Legislative Assembly of Ontario

REVIEW OF SPECIAL AUDIT ON TORONTO GENERAL DIVISION OF THE TORONTO HOSPITAL

CONTENTS

Thursday 15 October 1992

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

STANDING COMMITTEE ON PUBLIC ACCOUNTS

*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:

*Brown, Michael A. (Algoma-Manitoulin L) for Mr Callahan

*Grandmaître, Bernard (Ottawa East/-Est L) for Mr Sorbara

*Owens, Stephen (Scarborough Centre ND) for Ms Haeck

*In attendance / présents

Also taking part / Autres participants et participantes:

Otterman, Jim F., assistant Provincial Auditor

Sciarra, John, administrative assistant to Provincial Auditor

Mazzone, Vince, audit manager, Office of the Provincial Auditor

Mishchenko, N.J., director, special assignments branch, Office of the Provincial Auditor

Clerk / Greffière: Manikel, Tannis

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

The committee met at 1006 in room 151.

REVIEW OF SPECIAL AUDIT ON TORONTO GENERAL DIVISION OF THE TORONTO HOSPITAL

The Chair (Mr Remo Mancini): I see a quorum. The standing committee on public accounts is called to order.

As agreed to last week, we have asked the auditor to bring forward the report on the audit of the Toronto General division of the Toronto Hospital. The report is dated October 6, 1992. The acting Provincial Auditor has sent us a note, that we should recall. It says, "Pursuant to a motion passed by the committee," meaning the standing committee on public accounts, "at its May 14, 1992, meeting, we have completed and are attaching a report on the audit of the Toronto General division of the Toronto Hospital." I'd like to ask the auditor to take us through the report, please.

While we're waiting on Mr Mishchenko, did the members of the committee get a chance to review that documentation I left with you last week in regard to the annual meeting of the Canadian Council of Public Accounts Committees? Anybody get a chance to review that?

Mr Larry O'Connor (Durham-York): The clerk is heading in the right direction with it, and I look forward to seeing what else she brings forward. Have we sent a letter from the committee to the Board of Internal Economy, as suggested by --

The Chair: No, because we haven't decided on anything. We're going to have to decide on a few things before we can send them a letter.

Mr O'Connor: I guess we have to wait for a discussion to take place.

The Chair: Maybe, if we have time today, we'll do that. Mr Mishchenko, you're on board here.

Mr Nick J. Mishchenko: Sorry about that.

Mr Jim F. Otterman: Mr Chair, maybe I could start it off by giving a very brief overview. The report essentially deals with the major items in the motion of the committee involving concerns expressed around the new computer equipment at the Toronto General division of the hospital, contracts with Begley and Associates, and recent renovation and construction projects at the Toronto General division.

We also took into account other matters that were raised at the previous hearings; primarily, these involved various purchases, acquisitions of one type of equipment or service or another.

Essentially, we were able to provide an overall conclusion that the concerns raised, with the exception of operating problems with the new computer system, were generally without substance or were overstated. We've included in our report a fair bit of information on each of the areas we looked at, so that all the facts will be available to you to ensure understanding of the concerns raised.

With that, we'd be pleased to carry you through the rest of the report on an item-by-item basis or turn it open for questioning.

The Chair: I would prefer that we go through this report very carefully item by item, so that I and all the members of the committee and the members of the public who are watching understand exactly what it was that the committee had asked to be done and exactly what it was that the auditor's office had found. So I'm not in any hurry to skip through this report. This involved a lot of time and effort, and I want to make sure that all the members are aware of exactly what the conclusions are and understand those conclusions. I hope we can do that.

Mr Otterman: With that, Nick, let's start with the computer equipment.

Mr Mishchenko: The first section of the audit that we covered was the new computer equipment at the Toronto General division; that's primarily what's called the Ulticare system, a patient care system which the hospital started purchasing back in 1985. This system is still in developmental stages. There are a number of phases of the system that are still being implemented. Between 1985 and 1992 there were a lot of problems, I guess, with the implementation. There were some difficulties that the hospital was encountering with a number of the systems that were being added on to the patient care system. The hospital recognized that there were problems and has been trying to take corrective action during that time frame.

The total cost of the system, the capital cost of the system, is approximately $22.7 million since the time they first started purchasing the system. In addition, there's been about $4.5 million in operating costs during that phase. Again, as I mentioned earlier, the system hasn't been fully implemented yet. They're still working on it.

The hospital purchased the system from a company in California. Initially, Toronto General was trying to develop a system of its own, but realizing that there was already a company that was further ahead in developing a system and had already tested some different modules, it felt that this was a better approach for it than developing its own. So as a result, they contracted with this firm in California to put the system into Toronto General. It is the biggest system the firm has ever put on, Toronto General being a significantly larger hospital than a lot of other hospitals that have this system. Also, they were putting on a lot more modules than were in the other facilities.

I'm not sure whether you wanted me to explain whether the allegation --

The Chair: Yes.

Mr Mishchenko: Each individual one? Okay.

The first allegation we dealt with was the cost of the system. I guess what was discussed in the committee meeting on May 7 of this year was that the system cost approximately $85 million. As I mentioned earlier, the cost that we were able to arrive at for the system by going through all the invoices and purchase requisitions and contracts with the supplier was $22.7 million for the capital cost and $4.5 million for the operating cost, bringing the total cost to $27.2 million as of June 30 of this year.

Interjection: It was $22.7 million?

Mr Mishchenko: Yes, $22.7 million plus $4.5 million, so it's $27.2 million. This is on page 4 of our report.

The next concern raised was that operating funds had been used to cover the cost of the computers. We were able to find no evidence that that was the case. The funding for the computer came from the hospital's endowment fund, and it was all properly recorded as a capital cost. There was no evidence that there were operating funds used for those purposes.

The next concern was that the system was purchased from a company in California and it cannot be serviced locally. As I mentioned earlier, that's correct: The system was purchased from a company called Health Data Sciences in California, Burbank I think, and it does provide the software service for the system. They have proprietary ownership over the system, so of course they're the only ones that can service the software. The hospital feels that from its perspective it's still cheaper to go that route than have the company set up an office in Toronto to provide that type of service.

The hardware is supplied by a company that has an office in Toronto. Accordingly, any service relating to the hardware is provided by that company locally.

The Chair: It says here, "The hospital has a software maintenance contract with HDS, which includes four visits per year at no additional cost." Did you find out how many actual visits per year were made, whether there were three or 15, and what the cost of that was? Were you able to compare that cost with other costs in maybe different institutions?

Mr Mishchenko: No, we don't have any information on costs for different institutions.

The Chair: On the comparative costs?

Mr Mishchenko: No. This is the only system in Canada that's been supplied by HDS, as far as we understand, plus there's one in Quebec now, but I'm not sure where that one stands, whether that's been finalized or not.

The software maintenance costs are approximately $350,000 a year.

The Chair: Is that a contract?

Mr Mishchenko: It's a contract, yes. I'm not sure on the number of visits per year. It's more on an as-needed basis. At one time, HDS actually had an individual located at the hospital on a full-time basis in the implementation stages. However, that was felt no longer necessary, so that's why they went with this contract.

Mr Bernard Grandmaître (Ottawa East): Was this known from day one, the fact that it can't be serviced locally?

Mr Mishchenko: Yes. Apparently it's pretty common for these types of systems. The majority of systems of this nature are manufactured in the United States, and a software manufacturer, more for the protection of its development of that software, would not be willing to contract that out to somebody else. There's a proprietary interest there and as a result they would not. You'd have to do that regardless of where you bought it from, whatever the company was. The question is that if there was a company in Toronto, it would be a different story, but apparently there isn't.

The hospital did a significant amount of research back in 1985, which was evidenced in the board meetings of the hospital. When they made the decision to go with the HDS system, they had determined that this was the best system available at that time. But yes, it was clear that it was from California.

The Chair: Anything further, Mr Grandmaître?

Mr Grandmaître: Thanks.

Mr Robert Frankford (Scarborough East): I wonder if we could have a better explanation of what the whole system is and what it does, maybe not now, but I certainly would feel that it would be useful to know more precisely what we're dealing with.

The Chair: Let me see if it's more appropriate to do it now or later on.

