New rules push Ontario hospitals to scrap executive perks

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Hospitals across Ontario are scrambling to abolish executive perks, ranging from cosmetic surgery and memberships in private clubs to car allowances, as they brace for unprecedented scrutiny of their compensation practices.

But even as hospital boards of directors spent the past few months clawing back benefits and in some cases trimming pay packets, government officials remain concerned about the perquisites used to help recruit top executives.

Under new transparency rules that came into effect on Jan. 1, hospitals have posted on their websites employment agreements for their top executives, including benefits. Until now, only the salaries were published as part of the Ontario government's annual disclosure of public-sector workers in the province who earn more than $100,000.

Health Minister Deb Matthews said the agreements mark a new era of transparency just as hospitals face growing pressure to practice austerity.

"We knew when the contracts were going to be opened up to public scrutiny that it would raise a lot of questions," Ms. Matthews said in an interview. "For me, the issue is, are we getting the best value for money at a time when health-care dollars are going to have to be stretched even more than before?"

Rita Burak, a board member at University Health Network, the province's largest hospital complex, said she hopes the public won't just be interested in whether executives have a car allowance (most do) but will also look at how effectively they improve patient care.

The board of UHN has just updated its strategic plan, she said, including looking at how to squeeze more dollars out of research so the hospital can come up with innovative ways of saving lives while operating within its budget. "That means stretching every dollar and it means doing things smarter," she said.

Hospitals across the country are under pressure to contain costs as the federal government prepares to curb transfer payments to the provinces. Provincial and territorial leaders meet with Prime Minister Stephen Harper in Victoria later this month to discuss the new funding formula, which leaves transfers growing at 6 per cent a year until 2017 and then ties them to economic growth.

A review of dozens of contracts by The Globe and Mail reveals that perks were until recently common. But hospitals began abolishing many of them in response to new government rules that ban such benefits as club memberships. However, many CEOs continue to have car allowances.

One executive at Trillium Health Centre was given a $5,000 allowance that covered expenses including plastic surgery, golf-club memberships and weight-management programs in her original September, 2009, contract.

Those perks were taken away from acting chief executive officer Ruby Brown last July, when the hospital cited new accountability measures for the public sector in a letter that was made public Tuesday.

Larry Roberts, a spokesman with Trillium, said Ms. Brown never claimed any of the perks.

"These things were just an option of things you could use," he said. "It was a standard thing across the industry around recruiting good people to work for your hospital. To be competitive, you had to offer competitive benefits packages."

Ms. Brown, however, was far from alone. Until last year, UHN chief executive officer Bob Bell had the hospital pay his annual membership dues of $3,400 to the York Club, a private club in Toronto.

Credit Valley Hospital CEO Michelle DiEmanuele had her annual car allowance of $12,000 taken away. The Mississauga hospital is now putting the money toward performance pay. Credit Valley made the change in response to new Ontario legislation that links a portion of pay to meeting performance targets.

And at the Bluewater Health network, the CEO and all other executives were told in April that their pay would be scaled back by 2 per cent, an amount that would become tied to performance when this fiscal year is over.

Bluewater, which has 326 beds in total between its Sarnia and rural Lambton County locations, has been preparing for the changes for a while, said board chairman Bruce Davies. As well, he said it's been a "fair bit" of work to release the contracts.

"With executive contracts, these have typically been things that are private documents between the hospital and the employee," he said, "and so it takes a little while to get your head around it."