased this morning that representatives of the hospital are here to join with us to discuss the report. I would like to ask Mr Fraser Fell, chairman of the board of directors, to introduce the delegation that is here this morning. We're anxious to hear your comments and to participate with you in the review of the audit.


Mr Fraser Fell: As already mentioned by the Chair, my name is Fraser Fell, chair of the board of the Toronto Hospital. With me today are Ms Naju Shroff, a partner of Arthur Andersen, board member of the hospital and chair of the board's audit committee; Ms Denise Arsenault, vice-president, finance, of the hospital; Dr Alan Hudson, president and chief executive officer of the hospital; Mr John Callum, controller of the hospital, and also Mr David Allen, assistant vice-president, public relations, of the hospital.

As most of you know, we requested of the Chair of this committee the opportunity to come back to the committee following your receipt of the final report of the public auditor and after your review of the allegations with representatives from the Canadian Union of Public Employees. We welcome this opportunity to meet with you again, and we trust that we can, with your support, put these allegations behind us and get on with the task of looking after the thousands of patients from across this province who come to us for the very best in health care services.

While my formal remarks will be quite short, we are prepared to answer any of your remaining questions.

The board of the hospital has carefully reviewed the final report of the Provincial Auditor. The trustees, as you might expect, treated this process with extreme concern, particularly as the same questions had been raised during the first audit. As a board, we were convinced that the allegations were totally false. To hear the same allegations raised one more time and to have the auditors sent back to the institution a second time was a major blow to our board.

As very busy volunteer board members, they accept their responsibility for governing the hospital with a dedication that I have seen rarely matched in any other organization. Not only was our hospital's image brought into question throughout this process, board members, including myself, senior hospital administrators and others directly related to this hospital, were maligned to the point where legal action was a consideration.

In the words of the Provincial Auditor: "The union representatives were unable to provide us with substantiating evidence for many of the concerns raised. We concluded that, with the exception of operating problems with the new computer system, the concerns were generally without substance or were overstated."

The board of trustees accepts this finding. We are not pleased that the taxpayers of this province, at a time when funds are very short, were needlessly forced to underwrite the direct costs of the special repeat audit, not to mention the considerable waste of time by this committee, hospital staff and the office of the Provincial Auditor. We are convinced that we have been exonerated. We assume you also must believe this to be the case.

You are, I'm sure, going to ask me about what action we might take against those parties or individuals who, without thought to the damage their unfounded allegations might cause, created this situation.

I should note for the record that on at least two previously documented occasions in the past year, union representatives were given every opportunity, including the provision of forensic accountants, to review their concerns and to provide any proof or any substantiating evidence to support their case to the hospital or to external accountants. They chose not to participate.

The board has considered this issue very carefully. I am here to state to you that no disciplinary or punitive action is planned or contemplated against any party as a result of these proceedings. The results of the special audit speak for themselves and we are prepared to leave it at that.

Why do I say this? I am pleased to note that on Tuesday morning of this week, Dr Hudson, in his capacity as president of the hospital, met with Mr Roman Schyngera, president of the Toronto General CUPE local, Mr Ron Moreau, national business representative of CUPE, and Mr Michael O'Keefe, co-chair of the union-management committee. The purpose of that meeting was once again to extend to CUPE an invitation to participate in open, ongoing dialogue. We agreed at that meeting to put the past behind us and to work together to improve labour relations.

CUPE was asked and indicated that it would return to active participation in the labour-management committee. CUPE has agreed to bring its concerns to the table for discussion and clarification. We are once again optimistic of their full participation in the planning and decision-making processes and structures of the Toronto Hospital. We believe they are sincere, and we are prepared to work with CUPE and its many members who are so vital to the operation of this hospital.

The events of the past year have taught us all some very important lessons. Open communication is essential to today's management. We all recognize that times are changing. If we learn from the experience, we are all the better for it.

Since the special audit, the Toronto Hospital, for example, has initiated open board meetings and becomes one of the first teaching hospitals in Ontario to do so. In keeping with a more open approach to hospital decision-making, and to make the hospital more accountable to the public, we have also struck a community advisory committee made up of representatives from across the spectrum of communities served by this hospital. I have also referred to the labour-management committee initiated by Dr Hudson shortly after he became president.

The citizens of this province will continue to be well served by the Toronto Hospital. The board of trustees is committed to ensuring that hospital funds are well managed in accordance with sound accounting principles.

We now have a renewed commitment from CUPE to participate as a partner with the other unions and to bring their concerns forward. Through this whole process, we have become more open than at any time before in our more than 150 years.

Mr Chairman, I have no further comments but would ask that Dr Hudson be permitted to make a few comments.

The Chair: Thank you, Mr Fell. Please go ahead, Dr Hudson.

Dr Alan Hudson: Mr Chairman, ladies and gentlemen, I'd like to make some remarks to this committee to give some background to four particular issues which were raised during the discussion: the question of whether or not CUPE had access to internal mechanisms within the hospital to allow its concerns to be discussed; secondly, the question of whether or not the hospital ever denied the allegations that were made in a fashion that was clear to CUPE; thirdly, the question of how seriously the government and particularly the Ministry of Health took the allegations and their response to it; and, finally, a brief remark about the expense to the taxpayer of this exercise.

What I have is a series of letters, and I'm sure time does not permit me to read all these letters at this time. What I'd like to do is hand them in to allow your colleagues at this committee to read them at their leisure. So I'll make a very brief remark from each of these letters, and you will then have access to them to ensure that my remarks are not out of context.

The Chair: Do you have copies of the letters?

Dr Hudson: I have them here and I will give them to you, sir.

If I may just move through this, with that background, the first letter is dated October 29 and is addressed to Margaret Mottershead, the assistant deputy minister. It refers to many points which she raised and requested information on, one of which, in terms of human relationship, was, "On 24 July 1991 I invited the heads of the unions to meet with me on an informal basis to discuss a variety of issues." So the process in which CUPE was repeatedly invited to participate started on that date.

The next letter is on November 12, 1991. It is addressed to Frances Lankin and is actually signed by the then chairman of the board, Mr Crossgrove. Again, in response to several concerns raised by her related to these various allegations, Mr Crossgrove reports: "The hospital began an investigation into the patient computer system in September." It also outlines the investigations, both of them external to the hospital, by third parties, of the Begley situation. The dates of that are, again, in this documentation.

In a letter of the 14th written to Mr Al Wahid, president of Local 1744, there's again a record of meetings in July, and a meeting with Mr Rosario Marchese in September -- and other records which you can read about invitations tendered by the hospital to participate.

The Chair: Can I ask you a question about those meetings in September with Mr Marchese? In what capacity was he meeting with whom?

Dr Hudson: I invited Mr Marchese to the hospital. He is the MPP in whose riding the Toronto Hospital exists. I was new on the job, and there were two reasons. One, I wanted to meet him on the matter of helping each other do our jobs, respectively, and that was the basis of the meeting. The second was to explain to him the fact that we had layoffs coming down the line and they were going to occur in his riding. I wanted him to have some notice of that ahead of time.

The Chair: I see. Did you have further correspondence with Mr Marchese after that initial meeting, in any regard?

Dr Hudson: I had further correspondence not directly with him, but I subsequently had a meeting with him. I have correspondence about him. I subsequently had a meeting with Mr Jack Shapiro in his office here the other day to iron out the differences which arose following that meeting.

The Chair: Thank you.

Mr Hudson: If I may continue, on November 14, we have documentation of letters --

The Chair: Could I interrupt you, Dr Hudson? Mr Tilson has a question.

Mr David Tilson (Dufferin-Peel): One of the concerns I have, Mr Chairman, is that we've gone through all this whole process and we're now hearing that the Minister of Health has had some knowledge of all of this, and I would imagine that at that time the member who represented your area was also a member of cabinet; at least I would assume that. I would like to hear more about that, about what Mr Marchese --

The Chair: Could we allow Dr Hudson to finish his presentation, and then we'll go back to your specific question.

Dr Hudson: I'd be happy to discuss it further.

The Chair: Thank you.


Dr Hudson: In the letter I was discussing now, to Mr Al Wahid, I noted in November I had a very satisfactory meeting with Sylvia Blanchard and Mr Jim Fraser, who are the presidents of the ONA unions who were, in fact, participating in the practices we'd put in place to resolve these issues, ending:

"It seems to me that labour relations at the Toronto Hospital have not been the best for several years now. I am sure that both you and I would wish it otherwise; I look forward to meeting with you and starting a process of improving labour relations at the Toronto Hospital."