Mr Mishchenko: We'll be going through some of the intricacies of the system as we go along, and if you have any specific questions, I'll answer them then, if you want.

The Chair: How's that, Dr Frankford? Some of your questions are going to answered as we go along, and if they're not, we'll get a better briefing at the conclusion.

Mr Frankford: Is this just something that is at the bedside, or is it --

Mr Mishchenko: It's at the bedside, yes. There's a terminal located in each patient room where the doctors or nurses can input information as a patient is receiving treatment or they can obtain information as well as to what type of test results there have been and things of that nature. It's continuously being used in that process. There are terminals in each room and there are terminals at the nurses' station and terminals throughout the hospital.

Mr Frankford: What about outpatient clinics and individual doctors' outside offices?

Mr Mishchenko: I'm not sure if individual doctors' offices have them. There are a lot of terminals. I'm not sure if every single doctor would have one, but there may be terminals available to individual doctors.

Mr Frankford: But it would include outpatient clinics?

Mr Mishchenko: Outpatient clinics in that hospital, yes.

Mr Frankford: And every registered outpatient would be entered into it?

Mr Mishchenko: Yes.

The Chair: Any further questions, Dr Frankford? Is that okay for right now?

Mr Frankford: Thank you, yes.

1020

The Chair: I'm sorry, I should have asked this question about five minutes ago. Someone asked me about the tendering of the original $25-million or $22-million contract, whatever that big number was. How was that done?

Mr Mishchenko: I don't think we actually looked into the tendering process as part of it. We know they acquired it through getting information from what's available out there, but no, we didn't look at the actual tender. It wasn't one of the concerns that was raised.

The Chair: So you don't know if tenders were submitted by one, two or 15 companies and you don't know if the lowest tender was chosen? We don't know any of these things?

Mr Mishchenko: The best we could determine -- you have to remember, we're going back a long time. Back in 1985 there weren't a lot of systems available to purchase, even in the United States.

The Chair: Can I request an addendum to this report? I think it's appropriate for us to know how it was tendered; whether there was a fair tender, whether people were asked to tender, whether there were only two people in the entire world, or two companies in the entire world, who could provide this product and those two were asked to submit bids. I think it's a -- yes, Mr Cousens?

Mr W. Donald Cousens (Markham): After you, Mr Chair.

The Chair: I'm finished.

Mr Cousens: I thank you for asking for that guideline. If this is possible and not too much effort, it would be good. The report that has come back from the Provincial Auditor is extremely helpful and again I commend them for their efforts.

I wonder if you looked in any way at the guidelines established by the Ministry of Health for hospitals in the acquisition of computer systems. To what extent was the ministry involved and did they have guidelines to assist hospitals? There are 222 hospitals. That's what Elinor Caplan used to say. It reminded me of -- instead of ASAs, 222s. There's probably 221 or less today. It's certainly a lot fewer hospital beds. What guidelines has the Ministry of Health ever given in these decisions?

Mr Mishchenko: I'm not aware what the guidelines are for the Ministry of Health. However, I think the Ministry of Health is taking the position that when it comes to the acquisition of systems of this nature the ministry does not provide any funding for the acquisition; it's the hospital's responsibility to provide the funding. As a result, we found no indication where the Ministry of Health was involved in the initial stages with the hospital in discussing the system, what kind of system they were going to put in place, whatever. To us it appears it was a hospital-generated decision to go ahead and implement a system of this nature.

Mr Cousens: Not that you'd ever want to have a central bureaucracy as we had at one time in other countries, in the Soviet Union where they said everything had to be a certain way, but there should be some way in which, I would think, the ministry would have some form of consultative assistance available to the health care industry and service agencies across Ontario.

It's certainly evident in the Ministry of Municipal Affairs, where there are specialists from within the Ministry of Municipal Affairs who assist different municipalities in setting up and doing things. Certain fundamental criteria are met for a successful installation without telling them how they have to do it. Municipal Affairs is very anxious to see that the reports come back in a certain way and they've even come along and given funding, back in the early 1980s, so that they would do certain kinds of computerization. In fact, it happens now through the Ministry of the Environment where there is certain funding to do certain things.

It surprises me that the Ministry of Health has had a hands-off policy, as you describe it. It may be one of those issues, Mr Chairman, or through to Ray McLellan in research, where we do some review of the guidelines established by the Ministry of Health and the services they can and should be giving to assist hospitals in staying on track within a broad set of guidelines that will not permit this kind of --

Mr Otterman: It is no surprise to the Provincial Auditor that such guidelines or practices don't exist. If you refer to many of our previous reports which cover everything from monitoring the services they provide, including monitoring their budgets and the statements of expenditure, the inability to get information about foundations and the total funding available to hospitals, you will see that it is very much a hands-off accountability framework. Unless they are funding specific capital items, there will be very few conditions attached to any expenditures of that nature.

The Chair: If we could conclude.

Mr Cousens: I will, and I thank you, and I think that Mr Otterman's point would raise really a second issue for us to consider in our final report, and that is that we continue to look for ways in which the Provincial Auditor can have total access to all records that pertain to hospitals and health care, and that should be one of the areas of emphasis that we look at.

The Chair: Mr O'Connor, then Mr Frankford.

Mr O'Connor: More of a general comment. I was hoping that perhaps we can proceed through the report and then maybe hold some of our questions that seem to be in a more general nature towards the end, because I think we should try to have some continuity to this and it might flow a little easier. Our time is limited.

The Chair: I agree. Thanks for the advice.

Mr Frankford: I was wondering if there are articles in technical journals about this system or any press releases or any coverage so we could get some historical perspective on what was anticipated when the system was installed.

The Chair: That's a very good question. Is any of that documentation available?

Mr Mishchenko: Yes, we could supply some material.

The Chair: Could we get it out to the committee members as soon as we can? You have it now?

Mr Mishchenko: We have it here.

The Chair: Is that all right? We'll get it out this afternoon.

Does the committee agree we're going to ask for an addendum to this report to find out about the tendering process for the big contract? Is there a problem with that, anybody? No? Okay. Yes, go ahead.

Mr Otterman: Just for the record, Mr Chair, I have no problem with that. As Mr Mishchenko alluded to, it was not a major concern of ours, and that was mainly influenced by the result of our other work which covered the tendering area, particularly in the contracting.

The Chair: I've been asked for a one-minute recess because our sound system is not going through Hansard. It's not being properly recorded. Could we recess until 10:30? Please don't go away.

The committee recessed at 1027 and resumed at 1029.

The Chair: I'm told the sound system is in order again, so we'll carry on.

Mr Mishchenko: The next issue was that the hospital had spent $85 million on the direct purchase of a patient care system that does not work. The system is being used, there's no question about that; it's continuously being used by hospital staff. It has definitely not met all the expectations that the hospital originally had for the system. They've run into some significant problems related primarily to the hardware, but there have also been some software problems. In January 1991 the president of the hospital actually raised these concerns with the manufacturer, saying that, as it stands, the system wasn't acceptable.

In 1991 as well, the new president of the hospital commissioned both internal and external reviews to be done of the system to see whether the system was meeting the expectations. If it wasn't, why not, whether the system was still the system they should continue with or whether they should scrap it, and if it was a system that was workable, could it handle all the applications they were planning to put on the system.

The results of those reviews indicated there was a fairly reasonable level of satisfaction from staff that the system was useful. However, there were concerns about the amount of downtime. The system had a lot of problems with breakdowns and things of that nature and as a result it caused some problems for staff getting access to information as quickly as they would have liked. So the problems basically revolved around that. Most of the concerns the staff raised in those two studies that were done were that the system was not operating as quickly as they would like and they were not happy with the amount of problems they were having with downtime, recovery and things of that nature.

The Chair: Can I just interrupt for a moment? Members and also myself have just received this report. We're basically looking at it for the first time. I'm starting to concur more and more with Dr Frankford. It's very difficult to get a hold on what $85 million was used for when we describe it as the direct purchase of a patient care computer system. It doesn't tell us a whole lot and therefore it's difficult to put a lot of the other comments that are being made into proper perspective. I think if it's agreeable with the committee, maybe when we're finished we're going to have to require some further briefings on what these things actually do. I hope that's all right with your office too.

Mr Mishchenko: Sure.

The Chair: It's very difficult for us to be able to put A and C together when we don't quite understand what B is.

