MUHC projects $53 million deficit next year

MONTREAL – The McGill University Health Centre has plunged into an unprecedented financial crisis as it projects a deficit next year of at least $53 million, prompting the Quebec government to set up a committee to probe the MUHC’s finances, The Gazette has learned.

The MUHC is also planning to “divest” itself of a number of primary- and secondary-care services to slash costs. The organization has not announced precisely what services are on the chopping block, but The Gazette has already reported cuts in dialysis, gynecology as well as asthma care at the Montreal Children’s Hospital.

The MUHC’s financial troubles are much worse than what was publicly disclosed at the health network’s annual general meeting on Dec. 3, when René Carignan, associate director of finance, reported an operating deficit this year of $29.3 million. The Montreal Health and Social Services Agency had granted the MUHC a deficit of $12.3 million, but it exceeded that approved shortfall by $17 million. The MUHC, which comprises six hospitals, has a total budget this year of just over $1 billion.

In an email to staff, Norman Rinfret, executive director of the MUHC, warned of tough cuts to come. He also announced the creation an “internal audit function” to scrutinize finances.

“The status quo is no longer acceptable,” Rinfret said in the internal email. “The situation is calling for a thorough review of budget parameters by each department with a focus on improving our efficiency, effectiveness and performance – and ultimately aligning our overall operating costs with our funding.”

The internal audit will probe expenses by managers as well as MUHC purchases of materials, equipment and services.

“Internal audits in hospitals are seldom seen,” Richard Fahey, MUHC director of public affairs, told The Gazette. “We want to see if there is a proper use of funds internally.”

Rinfret has ordered every department head to come up with a list of cuts, or “necessary measures,” by March 15, 2013. Although Rinfret pledged that quality of health care would not be compromised, he suggested “areas of divestiture to be transferred to our partners in the health-care network.”

Rinfret’s email – as well as the announcement of an internal audit function – is a pre-emptive move as a government committee prepares a report this week on the MUHC’s finances. The government appointed Dr. Michel Baron, the former director-general of the Health and Social Services Agency of the Eastern Townships, to examine the MUHC’s books. His mandate is also to determine whether the MUHC has been defrauded.

The Baron committee, which started its work in September, has also been examining a real-estate transaction by the MUHC involving a property at 1750 Cedar Ave., next to the Montreal General Hospital, for a complex of outpatient clinics. A Gazette investigation in 2011 reported a number of anomalies about the deal, including a property transfer that was carried out without any deed of sale.

Both the provincial government and city of Montreal later objected to the project, and MUHC is now seeking to sell the property.

Fahey said the MUHC is not concerned about the possibility it will be placed under trusteeship.

“I have no indication of that,” Fahey said. “That’s the only thing I can say. That’s a question for the health minister (Réjean Hébert) more than for us. We are taking action. We are being proactive. We know of the challenging situation.”

Ariane Lareau, Hébert’s press attaché, could not be reached to comment on Rinfret’s email.

The MUHC has fallen under sharp scrutiny after the province’s anticorruption squad raided its offices on Sept. 18 and left with documents related to the awarding of the $1.3-billion superhospital contract. The police raid led to the arrest on Nov. 28 of Pierre Duhaime, former CEO of SNC-Lavalin, the design-build contractor for the superhospital. Duhaime has been charged with defrauding the MUHC.

The 12,000-employee MUHC is also a co-defendant in a lawsuit by a former director of planning, Yanai Elbaz, who is seeking to recover $192,000 for what he says are unspecified consulting services. Elbaz claims that Arthur Porter, the former executive director of the MUHC, committed the MUHC to honouring his contract with a private medical company that has commercial links with the health network.

In a separate file, Quebec Superior Court documents show a former director of human resources at the MUHC is being investigated by provincial police on allegations of defrauding the organization over a 10-year period.