Governance and financial review of Yukon Hospital Corporation identifies "financial strain" and "chronic cash flow shortfall"

Friday, 15 December 2023 11:11

Health and Social Services Minister defends the Yukon government's funding of the Yukon Hospital Corporation at the Yukon Legislative Assembly on November 21 (Photo: Government of Yukon)

Yukon Hospital Corporation used $7.3 million in capital funding for Mental Wellness Unit to cover operational and payroll costs due to a $7.6 million deficit in the 2023 fiscal year.

The sole-sourced Ernst & Young financial review of the Yukon Hospital Corporation commissioned by the Government of Yukon has raised concerns since it was made public on December 1.

Before the review was made public, representatives from the Yukon Hospital Corporation appeared as witnesses at the Yukon Legislative Assembly. According to Yukon Premier Ranj Pillai, their comments disproved Yukon Party MLA and Official Opposition Health Critic Brad Cather’s recurring concerns about chronic underfunding.

“[…] when it was time to sit with the Hospital Corporation […], what we saw was [that] the majority of what the member for Lake Laberge was saying on behalf of the Yukon Party was completely challenged,” said Pillai. “And actually, in most cases, what we found out was he was flat wrong.”

Yukon NDP leader Kate White heard their comments at the assembly. But after learning about one of the major findings from the Ernst & Young review, she says that the handling of one particular incident was disappointing.

“The hospital spent more than $7 million that they weren’t supposed to on operational expenses,” said White during a December 5 interview. “They took it out of something that was earmarked and secure for the construction of the new Mental Wellness wing, and that they used that for operations. And they didn’t discuss it or clear it with the Yukon government first.”

“And so, it really shows a clear lack of transparency. It shows a lack of communication from both sides. And, ultimately, it shows that the Yukon government kept that report back from the public prior to the house rising, and that when the Yukon Hospital Corporation appeared as witnesses, they omitted those details.”

Yukon Party MLA and Official Opposition Health Critic Brad Cathers says that in this specific instance, he understands why the Hospital Corporation used that capital funding without approval.

“Under normal circumstances, it would not be okay to use capital funding for O&M,” said Cathers in an interview on December 8. “But what we believe, and what Ernst & Young clearly says, is that had they not made that choice, they were at risk of not being able to cover payroll. So, in my view, the criticism should be fully directed at the Minister of Health, the Premier, and the Finance Minister.”

But this unauthorized use of capital funds was a by-product of a larger issue. At the time, the Yukon Hospital Corporation’s deficit was $7.6 million, stemming from what both Cathers and Ernst & Young call a consistent underfunding problem.

“We note that the [Yukon Hospital Corporation] has been under financial strain, which has caused the use of unusal measures to stay financially viable,” says page 12 of the review. Page 13 summarizes, “It is clear from the analysis that steps need to be taken collaboratively to address the YHC’s chronic cash flow and operating shortfall.”

Health and Social Services Minister Tracy-Anne McPhee, who had access to the full 18-page review for at least thirty days prior to its public release, interpreted those pages of the review differently.

“I don’t agree that it says that the hospital’s been underfunded,” said McPhee in an interview on December 8. “I know you will have heard that from other people. I don’t agree with that.”

“I agree that the process is that we estimate the best we can. We’ve increased every year since 2017. We have factors that cannot and absolutely are not anticipated in the run of a year. And then we look at what the expenditures are over that period of time.”

The Ernst & Young governance and financial management review of the Yukon Hospital Corporation was released on December 1, and is publicly available at https://yukon.ca/en/news/government-yukon-releases-report-governance-and-financial-management-yukon-hospital-corporation-accepts-outlined-recommendations.