Markham Stouffville Hospital redevelopment focus of probe

Yorkregion.com
Feb. 8, 2016
By Amanda Persico

Markham Stouffville Hospital is coming under fire for its failing procurement process.

The hospital launched its own investigation after learning about a fake invoice scam at Infrastructure Ontario - the Crown corporation responsible for awarding contracts to the public sector for Markham Stouffville’s $400-million expansion project.

Markham Stouffville, along with St. Michael’s Hospital, St. Joseph’s Health Centre and Infrastructure Ontario each launched their own investigations last fall.

The $400-million expansion project, completed last summer, included doubling the size of the hospital, expanding its emergency department and increasing surgical, maternal health and oncology services.

The hospital retained Deloitte LLP to conduct an investigation into the hospital’s procurement process in relation to the expansion project.

MSH released the confidential report on its website last week, which revealed numerous problems, including the lack of written quotes for goods and services and no open competitive process for tendering.

The report also highlighted the “frequent” practice of requesting cheques without proper quotes, purchase orders or contracts in place.

The report also found an instant where a consultant was paid a higher rate than outlined in the initial contract. And a consultant continued to provide consulting services beyond the expiration of the contract.

A number of suppliers invoiced the hospital through pre-existing suppliers, which lead to price markups and contracts awarded to friends and family, Deloitte auditors found.

When it comes to key corporate policies that deal with conflict of interest, the tendering and procurement process and who has signing authority, the hospital was found lacking.

According to the report, several corporate policies have not been reviewed in almost a decade.

Currently, the hospital has three conflict-of-interest policies, one for the board of directors, a general policy and another for purchasing. The policies don’t include specific examples or consequences.

The hospital also does not have a fraud management policy.

On Friday, hospital president and CEO Jo-anne Marr sent out an email to all staff, physicians and volunteers outlining the hospital's commitment to the report findings.

The recommendations fall under five categories, procurement practices, conflict of interest, hiring practices, document management and fraud prevention.

"We are committed to implementing all 37 recommendations and have already started work on many of the areas identified," she said in her email.

"It is important that we all learn from this report and take the opportunity to further enhance our systems and processes to ensure we are using wisely the public resources with which we have been entrusted."

The hospital started working on developing a stronger, arms-length whistleblower process and policy, reviewing all hiring processes and ensuring strong procurement practices are in place and are being followed.

The hospital is also working toward a zero-tolerance attitude when it comes to non-compliance of conflict of interest policies.

Recommendations:

Here is a list of recommendations made by Deloitte during the firm’s investigation into the $400-million redevelopment project between 2010 and 2015.

• All procurement processes are directed through a third-party, the Central Ontario HealthCare Procurement Alliance;

• Cheque requisition practices discontinue;

• Regular procurement training;

• Regular testing of the hospital’s internal procurement system;

• Update the hospital’s contracting policies to reflect acceptable use of subcontracted suppliers;

• Consolidate conflict-of-interest policies into one policy for all employees;

• Clearly define conflict of interest, provide examples, set out consequences, establish standard declaration forms for employees and employee contracts to reference the conflict of interest policy;

• Implement conflict-of-interest training for employees, volunteers, clients and suppliers;

• Perform due diligence on all new hires;

• Ensure digital information is appropriately retained and safeguarded;

• Create a fraud management policy that outlines staff procedures, instant response, recovering funds, dealing with the media and preserving evidence and reporting to police.

• Undertake a fraud risk assessment; and

• Review the hospital’s whistleblower policies to include other undesirable behaviours, not just financial wrongdoing