A letter of November 20 and on the record to Mr Schyngera:

"I was delighted to hear from you that, as president of your union local, you wish to participate in this process." That process refers to the strategic planning process of the hospital, which he stated he would participate in, and particularly discussing further the issue of funds, which was a major issue at the hospital at the time. "I would appreciate it if, as much as possible, your plans," which were for the budget, "could be accompanied by a business case in each instance."

A letter of November 25, 1991, to Mr Schyngera and to Mr Al Wahid:

"I thought we made significant progress at our meeting on Friday 22 November....I was particularly interested in the long list of issues which you raised with regard to Begley and Associates, and I am especially concerned about the allegation that Bill Louth," who is executive VP, "has been less than truthful with the auditors.

"I am arranging for you to meet with Mr Grant Jones (of Ernst and Young), who is auditing the Begley and Associates situation. I want you to have total access to him and to feel free to bring all allegations to his attention. It is essential that you be as specific as possible and that you document issues as fully as possible. I am sure you understand that when we make a decision it will have to be based on fact and not allegations. If you have allegations about inappropriate tendering, for example, I believe it would be reasonable to make that allegation and then back it up with some specific examples. Similarly, if you have concerns about conflicts of interest, please state the allegation and then give specific examples. The allegations against Bill Louth will have to be backed up."

I tell you, although it was a private meeting, that I was assured there would be no problem whatsoever of proving these allegations. In fact, "We have shoeboxes full of evidence."

I have a letter to Mr Jones discussing the setting up of the forensic accountants.

On November 28, 1991, a letter to Mr Al Wahid, again on several issues, but with regard to Begley and Associates: "Without breaking the confidentiality of our discussions, you will remember that you made several extremely important allegations with regard to this subject. I asked you whether you could substantiate these critical allegations and you assured me that you could." Then, as you well know, they subsequently did not step up the line. So the documentation of that process is here.

A letter of December 9 to Minister Lankin about several issues, but specifically with regard to the external review of Begley and Associates, ending up:

"After very careful review of the documentation and an historical review of the relationship of Begley and Associates with the Toronto Hospital, the following conclusions were reached.

"(1) No evidence is forthcoming to suggest any impropriety or breach of trust.

"(2) The arrangement has been to the hospital's benefit.

"(3) Taking into account (1) and (2), the decision is made to maintain the relationship...."

On December 10, a letter to Mr Schyngera:

"Dear Roman,

Re: A management and union forum on teamwork." This was a two-day event attended by a team from both management and labour, in which we invited him to participate -- and they did -- and in fact paid his way, as we paid for the union members, in excess of $1,000 each.

We now come to an extremely important letter with regard to these allegations and the claim that they were not refuted, so I will read a few more sentences from this letter. This is dated December 12, 1991, and in the letter is the claim of "[an] incredible amount of funds [that] have been squandered in an unjustified manner" and claims of "misspending" and "frivolous spending."

"In yet another document issued and circulated by CUPE...on 7 November 1991, certain members of the board of trustees are described as `blood-sucking vampires' and it is stated that they `must be driven out of the community.'"

In addition, there were claims that Mr Bill Louth owns shares in Begley, which of course would have been a massive conflict of interest -- incidentally, totally untrue; not a shred of evidence. There were claims against Mr Fraser Fell; Mr Alf Powis, who was here at this delegation before; against Mr Vickery Stoughton, that he held shares in a major vendor; against Sandy Twyon and against other people at the hospital, including myself.

"These statements are completely false and defamatory of the board of trustees, the Toronto Hospital and its president. They suggest, falsely, that members of the board of trustees and the president of the Toronto Hospital are acting for reasons extraneous to their public duties and not in the best interests of the hospital. They call into question the integrity and the good faith of the board of trustees and the president of the hospital."

That is dated December 12, 1991.

I have a letter to Gail Houston, another member of the government team, hospital coordinator, referring to the combined meeting of the union group and the management group.

A letter dated December 20, 1991, to both Mr Schyngera and Mr Wahid:

"I was disappointed to hear from Michael Baker that you did not attend the strategic planning meeting," despite the fact they said they would and were invited. "He told me that the union presidents who did attend made some excellent suggestions."

Another very important document, this one dated January 15, 1992, in which Mr Al Wahid and Mr Schyngera were invited to a meeting attended by all presidents to discuss the 1992-93 budget of this hospital. That process was in fact so successful that group has requested that when we go through the 1993-94 budget, which we're doing now, that the same process be used. Mr Schyngera was present at that and was invited to attend and did attend.

I'm nearly coming to the end of this sermon. At this point, on February 28, 1992, Mr Schyngera was present at the actual formal creation of the labour-management council, which grew out of a series of private meetings and subsequent group meetings in which he participated in the setting of the terms of reference and agreed that this would be the site at which labour-management issues would be discussed in terms of the major policy issues. Obviously, the negotiated issues would be discussed at other venues. That was for the second time agreed, that he would work with the hospital internally to resolve these problems.

February 5, 1992: a letter to Minister Lankin regarding the HDS Ulticare computer system, again a report to the minister. Incidentally, I might just add editorially that both the minister and Mr Decter took this entire situation extremely seriously and were in constant contact with me about it and, as you can see, I've issued reports to them about the findings of the external third-party reviews.

"After detailed consideration of the technical, functional and financial aspects of this project, the key recommendation is, `Based upon our analysis,'" -- that's the external review's -- "`we recommend that the Toronto Hospital keep the HDS Ulticare system as its core patient care system and supplement it with specific departmental systems.'"

There are also letters documenting the formation of the labour-management group. There's a letter to Frances Lankin on April 2, 1992, discussing further improvements in labour-management. I might add that she invited us to a meeting attended by herself, Mr Decter and the two co-chairs of the labour-management unit a few weeks ago in which the co-chairs reported to her of the excellent progress made and in which I reported to her on the lack of progress being made in our relationships with CUPE. The other unions have participated very well in this process.

Finally, there's a letter to Mr Michael Decter on June 12 to thank Mr Decter for steering me to Mr Pathe in the Ministry of Labour, who has in turn set in place a process, relationships by objectives.

My only request, Mr Chairman, is that when you come to review this entire process, you do in fact review the accusations and the facts of the matter.

Finally, I'll just state that I did meet with Mr Schyngera and with the business agent, Mr Moreau. Mr Schyngera has agreed that I will say what I'm now going to say, that he has requested that we put this entire matter behind us, that he told me he accepts the finding of the Provincial Auditor and that he wants to get on with the business in a rational fashion.

On the basis of that now third offer on his part to behave in a rational manner in terms of labour-management issues in the hospital, I accepted him at face value. I believe he's sincere. On that basis, I advised Mr Fell we do in fact put this entire issue behind us. The reason I brought this information along is because of the extremely serious allegations made against persons I've discussed, which clearly have to be on the record as being totally false.

The Chair: Thank you for all of the information you've brought to the committee, Dr Hudson. Staff are going to make photocopies of all documents to ensure that all members of the committee and appropriate staff in the Provincial Auditor's office have that. I'm assuming you may have seen some of that information during the original audit.

Dr Hudson: Excuse me, sir; I beg your pardon. I left out the fourth item I said I would cover, which is the question of the expense, if I just put that very simply, and that is that the question of the expense of this group has already been discussed. I've asked Ms Denise Arsenault what the cost was to us, and the answer is 2,000 person-hours of senior staff during the process of this audit and, in addition to that, an additional fee to our external auditors, who had to be involved as well to the extent of another $12,000.


Mr Robert Frankford (Scarborough East): So there was --

The Chair: Dr Frankford, just hang on a second, please. I want to make note of this point. Your staff at the hospital spent 2,000 person-hours?

Dr Hudson: That's an estimate made by the chief financial officer.

The Chair: Okay, and we already know that the Provincial Auditor spent 2,500 hours. I didn't quite understand the last point you made about external assistance.

Dr Hudson: Part of the issue, sir, was that the external auditors had information that was required. They had to go through all their files and pull out information for the auditor's appropriate review, and that is billed directly to the hospital.

The Chair: How much was that?

Dr Hudson: It was $12,000.

The Chair: The Provincial Auditor has told us that the 2,500 hours from his department work out to an average of about $60 an hour, if I'm not incorrect. That's correct. What would your 2,000 person-hours work out to in dollars per hour?

Ms Denise Arsenault: That rate wouldn't be a bad estimate.

The Chair: Approximately $60, okay. Dr Frankford, you had a quick question?

Mr Frankford: I wonder if the committee could receive the document you referred to, the report on the Health Data Sciences Ulticare.

Dr Hudson: The answer's yes. That document was available in full to the auditors.

Mr Frankford: Could it be circulated to the committee, please?

The Chair: Absolutely. Whatever information we have available will be made available to all members of the committee.