Mr Mishchenko: It took us a long time to put it together as well, as we were doing the audit, but it wasn't $85 million; it was $27.2 million. The concern was that it was $85 million.

The Chair: That was the allegation, yes.

Mr Mishchenko: But the actual cost was $27.2 million.

The Chair: I want to correct that. The $85 million was not the cost. The $85 million was the allegation, and the cost came in at something like $27 million.

Mr Mishchenko: It was $27.2 million.

The Chair: I want to make sure the record is very clear on that.

Mr Mishchenko: We can give you an overview on the system whenever you want, a rundown.

Mr Stephen Owens (Scarborough Centre): In terms of your comments with respect to the committee only receiving the report today, that's quite correct. My question is to Mr Otterman. I received a call from Mr Ron Morrow, the Canadian Union of Public Employees staff representative. He indicated to me that he was contacted by the Toronto Hospital Corp, his recollection was more than a week ago, by the secretary to the president, Dr Allan Hudson, and a couple of things were said: first, that they had a draft copy of the report, and second, that they were cleared of any allegations of wrongdoing.

I guess my question is in terms of process. Is it appropriate that a report is shared with the auditee prior to its coming to committee? If that is the process, why were not all parties given access to this report, if the view was to ensure the accuracy of the information that was given?

The Chair: I'd ask the auditor to answer that question.

Mr Otterman: The normal procedure is to review a draft report with the auditee in all the audits. In the case of the other people involved, the union representatives, we reviewed orally with that union representative, speaking from the draft report, to make sure of the factual accuracy from their side and also from the hospital side. As far as bringing the report to your attention, I believe it was transmitted to the clerk this Tuesday.

The Chair: Okay, now that we know that is common and customary practice, let's continue.

Mr Mishchenko: The next concern raised, on page 6 of the report and starting on page 7 as well: "Each department has developed its own internal system. Accordingly, the proposed benefits of an integrated computer system have disappeared."

It's not true that each department has developed its own internal system. There are a number of systems that are on the Ulticare system now that are fully run by that system. However, there definitely are some applications that aren't on the system now and some that likely will never be. For example, what happened back in May and June 1991 is that the biochemistry application at Toronto General Hospital was put on to the system and it failed, so it was taken off the system.

In addition, the medical records department has purchased a standalone system because it didn't feel that the Ulticare system was adequate for the statistical reporting information that was required to operate the department.

While there is a pharmacy application available to be put on Ulticare, it doesn't look like it will be put on the system now, and I think a lot of that, really, is because of the problems they've had with maybe going a little bit over capacity. The system couldn't handle all the applications that were going to be put on there.

The hospital now has gone back to the manufacturer of the disc storage equipment, requiring it to provide them with more capable equipment that can handle a lot of the things that the hospital wanted to put on the system, and that apparently will be done some time this month. They're still hoping that it'll be finished by the end of October. But one of the biggest problems they had was that these storage devices they had weren't up to scratch. They were having a lot of disc failures.

Mr Cousens: Is there any way in which we can recover any money from the manufacturer, when you indicate that there were defects in disc storage devices, that it failed to live up to standards that would have been in any basic government contract with the computer vendor?

Mr Mishchenko: The action the hospital wanted, really, was for them to replace the equipment, which they are doing at no additional cost to the hospital.

Mr Cousens: Would there be any benefit to the hospital to also sue for lost time, people's investment, expectation and other services that are lost because of it?

Mr Mishchenko: We understand that there were discussions about the possibility of taking some sort of action. Unfortunately, I think there was some concern about the contract itself, as to what ramifications or what possibilities there were. I keep referring back to my colleague here, but he's the individual who's more familiar with that aspect of it.

Mr Cousens: Oh, that's all right. We'd be glad if you sat at the table.

The Chair: I've asked one of the other officials from the auditor's office to join us at the table. It seems he has some knowledge about the matter, and it might be helpful as our colleagues ask their questions. Any further questions on this?

Mr Cousens: Does he have any further response to give with regard to --

Mr Mishchenko: I don't think so. I think the hospital pretty well felt that if it could get the equipment and it would provide what was wanted and it was satisfactory, that would satisfy it.

Mr Cousens: What's the value of the equipment today? It was worth X dollars then, $21 million or something. What's it worth today with the pricing of the product as it's gone down?

Mr Mishchenko: I wouldn't have any idea on that at all.

Mr Cousens: It's probably worth less than half the price they paid for it?

Mr Mishchenko: Definitely some of the terminals that were acquired years ago would be cheaper today than they were five years ago or six years ago.

Mr Cousens: If that's five and six years ago, you're talking maybe 25%.

Mr Mishchenko: If you depreciated it at 30%, you'd probably get it down close to zero, from a financial perspective, but that's common with computer equipment.

The Chair: Anybody else? No? Okay, let's carry on.

Mr Mishchenko: The next concern was that there were computer terminals in storage that have never been used and probably never will be. There are definitely computer terminals in storage. The hospital has closed down a number of beds in the last few years, and as a result, of the 3,000 terminals that were acquired for the system, about 300 are currently not in use.

In addition, the hospital sold 193 terminals a couple of years ago, not because there was a surplus of terminals; these terminals actually were defective. There were some problems with them, so the hospital felt it would be better just to dispose of them through a sale to another company. The terminals would still function well for the company that purchased them because of the different access methodology that was being used, but they weren't functioning properly for the hospital. They had been in use for a number of years; they weren't new terminals that were defective and automatically sold.

One of the other concerns raised is that there were computer terminals that had been compacted and destroyed before they had been used. We found no evidence of that. A union representative was able to give us the asset number of one terminal which was alleged to have been disposed of in such a fashion. However, it wasn't part of the Ulticare system; it appears it was part of the financial system. It wasn't a new terminal; it was an old terminal. The other 25 terminals that have been disposed of were ones that could no longer be repaired.

1040

Mr Owens: In terms of the 25 terminals that were disposed of because they couldn't be repaired, do you have any understanding of how old these terminals were, and was there any attempt by the hospital to recover any kind of dollar value for the terminals?

Mr Mishchenko: The warranty periods for equipment of that nature are quite short. The depreciated value of those terminals would be fairly low by the time they were disposed of, but I don't know if they recovered anything from the company or not. We're not aware of that. I don't think so.

The Acting Chair (Mr Michael Brown): More questions? No? Then we can move along.

Mr Mishchenko: The next concern was that there was a $5-million computer mainframe purchased which is unusable and which was bought to go into the system. It had been sitting uncrated on a loading dock for a number of years. The concern was that this had been purchased from a manufacturer in Korea. It was never installed because it didn't meet CSA standards. We weren't able to find any evidence of this concern. The union representatives did take us to two crates that they felt were the equipment they referred to. However, it turned out to be laboratory equipment, not computer equipment. They had the crates opened, and they looked at them and determined it was definitely not computer equipment.

We also reviewed all the records we could. We not only looked for $5 million; we looked for any major piece of equipment that could have been bought in the last number of years, assuming that maybe the $5 million was incorrect, to see if there were any pieces of equipment that were unaccounted for, and we found no record of anything of that nature.

Mr Owens: How many years did you go back?

Mr Mishchenko: We went back to 1985, which is when they started acquiring the equipment.

Mr Owens: They started acquiring the Ulticare system?

Mr Mishchenko: Right.

Mr Owens: So the possibility exists that there perhaps may have been a mainframe purchased. I guess my concern about the way this issue is set out is how the allegation was distilled. My understanding of the allegation is that there was in fact a $3-million Perkin Elmer mainframe that had been purchased prior to the installation of Ulticare and that the Perkin Elmer mainframe that had not been used was in fact used as some type of barter in order to reduce the price of the Ulticare system.

The issue of the CSA standards was in fact not an issue with respect to the mainframe but the computers at the bedside. I've asked the clerk to see if we can get the Hansard of the day the union appeared just to make sure my determination is correct and not just working on memory. I looked at the way this is set out, and it didn't quite ring as I thought I had heard the concern.

Mr Mishchenko: We raised each of these concerns with the union representative to make sure we were accurate as to what we were referring to. We're aware of the Perkin Elmer system. It was traded in; it was part of the deal with HDS. It was a former system the hospital had and it traded it in as part of the deal with HDS for this new system.

