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Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..01 Purpose of this Chapter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .03 Our involvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .04 Twin Rivers District Reporting Initiative Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..16 The reporting model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..17 Importance of the reporting project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..21 Our involvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..22 Involvement by Deloitte & Touche, Chartered Accountants . . . . . . . . . . . . . . . . . . . . . . . . . ..24 Project status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..25 Providing assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26 Examination of two issues that affect all District Health Boards Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..29 Rural Health Coalition Agreement Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..32 Key terms of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..35 Department's interpretation of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36 Our audit conclusions and findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43 1994-95 audits of four Districts Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..49 Our audit conclusions and findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50 Appointed auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..53 |
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| Introduction | .01
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The Department is to provide leadership
and vision to the health system to protect and improve
the health and well-being of the people of Saskatchewan.
The Department provides policy direction and health
services. The Department provides many of its services through District Health Boards (Districts). During 1995-96, the Department provided nearly $1 billion to Districts for health services delivery. |
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.03 The purpose of this Chapter is to provide an interim report on our efforts to ensure public money spent on health services is managed well. We report on:
- our involvement in the performance reporting initiative undertaken by the Twin Rivers District;
- the status of our examinations of two important issues faced by all Districts;
- our audit of the Department's compliance with its agreement with The Rural Health Coalition; and
- our audits of four Districts for the year ended March 31, 1995. These audits were incomplete at the time we issued our 1996 Spring Report.
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.04 The provincial health system, and its reform, is significant to Saskatchewan. District health boards now decide how best to organize and deliver health services. Their decisions should be made in concert with direction received from the Assembly and the Department. The main part of that direction is within The Health Districts Act, service agreements and financial and health plans.
.05 Members of the Legislative Assembly and the public want our Office to tell them whether Districts manage public money well. We agree this is important. Our goal is to ensure public money spent on health services is managed well.
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.06 To achieve this goal, we are focusing our work on the management and accountability information systems and practices of Districts and the Department. Our work consists of:
- examining Districts' financial statements, their internal controls to safeguard and control their assets, and their compliance with legislative and related authorities including key agreements; and
- working with Districts and the Department on identifying and examining issues that are critical to ensuring health dollars are managed well.
.07 To carry out our examinations, we work with other auditors appointed by Districts using the process recommended in the June 1994 Report of the Task Force on Roles, Responsibilities and Duties of Auditors.
.08 The March 1995 fiscal year was the first year we examined all Districts. We reported the results of our examinations in our 1996 Spring Report. We will report the results of the March 31, 1996 audits in our 1997 Spring Report.
.09 A few Districts have expressed interest in having us do their audits directly. We have declined these requests because we think our resources can be used more effectively by:
- overseeing audits of Districts;
- examining issues common to all Districts; and
- working with and assisting public accounting firms.
.10 Each year, we plan to examine one or two important management and accountability issues significant to all Districts. Our goal is to identify opportunities to improve practices and to provide assurance to the Legislative Assembly that public money is managed well.
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.11 To ensure we examine issues significant to Districts, we seek advice from those senior officials responsible for leadership within the health care community. Accordingly, we have created an Advisory Group.
.12 The Advisory Group is composed of senior representatives from the Districts, the Department, the Saskatchewan Association of Health Organizations (SAHO), the Health Services Utilization and Research Commission, public accounting firms, and our Office.
.13 The work of the Advisory Group is important. For example, they provided essential advice on the audits of two issues we reported in our 1996 Spring Report. These issues are important to all Districts. The first audit assessed whether Districts had an adequate process to identify the health needs of their residents. The second audit assessed whether District annual reports provide the Minister and the public the information they need to assess the performance of Districts.
.14 Also, the Advisory Group is providing advice on two additional examinations of issues important to all Districts. We describe these examinations in paragraphs .29 to .31.
.15 In addition, the Advisory Group thought strategic planning and on-going professional development for District directors are important issues for our Office to consider examining.
Introduction
.16 The Twin Rivers District Health Board (District) has started a long term project to enable it to measure and report on the cost and effectiveness of its services. The District needs to set up its books, records and systems to help:
- measure and report on:
- the cost of its services;
- whether services are effective;
- whether services are delivered efficiently; and
- make resource allocation decisions.
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.17 The District refers to the books, records and systems it is designing to measure and report on its performance as the Client-focussed Decision Making model (CDM).
.18 The CDM reporting model is based on a reporting framework called Service Efforts and Accomplishments (SEA). The Government Accounting Standards Board (USA) developed the SEA reporting framework and describes it in its 1994 Concepts Statement No. 2, Service Efforts and Accomplishments Reporting.
.19 Various state and local governments, hospitals, colleges, universities and utility corporations use the SEA reporting framework.
