AHS chairman faces ouster over refusal to withdraw executive bonuses – Uproar pits health superboard against province

By Jamie Komarnicki and Don Braid, Calgary Herald June 12, 2013 7:05 AM

A high-stakes showdown erupted Tuesday between the Redford government and Alberta Health Services board after directors refused to spike executive bonuses — and the spat is expected to trigger the departure of the superboard’s chair just nine months into the job.

While no formal confirmation of the move came Tuesday, several sources confirmed board chairman Stephen Lockwood is expected to leave the position Wednesday.

It’s unclear whether he’s poised to resign or Health Minister Fred Horne will force him to leave. Horne has scheduled a news conference Wednesday to comment on the situation.

One source said the entire AHS board could be ousted and it’s likely a new chair will be named Wednesday.

Reached late Tuesday, Lockwood said he would comment after today’s developments, “if any” occur.

At a board meeting, Lockwood said he planned to “continue to lead until I don’t think I can be effective, or until I’m asked to depart.”

Observers say the public blow-up between AHS and the Tory government raises new questions about whether political “games” are interfering with the health superboard’s ability to run the medical system.

Opposition critics blasted the board’s decision to shell out pay at risk that could hit $3.2 million to the 99 senior leaders for the fiscal year 2012-13, when other areas such as home care and palliative care are being pinched.

The dramatic situation unfolded rapidly Tuesday when Horne issued a statement just before the AHS board was to hold a news conference on its financial statements, which contain bonus pay information. The minister said the government “cannot and will not accept” the health authority’s decision to award pay at risk.

Horne said the bonuses can’t be awarded at a time when front-line staff such as doctors and teachers are taking wage freezes and directed AHS to rethink the decision.

However, in a board meeting organized on the fly Tuesday afternoon, the AHS directors ignored the directive and approved the organization’s financial statements, including pay at risk.

“Today is not about pay at risk,” Lockwood said. “It’s about an arm’s length relationship between government and Alberta Health Services.”

He noted the payments were first approved by the board in February, and will be eliminated moving forward.

“We’re talking about autonomy and integrity,” Lockwood added.

“It’s about the ability of AHS to operate independently from government.”

Lockwood, president of trucking company Mullen Group, was appointed in September 2012 to a three-year term as AHS board chair. He had previously said the organization will cut executive bonuses in the 2013-14 fiscal year, but it would be unreasonable to eliminate performance pay promised under the terms of the last contract.

Lockwood has in the past called on elected politicians to not interfere with the running of the health system.

However, Horne also announced Tuesday the government would launch a sweeping review of how boards and commissions are run, starting with AHS, to ensure Albertans “can have trust and confidence in the decisions made by boards and commissions.”

The AHS review will be complete by Sept. 1, 2013.

Lockwood shot back that the government already concluded a review of AHS governance last year and called a second report a waste of taxpayer money.

The board chair also openly questioned why the Redford-government directed AHS to hold back on the release of its annual report and financials.

“In my view, good governance and best practice would include releasing documents like that as soon as they’ve been approved by the board.”

A former AHS chief executive ousted amid a political fracas over ER waits in 2010 said the Alberta government is once again trying to meddle where it doesn’t belong.

“It’s obviously political interference,” said Stephen Duckett, whose contract was terminated in November 2010 by the AHS board, under pressure from government.

Pay at risk, a portion of salary that executives must earn based on reaching year-end performance goals, is a clear example of why AHS must be allowed to operate free from politics, Duckett said from Australia.

AHS executives earn salaries based on the mid-range of the scale for similar positions, and the bonus structure ensures Alberta attracts good talent, he said.

“It’s a game isn’t it, that’s being played in the political arena,” Duckett added.

“What is the point of having a board if the minister wants to get involved in decisions at this level, just because of political pressure.”

Duane Bratt, a political science professor at Mount Royal University, said the situation is a no-win for the governing Tories, since it created AHS and appointed the board — and the health authority has been dogged by controversy surrounding executive compensation.

But the optics of allowing the board to give bonuses to its top brass while the medical system is being squeezed “just looks horrid,” he said.

“This is a significant challenge to the government because if they intervene, they did create an arm’s length agency to run health care. And if they don’t, it looks like they have no control over the health-care system,” said Bratt.

Wildrose Leader Danielle Smith said the situation showed Horne had lost control of the health system.

She said he now has two choices: Order the board to cancel the bonuses, or fire the AHS directors.

“Because what we’ve seen here is open defiance. We’ve seen an AHS board that don’t believe they have to answer to anyone,” she said.

With files from James Wood and Chris Varcoe, Calgary Herald.

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