Mr Owens: I'm just wondering if one part of the story had become mixed with another part of a different story.

Mr Mishchenko: I don't think so. I think we were pretty careful to ensure that wasn't the case, and we had discussed that with the union president numerous times during the course of our audit.

The next concern raised was that the president of the nurses' union had made submissions to people in Quebec who are buying the system that the system was dangerous. The concern was that he had cited an example of a patient who went into the operating room in 1991; there was incorrect information on the screen and the patient was given incorrect drugs as a result. Apparently this was not an isolated incident.

We were unable to find any evidence that this system is actually dangerous for patients, and neither the internal nor external reviews indicated anything of that nature.

We also met with the president of the union who was named in the concern and he was not able to confirm that this had existed. He was not sure where the allegation or the concern had come from with respect to the incorrect information being given about a patient.

He did meet with a Quebec hospital union and most of the concerns he had with these people -- it wasn't a formal submission; it actually was over dinner, I think, in Toronto, where the individuals sat down and discussed what the nurses' union thought of this new system that was being implemented at Toronto General Hospital. The main concerns he raised with these representatives were that the system was very slow and seemed to be down an unacceptable number of times, which caused problems for nursing staff to get information put on to the system.

The Chair: You used the word "denied" in your report. Were those his words, or was it just an outright denial of the allegations?

Mr Mishchenko: Just an outright denial, yes.

Mr Grandmaître: Were the Quebec people dealing with the same company as we were?

Mr Mishchenko: Yes, they were. It was a hospital in Sherbrooke, Quebec, that was considering implementing this system.

Mr Grandmaître: Considering. I see.

Mr Mishchenko: At that time, yes.

Mr Owens: Mr McClelland has been good enough to share his copy of Hansard with me. Hansard does indicate, as is printed in the report, that the mainframe in fact was problematic with respect to CSA. The issue with respect to the mainframe is not really clear in terms of Hansard, about whether it was purchased for installation with Ulticare or had been purchased prior to the installation. My concern was that the allegation, as distilled, lacked clarity and that I thought I had heard differently in terms of what the concerns were around the issue of the mainframe and the patient computers at the bedside.

Mr Otterman: Mr Chair, perhaps I could respond to that. I think Mr Mishchenko has indicated that we've had many meetings with the union people and certainly the opportunity was there to clarify any of these things and help point us in the right direction. So all I can say is, if you had that understanding, that information was not presented to us by the people we spoke with.

Mr Owens: It would certainly be their responsibility to do that.

Mr Otterman: It would be helpful.

The Chair: Okay? Let's carry on.

Mr Mishchenko: The next concern dealt with patient files having been lost; billing statements and billing accounts being mixed up or lost in the system.

We were unable to find any evidence that patient files had been lost. There was a document provided by the union representative at the meeting with the committee dealing with problems with the patient billing system, which we did follow up.

1050

Back in 1990, the finance department -- and it was actually raised by one of the staff in the finance department -- was concerned. I think what had happened is that a patient had been overbilled, and as a result of that, they went back to the system to find out how that could have occurred and realized there were some problems with billings dealing with only the Toronto Western division. They didn't have any problems with Toronto General.

What had happened is basically there was some bug in the system that resulted in incorrect information being inputted into the financial system, and as a result, some patients could get overbilled, some could get underbilled and some may not get billed for certain charges that they could have incurred during the time they were at the hospital.

This was near year-end, so there was a real concern on the part of the hospital to make sure that everything got taken care of before it came time to have its audited financial statements prepared, because there could be some concern with that if it was significant.

The hospital took corrective action as quickly as it could, and it basically went back into the system and made sure that any transfers that should have been made were made, and were made properly. We were able to find evidence of that.

Mr Frankford: On a point of clarification: The files we're talking about are computer files or paper files?

Mr Mishchenko: Vince? Basically computer files.

Mr Frankford: Are we talking about computer files or paper files?

Mr Vince Mazzone: You'll have to refresh me, sorry. Is it on page 9?

Mr Mishchenko: Yes.

Mr Mazzone: On the patient billing, was that a computer file or paper file?

Mr Mishchenko: It was a computer file.

Mr Frankford: And we're also talking about direct billings to patients?

Mr Mazzone: It's a computerized accounting system which interfaces with the Ulticare system that provides billing information or information that would require billing. That information was not properly transferred from the Ulticare system to the financial system, and that's where the problem was. It was on the transfer.

Mr Frankford: And this is direct billing to patients?

Mr Mazzone: That's right.

Mr Frankford: And that's all.

Mr Mazzone: Yes.

The Chair: Anything else?

Mr Frankford: No, that's fine. Thank you.

The Chair: Can I ask if there was a certain percentage figure of misinformation being put into computer records, for whatever reasons? I don't want to go into the reasons right now, but was it 1% of all information, 5% of all information, and is there a standard figure in the industry that allows for such mistakes? If there is, is this comparable to whatever else is going on?

Mr Mishchenko: I wouldn't be able to tell you what the industry standard is or what the percentages were. All we know is that whatever the errors were, they were corrected, and that's the best information I can provide you with. I think Vince has a little bit of information on that.

Mr Mazzone: The problem occurred over a four-month period and I think it affected some potential of 400,000, but they were unclear. They had to go back and --

The Chair: That's 400,000 what?

Mr Mazzone: It was $400,000.

The Chair: Order, please. I can't hear the answer. Sorry, go ahead.

Mr Mazzone: I think there was a potential of up to $400,000 of transactions. I can't remember totally but it was over a four-month period and there were both positive and negative charges that could have arisen.

The Chair: So there was $400,000 incorrectly stored over three or four months potentially. That was over three months, you said?

Mr Mazzone: Four.

The Chair: Over four months. Would it be fair to multiple that by three to get the yearly figure?

Mr Mazzone: No. It was just over that exact period.

The Chair: It didn't happen before.

Mr Mazzone: It didn't happen before that. They went back to that one isolated period and corrected it. That was the recovery process that was followed.

The Chair: Okay. Next?

Mr Mishchenko: The next concern was that the Ontario Nurses' Association found that the former president of the hospital had shares in HDS while the individual was the president of the hospital and that various former directors of labour relations from the hospital are working with the company in high administration levels. As well, the vice-president of nursing for the Toronto Hospital also had shares in HDS and a company from which the hospital bought its case management system.

I'll deal with the shares in HDS first of all. We did speak with the representative from the Ontario Nurses' Association, who, we were told, was the individual who had this information. This individual denied any knowledge of the former president or of the vice-president of nursing having any shares in the company.

We obtained in writing from the president of HDS confirmation that this was the case, that there was no financial interest of any nature by these individuals in the company. We also obtained confirmation from the company that it had not hired any former employees of the Toronto Hospital in any capacity. Any questions on that before I move on to the next stage? Okay.

The next issue dealt with the vice-president of nursing having shares in a company from which the hospital bought its case management system. That is correct; however, that was known right up front, when the hospital hired this individual. One of the reasons for hiring the individual was because of that individual's knowledge of the system that the hospital was putting in place.

I just let you know that the case management system is not the patient care system. They are two distinct systems. I'll explain a little bit later on what the patient management system is. The patient care system is the HDS system. The system with respect to case management is purchased from a completely different company and basically has no ties with the Ulticare system.

We did obtain confirmation that yes indeed, this individual was the owner of the company that provided the case management system and the vice-president of nursing and it was in her employment agreement, in the contract with the hospital, right up front, that she could be the owner of the company and would spend one day a month on business related to that company as part of the agreement with the hospital.

The Chair: I have a question. Your report states that the hospital acquired consulting services for case management from the centre from April 1989 to December 1990. What was the cost of that contract?

Mr Mazzone: I believe $218,000 was spent over the entire period. It was not on a fee-for-service basis, so it varied monthly.

Mr Mishchenko: That would include travelling costs of individuals coming up to take advantage --

The Chair: Some $218,000? Is that 15 months or 18 months? I'm having trouble seeing this. Is that about 18 months?

Mr Mishchenko: Yes, a little more than that. Pretty close, about 20 months.

The Chair: So there was $218,000 of services bought over 18 months from this individual's company. Then your report goes on to state that on June 22, 1989, the then president of the centre, the person whom we're referring to in regard to the $218,000, was offered the position of vice-president of nursing at the hospital, effective October. Do we know what the salary offer was for that person?

