Hospitals in Ontario used money that should have been spent on front-line health-care services and instead awarded lucrative contracts to consultants who spent freely on travel and entertainment, the province's auditor says.
The auditor's findings, released on Wednesday, demonstrate that Premier Dalton McGuinty has failed to impose an era of restraint within the public sector. Mr. McGuinty attempted to end spending scandals that dogged his government a year ago by having every agency in the province, including major Crown corporations, adopt stringent rules covering travel expenses and consultants.
But the spending abuses Auditor-General Jim McCarter uncovered in the province's hospital sector have persuaded the Premier that he needs to cast a wider net, said a senior government source.
The government unveiled new rules on Wednesday that would prevent the public sector from using taxpayers' money to hire lobbyists. In addition to their use of consultants, Mr. McCarter said eight of the 16 hospitals he audited spent $1.6-million on lobbyists.
Hospitals, universities, colleges, school boards and children's aid societies are among the public-sector entities that would also have to comply with stricter rules on expenses and procuring goods and services.
But the proposed legislation takes particular aim at hospitals. As first reported in The Globe and Mail, hospital executives would have to post their expenses online and their pay could be docked if they fail to comply with the legislation.
"There is a culture change that is under way now," Health Minister Deb Matthews said at a news conference. "Some, I think, have got it but I'm afraid that others have not."
In his report, Mr. McCarter cites examples where consultants billed hospitals for a business trip to Singapore at a cost of $700 a night for a hotel room, $7,800 in airfare for a personal vacation in Japan, and a $350 dinner in Toronto for three people. One consultant even tried to bill a hospital a service fee of $3,000 when the auditor asked for receipts to support expenses totalling $170,000.
Mr. McCarter audited 16 of the province's 154 hospitals, examining their use of consultants over a three-year period ending March 31, 2010. Every hospital, from the large teaching institutions in the Greater Toronto Area to small, regional ones, failed to ensure that they were spending taxpayers' money effectively, he said.
The findings, he said, are reminiscent of eHealth Ontario, which awarded contracts totalling hundreds of millions of dollars to consultants without competitive tenders. The eHealth scandal dominated media coverage of Ontario politics in the summer of 2009 and led health minister David Caplan to resign from cabinet and Mr. McGuinty to tighten the rules for arm's-length agencies.
"I was a bit surprised that eHealth had not been a wakeup call for hospitals to tighten up their procedures," Mr. McCarter told reporters.
The Ontario Hospital Association issued a rare public apology. Ms. Matthews also said she is sorry and likened the auditor's findings to pulling out the fridge in her kitchen.
"Sometimes, you don't really want to know what's gathered behind your fridge, but when you do, you clean it up," she said. "I don't think that this is acceptable."
Opposition members criticized the government for allowing hospitals to squander scarce health-care dollars as many make cuts to front-line services.
"It's a damning indictment of how consultants made off with thousands of dollars," New Democratic Party Leader Andrea Horwath said of the report.
"People are outraged at this huge waste of their money that should be going into front-line health care," added Progressive Conservative health critic Christine Elliott.