We've got approximately an hour and 15 minutes for questions and answers, so what I'm going to suggest is that we divide up the first hour, 20 minutes per party, and then that'll leave us 15 further minutes to kind of wrap things up. I won't take any time myself but I may interject with a question every now and then in the tradition that I've been taught by Michael Breaugh, the former Chairman of the standing committee on the Legislative Assembly whom I understudied for a number of years, and Elie Martel and others.

Mr Tilson: You're doing a fine job, Mr Chairman.

The Chair: Thank you. I appreciate that. We have Mr Cousens and Mr Tilson, then we'll move to the government and to the official opposition.

Mr W. Donald Cousens (Markham): I think the first thing I want to say to Mr Fell, Dr Hudson's staff, is that I just hope more volunteer boards and hospital boards never have to go through what you've been through. I convey to you, certainly having been involved with the Markham-Stouffville Hospital and York Central Hospital, the effort that's put in by volunteers, people who care so genuinely about health care in their communities. When we talk about volunteerism, I don't think anyone in the world, unless they've been close to a hospital, knows the hours and the commitment that are put in by you and the people around and just the generosity of time and effort to the community. I say thank you again.

The one thing that came through in your report, as well as in Dr Hudson's, is that you want to get on with the world. I commend you for that as well. It's not easy, after what you've been through, and I'm sort of weighing -- and Mr Tilson and I have already discussed a series of questions we want to follow through on, but we both have the greatest respect and admiration for what you're doing in that hospital.

There aren't too many of us in Toronto who haven't used the facilities, and we recognize them as being world class. It's my hope and desire that we continue to keep it that way, and unless you've got good labour relations going, you'll never have it again. You have it in spite of certain things. So the spirit and the intention you've expressed this morning is, to me, of the highest order. I sensed last week as well, when we were interviewing CUPE, that there was a sense that "we've made a mistake and we want to turn the corner." That pleased me as well.

I just want to make the positive notation that I'm glad you've come this morning, I'm glad the record is clear and I'm glad you're there to continue to serve our community with one of the world's great-class hospitals, just that generally.

I'll pass it over to David, who has a few questions that come out of other things we've been dealing with.

Mr Tilson: In my rough calculation of this whole exercise that the hospital and this committee and the Provincial Auditor have been put through, it appears we're talking about almost $300,000, which is just terrible. I tell hospital people in my riding, specifically in the county of Dufferin, what Toronto Hospital has just been through, and they simply can't believe it.

I can tell you that as far as Mr Schyngera is concerned, he should be sitting on pins and needles that he's not going to be sued by the hospital, by Dr Hudson personally and by all the other officials personally, because he has certainly put the hospital officials through the wringer.

I should hope that he'd want to put this behind him. There's no wonder that labour-management, between the hospital and the hospital officials and labour, is bad, having gone through this exercise. It's regrettable, and there's no question that if I had a business and an employee did that to me, I'd fire them, but I suspect our labour laws preclude that from happening, and that's too bad.

One of my concerns -- and I was particularly interested in some of the correspondence Dr Hudson was referring to us -- is that the Minister of Health and the Deputy Minister of Health have known about these allegations, have known about the process, have known about what's going on, they knew the Provincial Auditor was going to undertake an extensive audit as a result of these very serious allegations, and they appear to have done nothing. I can't believe that the members on the government side didn't tell some officials in the Ministry of Health -- aren't you a parliamentary assistant to the Minister of Health? I don't know, but the fact of the matter is that nothing has happened.

We've been put through this unbelievable expense, and this has been done, it appears, with the consent of the Minister of Health; certainly of the Deputy Minister of Health, and I suspect, when we look at some of this correspondence, we'll find out the Minister of Health. To spend $300,000 of time and effort is reprehensible.

It's fine to say that the hospital can get on with its business. It's tough enough running a hospital, to have go through all this. My concern, though, is that we have a ministry that knew about it and didn't do anything about it. They knew we were undertaking this audit, that we were asking the Provincial Auditor to undertake this second audit dealing specifically with these very serious allegations. They knew the allegations were false, as I understand it, they knew before the Provincial Auditor started to investigate it, yet they remained silent and allowed this to happen.

I would like to hear from other members of the committee. I quite frankly think the Minister of Health, certainly the Deputy Minister of Health -- he's been here once -- should return to this committee and should explain why they allowed the taxpayers of this province to spend all this money. I'm lumping all the hospital moneys into the same parcel, mind you, but it's all taxpayers' money in the long run.

I'd like to hear from Mr Hudson. He made some comments specifically about some oral discussions he had with Mr Marchese. I don't know whether Mr Marchese was a member of the cabinet at the time you had those discussions. Having heard my comments and my concerns as to what the ministry knew and what the minister knew, I would like you to comment or to elaborate more on what discussions you had with ministry officials, realizing my concern that we have been put through this exercise for nothing.


Dr Hudson: I'll respond to those issues as best I can.

With regard to the issue of individuals -- Mr Stoughton, Mr Louth, myself and others -- suing Mr Schyngera and with regard to the question of dismissing him -- and incidentally, in our opinion the labour law does allow for dismissal on the grounds of what has happened, but that's obviously a matter of opinion -- we essentially decided to put all that behind us in the light of the expressed intent, as this committee has heard, from CUPE and Mr Schyngera that they wish to put all this behind them. That is the basis of our saying, "Let's put all this behind us and get on with our job."

The fact is obvious to us and to CUPE and I'm sure everyone in this room that health care in this province, the whole of Canada, is going to be in a very tough environment for the next several years, and very plainly it's essential that any major institution have good, rational labour-management relations. So it's on that basis that Mr Fell made the statement that we will not pursue either of those options.

With regard to the issue of government knowledge and action, I obviously can't comment on its relationship to the activities of the auditor going back into the hospital, but I really must comment on the fact that Mr Decter and Minister Lankin took this whole situation extremely seriously and were well informed about it and were receiving reports from me. So on the section prior to the Provincial Auditor going back in, I thought they were taking this every bit as seriously as I was, and I can assure you that I was taking it very seriously. But I cannot comment on the specific point you raised about the subsequent visit of the auditor.

In regard to Mr Marchese, my difference of opinion with him arose from the fact that despite the fact that the Toronto Hospital is in his riding, he took these allegations, as far as I could see, at face value and accepted them. He did not have the courtesy of giving me a call to discuss them with me or to ask me to come and visit him or to return a visit to the hospital which I had initiated. That was the basis of my disagreement with Mr Marchese's behaviour, and I made sure that he and the minister and the deputy minister understood that.

Again, I should emphasize that Mr Jack Shapiro and I met with Mr Marchese and his assistant recently and we've agreed, again on the same basis, to let bygones be bygones. Hopefully, I can help him in his responsibility as an MPP and he can help me in my responsibility as president of the hospital. So again, we have agreed to pass over that period of our history.

The Chair: Does Mr Cordiano have a supplementary?

Mr Joseph Cordiano (Lawrence): Pardon me, Mr Tilson, but this is a point I raised with the Deputy Minister of Health, Mr Decter, when he was here. I asked him specifically about the procedures the Ministry of Health may have had for dealing with these sorts of incidents, these sorts of allegations. At the time, I remember his response, something to the effect that there was nothing documented by himself or anyone who was attending those meetings that were held with perhaps you, hospital officials and union officials; that in fact there wasn't really a process in place or a set of procedures to ascertain the kind of information we're talking about; that in fact there was nothing documented, which was rather startling to me.

You say today that these matters were taken quite seriously at the time by the deputy minister and by the minister, that in fact a great deal of action took place as a result of your meetings and as a result of union officials' meetings. So we're sitting here today getting quite a different story from you as to the extent of involvement with respect to ministry officials and how seriously they took these matters. Yet they told us, on that very day Mr Decter was here, that they didn't document any of this information.

The Chair: Very quickly on the supplementary, please.

Mr Cordiano: How would you comment on that? I would like to know from you that you made a number of meetings take place and that a number of incidents occurred. Can you provide us with that detailed information so we can ascertain whether in fact there were a number of meetings that took place?

Dr Hudson: In response to that issue, several points. I have purposely, in pulling letters from my files, shown letters addressed to the minister, to the deputy minister, to Mrs Mottershead, to Gail Houston, and I have letters to Pat McGee and various other officials. I believe probably one of the issues for Mr Decter is that he's responsible for at least 240 hospitals and it may not be that easy for him to find the letters, copies that went to him and so on, whereas for me, of course, it's all in one file. Mr Decter is one of the best public servants I've ever had the opportunity of working with. So they took this matter very seriously, and that is why I tried to document the issue.

With regard to the question of whether there are mechanisms within the ministry to deal with this sort of thing, I believe the position taken by the minister and the deputy minister was that there were third parties investigating these issues, as I have again documented. So it was not the case of the Toronto board judging themselves. We had external people judging the allegations on the two major issues of Begley and HDS. I think that's the only comment I can make on that.