.20 SEA helps organizations to assess their performance by comparing actual results to benchmarks (performance indicators).
.21 Assessing and reporting on program effectiveness and cost of services should:
- help the District make difficult resource allocation decisions and explain its decisions to the Minister and the public;
- enable the District to comply with its legal requirement to report publicly on the effectiveness of its programs and the cost of its services; and
- provide guidance to other Districts in implementing reporting systems designed to report internally and externally on their effectiveness.
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.22 The District asked us to provide advice and assistance. We agreed to work with the District because the project could be important to all Districts and the Department. The project could help all Districts to measure and report on the effectiveness of their programs and the cost of their services. Such reports could assist the public and the Department to assess whether public money is managed well.
.23 Our contribution to this project includes:
- advising and assisting the District on how to report on its effectiveness and on its cost of services. This includes helping the District to select realistic (measurable and manageable) performance indicators;
- advising the District on how to establish and maintain the necessary books, records and systems;
- assisting the District in evaluating this project after it is working; and
- publicly commenting on the District's 1996-97 annual report. This report will begin to include information on the effectiveness of the District's programs and the cost of its services.
.24 The District has hired consultants, Deloitte & Touche, Chartered Accountants to help set up the necessary books, records and systems. Deloitte & Touche will provide technical support and provide advice on all aspects of the reporting project.
.25 The District expects to report publicly on its effectiveness reporting project this fall/winter. The first report will describe the reporting model and process. Subsequent quarterly reports will address services in one or two of the District's six program areas (59 services in total). Over the next eighteen months, the District plans to report on the cost and effectiveness of all its services.
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.26 The Minister and the public will need independent advice on the reliability of the District's reports on the effectiveness of its programs and services. Our office, and the District's appointed auditor, can provide this assurance. This assurance adds credibility to the District's report. It would enable legislators and the public to place more confidence in the District's management.
.27 It is, however, too early to provide this assurance. As discussed earlier, the District's reporting initiative will contribute to the development of benchmarks or performance indicators. These indicators will help management, the Minister, and the public measure the effectiveness of health programs and services. Performance indicators that are generally accepted within the health community are not yet in place. The development of these standards will take time. It will also take the efforts of many.
.28 Our office plans to monitor the development of these standards. We expect the development will take three to five years. Once these standards are better developed and accepted, our office plans to provide assurance on reports Districts make on the effectiveness of their health programs and services.
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Introduction
.29 This year we are auditing two issues that are important to the management of health services. One focuses on health district governance. It examines the processes used by Districts to ensure directors understand their accountability obligations. The other audit focuses on resource allocation. It examines the processes Districts use to ensure they consider information on the health needs of residents when making resource allocation decisions.
.30 For both these audits, we are examining a few Districts as opposed to examining all Districts. We will select Districts based on various factors. These factors include size of the population they serve, their level of expenditure, and the nature of the services they provide.
.31 We plan to report the results of these audits in our 1997 Fall Report.
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Introduction
.32 In our audit of compliance with authorities, we examined whether the Department complied with agreements that govern its activities relating to financial reporting, safeguarding assets, revenue raising, spending, borrowing, and investing.
.33 In February 1994, the Department signed the Statement by the Rural Health Coalition and Saskatchewan Health (Agreement). This Agreement is with the Rural Health Coalition (Coalition). The Coalition was formed in 1993 and consists of the 51 rural communities whose hospitals were converted to health centers.
.34 We found that the Department complied with the Agreement, except for the provisions described in paragraphs .43 to .46.
.35 The Agreement addresses three main areas:
- physician services;
- a process for resolving disputes between district health boards and the 51 communities; and
- health center services in the 51 communities.
.36 To comply with the Agreement, the Department needs to interpret its financial and non-financial obligations under the Agreement.
.37 We think the Department's interpretation set out in paragraphs .38, .39 and .40 are reasonable.
.38 In the Department's view, the overriding provisions in the Agreement are:
- the Department and Districts may make changes to the Agreement's initial health service commitments based on the evolving health needs of the communities; and
- where communities disagree with changes to health services, they can have their concerns addressed through a dispute resolution process.
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.39 The Department interprets its non-financial obligations under the Agreement as follows. The Department:
- supports the principle that primary physician services should be provided as close to home as possible;
- provides direction to the Districts to ensure a safe level of quality care; and
- encourages Districts to develop long term plans and agrees to participate in the planning meetings.
.40 The Department interprets its financial obligations under the Agreement as follows:
- For Districts containing the 23 communities with combined special care homes and health centers, the Department agrees to:
- complete a review of funding for laboratory and x-ray services and make necessary adjustments where required;
- prepare guidelines for the use of observation/assessment beds; and
- ensure laboratory, x-ray, emergency, respite care, palliative care, convalescent care, and long term care services are available and accessible in the district and provide funding to the Districts to support these services.