Mr Mishchenko: No, we don't.

The Chair: Is that information available?

Mr Mishchenko: I'm not sure what the hospital's position would be on providing that information. We don't have it. You'd have to obtain it from them.

The Chair: You have no ability to get that information?

Mr Mishchenko: We could ask for it. I'm not sure that we would get it.

The Chair: Okay.

Mr Otterman: I think, Mr Chair, if I may, when you get into the salary information related to individuals, we have to be careful on the protection of privacy. At best we could get the ranges, if this committee so directed or asked.

The Chair: I think it would be helpful to get the range of salary.

The other thing is, this year we were advised in writing by the vice-president of nursing, and that refers to the individual who has the $218,000 contract, that the centre was closed in May 1991. Was there any reason for that centre being closed in May 1991? If you can bill only one institution for $218,000 over a period of 18 months while at the same time having a full-time job, why would anyone close the centre? It does not make financial sense.

Mr Mishchenko: We did not pursue the issue with this individual.

1100

Mr Mazzone: The payments made to the centre were not for the EP and nursing services. They were made for other staff who were hired by the centre. There were other individuals who have come up from the centre, from I believe it was Boston, and worked at the hospital and provided their consulting services. So there were other costs involved.

The Chair: I'm sure there were. Okay, any other questions?

Mr Michael A. Brown (Algoma-Manitoulin): Following the termination of that contract, was there a replacement contract issued?

Mr Mishchenko: No, there have been no further payments made to the company since that time.

Mr Brown: No, I didn't mean to that particular company. I'm wondering where the hospital would receive the service or find the services that were being provided by that particular company following the termination of that company.

Mr Mishchenko: Once the system was put in place, in December 1990, the hospital had received all it needed from that particular company. It had obtained all the care maps and things of that nature that it needed for the patients. As well, the appropriate training had been provided to hospital staff for the hospital to continue on its own, not requiring any further services.

Mr Brown: What you're really saying is that particular project of the hospital was complete.

Mr Mishchenko: It was complete to the point that the hospital felt it could now take care of it itself, but there are still some concerns with the system, and the hospital has done some studies to determine whether it should continue with the system, modify the system, or there was even discussion of abandoning it. However, it looks now like they will continue with a system similar to this, with maybe some modifications. But they're still working on it. They haven't determined that yet.

Mr Brown: Then it would be fair to say they had hired outside consultants to do this work?

Mr Mishchenko: No.

Mr Brown: No? It was all done in house?

Mr Mishchenko: To date, yes.

Mr Frankford: Could I ask if there are any articles in medical journals about case management, particularly the Toronto Hospital experience?

Mr Mishchenko: Do we have anything?

Mr Mazzone: I have a pamphlet or a brochure on case management and what it's all about. I don't believe I recall any write-ups in medical journals regarding it, but it's basically a very fundamental or an objective-oriented type of approach for care. Basically what it is, you have a map of the anticipated events that are going to happen over this patient's stay. It's mapped out over the period, and the map is also provided to the patient so he or she knows exactly what he or she can expect, based on years and years of experience on this same type of ailment and treatment.

Mr Mishchenko: I'll provide the pamphlet if you'd like the pamphlet.

Mr Frankford: Yes, sure.

The Chair: Any further questions on this point?

Mr Mishchenko: That basically wraps up the section dealing with the computer system.

Mr Otterman: Perhaps at this point, before we move away from the equipment and software system, your early question was about tendering and whether we could provide you with some information on that. I believe Mr Mazzone is able to provide at least an overview at this stage to be helpful to the committee.

Mr Mazzone: The information we have basically comes from board minutes we've had access to. According to the president at the time, there were approximately three systems reviewed, maybe a little more background, at the time they were developing their own system in-house, getting back to your comment on the Perkin Elmer system they had acquired.

I believe they were somewhat along and then they realized there were better systems available at the time. During the time, there were a lot of developmental systems similar to that which they were developing themselves. There was one system that was up and running in Beaumont Hospital in the United States. They sent 10 representatives of the hospital down there to view it. It was an up and running, functional system and they were quite pleased with the system.

I believe they reviewed two other systems and concluded that this system they purchased, which was supplied by HDS, was the furthest along and offered the most financial benefits to the hospital for the long-term period. So at that point they decided to discontinue the system they were developing in-house and contract with HDS directly.

The Chair: I appreciate the information. I'm not going to say whether I like how it was done, but certainly in my view it's not the traditional method of spending many millions of dollars.

Mr Noel Duignan (Halton North): You mentioned the fact that you had access to the board minutes. Did you have free access to all the board minutes or were they just selective minutes of meetings?

Mr Mazzone: Selective minutes.

Mr Duignan: So the board selected the minutes for you to review?

Mr Mishchenko: We didn't review all the minutes, but we did ask for minutes pertaining to specific issues dealing with my notes.

Mr Duignan: They supplied you with all those minutes or did they select various parts of those minutes just to give to you?

Mr Mishchenko: They pretty well supplied us with whatever we asked for. They didn't make the decision as to what we would get; it was based on our request.

Mr Owens: How did you know what to ask for?

Mr Mishchenko: For example, when it came to the computer system, the first question we had was: "Was it reviewed by the board? When you required the system, did the board have any input into the decision? How did you decide on HDS?" They indicated it was brought to the board's attention and there was a meeting of the board, so we asked for the minutes dealing with that meeting.

The Chair: Any more questions? Okay, let's get on with the rest of the report.

Mr Mishchenko: The next area dealt with contracts with F.D. Begley and Associates. F.D. Begley is a company the hospital is using to provide it with construction management services. Originally, it hired a director of planning and construction back in 1980, and then in 1983, the staff who were involved in that were taken off the hospital's payroll and became employees of F.D. Begley and Associates.

F.D. Begley is paid a flat fee for its services, which primarily just covers the salary and benefits of the president of that company. In addition, the hospital pays the salaries and benefits of all other Begley employees and provides office space there.

F.D. Begley primarily works for the hospital 100% of the time. It's done a little bit of work for other organizations, but the majority of work it has done over the last eight or nine years has been for the former Toronto General Hospital and now for the Toronto Hospital.

Begley -- I'm using the term "Begley" as the company -- acts as the hospital's agent in dealing with subcontractors, architects and municipal regulators. It doesn't receive any additional remuneration for work that's being done, either by its employees or subcontractors. The hospital pays the actual cost of those particular services.

So if Begley hires a firm to reconstruct or rebuild a section of the hospital -- Begley being the agent for the hospital -- it's done through a tendering process, and the hospital pays the actual costs of that. There's no additional money paid to Begley for providing that service. There's no markup on that.

1110

This arrangement has been reviewed a number of times by the hospital through its building committee and through its finance committee, and they felt that this is still the best process for the hospital to follow, to have Begley provide these services for them rather than going and hiring somebody on a full-time basis as a hospital employee.

In the past year, I guess because there have been a number of concerns raised about the relationship between the hospital and Begley, the president of the hospital commissioned a review to be done of that arrangement. They asked their external auditors, their lawyers and their architects to look at various aspects of these arrangements to see whether they should continue with this process.

After receiving these reviews and going through the information, the hospital still feels that this is the best route for the hospital to follow. It advised the ministry of that, as well, back in December 1991, and they're currently in the process of drawing up a new contract with that firm.

The Chair: What response was given to the hospital by the Minister of Health after having received the information from the hospital?

Mr Mishchenko: We didn't see a response.

The Chair: Was there a response?

Mr Mishchenko: Not that we're aware of.

The Chair: Then why did they bother telling the minister?

Mr Mishchenko: I think it was more as a result of some concerns raised publicly about the arrangement. I think the hospital felt it necessary to pass this information on to the ministry. I think you'd have to ask the president of the hospital why.

The Chair: Do you have any knowledge of any phone calls from the minister's office to the hospital approving the arrangement or at least commenting on the arrangement?

Mr Mishchenko: No, we're not aware of any.

The Chair: I guess this is not a question for you, but are we to believe that a major hospital sends a report to the Minister of Health in the month of December 1991 and nobody responds, nobody calls, nobody writes, nobody says, "What's this for?" or "What should we do with it?" or "Why are you sending us this information?"