The Chair: Thank you. Mr Tilson.

Mr Tilson: As far as our time allotment is concerned, other than one question I have, I don't have any questions. I think I would pass to the --

The Chair: You can reserve your time for later.

Mr Tilson: But the one question I do have is, do you have any correspondence in response to your queries to either Mr Decter or Ms Lankin dealing with these issues that you could make available to --

Dr Hudson: Yes; excuse me for interrupting. The letters I have indicated are in fact, in the case of Mrs Mottershead and the case of Minister Lankin, responses to letters they wrote asking that these issues be addressed. So I can find those letters in my file if it would help this committee.

Mr Tilson: It would, Dr Hudson. I'm concerned, Mr Chairman, with two issues. I'm concerned about the process, because if it happens once, it can happen again, or maybe it will and maybe it won't; hopefully it won't. I'm concerned with the process, as to what the Ministry of Health does when situations like this arise and how it deals with it.

I'm also concerned as to what knowledge the minister, particularly the minister, had about all these allegations and why she allowed this committee to proceed, at this unbelievable expense, on completely false allegations, completely unfounded allegations. Dr Hudson, if you're prepared to make that available to us in due course, I would appreciate receiving copies of correspondence from Mr Decter and Ms Lankin to you or your staff.

Mr Chairman, I would reserve any other time I have.

The Chair: I'll make note of that, Mr Tilson.

We have Dr Frankford, Mr Duignan and Mr O'Connor: 20 minutes.

Mr Frankford: If I can perhaps make some comments on my understanding of what is going on with this process, the audit of the Toronto Hospital did not just start because the union came here with allegations. This committee had been looking at the Toronto Hospital, and that, I believe, was instigated by the fact that the Provincial Auditor had included the Toronto Hospital in his report. Partly, that was to look at agencies or independent bodies like universities which the auditor had reviewed previously, and then in the more recent one they'd looked at the Toronto Hospital. I believe questions were raised about the access of the auditor to hospitals, the extent to which the auditor could look at all the operations. I think this is particularly important in relation to the value-for-money aspect, which is becoming an increasing part of the auditor's role.


Actually, I don't have the mandate of this second review. Although the auditor was, I believe, asked to look at the topics raised by these allegations, it was not confined to that and I would like to make the point that -- okay, thank you. Shall I read it?

"The standing committee requests that...the Provincial Auditor perform a follow-up audit with full access to all the financial and related records of...the Toronto Hospital.... The audit should address, but not be restricted to...the new computer equipment...Begley and Associates...recent construction/renovation projects...." I'm not sure if, in fact, the question of recent construction/renovation projects was looked into.

Dr Hudson: Mr Chairman, I'm happy to respond to that.


The Chair: Order, please. I'm having difficulty hearing the witnesses. Please go ahead, Dr Hudson.

Dr Hudson: With regard to the point just raised about the first audit, which was, as you state, the provincial audit, I should state -- I think I have already documented this; I'm happy to do so again -- the fact that I called a meeting of the provincial auditors, the external auditors of the hospital, the then president of the hospital, Mr Crossgrove, and several other officials, because the provincial audit had actually concluded before I started my job in July of last year; it had just concluded.

We sat down and Mr Crossgrove specifically asked, and it is minuted word for word, if the provincial auditors had any further concerns, at the end of the meeting, and we discussed the issues of the controls that had been put in place and other financial items. Did they have any specific further issues they wished to raise? Did they have any specific further questions? That's on the record; it's in the minutes. The answer was no from the provincial auditors. They were satisfied at the conclusion of that meeting with the situation. The answer is that in my view this go-round is directly the result of the CUPE allegations.

Mr Frankford: I'm new to this committee so I was not on the committee in the first go-round. I think that we have opened up areas to look at value for money and particularly I'm interested in computer systems and their application. Perhaps I will just state that and then defer to my colleagues here, and if there's time I would like to ask some questions about it.

Mr Noel Duignan (Halton North): First of all, I wish to remind my colleague across the floor, Mr Tilson, why this committee did what it did. It moved a motion on May 14, which in fact was moved by Mr Tilson, and the motion read:

"The standing committee on public accounts requests that, under section 17 of the Audit Act, the Provincial Auditor perform a follow-up audit with full access to all the financial and related records of the Toronto General division of the Toronto Hospital and report the results of this audit to the committee by September 1, 1992. The audit should address, but not be restricted to, the following:

"(a) the new computer equipment at Toronto General division;

"(b) contracts with Begley and Associates;

"(c) recent construction/renovation projects at Toronto General division.

"This audit may also take into account the concerns raised at the committee's hearings in February and May 1992."

As I say, that motion was moved by Mr Tilson and basically had general consensus from all the members of the committee. I guess that was raised because a number of allegations were raised by the union at that particular time.

I'm a fair-minded individual and I believe that when anyone appears in front of this committee he should have all his facts in front of them and if the allegations are true he should have the facts to back it up. If not, he shouldn't make those statements in this committee.

However, there were some concerns raised out of that audit that I would like to ask some questions around. One is dealing with the contract with F.D. Begley and Associates. I know I've asked the auditors to follow up with some information for me on it. My questions today in relation to your comments here are basically just very general. For example, has the resident general contract arrangement been satisfactory with Mr Begley and associates?

Dr Hudson: The answer is yes, which is why the contract has been re-signed and why following a very careful review by initially a subcommittee and subsequently the full board of the external review of Begley, the arm's-length third party, which showed no evidence of wrongdoing -- in the opinion of the board, the system was very much to the hospital's benefit. The answer is yes, the system is essentially as was, and of course is downsized because of the reduction in capital spending at the hospital. The contract was renewed.

Mr Duignan: At one of our recent committee meetings I asked the auditors if they had concerns around the fact that the recent contract for services with Mr Begley was renegotiated without tendering, and they expressed that they had a general concern about the tendering process. I wonder, could you please comment on that, why the contract wasn't tendered?

Dr Hudson: Concerns about the tendering in general were in fact refuted by the auditor, who found that the tendering procedures were exactly as they should be, except in a few minor issues of small amount. The issue of Mr Begley's contract not being tendered was that the process had been in place and was essentially being continued. There was no reason to tender it. We weren't discontinuing something and looking at something new.

Mr Duignan: That still hasn't answered my question. Why wasn't this particular service tendered?

Ms Arsenault: The policy of the Toronto Hospital allows for circumstances under which certain contracts would not be tendered every three years or things like that. The circumstances would be cases where there are sufficient grounds for not doing so, sufficient benefits derived from the situation that would be lost if we tendered the contract.

Specifically, in the case of Begley, you have with that group a knowledge of the Toronto Hospital that could not be reproduced in other people without very considerable additional cost. Their knowledge of the Toronto Hospital is of great value to us and, for that reason, through our purchasing policies, being satisfied that the benefits are there, it has not required us to go out to tender.

Mr Duignan: I'm still not quite satisfied with the answer but I'll follow up later with the auditor in relation to this question.

This particular contract or service, what is the dollar value of it?

Ms Arsenault: The value varies from year to year. In the current fiscal year the total amount of the contract, which in many respects is for direct costs associated with buildings and what not, would be approximately $6 million.

Mr Duignan: You have a contract for service with an individual worth $6 million and it's not open for tender?

Ms Arsenault: No. I am not being very clear. That is the total amount of work that will be done in construction at the Toronto Hospital, for renovations, new buildings, the completion of certain new buildings at the Toronto Western Hospital.

What Dr Hudson was referring to with respect to the tendering process was that the large majority, almost all of that $6 million, is work that is tendered indirectly through Begley. The Toronto Hospital satisfies itself, through its building committee, that Begley tenders the work appropriately, and that's what the work that was done by the Provincial Auditor substantiated. Virtually all of the work that is done by Begley is contracted and tendered.

Mr Duignan: That's not the question I asked. The question I asked is, how much does the hospital pay for the contract with Mr Begley?

Ms Arsenault: There's a flat fee paid. There's a flat fee associated with that contract.

Mr Duignan: What's the flat fee?

Ms Arsenault: It's $150,000 or very close thereto.

Mr Duignan: Roughly; that's about the average?

Ms Arsenault: Yes.

Mr Duignan: Also, at that point you provide office space and all the necessary office equipment to Mr Begley. I was wondering, what size is that office space and what are the overhead costs associated with that space and equipment in it?

Ms Arsenault: The office space is approximately 2,000 square feet in each division.

Mr Duignan: In each division? How many divisions?

Ms Arsenault: Two divisions: Toronto General and Toronto Western sites.


Mr Duignan: That's 4,000 square feet?

