A much-anticipated report released Dec. 1 has revealed that the Yukon Hospital Corporation broke its funding deal terms with the Yukon government when it spent millions specifically intended to pay for a mental health unit to cover operational needs, like paying its staff, without approval.
The territorial government initiated the review through a $300,000 sole-sourced contract awarded to Ernst and Young Orenda Corporation earlier this year. The government’s reluctance to immediately release the review upon receiving it in October led to questions about what the review might reveal.
The News reached out to the hospital corporation, the health minister and the opposition for their reaction to the review released on Dec. 1.
“It’s damning all around,” Yukon NDP Leader Kate White said. Her three-member caucus has been holding up the government through a confidence and supply deal with the governing Yukon Liberal Party.
“It just shows a clear lack of communication between the hospital corporation and [the Department of] Health and Social Services.”
The purpose of the review was to “improve governance, fiscal management and internal controls” within the hospital corporation (which is funded 80 per cent or more by the Yukon government) and between the hospital corporation, the Yukon government and the Health and Social Services department.
Parts of the review that struck Yukon Party health critic Brad Cathers were that the Yukon government was made aware of financial pressures to meet operational needs, that the hospital corporation used capital funds for operations, and that the hospital corporation was facing a deficit and at risk of not meeting payroll.
The report provides evidence of what the Yukon Party has been saying for years, according to Cathers. He said it shows “just how bad the financial crisis affecting our hospitals is and lack of action by the current Liberal government to address operational needs.”
“The fact that [the report refers] to the situation as a chronic cash flow and operating shortfall is further proof that this isn’t just a one-year problem. This is a chronic issue with underfunding,” he said.
Per the report, operational demands and financial pressures on the hospital corporation had been building and were exacerbated by the COVID-19 pandemic. Supplemental COVID-19-related funding had been provided to cover operating costs and meet service demand, but that flow has ended.
The report states that the hospital corporation got capital funding to pay for a mental wellness unit, also known as a secure medical unit or a short-stay psychiatric unit. However, $7.3 million from that capital funding exclusively meant for building and completing the unit was spent on operational purposes.
The report points to several root causes that led to the hospital corporation using capital funds for operations including inflation and resulting higher costs coupled with lack of clearly defined escalation protocol or accountability framework. These impact both the hospital corporation’s and the government’s ability to work together to manage increasing cost pressures and the resulting deficit.
Although the health department was notified of financial pressures to meeting operational needs, the report found no formal written notification from the hospital corporation to the health department that capital funds were being spent on operating expenses.
Ultimately, even though the situation that led to using capital funds for operations was communicated across all levels of governance, how the hospital corporation funded this deficit wasn’t acknowledged and documentation of the discussion and resulting decisions was not done.
The report notes there was a lack of understanding of the fallout of the budget shortfall and how it would be mitigated.
The report makes five findings, not including the situation that led to the report, as well as eight recommendations to deal with the root causes that both parties can control.
Representatives from the Yukon government and the hospital corporation each said all recommendations have been accepted.
The main budget for this fiscal year includes $93.6 million for hospital services, which is up from previous years, plus $12.2 million in capital funding. The supplementary budget, which MLAs passed at the end of the fall sitting, includes another $17.1 million for operation and maintenance.
Health Minister Tracy-Anne said “additional funding to support the surgical program and medical imaging into year end” on March 31 — which was announced in a press release issued around the same time as the review on Friday — has yet to be determined.
McPhee explained the motivation behind commissioning the review.
“Our government was committed to financial responsibility and the use of taxpayers’ funds effectively, of course, to expand hospital services and to address wait times and to increase access to care,” she said.
“A key takeaway, I think, is that our cooperation together with the Yukon Hospital Corporation is paying off with respect to better accountability and the better governance and financial management and internal controls with respect to the hospital and how we better communicate between us and within each of our respective organizations. I think the recommendations are important to enhance the processes and we will implement the recommendations working together.”
For example, McPhee noted they are already trying to make transfer payment agreements less cumbersome.
At a meeting with Ernst and Young Orenda Corporation last week, McPhee said improved communication was identified as a key change that needs to be made. She noted her side and the hospital corporation have weekly meetings with finance teams, biweekly meetings at the director level and monthly meetings or more between the deputy minister and the hospital’s chief executive officer, as well as with the minister and Allan Lucier, chair of the hospital corporation.
The review mentions that the recommendations are mindful of the Yukon government’s intent to shift to a new health authority that will be governed by the health department and include the hospital corporation and other areas of service delivery.
Lucier said the hospital corporation has enough money to afford the mental wellness unit. He noted there’s “no hard feelings” regarding having a third party examine its finances, particularly as the health system evolves.
“We’re not starting from ground zero on this. I think this is an opportunity to embrace what the hospital continues to do,” he said.
“It’s going to require that understanding between government and that entity just like it does now between the hospital and the government, and we’re going to really have to be able to show the public those linkages between the dollar spent and the services provided.”
Lucier said that means tying what money the hospital receives to metrics. For example, how many major joint replacements and ophthalmology procedures will take place, what’s the total number of surgeries that are going to happen and what are acceptable wait times for the emergency department?
As the report notes, the health-system transformation involves moving from overseeing the hospital corporation to an approximately $300-million health authority, thus what specific functions the department is responsible for and where it will need to beef up capacity to deliver those functions will need to be clearly understood.
White is concerned that if things can’t get done properly at the smaller level, then how is it going to work in a bigger picture with even more pieces.
Meanwhile, White accused the hospital corporation of omitting important information while appearing as witnesses in the Yukon Legislative Assembly during the fall sitting, and the Yukon government of having more interest in “trying to keep their numbers low than actually realistically funding the hospital for where it needs to be funded.”
“[The hospital corporation witnesses] said everything was fine for 2023, which obviously it wasn’t because they used, you know, more than $7 million that was earmarked for capital projects for like operation and maintenance, and they didn’t think that that was worth mentioning,” she said.
Contact Dana Hatherly at dana.hatherly@yukon-news.com