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- For Districts containing the 18 communities with a special care home and a separate health center, the Department agrees to:
- provide funding to ensure 24 hour on duty registered nursing services responsible for the provision of emergency/outpatient services; and
- provide funding for training staff in emergency response skills.
- The Department agrees to provide funding for respite, palliative, convalescent, and long term care services during the development of District long term plans for these services.
- For Districts containing the 10 communities with a health center and no special care home, the Department agreed to provide a one time payment of $50,000 for each of the 10 communities to bridge the transition to longer term District health plans.
- The Department agreed to fund the Districts with up to $1.1 million, prior to March 31, 1994, for the 18 communities with a special care home and a separate health center and to the 10 communities with a health center and no special care home.
- The Department agrees to continue to provide annual funding of $648,000 to the 18 communities with a special care home and a separate health center for 24 hour on duty registered nursing services.
.41 We have audited the Department's compliance with the Agreement. As stated earlier, our audit focuses on authorities relating to financial reporting, safeguarding assets, revenue raising, spending, borrowing, and investing. In particular, our audit focused on ensuring the Department met its financial obligations under the Agreement described in paragraph .40.
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.42 Districts deliver most health services. Therefore, to ensure the Agreement is carried out, the Department needs the cooperation of the Districts. The Department needs to:
- advise Districts how to meet the terms of the Agreement;
- monitor the Districts' performance in complying with terms of the Agreement; and
- take corrective action if terms are not met.
Our audit conclusions and findings
.43 The Department needs to improve how it meets two of its obligations under the Agreement.
.44 The Department has told the Districts about the terms of the Agreement. The Department has monitored the District's performance to ensure they meet the Department's obligations. The Department has provided Districts the funding the Agreement requires, except, it has not completed its review of funding for laboratory and x-ray services at the 23 communities. This review may result in the Department adjusting its funding to Districts for laboratory and x-ray services.
.45 As we state earlier, a key element of the Agreement is a dispute resolution process to resolve disagreements in changes to health services in the communities. The Agreement provides for a working group consisting of members from the Coalition, Districts, and the Department to recommend to the Minister a process to enhance discussion, problem solving and consensus building and procedures for breaking impasse. The Minister has accepted the working group's recommendations. The Department is working to implement the recommendations. The recommended dispute resolution process is not yet in place.
We recommend
.46 The Department should ensure it completes the review of funding for laboratory and x-ray services at 23 communities and implements a dispute resolution process as required by the Rural Health Coalition Agreement.
.47 The Department told us:
"A review of provincial laboratory services was completed by the Provincial Laboratory Consultation Committee in 1996. The Committee included representation from the College of Physicians and Surgeons, the Saskatchewan Medical Association, the Saskatchewan Society of Medical Laboratory Technologists, the Saskatchewan Association of Combined Laboratory and X-ray Technicians and Health Districts (nominated by SAHO).
Although the Committee did not look at individual facilities or communities, it did identify the core tests that should be readily accessible to residents of a district and which should normally be available in health centers. This information has been provided to Health Districts to enable them to plan the delivery of required lab services for their residents."
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.48 Also, the Department told us it has settled some disputes with communities through an informal dispute resolution process.
Introduction
.49 In our 1996 Spring Report, we noted we had not completed the 1994-95 audits of four Districts. We have now completed the audits.
Our audit conclusions and findings
.50 Our conclusions, findings and recommendations in these audits are similar to those we reported in our 1996 Spring Report. We reported that at March 31, 1995, boards of directors of most Districts needed to improve how they:
- oversee senior management;
- safeguard assets;
- comply with legislative authorities and agreements; and
- ensure adequate accountability to district residents and the Minister of Health.
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.51 We found the financial statements of the four Districts are reliable except for the following matters. For one District, we could not verify the reported value of its capital assets. The other District did not reflect prior period figures that were comparable to the current year figures.
.52 Chapter 9, Part C of our 1996 Spring Report includes a description of our conclusions, findings and recommendations.
.53 My Office worked with the appointed auditors of the four Districts using the framework recommended by the Task Force on Roles, Responsibilities, and Duties of Auditors. The four appointed auditors and my Office formed the opinions referred to in our 1996 Spring Report, except as follows.
.54 One District's appointed auditor's did not do sufficient work to form opinions on the District's internal financial reporting to the directors and the adequacy of the District's affiliation agreements.
.55 The Provincial Auditor Act requires us to do additional audit work when we are unable to rely on the reports of an appointed auditor. Our additional work consisted of reviewing the District's internal financial reports, affiliation agreements and discussions with management.
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1998.05.13 |