Ms Arsenault: Correct.

Mr Duignan: What would be the average square-foot cost of the office space in that building if you rented it to somebody else in the market, even today's market?

Ms Arsenault: The overhead costs?

Mr Duignan: Yes.

Ms Arsenault: The market rates for such space, I think, right now would be about $8 to $10 per square foot.

Mr Duignan: Is that just for the direct office space rent or would that include the overhead?

Ms Arsenault: No, that would be full cost.

Mr Duignan: Full cost and for the --

Ms Arsenault: Today's rent market.

Mr Duignan: -- cost of the copiers etc?

Ms Arsenault: Correct.

Mr Duignan: Okay. Do you believe the contractual arrangement with Mr Begley is cost-effective?

Ms Arsenault: I am certain of it.

Mr Duignan: I would like to get back to the subject at a later point, but I want to leave some time for my colleagues to ask some questions, Mr Chairman.

Mr Larry O'Connor (Durham-York): I want to thank you for coming here today. I know we live in a busy, fast-paced world and I'm sure your time is quite valuable. As my colleague across the floor said, the hospitals and boards do have a very important role to play and the volunteer aspect of that needs to be applauded from time to time, and we certainly echo that applause.

One thing, I guess, that was made clear to us as a committee when the deputy minister was here is that the minister and deputy minister realize that autonomy needs to be held within a hospital and a hospital board. When we were reviewing this, though, the minister's office and deputy minister's office were quite aware of it. They didn't want to interfere with the autonomy of the board or this committee because they felt that if the committee was looking into it, why should they spend the manpower looking into it?

Though these things often cause some pain and what not in looking at things, I think there's always something to be gained out of a situation such as this. It was the committee that had decided to do the audit and the information from CUPE had come after the fact. You have stated a commitment to improve labour relations. I think it must be very difficult in any hospital to continue to have good labour relations, considering the whole shift in health care, the lack of financial resources and restraints that the hospitals are under right now.

Certainly one needs that cooperation and a good level of labour and management relations. Again, I guess I have to applaud you for stating that you're willing to proceed and try to work together cooperatively with all the different stakeholders, the unions and what not, to make sure that those relationships are open and that you can work together at living with the financial situation we're in right now.

I know it's quite a change in the way health care has been provided for in the past. The dollars aren't flowing nearly as freely as they have been in the past. In fact, we even had some comment here about some of the operations in the hospitals that went back probably about three or four ministers and why the minister okayed something like that. There's a lot of discussion that can take place.

I guess one thing had perked my curiosity: Given the merger that took place and the cost savings that, I guess, never were realized, I wondered about the consolidation in floor space at the hospital. I realize you've got many different buildings. Not having an opportunity to tour the facilities and what not, I just wondered how well utilized your floor space is. There was some talk of space just being used for mere storage and what not. I would think that's very high-priced storage but maybe it's an efficient way to run the hospital. I wonder if maybe you could comment on that.

Dr Hudson: Thank you, sir. Just with regard to your first question about labour relations in general, it may be of help, Mr Chairman, if the committee had a pie graph of the breakdown of the unions at the Toronto Hospital which, as you can see, include CUPE, SEIU, UPGWA, OPSEU and ONA.

The answer is, as the cochair, who happens to be the president of ONA, told Minister Lankin, the general labour relations at the Toronto Hospital are good. Obviously, there are major issues of disagreement, as one would anticipate in a situation like that. The key point is that they should be approached in a rational, negotiated way. ONA, for example, has put on the table a written list of some extent of issues to be addressed, and we're approaching them. As recently as last month, I had the executive committee of ONA in my office to go through issues with them.

I just bring the point up that since July last year, this has been totally available to CUPE; not only available to CUPE but also external accountants available to CUPE. We've got a long, long way to go, and you're absolutely correct in your sensitive statement of how difficult it is when 70% of the hospital's costs are salaries. Clearly then headcount is one of the key issues determining the financial viability of the institution and how difficult that is.

In that regard, we've made a terrific effort to work on the 30%, which is the supply side of it, not the salary side of it, and we're just in the middle of a major process of trying to optimize that component, because every dollar we save means fewer layoffs obviously. I think there's been very remarkable progress at the hospital and I'm sure all, including Mr Schyngera, will be happy to say that.

With regard to the issue of floor space at the Western division, all the patients have now been moved into the new part of the facility, which is the Fell wing, which is a modern up-to-date component from the point of view of patient care. These are very, very sick people coming to the Toronto Hospital. They are frequently referred from other hospitals because of complications or because of very special and severe problems. So that component of the building is very well used.

We've moved out of some of the older parts of the building. That is being redeveloped for laboratory space, redeveloped for teaching space and so on, and of course obviously including areas for storage. In a massively complex operation like this, that is the case.

At the General division, we have a couple of wards closed that could be used for patient care but we can't afford to pay the nurses to care for the patients and so we have to close the wards. That ward again is being used for educational purposes, so that when patients come to the hospital that will be the subject of teaching exercises. They are treated with dignity and with care. There are specific rooms set aside now in which medical students can be taught.

In our very large responsibility to the university, we take 40% of a current class of 250 students. We are using that space for newer concepts in education such as a new computerized system where students can sit down with a computer and interact in what is now the modern method. Instead of having to stuff all the textbook knowledge into your head, you can in fact have it in a computer, and it's a totally new style.

We are using the space, as it becomes available, as productively as we can. But clearly we have had to close down and downsize, as has every other hospital in this province, to cope with the realities of our economic times.

Mr Cordiano: I just want to review a number of matters with respect to how events led to information having been gathered by the ministry and officials of the ministry. I'm just glancing through all of the correspondence that you've provided us, and it's obviously correspondence that you sent to either ministry officials or union officials. I don't see any of the correspondence you received in response to any of this correspondence that you sent out.

Dr Hudson: The Chairman just asked me about that earlier. In fact several of those letters are replies, and I gave an undertaking, I believe, that I would forward those letters to the committee.

Mr Cordiano: Right, that's understood. The reason I ask that again is because I want to get a picture of when these allegations were first made. I believe through your correspondence it is clear that you undertook some action to discuss matters with CUPE officials, with the local, and what I want to make clear is the point at which the ministry was made aware of these matters.


Dr Hudson: I can respond to that. Mr Decter and I started our jobs almost simultaneously, so we had a get-acquainted meeting within weeks of both of us taking up our jobs, at which time I discussed a variety of issues that were facing me. He then and subsequently -- that means July or August at the latest -- was aware of these issues.

Despite the fact that Mr Decter has a massive responsibility to the province, I can speak to him any time I like. There's no problem about access. During conversations about a variety of things, I would tell him what was happening in terms of the external reviews. So a fair amount of this took place on the telephone during the course of what I would regard as natural relationships between the president of the biggest hospital in the province and the deputy minister.

I can't give you more detail than I've done. I certainly will give you the letters of inquiry from the minister and from the deputy minister to us, but a lot of this was in conversation. I'd phone him about the financial issue, I'd phone him about the CHO, I'd phone him about advice on a labour-management problem, and during the conversation I'd say, "We're anticipating the report on the HDS next week," or whatever it was. I assumed that this information was feeding into the ministry as it went along.

Mr Cordiano: So this letter dated October 29, your response to the assistant deputy minister --

Dr Hudson: Ms Mottershead?

Mr Cordiano: Mottershead, yes.

Dr Hudson: That's in response to a letter to me in which she specifically inquired and asked me to give her the information. As you can see, there are several items in that letter, and those are basically ticking off the questions she had asked me.

Mr Cordiano: So this is what? The first letter, perhaps the first document, with respect to information that was made available to the ministry?

Dr Hudson: The first documentation, it might well be.

Mr Cordiano: Rather than phone calls.

Dr Hudson: Exactly, yes.

Mr Cordiano: Then there's a letter to the minister dated November 12.

Dr Hudson: I believe so. That's the one signed by Mr Crossgrove?

Mr Cordiano: That's the next piece of correspondence to the ministry.

Dr Hudson: That is signed by Mr Crossgrove. Is that the letter to which you're referring?

Mr Cordiano: Yes.

Dr Hudson: That was in response to a letter from the minister to the chairman of the board with reference to financial questions, with regard to labour questions, with regard to management decisions, and that was Mr Crossgrove's response to her letter. I can provide you with the letter.

Mr Cordiano: So the minister wrote a letter to the chairman of the board on November 8 making inquiries about a variety of matters which are obviously germane to this discussion.

Dr Hudson: In part, yes.

Mr Cordiano: Would that be fair to say?

Dr Hudson: Yes.

Mr Cordiano: Since that time the ministry certainly had documented, or at least had a sufficient quantity of information to make requests or to ask questions in the form of correspondence, which we see right here.

