Yukon Hospital Corp. used capital funds just to meet payroll last year, report says

A review of the Yukon Hospital Corporation's finances says the corporation ran a $7.6-million deficit last year, and had to pull capital funds from a planned Mental Wellness Unit just to meet payroll.

The review, done by the accounting firm Ernst and Young, was completed in October and released by the territorial government on Friday. It analyzes governance and financial management at the hospital corporation. 

According to a government news release, the review was "necessitated by the evolving health care landscape in the Yukon, particularly the challenges and financial pressures intensified by the COVID-19 pandemic."    

Among other things, the review looks at the "root causes" that led the Yukon Hospital Corporation (YHC) to take the unusual — and unapproved by the government — step of using money intended for a capital project to cover basic operating expenses.

The YHC, the review states, has been dealing with a "chronic cash flow and operating shortfall."

"We note that the YHC has been under financial strain, which has caused the use of unusual measures to stay financially viable," the review states.

The report states that the hospital corporation was so strapped last year, it used $7.3-million in capital funds — intended for the building of a new Mental Wellness Unit — to cover payroll and operating costs.

It cites inflation, workforce changes, and post-pandemic population health needs as some of the factors putting ongoing financial pressure on the hospital corporation.

It also found problems with how the YHC communicated its problems to the Yukon government — which provides almost all of the corporation's funding.

"This made it challenging for the [Yukon government] to appropriately fund the YHC," the review states.

"While the deficit was clearly communicated, there was a lack of clear communication on its implications, or put another way, no one asked where the money was going to come from."

The review also found other oversight problems, including a lack of reporting requirements for the hospital corporation on metrics like wait times.

It includes several recommendations for improvements, including more streamlined funding agreements. The government and the YHC say they accept all the recommendations. 

'Crisis' in health care, says opposition

To Brad Cathers, health critic for the opposition Yukon Party, the report from Ernst and Young confirms what his party has been saying — that the governing Liberals have been under-funding Yukon hospitals.

"The fact that they referred to the situation as a chronic cash flow and operating shortfall is key, because it indicates this is not just a one-time, one-year problem," Cathers said.

"The current Liberal government has ignored calls from ourselves as well as health professionals to provide additional resources."

Cathers argues that there is a "crisis" in health care right now, and the buck stops at the premier, and the ministers of health and finance.

"They are ultimately responsible for whether the hospital has enough financial resources," he said.

Speaking to CBC News on Friday, Health Minister Tracy-Anne McPhee dismissed Cathers' suggestion that the hospital is chronically underfunded.

"I don't think he has the facts right, to be frank," she said.

McPhee said the government has transfer payment agreements with the YHC, and also "regularly" ensures the hospital has enough funding through supplemental budgets. She pointed to the government's supplemental budget, passed last week, which included an additional $17.1 million in funding for the YHC for this year.

"What we are absolutely pleased about to see in the Ernst and Young report is a review of the governance of financial management and internal controls that can be improved. And much of that work has already started, before we even saw the final report," McPhee said.

"The facts are that no one can estimate exactly what the requirements are going to be to run the hospital in the run of an annual year."

McPhee also pointed to a government news release earlier on Friday that said additional funding was going to the YHC to address the "immediate pressures impacting surgeries and medical imaging programs in the territory" — though Cathers said he saw no dollar figure attached to that announcement, nor any indication that this was funding not included in last week's supplementary budget.   

Allan Lucier, chair of the YHC's board of trustees, also spoke to CBC News on Friday about the corporation's deficit last year, and the $2.9-million deficit so far this fiscal year. He chalked it all up to external pressures, such as the impacts of the pandemic, inflation, and the territory's growing population.

"We do as best we can to contain those costs throughout the year, but some of them are just beyond, beyond our authority to sort of control," Lucier said.

Lucier also said YHC is working closely with the government on its budget and shortfall, and that Yukoners should still feel confident in the hospital system.

"The hospital is still the place to be. If you have an emergency, if you require medical treatment or whatever, then the hospital is the place to be," he said.

"This report, and the relationship that we continue to improve with the government, is only going to make that better."