Mr Mishchenko: I'm not aware of any.

The Chair: Could we find out?

Mr Mishchenko: Sure.

The Chair: Let's find out. Any other questions?

Mr Duignan: Begley's offices are located in the Toronto General Hospital. Does the hospital charge them rent for the use of that office space or is that provided free by the hospital?

Mr Mishchenko: No, it's provided free by the hospital. It was part of the initial arrangements, right up front.

The Chair: Any further questions?

Mr Owens: Was a value-for-dollar audit performed as part of this process of reviewing the tendering process and the actual workmanship within the hospital, whether the institution is getting the best bang for its buck in terms of the contractors that are coming in to do the work?

Mr Mishchenko: We did review the tendering process that was followed for any of these projects and found that it was a proper tendering process. There were competitive bids received from numerous companies for pretty well every phase of every project that we looked at, and we looked at a lot of projects. It looks like all the firms that did the work were well known, reputable firms.

Mr Owens: I have no reason to disbelieve what you've stated in your report. Was there a follow-up done on the kinds of work performed by the contractors coming in and doing the renovations, doing the additions, to ensure that in fact the money that was spent on contracting a particular firm was money that was well spent, appropriately spent?

Mr Mishchenko: We didn't come across anything that would lead us to believe that there was a problem. However, I'm not sure that we would even be capable of doing that type of assessment. I think you'd have to hire experts in that particular field to go in and actually determine whether the work was done up to standards. But there are all kinds of building standards that have to be met before you do a project. There are architects involved who review the work that's being done by the individual, there are engineers involved, and we're not aware of any legal action being taken by anybody with respect to workmanship or things of that nature.

Mr Owens: So there's no indication of payments not being made due to shoddy workmanship or issues around that?

Mr Mishchenko: You're going to find some problems in construction projects. There were instances where, for example, Begley and Associates would withhold money from a firm to get some remedy done on a particular phase of a project. I'll give you an example. With the revolving door, which is an issue we'll get to later, there were some concerns about some of the work that was done there, so Begley withheld payments to that firm until corrective action was taken and then released the additional funds. But that's common in the construction industry, that you would have things of that nature where you would withhold a certain amount of funds. Holdback is a common practice.

Mr Owens: Just so that I understand the relationship between Begley and the hospital, the hospital would pay Begley to subcontract, to tender out projects for the hospital, and in terms of markup, it's in your report that Begley did not receive a markup on contracts. So how is Begley paid for its services?

Mr Mishchenko: Begley is paid an annual retainer by the hospital. It's part of a contract they've had from, I guess, back in 1983, and that basically covers the salary and benefits of the president of Begley, who acts on behalf of the hospital in negotiating, tendering, things of that nature. There is no additional payment made for that. Also, the hospital does pay for the actual costs of the salaries of Begley employees who are working for the hospital.

Mr Owens: So would contracts be signed on Begley letterhead or would they be signed on Toronto Hospital letterhead? In terms of the performance bonds and compliance with legislation, like the Occupational Health and Safety Act, who would then be responsible to ensure that these compliances were in fact happening?

Mr Mishchenko: The contracts are on Begley letterhead, first of all.

Mr Mazzone: All the contractors, all the approvals and all that are obtained through Begley, for Begley, and they would be on a project basis. I guess everybody would deal with Begley on any project. The hospital's involvement is only at the approval stage of the project.

Mr Owens: This seems to be a bit Kafkaesque.

Mr Otterman: Mr Chair, if I may, I believe in effect this arrangement, hopefully to reduce it to simple terms, would be no different than if you were dealing with a general contractor on a project. This company and its staff I guess could be viewed as a resident or contractual permanent general contractor, if that's helpful.

Mr Owens: I'll think about it and get back to you.

The Chair: Okay, Mr Owens? We have Mr Tilson and then Mr Duignan.

Mr David Tilson (Dufferin-Peel): Mr Chairman, I guess I'd like to pursue the line of questioning you were commencing. Specifically, on page 14 of the report you list three very serious concerns, talking about the plant engineering staff could do this work for $18 an hour, whereas Begley, for the same amount, charges $30 to $65 an hour. The second one is that there was no open tendering process in this particular area that you're looking at. Thirdly, you're suggesting a very serious conflict of interest.

This obviously has been going on for some period of time. I'd like to know what process the Minister of Health has in reviewing these types of matters. In other words, does the Minister of Health have any idea about these types of things that have been going on, to your knowledge?

1120

Mr Mishchenko: Just to make it clear, the concern is not our concern. That was the concern that was raised at the meeting.

Mr Tilson: I understand.

Mr Mishchenko: Our response to some of these concerns indicates that we aren't concerned, that we don't share that.

Mr Tilson: I understand.

Mr Mishchenko: However, as far as I'm aware there would be no process for the ministry to --

Mr Tilson: My question was the same type of question the minister had, that when these issues are raised by whoever -- by you, by the union, by whomever -- does the minister have an obligation -- not an obligation; I believe the minister does have an obligation. But does the minister have a process to follow through with these types of allegations? Why has it all of a sudden surfaced at this committee? Surely the Minister of Health would be pursuing these matters.

Mr Otterman: I'll ask Nick this. Did we pursue with the ministry to see if they were aware of this earlier?

Mr Mishchenko: No.

Mr Otterman: The answer is no. The answer to why they wouldn't have been aware it of or why they wouldn't have pursued it, we therefore can't answer. It'll be a good question for the ministry people.

Mr Tilson: We're sitting in this committee and I think we're now into it. If the minister isn't pursuing these matters in this hospital, or any other matters, surely -- the minister's forking over all kinds of dollars; she must be doing this responsibly; surely if allegations are being made, rightly or wrongly -- these are very serious allegations. You have said you don't agree with some of them, but I'm interested in knowing what process the minister follows. I understand what you're saying, that you hadn't pursued that, and I would hope that would be a matter this committee would pursue.

Mr Chairman, Mr Cousens and Mr Grandmaître have made two suggestions. One is that this might be one of our recommendations, and secondly, to further our report on this subject, perhaps people from the ministry could come and offer some sort of explanation as to how they pursue these types of matters, which is a similar type of question that you were asking.

The Chair: I agree with you entirely and I would say the committee will have some time to discuss this matter at our conclusion. It appears, from the reading of this report, that the allegation of fraud or of any of those things in fact are not true, but that doesn't mean we don't have any concerns.

For example, my initial concern would be that some $20 million of a gigantic computer contract was given out with no tender. The vice-president of nursing was hired, while at the same time providing consulting services to the hospital. Who would control the vice-president of nursing as to whether or not the consulting services being bought were in fact needed? The third question that I have would be in regard to Mr Begley. Is this common practice in hospitals across the province, to have a resident general contractor paid for? If this is, has it been proven to be financially satisfactory or is there another way?

I see a lot of questions here that we could probably ask of officials of the Ministry of Health and I agree that the Ministry of Health must be involved. Our committee can do a lot of work, but we must work in cooperation with the ministry.

Mr Duignan: I tend to agree with you, Mr Chair. I just want to get back to your third concern, the arrangement with Mr Begley. I wonder how much this arrangement costs the Toronto Hospital. Have you an idea what's paid to Mr Begley? Second, what is the square footage of the office space provided to Mr Begley's firm and is the equipment in that office provided by the hospital or provided by Mr Begley's firm? Third, does Mr Begley then pursue other business interests outside Toronto General Hospital out of that public space as well?

Mr Mishchenko: We don't have the amounts paid to Begley, and yes, they do work for other organizations -- very minimal. When that's the case, there is a deduction from their billing to the hospital for their staff's time. For example, if they have an employee working 80% of the time for work at the Toronto Hospital and 20% of the time for another particular project, then the hospital will only be billed for the actual percentage dealing with work for the hospital. We don't know how many square feet we're talking about in office space; we didn't measure it.

Mr Duignan: That's fine, but they're still using the office space to look for other work as well. Correct?

Mr Mishchenko: Yes.

Mr Duignan: In fact, are the office supplies, equipment and photocopy charged back to the hospitals on a monthly basis?

Mr Mishchenko: That's right. I guess you have to sort of look at the arrangement. If you hired a firm located in its own building, you would somehow be paying for that firm's space one way or the other. I guess that's the hospital's explanation as to why they pursued it from this perspective. They felt it was more economical.

