Shelley Spence, CPA, CA, LPA
Office of the Auditor General of Ontario
20 Dundas St W #1530
Toronto, ON M5G 2C2
Dear Auditor General Shelley Spence, CPA, CA, LPA:
Subject: Audit Request: CEO, Board and Ministry Financial Management and Decision-making Before, During, and After Minden Emergency Department’s (ED) Permanent Closure
We are writing to request an audit of the CEO, Board and Ministry financial management and decision-making processes at Haliburton Highlands Health Services (HHHS) prior to the abrupt and permanent closure of Minden’s Emergency Department (ED) – a successful public health institution and community linchpin for 30 years.
Enclosed are detailed financial charts for FY23 and unapproved net monies owed between HHHS and the Ministry of Health from FY17 to FY23, that indicate alarming trends and raise critical questions that we believe require your attention.
We feel it is important to understand the specific factors leading to HHHS’ $4 million deficit for FY23; the decision-making process and rationale for the permanent closure; and to assess whether measures could have been taken to avoid the loss.
Our team believes we now have a moral and ethical imperative to understand how these decisions affect the provision of essential healthcare services. We believe our request falls under your jurisdiction, considering the significant public dollars associated with the closure.
We believe this audit should focus on financial transparency, the accountability of decision-makers, and the impact of these decisions on public healthcare planning and provision, especially as it concerns vulnerable populations.
Key Areas of Concern
Decision details: Most stakeholders do not know when the decision was made or the details of the vote. A Freedom of Information (FOI) request seeking the business case and decision details was submitted; the business case was not included and the information sent was heavily redacted.
Reported Deficit Fluctuations: The enclosed charts show erratic deficit trends, with the reported deficit increasing from $220,000 to a staggering $4.1 million within a single fiscal year. We question the factors contributing to such fluctuations and the substantial discrepancy between the initial and audited financial statements.
Forecasting and Financial Oversight: HHHS inaccurately projected its FY23 Year End deficit by $1 million eight days beforehand. On March 23rd, 2023, the board projected a $3 million deficit for Year End (March 31st). At its AGM on June 22nd, HHHS reported a $4.1 million deficit for FY23 ending March 31, 2023.
Furthermore, the inability of HHHS to estimate additional monies, indicated in Note 21 of their financial statements, may be cause for concern about the integrity of financial management and reporting practices within HHHS and its ultimate oversight by the Ministry.
Strategies to Address Deficits: There is a concerning lack of information on what measures were taken to control the escalating deficits beyond repeatedly advocating with the Ministry to release approved funds and/or additional funds. This is evidenced and reflected repeatedly within HHHS’ board meeting minutes ahead of the closure and several years prior to it.
- Current HHHS board chair David O’Brien and former finance committee member Kelly Mitchell performed in ad hoc government relations assistance roles on behalf of HHHS beginning in 2018
- HHHS’ board members initiated an advocacy effort (championed by then-chair Jan Walker) condemning Bill 124’s impact on staff and,
- One month ahead of Minden ED’s closure, HHHS’ board meeting minutes specifically state that both financial and staffing pressures inform every decision they make; the minutes also state HHHS’ inability to retain staff due to higher wages elsewhere.
We urge your office to investigate whether appropriate actions were taken and the level of stakeholder engagement in HHHS’ planning and execution of strategies to address its deficit. Our team has identified different accounting and/or financial management practices across different healthcare systems in Ontario. We believe HHHS may have been able to mitigate its deficit and remain operational if it had adopted the best practices of other healthcare systems in Ontario.
FY 24 Budget Projections: It is imperative to ascertain whether HHHS projected continued deficits in the FY 24 budget and if these projections influenced the decision to close the ED. For instance, when did HHHS get access to FY24 budget vs. when was the decision made to close the ED?
Owed Monies and Financial Statements: The significant increase in monies owed to HHHS in FY21 and FY22, and the subsequent changes in FY23, warrant a detailed audit to understand the causative factors and their impact(s) on HHHS’s financial position.
Questions for Audit Investigation
- Why did the monthly deficits reported by HHHS fluctuate so significantly?
- What led to the unexpected rise in the deficit reported in the audited financial statements?
- Why was there a lack of estimation for additional funds as indicated in Note 21 of the financial statements?
- What steps were undertaken to mitigate the rising deficits, and were stakeholders involved in these discussions?
- At what point in the fiscal timeline was the decision to close the Minden ED made, and were the fiscal projections for FY 24 considered in this decision?
- What caused the substantial increase in monies owed to HHHS in FY21 and FY22, and why did this trend not affect the long-term care sector?
- How are the monies owed recorded in the financial statements, and have there been any adjustments by the Ministry of Health?
These questions are crucial in understanding the fiscal management of HHHS and the factors leading to the closure of Minden ED. The patterns reflected in these charts and the subsequent permanent closure decision appear to be symptoms of deeper financial and operational malaise.
The closure of Minden ED stands to affect the well-being and health of our community profoundly, we implore your office to initiate an audit promptly. The findings of such an audit will be instrumental in restoring public trust and ensuring that similar incidents do not occur in other healthcare institutions across the province.
We thank you for your attention to this grave matter and stand ready to provide any further information required for your investigation.
Sincerely, Jeff Nicholls, Adria Scarano, Aurora McGinn, Tracy Klompmaker
On behalf of Minden Paper