Ontario's auditor general said favouritism and oversights led to $1 billion in taxpayer money poured into eHealth and its predecessor agency, yet Ontario remains at the back of the pack with respects to a working online medical records system.
"I don't think the Ontario taxpayers have got a billion dollars back for the investment that was made," Auditor General Jim McCarter told a Queen's Park news conference on Wednesday.
McCarter blames the frequent awarding of millions of dollars worth of untendered contracts -- about two-thirds the value of all consultant contracts -- on the government having no proper strategic plan on the actual results it wanted.
He also blamed lack of supervision over the agency. "They weren't managing this project as tightly as they should have been," he said. "We've seen this in other audits. Lack of oversight, broken rules. It goes together like a horse and carriage."
The report says eHealth CEO Sarah Kramer felt she had authority to personally hire any consultant she wanted. It said she favoured "a number" of the firms that were hired. McCarter said this was "inappropriate."
In one case she hired a firm to help hire 15 senior managers. Even though only five of those positions were filled, the government has not demanded a refund.
He said the board of directors felt it had little power over Kramer-- who has since stepped down-- because she had the support of Premier Dalton McGuinty.
He said the board of directors should have been involved in hiring her and monitoring her salary and $114,000 bonus, but the board had "little or no input whatsoever."
"The CEO basically had almost complete authority, complete autonomy to make those decisions," he said. "To a large extent it was, 'I've been given the mandate to get this thing done and I think that what I'm doing meets the exception criteria under the procurement policies and therefore I'm basically going to sole-source almost everything to people that I know and worked with in the past."'
McGuinty told a separate news conference that while he wanted results, he didn't tell anyone to break the rules.
McCarter did say there was no evidence that partisan politics played a role in the awarding of contracts. "As well we saw no evidence that those who awarded the contracts obtained a personal benefit from the firms getting the work," he said.
Kramer responds
In a statement released Wednesday afternoon, Kramer said the board knew how the contracts were being awarded.
She said the "relevant expertise" of the consultants hired was "a good enough reason to proceed under clear and unambiguous procurement rules allowing for such exemptions to open tender."
McCarter's report says the eHealth culture was to rely heavily -- and in some cases completely -- on consultants.
He said consultants were given management positions and the authority to hire other consultants, sometimes from their own firm.
McCarter explained that the minister of health should have received regular briefings on what was going on during the projects, but that didn't happen.
"At the end of the day, the Minister of Health has to have some accountability," McCarter said.
David Caplan stepped down as health minister Tuesday in the wake of the scandal. He was replaced Wednesday by former Youth Services minister Deb Matthews.
McCarter also accuses the government of stonewalling his audit. He says he had asked the government for access to offices but it took six months. He says his staff was at first told there wasn't enough space, and then told the ministry had not yet agreed to the "overall scope" of the review.
The eHealth agency was meant to create electronic health records for people in Ontario by 2015. The computer network system costs $72 million a year to run, and is used at less than one per cent of its capacity.
Some of the spending included consultants getting paid $2,700 a day, then expensing their morning coffee and muffin. Kramer spent $51,000 on refurbishing her office and consultants even billed hours for changing their voicemail greetings.
In a statement Wednesday, eHealth issued an apology.
"We understand that public expectations have not been met and apologize to taxpayers for this failing," wrote Rob Devitt, eHealth's interim CEO.
The statement said eHealth will make sure that the things outlined in the report don't happen again.
McCarter also made this point: "Quite frankly the money that eHealth Ontario spent was very small compared to the money spent by the Ministry of Health and (Smart Systems) over the years."
About $800 million of the $1 billion was spent on SSHA, eHealth's predecessor, which was born under the Ernie Eves Conservative government in 2002 and wound down by the McGuinty government in the fall of 2008 (Kramer took command of eHealth in early November 2008). The ministry had 27 full-time employees by 2008, but more than 300 consultants.
"The $5.6 million of eHealth Ontario contracts that are under dispute pale in comparison to the hundreds of millions of dollars squandered on eHealth prior to the creation of the agency," Kramer said in her statement.
"Indeed, the $5.6 million represents approximately the amount that the previous eHealth efforts would burn through in the course of a single week -- with, as the Auditor General has pointed out, no concrete results."
McCarter felt the SSHA has become a "scapegoat" for the lack of progress in putting the medical records online. The report says that the SSHA did begin to examine potential advances like more secure web technology that could fix the problems, but these have not yet been implemented almost a decade since SSHA was established.
With a report from CTV Toronto's Paul Bliss