Dr Hudson: That is correct.

Mr Cordiano: So there is some documentation there. I'm just trying to ascertain what --

The Chair: Maybe I can interrupt at this point and let all the members of the committee know that Mr Decter has responded to my letter requesting all documents, papers and things in his file. I've just recently received it. We were unable to make copies of it for the members for today, but hopefully some time this week every member will receive the package. It's extensive, but not to the point where it would be unmanageable.

Mr O'Connor: As thick as this?

The Chair: It's substantially more than that.

Mr O'Connor: Because this was made available in a matter of minutes.

The Chair: The clerk does not have anyone to assist her in this building. That is the difficulty.

Mr Cordiano: I accept that, Mr Chairman, and perhaps that will assist us in our deliberations some time in the future. We're trying to get a sense, if I may just say this, of what took place with respect to a number of -- or the lack of procedure, if you will, in the process that was followed, enabling us as to do our work more efficiently as a committee in the future, knowing that if there is a lack of procedure in place in a ministry for matters like this, then it obviously will fall back on to a body such as this which would make inquiries once allegations are made.

It's important for us to determine that there is an effective and efficient system in place for dealing with these matters, not only in the Ministry of Health but perhaps elsewhere, and I think it's appropriate for us to get to the stage at which there's some formalization of these matters not resulting in inefficiencies of the kind we've seen take place with this incident.

That may not be a question for you to answer, but obviously I think what you're saying here is that there was an informal process that took place initially -- which I think everyone can appreciate and understand. But at some point these allegations were of quite a serious nature and the ministry, in my opinion at least, would have had to formalize this process so additional action could be taken.

I see here that with respect to the correspondence you made available for us, the board -- the hospital -- took initiatives to undertake a series of inquiries; outside experts were called in to undertake investigation. I see you had a series of meetings, or invitations were held out to the local to discuss these matters. Requests were made for these allegations to be documented and specified.

I see that perhaps you took appropriate action, but on the other hand, I don't see that the ministry had followed these steps in the process which would have indicated to us, or to the auditor, for that matter -- he would not have had to do his 2,500 man-hours of investigation if it had been much more clear that these matters were ongoing and that there was a formalized process in place at the ministry level.

Dr Hudson: I understand the point you're making. I think, in fairness, as you state, the policies of the ministry clearly should be discussed with the ministry, not with me.

Just to reiterate -- I hope I am not giving the wrong impression -- it is my impression that Mr Decter took this whole matter extremely seriously, as did I, and he knew the board was taking its responsibility very seriously in this matter. He appreciated that the board members could not sit in judgement on themselves because they were the objects of the criticism, and he knew external third parties were in fact investigating it.

The discussion of what the policy of the ministry should be, should clearly be with the minister or the deputy. My attitude was that they took this as seriously as I did and they knew the matter was being investigated. Beyond that, in terms of the internal formal policies of the ministry, I think that should be addressed to the ministry.


Mr Cordiano: I can appreciate that, and I don't mean to put you on the spot. To the extent that I think it would involve the ministry looking at this, examining it for future reference and its own use, I would imagine that at some point discussions with people such as yourselves right across the province would take place to put a process in place that would make sense to all.

I think it's appropriate, because any kind of spurious allegations that are unfounded need to be sorted through immediately without the kind of time, effort and waste we've seen in this procedure.

It's not only the ministry, but I think it would be appropriate for the ministry to undertake that kind of process with the people who are affected as well. I would like to see a give and take between the ministry and the officials of the hospital determining what the best way to do that is. It would involve your active participation, I would think.

Dr Hudson: In response to that, the record shows, the documentation shows, that the hospital's attitude to allegations and suggestions and criticism is to encourage them. Throughout the documentation, we kept saying, "Come and tell us about them."

The key point is that the allegations must have some even vague semblance of reality and must obviously -- if someone accused Premier Rae of having shares in a major vendor to the government, that's not a light accusation. These are extraordinarily serious accusations that were made, with absolutely no evidence for them whatsoever. The hospital's position remains -- it's the same as it has always been -- "Bring your allegations forward. Let's discuss them. Let's look at them."

What I've learned from this is that I will never again arrange for a forensic accountant to look at the evidence. I'll demand to see the evidence myself. But I suspect what I've learned has been learned by quite a few other people here as well.

Mr Cordiano: That is an important and significant point, because I believe that since you had outside accountants looking at this matter, perhaps that triggered in outside observers the view that this was being conducted further as an investigation because there were some reasons for carrying out further investigations.

What I'm trying to get here is a first screen of allegations and the kind of evidence you might use in preliminary stages. That obviously did not happen all the way through in any of these procedures.

Dr Hudson: Entirely by CUPE's choice.

Mr Cordiano: Yes. Okay, thank you.

The Chair: I would like to take the opportunity to ask a few brief questions and make a couple of comments.

First of all, I'd like to say that when this committee made the motion on May 14 of this year -- if I'm correct on the date -- I don't believe we were aware of the extensive involvement of senior officials within the Ministry of Health. Certainly I was not aware that Mr Michael Decter, the deputy minister, had spent more than half a day -- that's an extraordinary amount of time for the Deputy Minister of Health to spend on any matter -- meeting with representatives of different unions to gather the information. Then for us to be told, "Well, yes, it was important, but a lot of the information was verbal and not a lot of notes were taken," I find extraordinary.

I also find it extraordinary that the sitting member was told of these allegations -- I'm assuming that his concerns were passed on to the government for review and I'm assuming that that worked its way up to Mr Decter also and that answers to these allegations were available. What happened to the answers when they were received by the sitting member?

While we're an independent committee of the Legislature -- I know the members feel strongly about their independence and we're not going to take orders from outside sources, if I can say that -- we still are available to receive information. I think it's incumbent upon senior officials in the government, when they see the public accounts committee, which works hand in hand with the Provincial Auditor, moving in a direction which has already been completely reviewed by the government to its satisfaction, I think it would only be courteous and professional for us to be told, through some type of correspondence, that the matter has been reviewed: "Do you want to call us in to give you whatever information?" We sent the Provincial Auditor out and used 2,500 person-hours of that office's time that we cannot use on any other matter.

Mr O'Connor: Is there a question in there?

The Chair: Are you the Chair right now?

Mr O'Connor: I was just asking if we are going to get a question.

The Chair: The other point is that we forced you, an institution that is under financial stress because of the economic situation in the province today, to spend a further 2,000 person-hours of time plus other costs. So we've used up 4,500 hours of expensive time to go over a presentation that supposedly had been reviewed by the senior officials within the Ministry of Health, all the way up to the minister herself. That causes me a lot of concern, and I think that's a matter that this committee should discuss on a future date.

Somehow, we're going to have to coordinate our work with the ministries in the government, first of all to find out if the work we're undertaking has in fact been discussed with them and reviewed by them and what information they have. I think that's going to be an important topic of discussion. I would like to see Mr Decter come back. I have many questions for him, and I think maybe other committee members do.

While the auditor's report exonerates the hospital as far as wrongdoing is concerned, I still have a couple of concerns I'd like to ask about. We live in an environment, and I've been in a political environment for over 20 years, and in this environment we usually tender for just about all services that the government wishes to buy. I know that cabinet ministers cannot issue authority for services to be bought over a $10,000 limit. There's that restriction.

I'm still not satisfied, and I'm not satisfied possibly because I don't have all of the information, as to why a multimillion-dollar computer contract, maybe in the $20-million range -- I guess that is approximately the correct figure -- was given out without a tender. That concerns me a great deal. Twenty million dollars is a lot of money. One million dollars is a lot of money. All of us here work within an environment, as I said to you, that this is foreign to us. If your hospital is giving out $20-million contracts without tenders, then I really wonder what's going on elsewhere. How high does this go? That, to me, has been a concern from day one. It's still a concern today, and I think it's a legitimate question that this committee should put to you, Dr Hudson.

Dr Hudson: I think it's an extremely legitimate question. The issue of tendering was in fact reviewed by the Provincial Auditor and was found to be, in the Begley situation, completely within a normal range of behaviour, except for some minor points they raised. The tendering policies of the hospital were raised before when we were here, and they are quite explicit.

The specific issue of the HDS contract, which was not tendered, of course goes back a long way before I got there, but the issue at that time was that there was only one vendor in the world. This was totally a cutting-edge system; in fact, it is a system which has to this day not been duplicated.

So when I asked the question you've asked me, because I agree with you that it's an absolutely critical question on the use of public funds, that was the response I was given, that at the time of the arrangement between Data General Hardware and the HDS group in California that put the whole package together, there was simply nowhere else to tender it.

The Chair: Then that leads to another question. Are all hospitals in Ontario using this California firm for such equipment?

