The IWK Board Needs to Do Better
Posted September 29, 2017
The troubles at the IWK Health Centre have prompted a feeding frenzy by commentators and opposition politicians. The fundamental issue is not the small amount of money involved but rather the performance of the board.
There is strong evidence that it provided lax oversight on the expense account of former CEO Tracy Kitch, and there are indications that CFO Stephen D’Arcy helped to conceal the problem. He was placed on paid leave two weeks ago and has now resigned.
It is entirely appropriate that the board has invited Auditor-General Michael Pickup to perform a broader investigation into the hospital’s financial management and controls, and to become the regular auditor starting next year.
That may turn up more issues, but as of now, the financial impact of the Kitch affair is $47,000, all but $10,000 of which has already been recovered. This in an operation with a budget approaching $300 million per year.
Yet there are calls for new Health Minister Delorey to immediately fire the board and seize control of the hospital. That is neither necessary nor appropriate.
The Minister is already able to exercise a great deal of control.
Among his authorities are the ability to dismiss some or all of the directors; determine the organization and internal management structure; audit any program, facility, service or action; amend, revoke or replace by-laws respecting management, and medical and dental staff; approve business plans and budgets; and many more.
And with what would the Minister replace the current board?
The Department of Health is not equipped to fulfill the board’s function, particularly at a time when a CEO search needs to be commenced.
The Nova Scotia Health Authority (NSHA) is already fully challenged with its mandate and could hardly find time to provide oversight to the IWK. Apart from that, there is an understanding with PEI and New Brunswick, who send many patients to the IWK, that they will have representation in the governance.
The province benefits greatly from the distinctive identity and operation of the IWK. It has not been subject to the kind of labour disruptions that have troubled the QEII Health Sciences Centre.
The associated IWK Foundation has been enormously successful in fund-raising. most recently attracting donations of $51.2 million for new space in the areas of mental health, women’s health, rehabilitation services and intensive care, as well as for research. That is harder to do when a hospital is part of a government department.
The independent Board members are well-qualified volunteers, for whom this has been a devastating and trying experience. Beyond dealing with the immediate matter, they need to take a hard look at the way they are organized and do business.
There are too many board members. The bylaws call for twenty individuals fulfilling a variety of requirements—three from New Brunswick, one from PEI, three medical leaders, a representative of the Foundation, the CEO, and one from the NSHA Board (non-voting).
More is not better. In 2001, the Toronto Symphony Orchestra’s 60 member board included many of the city’s most prominent CEO’s. It very nearly went bankrupt, and only survived when the musicians agreed to make concessions and the provincial government helped.
Twenty is too many. It leads to a diffused sense of responsibility in which the chair and a handful of others do most of the work while the rest are mostly passive. Twelve is a much better size and anything above fourteen is too large. It is hard to be disengaged on a small board.
It is bad governance to have more than one employee on a board (typically the CEO) and it is perfectly fine to have none. Medical and other leaders should be fully engaged by the CEO in determining recommendations to the board, and should lead presentations to the board on areas where they are responsible, as well as participating in other discussions affecting patient care.
But it is not good governance for them to vote on their own, and it is not a good use of their valuable time for them to be present on a host of other issues.
It is evident that there have been inadequate controls and oversight of executive expenses. It will not be surprising if other weaknesses are identified by the Auditor General. The Finance, Audit and Risk Committee owns the current issue and needs to fulfill a stronger mandate.
The IWK is a very valuable and very public organization. It depends hugely on the goodwill of its patients and their families, and of the broader communities that it serves.
The present matter is financially trivial, but represents a threat to that trust.
Health Minister Delorey has been wise to let the matter play out. The Board must use the opportunity to up its game.
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