Mr Duignan: That's fine if the office space is being used for work on the hospital, but the office space is also being used to conduct business elsewhere.

Mr Mishchenko: Very little. It's not even --

Mr Duignan: Little or otherwise, I'd like to know how much it's being done.

Mr Mishchenko: The hospital would not be billed for the variable costs dealing with staff and things of that nature, dealing with another project, but you're correct, the office space would still be provided and there would be no reimbursement to the hospital for that.

Mr Duignan: I would still like my questions answered in relation to how much the hospital pays Mr Begley and what size of office space is being provided to his company in the hospital.

Mr Mishchenko: Are you concerned about the total payments to Begley for all the staff time as well, and everything else: the total billings, just the annual retainer or --

Mr Duignan: The retainer, the billing and everything. Any payments to Mr Begley.

Mr Paul R. Johnson (Prince Edward-Lennox-South Hastings): I was just wondering if you could tell me if this is a cost-effective arrangement, a good value-for-money arrangement, and is it in the overall interests of the hospital to have an arrangement like this.

Mr Mishchenko: I'm not sure how easy it would be to determine whether this is the most cost-effective method or not. We didn't try to go through that process.

Mr Otterman: If I may, on the cost-benefit arrangement, you'd have to take in many factors. I suspect the largest one is that by retaining a general contractor who is very knowledgeable about the operation, there are going to be benefits that far outweigh the costs; otherwise they wouldn't go ahead with this.

Other than in the general sense, I don't think we can speak. We did not do a cost-benefit analysis. That would require a great deal of work, given the nature of the projects they undertook over the years. I would think that could be done, though, on a comparative basis by comparing if you engaged an external general contractor, but you would be making some assumptions there as to what problems you would entail with those because they weren't knowledgeable with the business. So whether you could really get it down to a clear-cut decision-making area, I'm not sure. I'm not sure if we had any information available from the hospital in that regard. Did we, Nick?

Mr Mishchenko: No.

1130

Mr Johnson: From year to year, the cost of retaining F.D. Begley and Associates obviously varies. If they have a different number of employees and different contractual obligations from year to year, then obviously the costs would vary quite substantially, I would guess, from year to year. Would that be correct?

Mr Otterman: Yes, I think that is correct, depending on the project activity going on. I think that probably one of the major considerations in regard to having your in-house staff versus the other when it comes to plant engineering is to be able to address those peaks and valleys, that there must be some cost benefits to that area.

Mr Johnson: Would there ever be a time when they would no longer be required? Is there a time in the life of a hospital when this kind of contract would no longer be necessary or to some small degree would it always be possible to maintain this kind of relationship?

Mr Mishchenko: Basically, the hospital, over the last 10 years, has had a lot of projects. There are less now, though, with less funding available. However, there are still things that are being done. Whether you renovate a floor, move a department, things of that nature, you're always going to need that capability of some nature, whether it's on a full-time contract basis, whether you have to contract it out on a periodic basis or whether you have a person permanently on staff to provide that kind of service to the hospital. But you're always going to have something going on. It's a large facility so I don't think you'll ever reach the stage where they're doing nothing.

But they have cut back on the number of people. It's up and down with Begley employees. As the work drops off, the number of employees drops off, so there has been adjustment for that.

Mr Frankford: On page 14, you say you were able to compare the rates paid to hospital employees and individuals hired directly by Begley. Could I ask what information, in what form that came, that you were able to do that?

Mr Mishchenko: If Begley employees were actually doing work for the hospital, whether it be minor construction projects or things of that nature, there's the actual billing to the hospital. So we were able to look at what the hourly rates were, the benefits that the hospital paid for, everything. With hospital employees, we went back to the payroll department and obtained from the payroll department information as to what the hourly rates were for its employees, plus what it cost for benefits. So we just rolled those up and came up with this. It's not a hard-and-fast number, but we feel comfortable that those numbers are reasonably accurate.

Mr Frankford: This was assessing what is going on currently.

Mr Mishchenko: That's right.

Mr Frankford: So you don't really know what would have been the comparable rates two years ago or five years ago.

Mr Mishchenko: No, we didn't go back that far. But we didn't see anything to indicate that there was a big fluctuation up and down in the rates.

Mr Duignan: On the point that Mr Johnson was on, over the last two years, renovation work and construction has decreased significantly at the Toronto General. In fact, it's gone from 30 staff to six. Has his retainer fee decreased over that period of time because his workload has decreased?

Mr Mishchenko: No, because the retainer fee basically covers the salary of the one individual.

Mr Duignan: Just the one individual?

Mr Mishchenko: Basically, yes. There's not much left.

Mr Duignan: So he would then bill for any extra staff he would hire.

Mr Mishchenko: That's right, yes, and that would be staff directly hired for work.

Mr Duignan: But his retaining fee still remains the same.

Mr Mishchenko: Yes.

Mr Duignan: Plus his office space.

Mr Mishchenko: Yes.

Mr O'Connor: At the top of page 13, you referred to the downsizing of major building projects. I realize we're going to get into some of the office space and what not a little later on in your report. Did you do an overall audit of space available within the hospital and all its buildings and come up with any sort of value for money, whether the space was being used appropriately, and would that be something that Begley has been involved with as part of the downsizing project?

Mr Mishchenko: There's a lot of vacant space in the hospital now. A lot of wards are shut down. Are you talking about office space or are you talking about the hospital itself?

Mr O'Connor: I'm talking about overall space that the hospital has available to it for its daily operations.

Mr Mishchenko: We didn't do an audit of it because it wasn't one of the concerns that was raised and we were not made aware of a concern related to that, so I can't really answer your question. Begley's responsibilities deal more with construction-renovation. Their concerns would not be related to, "What do we do with empty space?" or things of that nature. That would be a hospital decision.

Mr O'Connor: My concern is whether, in the operations Begley's related to, in downsizing and construction related to some of the downsizing, has there been an overall look at all the space available to the hospital in coordinating some downsizing? If there is vacant space available, are they taking a look at disposal of some assets that aren't necessary to the hospital?

Mr Mishchenko: I can't answer that. I'm not sure whether they have or not. I'm sure the hospital is looking at its facilities, but I can't give you a firm answer on that.

Mr Owens: I want to have another go at this relationship. In terms of how the report reads, Begley is paid a flat fee -- I'm looking at page 11 -- for its services, which essentially covers the salary and benefits of the president. In addition, the hospital pays the salaries and benefits of all other Begley employees and provides office space. Office supplies and equipment and the leasing of a photocopier are charged back to the hospital.

Mr Mishchenko: Right.

Mr Owens: What I'm struggling to understand is, where does the hospital end and Begley take over? The way the report reads to me, and correct me if I'm wrong, it appears that Begley is simply another department of the hospital. There doesn't seem to be any clear or definitive split between Begley and the hospital qua hospital.

If the hospital is paying the president his salary and benefits, if the hospital is paying the employees, if the hospital is supplying the space, supplying the office supplies, I'm really at a loss to figure out where in fact the line is drawn. Does Begley have representation on the board of directors of the hospital?

Mr Mishchenko: No. Begley is involved with the building committee because --

Mr Owens: Right, but they don't have a representative on the board of trustees?

Mr Mishchenko: No. At least not one that we're aware of.

Mr Duignan: Doesn't that committee have representation on the board? Would that building committee have representation on the board?

Mr Mishchenko: There would be board members on the committee. Maybe that's the other way to go around. There's a board of trustees and there would be members from the board of trustees on the building committee.

Mr Duignan: What position does he hold on that committee?

Mr Mishchenko: I'm not even sure if it's just director of construction, similar to if he was an employee of the hospital in that role; not as a board member, but as an employee of the hospital. There are a number of other employees of the hospital on that committee as well.

Mr Duignan: That gets back to Mr Owens's point.

Mr Owens: If I wanted to play devil's advocate, I could say, "Listen, guys, that relationship doesn't appear to be arm's length." I could set up what appears to be some kind of arm's-length corporate relationship with somebody so that I could go out and contract out work and look at avoiding various responsibilities with respect to legislative responsibilities, responsibilities under collective agreements. I'm really struggling to figure out where the line of authority of the hospital ends and where Begley starts off. Again, maybe it's lack of clarity in the way the report is drafted. Do you see a clear differentiation between Begley and the hospital? Am I missing something here?