Dr Hudson: The answer is no. There is a wide variety now. I forget the exact date. Mr Fell, can you recall when this decision was made? Six or seven years ago, at least. Do you have the date in your head?

Ms Arsenault: Yes, 1984-85.

Dr Hudson: It was 1984-85 when the initial arrangement was made. Since that time, of course, there is a wide variety of vendors for various hospital systems. We have a hospital of incredible complexity and seriousness of illness of patients and so on. We now have just recently undertaken quite a significant review of alternative systems, because there are additional pieces we need to add on to our system. Members of the staff have been to Sunnybrook, which has another system, and to various hospitals in the States that have other systems. At the moment, there is still no comprehensive system that could be tendered against ours. But in terms of additions now, anything added on to what we've got will be tendered in the usual way.


The Chair: I don't dispute your answer and I don't want to dispute the facts, but I dispute the idea behind it. I'm assuming that all of the hospitals in North America are functioning, and most of them, I would hope, are functioning at the same professional level that your hospital is functioning at. I'm assuming they have systems in their hospitals such as the one we're discussing which make the operations of the hospitals efficient and professional and everything else that is needed to serve the patients. I've got to believe that they have other systems in place and I've got to believe that this California operation is not supplying every hospital on the continent with this hardware or software system, whatever we want to call it.

If we look at it in that perspective, then I find it difficult to accept that the decision -- and I don't want to be a Monday morning quarterback or a seven-years-later quarterback and I don't think the committee wants to do that either, but I think you would be asking us to believe a great deal for us to believe that that was the only system, that they were the only people and therefore we couldn't tender.

I don't think that's good public policy process. I think it's rife for abuse, and I'm hoping that other hospitals in this province would not allow themselves to be put in that position, because it allows for the institutions to come under severe questioning, which is what's happening right now.

Any further questions by members? Each caucus has five minutes.

Mr Tilson: Dr Hudson, getting back to one of the two issues I'm concerned about, Mr Decter obviously had some knowledge of all of this; he had substantial knowledge of this. He had discussions with Mr Schyngera. He had discussions with you. Do you believe the ministry pursued any of these allegations in-house? Do you have any information that can assist us? Again, I'm trying to have some assistance to the committee with respect to the process that the ministry has when it hears allegations such as this towards a hospital. I guess my question is, to your knowledge, did Mr Decter or any of his staff pursue any investigation of these allegations that were made by CUPE?

Dr Hudson: It was my knowledge that either Mr Decter or Ms Lankin, or both, directly received the allegations of CUPE. What they did about it, beyond what I've told you that I know of, I have no further knowledge.

Mr Tilson: So you don't know whether they came to any conclusions. Did they communicate with you or any members of your staff or any members of the hospital? In other words, after you believe that these allegations were made, the same allegations that were made to this committee, were there any telephone calls or any correspondence that were made to you or members of your staff inquiring about these very serious allegations?

Dr Hudson: I told Mr Decter that these allegations were false, and I told Mr Decter and Ms Lankin and wrote to them, or wrote to the ministry, that the findings of the two major external reviews were that there was no wrongdoing, there was no substantiation of the allegations. That was the end of the matter as far as I was concerned, so I cannot reply as to what the ministry did with that information. My assumption was that they accepted it.

Mr Tilson: So because there was no further communication from either Ms Lankin or Mr Decter, you believed that they were satisfied.

Dr Hudson: Yes.

Mr Tilson: Thank you. I have no other comments or questions.

The Chair: Thank you. Mr O'Connor and then Dr Frankford and then Mr Hayes. You each get two minutes.

Mr O'Connor: I'll keep this as brief as possible. I guess what this points to is the fact that we as committee members and members of the Legislature do make mistakes as well. Perhaps we should have inquired at the Ministry of Health before we even sent the auditor in, so maybe we've got something to learn. We'll talk about this later, at another time. I guess it's like the opposition, when it made allegations about all the deputy ministers spending wildly and everything, and in fact we sent the Provincial Auditor in to investigate because that was an allegation that this committee thought should maybe be investigated. It was never substantiated. So I guess things do happen at times where we don't need to maybe go in and do all that spending and all the investigations that we did do.

Back to my question that I had asked, though, about floor space. The reason I asked that question was because of page 17. I know my colleague across the floor raised this. I think he was talking about a former minister, when the approval came through a Conservative government at the time. Anyway, page 17 mentions two floors of empty floor space in the Max Bell Research Centre. That's why I had asked the question about floor space. I know we've got a very brief time, so could you maybe answer the question I asked earlier about floor space and utilization?

Dr Hudson: At Max Bell?

Mr O'Connor: That was at Max Bell, according to the audit, but I was asking about all of the hospital space, given that there is a restructuring going on, and how well it is being utilized.

Dr Hudson: The Max Bell Research Centre is an extremely busy part of the hospital. The Toronto Hospital last year received over $28 million in grant capture, the highest for any hospital in the city. Much of the work -- not all, but much of the work --

Mr O'Connor: If I could help you here, I realize the importance of that and the research that the hospital does, but floor space is the question. I'm not speaking specifically about Max Bell; I'm speaking about the overall hospital space with the new hospital that's been formed by the amalgamation and some of the downsizing. You've explained how you've utilized some of this space through the teaching, which is a very important aspect, and the hospital is renowned around the world for that. But the hospital space utilization, if you would, please.

Dr Hudson: If I could just finish off the Max Bell issue, the accusation was that it wasn't being used. The floors that are not used, to answer your question, all the shelled-in floors, have not been completed. When the money is raised by private donation to do so, they will be filled in. We have more than enough applications for research space that we cannot meet. So there's an empty part which is now used for storage which is not complete; it cannot be used. When the money is raised, we will use it.

As I said before, space is obviously available when you downsize an institution. That's within the structure of the building, and we are using that as constructively as we can. In fact, it gives us quite a few opportunities to expand various areas of the hospital that are tight for space. For example, the foundation office has just moved. There's an area which raises large amounts of money to support research and, to some extent, teaching in the hospital. So we are using the space that becomes available as it becomes available. Some of it is locked up and fallow and will remain so until there is sufficient funding available to hospitals in general, not to our hospital in particular, to use the space again.

We've also knocked down part of the building, the north Bathurst wing of the hospital at the Western division. If you go there now, it's a parking lot. That was part of the density arrangement, the density laws for that site. So that was an area of the hospital that has just simply been wiped out, and we are now generating revenue from that parking site for the use of the hospital.

I don't know if I can be any more specific on the issue.


Mr Pat Hayes (Essex-Kent): Dr Hudson, I guess you've already been asked questions regarding the accommodations for Begley, and of course paying $150,000 -- am I correct? -- as his salary. I guess the other thing is that you also pay for 4,000 square feet of office for them and for other equipment.

Actually, I have two quick questions. Do you pay for employees under Mr Begley also? Then my second question would be, don't you feel it's kind of unusual that, in a public institution you would accommodate and spend money for a firm and that firm is also able to use that office space and pay employees to do private work outside of the hospital? Is there any return from Mr Begley towards the hospital for accommodating him, paying his salary and paying for office space and equipment?

Dr Hudson: Sir, if I could ask your indulgence, Ms Arsenault had started answering those questions. I'll ask her to respond to those.

Ms Arsenault: There are really two parts to your question, I think. One has to do with the issue of space and the other has to do with recoveries, if you'd like, when work is done for other institutions. What I think has not been very clear, perhaps, to this committee is that virtually all the work that is done by Begley is done for the Toronto Hospital. There have been, over the years, some minor exceptions to those rules, but you should understand that the exceptions have been work that was done for the University of Toronto, for the Wellesley Hospital and for Women's College Hospital. Had any work ever been done for a non-public institution, the Toronto Hospital would have required a recovery of overhead. We did not require recovery of overhead when we knew we were assisting a sister institution, really.

The other thing --

Mr Hayes: Mr Begley would also make more money doing that other work, no? If he worked for the university or other institutions, would he receive revenue or fees from those other institutions, at the same time working out of a hospital?

Ms Arsenault: The arrangement we had with Mr Begley was that it was a portion of the staff cost that would otherwise have been covered by the Toronto Hospital. When staff were working on other projects, the recovery was made not from the Toronto Hospital but rather from the other institutions, so it therefore reduced our costs and they were passed on to the other institutions instead. So the $150,000, in those years when there would have been outside work done, would have been shared in part by the other institutions, and the Toronto Hospital's share was therefore less.

Mr Hayes: So you're saying that if this were happening at the present time, Mr Begley --

Ms Arsenault: Yes, that's right.

The Chair: We're way over our time limit. I've been very generous.


Mr Hayes: You ask your questions in the manner you want, Mr Tilson, and I'll ask the way I want.

The Chair: Order. Order, please.

Mr Hayes: It was the fee. Does he get extra fee? That's what I wanted to know.

Ms Arsenault: Yes.

The Chair: Mr Cordiano, you have five minutes.

Mr Cordiano: I'm still very distressed. The more I read this correspondence, the more I come to the conclusion -- various pieces of information, for example in your letter to the minister on December 9 in response to the Ernst and Young information supplied, looking into the relationship of Begley and Associates with the hospital, you point out very clearly that, "No evidence is forthcoming to suggest any impropriety or breach of trust." Similar words in a letter dated February 5, 1992: "No evidence of impropriety is reported in the report nor was any suggested in meeting with the external reviewers." This was again to the minister, and then finally, April 2, 1992: "On the financial front, the problems which were revealed in late summer 1991 have been defined and managed. The various components of the recovery plan are now showing significant financial return and this will be reported to the ministry in the usual format."

There's a whole series of reports that you make to the minister personally, at least addressed to her attention, about this ongoing matter. You keep referring back to it. You've brought it to a conclusion satisfactory to yourself and all those concerned on the hospital board, I imagine, and any others who were looking at this question.

This is really my question: The ministry was satisfied by the efforts that you undertook to investigate this matter, to bring it to a satisfactory conclusion? I don't have the correspondence; I apologize. Perhaps we should have that in front of us, but I'd like to get a sense from you personally that this matter, to the best of your knowledge, had been satisfactorily resolved with the view that the minister had taken at that time in her correspondence back to you, in response to the letters that you had written to her.

Dr Hudson: Sir, it was my impression that when I reported that the results of the external reviews showed no wrongdoing and that the board in fact had gone through this extremely carefully and reviewed the reports from outside, the deputy accepted that as a satisfactory inquiry into the matters at hand. My impression was that the ministry accepted it.

Mr Cordiano: The minister had no qualms about this? In her response to your letters, there was no suggestion that additional efforts on the part of the ministry would be undertaken? In fact, she was completely satisfied with the review that had been conducted or the investigations that had been taken?

Dr Hudson: Your comment about the fact that having made the report to her -- because I knew she was very concerned about this -- there was no subsequent request for further information or subsequent request for clarification from them: To my knowledge or remembrance, that is correct. I assume that they, as the board had done and as I had done, had come to the conclusion that there was no basis for the allegations.

Mr Cordiano: Right, and in light of the fact that I believe CUPE and, in fact, the sitting member had made some reference to concerns, had been apprised of these matters as far back as the summer of that previous year, 1991, and had made a number of relevant pieces of information available, it seemed to me that everyone was quite concerned about this and that the ministry had absorbed all of this information and then perhaps relied on your review to be conducted to reach a final satisfactory conclusion. Everyone thought, "Well, we've done our work and there doesn't seem to be any wrongdoing here." Of course, CUPE wasn't satisfied, and yet the ministry was. Now, you know, coming back to this committee, it looked as though we had a matter to look into that was quite serious that needed further work.

Dr Hudson: I can't comment because I simply don't know why CUPE wasn't satisfied. What their motivation was, needless to say, has crossed my mind numerous times. I don't know what the answer is.

Mr Cordiano: But the ministry was satisfied and that's basically the final point I wanted to make.

Dr Hudson: Yes.

The Chair: Mr Tilson, five minutes.

Mr Tilson: I have no other comments.

The Chair: Very good. Thank you.

Mr O'Connor: Mr Chair, I have a motion.

The Chair: You have a motion?

Mr O'Connor: I don't know if it's in order or not. It's just that some of the information that we have received from CUPE has stated some employees' names and what not. I just thought, whether it needs to be a motion or not, that we should keep this confidential among the committee members. It's just a concern I raise.

The Chair: I'm not sure how we're going to do that.

Mr O'Connor: I don't know whether there needs to be a motion or just a recognition that we should perhaps keep that confidential.

The Chair: Let me say this: I've always asked the committee members to use their best judgement when they receive information, and I've always told committee members that if they make certain documents public they're going to have to be the ones to explain why.

Yes, Mr Duignan?

Mr Duignan: If I could just point out very briefly that when it's circulated to members of the committee it's already a public document.

Mr Cordiano: This is public information.

The Chair: I just reiterate my advice to the members: Use your own best judgement.

Mr Cordiano has a notice of motion.

Mr Cordiano: I think we've finished our questions with the witnesses. Are we dealing with the item that I brought before you?

The Chair: I'm --

Mr Cordiano: Before we get to that, if I may, I would like to put a motion on the floor with respect to this subject, to conclude it.

The Chair: I was just going to mention the fact that you had a notice of motion, because we have approximately nine minutes' time left, so whatever else we want to do, we're going to have to judge ourselves accordingly. Do you have a motion, please, Mr Cordiano?


Mr Cordiano: I would suggest, and I would like to make it in the form of a motion, that this committee request that the Deputy Minister and the Minister of Health come before it to explain a series of matters relating to this subject so that we can ascertain what procedures are in place in the ministry and if they are in fact effective to deal with serious allegations that come before the ministry. I think it needs a follow-up.

The Chair: Would you be satisfied with a motion that read, "The public accounts committee requests the attendance of the Minister and Deputy Minister of Health at their earliest possible convenience"?

Mr Cordiano: Yes, that would be reasonably satisfactory.

Mr Duignan: This side has no objection to that motion. I'd like to call the question on it.

The Chair: Everybody understands the motion? All in favour? Opposed? The motion is carried. The clerk will prepare a letter of invitation for me to sign on behalf of the committee.

Mr Fell: If I may just sum up, as far as the hospital is concerned, we reaffirm our position that this matter is behind us now. We're going forward. The hospital has just been awarded a three-year accreditation, which is the best accreditation one could get in our circumstance. We are the leading teaching and research institution in this country. As a result of the merger, there was a real benefit from the merger, and I think a one-pager on the savings has been filed with this committee previously. We go on from here and we thank you for your consideration of our case.

The Chair: On behalf of the committee, I would like to thank Fraser Fell, chairman of the board of directors, Alan Hudson, president and CEO, and other senior staff members from the Toronto general division of the Toronto Hospital for their attendance this morning, for giving us the information they have and for answering all of our questions. Thank you again and best of luck.


The Chair: The committee has two other items to deal with this morning. Mr Cordiano, you have asked us to distribute on your behalf a notice of motion. Would you like me to read the notice of motion into the record at this time?

Mr Cordiano: Sure.

The Chair: Mr Cordiano has moved, dated November 19, 1992, that the Provincial Auditor review the Workers' Compensation Board's plans to build a $200-million office tower to serve as its new headquarters. As part of his consideration, the auditor should examine whether this is good value for money in light of the fact that it would cost $380 per square foot for this new office space at a time when there are 27 million square feet of available office space at an average cost of $20 per square foot in Toronto.

That's Mr Cordiano's notice of motion. We'll discuss it next week.

Mr Paul Wessenger (Simcoe Centre): If we're going to discuss it next week, it might be helpful if we got some information from the WCB with respect to whether it still intends to proceed. I know there's a news column today that indicates that the matter might not be proceeded with, in which case it would not be useful for the committee to investigate something that isn't going to be proceeded with.

The Chair: We'll undertake to find out. I'm not sure who we're going to call. I know the Treasurer has made some comments. We may call Mr Laughren or we may call Mr Di Santo directly, but I want to have the consensus of the committee that we undertake those phone calls. I cannot allow the clerk to call without the support of the committee behind her.

Mr Cordiano: Could I just say very briefly that the decision not to proceed is really immaterial. I think the decision itself to move in this direction is what I would like to understand more about. If there really wasn't a necessity for this space, then consideration has to be given as to how a decision like that is arrived at.

The Chair: It might be a good information-gathering session, if members wish to do that, depending on what happens over the next week or so, but I'm going to leave that in the hands of the members.

We have one other small matter before we go, the report of the subcommittee on the Canadian Council of Public Accounts Committees conference.

"The subcommittee on the Canadian Council of Public Accounts Committees conference met on Thursday, November 5, 1992, and discussed matters relating to the conference to be held in 1993.

"It was agreed that the conference will start on Sunday, July 4, 1993, in the evening and will end at noon on Wednesday, July 7, 1993.

"It was agreed that the conference will be held in conjunction with the Canadian Office of Legislative Auditors.

"It was agreed that accommodation will be in downtown Toronto.

"It was agreed that the clerk will investigate using room 151" -- this room -- "for some" -- or all -- "sessions."

Can I have a motion to accept the subcommittee's report moved by Mr Duignan? All in favour? Carried.

Thank you. We'll see you next week.

The committee adjourned at 1156.