1140

Mr Mishchenko: It's like any other contractual arrangement. You could see Begley as a department of the hospital; it's serving that role. But it's also serving a role of a general contractor, in that position as well. You're right. It's not like a really clear line between the two. That's why he has that title of, I think, director of construction at the hospital. So the hospital itself recognizes the need for that.

Mr Owens: Do you have an understanding of whether F.D. Begley and Associates Inc conducts business with any other hospital outside the Toronto Hospital Corp universe, or any other interests outside the Toronto Hospital universe?

Mr Mishchenko: Not in the form that they have with the Toronto Hospital. I know they've done some work for some other hospitals, but they seemed to do more work for other hospitals when there was less work to be done at Toronto Hospital. Their primary role is for Toronto Hospital.

The Chair: Any further questions?

Mr Owens: In terms of the relationship and pursuing the report further, I think we need to take a look at what this committee can recommend in terms of arm's-length relationships to ensure that in fact they are separate and that it is the best arrangement that can be made for the institution in terms of value for dollar and in terms of compliance with legislative requirements. I think we need to pursue that.

I'm not suggesting that there's any conflict of interest and I'm not suggesting that there's any violation of any legal practice. I'm curious about the relationship and the perception that if the institution is paying the salaries and benefits of the president and the employees, supplying office space and office supplies, it's very difficult for me as a legislator to make that differentiation between what is hospital and what is contractor in terms of trying to get at the issues at hand.

Mr Mishchenko: We understand that this arrangement is not unique to Toronto General Hospital. There are other hospitals -- I can't recall off the top of my head which ones they were -- that do have similar practices being followed. Not with Begley; they would have another firm providing those same services. But then there are other hospitals as well that would not have that arrangement and would hire general contractors and pay them as they go along; of course that has an effect.

There are all kinds of things that come into play. The architect's fee is variable on the amount of work the architect is responsible for and has to do; in some cases it could be reduced because we have a general contractor or Begley people there. In the review the architects did, they actually brought that up as well, that there are savings by having this arrangement. But for us to say whether it is the most cost-effective way of doing it, we can't decide that far.

Mr Cousens: Before the meeting breaks up, I'd like to put one motion on the floor to follow through on some of the issues Mr Owens and others are raising, just read it into the record and at some time -- maybe this isn't the time to do it.

The Chair: Is this a notice of motion?

Mr Cousens: I just move that appropriate Ministry of Health staff be invited to attend the public accounts committee to review and discuss issues that arise from the Provincial Auditor's report on the Toronto General Hospital. I think there's tremendous value in that, if the deputy and some staff are able to come to respond to some of the concerns that are coming out from all these questions.

Mr O'Connor: The parliamentary assistant is here now.

Mr Cousens: With all due respect to the outstanding capabilities of the former parliamentary assistant to the minister responsible for the greater Toronto area, who happens to be a very dear friend of mine --

Mr Owens: Who took a very ethical stand.

Mr Cousens: Oh, ethics is something you can have any day around here.

Interjections.

The Chair: Mr Cousens has moved that appropriate Ministry of Health staff be invited to attend the public accounts committee to review and discuss issues that arise from the Provincial Auditor's report on the Toronto General Hospital. Any discussion? I think we should allow Mr Cousens the opportunity to lead off, since it's his motion. Then I'll take a list and we'll all get a chance to make our comments.

Mr Cousens: Briefly, it's an excellent report we've got before us. We're not going to finish it today, obviously. There will be a future opportunity. At that time, once the auditor has gone through it, and if we've missed a few things, thereafter there would be a good benefit for all of us, if we've got some wrong ideas about things that are happening or should be happening and maybe already are -- see, the Ministry of Health read these reports too. They might have some plans where they're already in the process of implementing some corrective action to safeguard the provincial coffers from future such problems, but if they're not, this would give them the chance to hear the views of concerned members of the Legislature.

I see it as a positive motion. I don't want it to be a witchhunt, but it could be fun to have them here.

Mr Grandmaître: I'll be supporting Mr Cousens's motion. When you read that Mr Begley's arrangements date back 10 years ago, I'm just wondering, in the Ministry of Health right now, who was there 10 years ago with all the changes that have happened in the last 18 months?

Mr Owens: Who was there 10 years ago?

Mr Grandmaître: Who was there who is still in the ministry? We'll have to call people like former Tories and all these people.

Mr Cousens: They're still Tories; they just don't have any office any more.

Mr Owens: I'd do a membership list check.

Mr Grandmaître: And they have a TTC pass and no more limousine.

Mr Owens: I was going to comment on Mr Cousens's motion. I think it may some value, although I gather the way the ministry will get its answers is to call the parties involved without having conducted a separate investigation. The committee might want to take a look at inviting the parties back and having a conversation with the hospital and the union.

The Chair: For the benefit of the committee at this stage, since you've brought up the matter, my understanding is that the president of the hospital has already called.

Mr Owens: I'm sure he has.

The Chair: He has requested to appear before the committee, so based on that information, I think we already have an answer to a potential motion.

Mr Owens: Great. It was more of a suggestion, in terms of continuity, that we have some comments on the report.

The Chair: Any further discussion on Mr Cousens's motion?

Mr O'Connor: I think Mr Cousens's motion is a valid one. I believe the minister's office and the ministry would be more than interested to be here as well to hear some of this information first hand.

Being new to the Ministry of Health, as the new parliamentary assistant --

The Chair: I thought you resigned?

Mr O'Connor: -- as the new parliamentary assistant to the Minister of Health, the ministry itself is an overwhelming size, so there are many things on its plate at any given time. It may not be possible to get the deputy here for the entire thing, but it's certainly a recommendation I support. I think we should get somebody there to help out. For their own information, I'm sure this would be quite valuable to them as well.

The Chair: Is the committee willing to leave it up to the clerk and myself to make a list of appropriate officials? Okay.

Mr Cousens: And the clerk?

The Chair: Yes, that's what I said, "the clerk and myself." Thanks, Mr Cousens. All in favour of Mr Cousens's motion? Opposed? Carried.

Mr Owens: I want to ask for a quick clarification on the issue I raised earlier with respect to the draft report. In terms of communication with all the parties that were involved, it's my understanding that the hospital had an actual hard draft copy of the report. Did the union have a hard draft copy of the report?

Mr Otterman: No, it did not.

Mr Owens: Okay, and who did you or your staff communicate with from the union in terms of the draft report?

Mr Mishchenko: The individual who appeared in front of the committee on May 7, Mr Schyngera.

The Chair: We have approximately six minutes left. I'm going to ask the committee whether it wants to continue or stop here. We've not quite completed page 13.

Mr Pat Hayes (Essex-Kent): I've got one real quick question, Mr Chair.

The Chair: Please go ahead.

Mr Hayes: Begley and Associates: Reading through the report, it talks about the hospital actually being billed back or charged back for photocopying, office supplies and equipment. At the same time, they're saying that Begley's employees are paid by the hospital. When Begley is working out of the hospital premises, is it doing work for other hospitals or any other organizations at the same time?

Mr Mishchenko: They are doing some work, but not very much. The majority of the work is for Toronto. Originally, they started with Toronto General. Since the merger of the two hospitals, they are now doing work at Toronto Western as well.

The Chair: Can you tell Mr Hayes who these other people are and what the value of the work is? Are there any numbers?

Mr Mishchenko: I haven't got a number here. I think they've done some work. Was Wellesley Hospital one, Vince? Wellesley was one. I'm not sure of the other ones.

Mr Hayes: Could we get that information?

Mr Mishchenko: We can try.

The Chair: Anything else, Mr Hayes?

Mr Hayes: No, thank you.

Mr Duignan: Very briefly, to follow up on something you said, does the Begley type of arrangement also exist in other hospitals? Do you have information on that, and if so, could you supply it to this committee, those types of arrangements etc, the cost?

Mr Mishchenko: We don't have anything on costs.

Mr Duignan: I would be grateful for whatever arrangements or information you have.

The Chair: Anything else? The committee stands adjourned until next Thursday morning at 10 am.

The committee adjourned at 1153.