As B.C. readies $2.5B transfer to First Nations Health Authority, questions arise about missing $4M
National Post
Brian Hutchinson | Jan 21, 2013 8:29 PM ET | Last Updated: Jan 22, 2013 8:40 AM ET
More from Brian Hutchinson | @hutchwriter
More from Brian Hutchinson | @hutchwriter
Ben Nelms for National Post
First Nations Health Authority CEO
Joe Gallagher is pictured in the offices of the FNHA in West Vancouver,
British Columbia on January 18, 2013
VANCOUVER — Health Canada insiders
are raising concerns about millions of dollars in federal funds
provided to a First Nations health organization that is set to take over
responsibility for all aboriginal health services in British Columbia.
The First Nations Health Authority (FNHA) will soon replace Health Canada in delivering aboriginal health care in B.C., an unprecedented transfer of power and money that includes $2.5-billion in government payments over the next five years.
But the FNHA has already directed millions of dollars to programs that lack clear objectives, according to Health Canada documents obtained by the National Post. Numerous financial “discrepancies” and “differences” have also been identified.
The FNHA has received more than $80-million in start-up funds from the federal and provincial governments since 2007. To date, its role has been limited to building its own operations, holding community engagement sessions with B.C.’s 203 aboriginal bands and collaborating with B.C.’s regional health authorities on health services it will need to deliver after the historic transfer.
Internal Health Canada documents report that the organization has directed amounts as large as $5-million to programs with “no clear rational [sic],” and for activities “to be determined” later. The documents include a three-page regional-evaluation review written in October and forwarded to senior department officials in Ottawa.
The review also identified large amounts of unexplained “surplus” amounts left over from years of start-up funding, money that was supposed to be spent on health-related programs and consultations.
Meanwhile, more than $4-million received by the FNHA since 2007 could not be accounted for at all, says the Health Canada review.
The federal government announced 15 months ago that it would “transfer its programs and resources for First Nations health in B.C. to the First Nations Health Authority,” which operates out of an office tower in West Vancouver.
The government also said it “will provide up to $17-million to support B.C. First Nations in preparing for the transfer.” Ottawa had already given the FNHA $39-million to help get it running and create its own health-related programs. The B.C. government has to date contributed $20-million to the FNHA in seed money, out of a total provincial commitment of $100-million.
Health Canada currently funds and delivers comprehensive health-care coverage to approximately 127,000 status Indians in B.C., including $180-million worth of annual, non-insured health benefits such as dental care, vision care, drugs, counselling and medical-related travel.
First Nations groups in B.C. say they are best suited to direct health-care policy and services for aboriginals in the province. “That’s good in theory,” says one former Health Canada executive in B.C., “but the devil is in the details.”
The transfer from Health Canada to FNHA is to be completed in October. Total government funding to the FNHA is to increase 5.5% annually over the next five years, from $386-million in the first year to $482-million in 2019. If it proves to be a success, the initiative could lead to similar arrangements with First Nations across Canada. About 200 Health Canada employees in B.C. will lose their jobs within the department later this year; most will be offered work with the FNHA.
“People [within Health Canada’s B.C. branch] aren’t happy with the direction that’s been chosen,” says Jim Rogers, Health Canada’s regional dental officer for First Nations and Inuit Health. “This hasn’t been a transparent process. I’m very concerned about the way we’re moving forward with the delivery of health care for First Nations, but it’s politically incorrect to ask questions. I’m glad someone is finally asking them.”
A retired Health Canada executive who examined the department’s October 23, 2012 internal review says it presents “a real worry. This [FNHA] is an organization being groomed to take over a huge chunk of money, and in the run-up, they aren’t dotting the I’s. It’s not supposed to go this way.” The FNHA currently has a staff of about 60. It spent almost half of its $17-million budget last year on community projects, meetings and travel.
The FNHA “confirmed” it held as “surplus” $33-million in government
funding meant for programs in its start-up phase, says the Health Canada
report. “However, it should be noted that currently no documentation as
to the reason for the surplus is on file,” it reads. “The FNHA is in
the process of providing us with a surplus usage plan.”
An FNHA spokesman said in an email Monday that the organization uses a different accounting method than Health Canada, suggesting that this may have caused confusion about “surplus” funds. The FNHA expects to have only a $1.8-million surplus when its current fiscal year ends in March.
Health Canada initially offered no explanation for the $4-million accounting discrepancy also identified in its review. Requests to interview department officials involved with the FNHA transfer were ignored.
However, in an email exchange within the department, leaked to the National Post, Health Canada officials discussed offering this proposed response to the National Post’s inquiries: “There are no funding discrepancies between Health Canada and the First Nations Health Authority. Health Canada has been working with accountants from both organizations and the $4 million in question has now been reconciled.”
In the same e-mail exchange, a regional Health Canada executive wrote that he was still “confirming the reconciliation of the 4 million which I hopefully get by tomorrow.”
“I would not be so specific regarding discrepancies,” advised a Health Canada communications advisor, according to the emails. “Suggest I would just indicate that discrepancies identified have been reconciled (I have modified the proposed message).”
“There has never been an issue of misappropriation of funds or unaccounted expenditures,” reads Health Canada’s response, “but rather one of properly reconciling funds between two organizations who transferred funding and responsibilities. Independent auditors reported no concerns with the quality of documentation or accounting procedures and systems for either organization. Accountants from both organizations have been working on a detailed reconciliation report and Health Canada was recently advised by the First Nations Health Authority that the previously identified differences have been reconciled.”
But this came as news to the FNHA’s chief executive officer, Joe Gallagher.
He told the National Post in an interview that Health Canada has never raised any issues with him regarding a $4-million accounting variance.
“Health Canada might have been talking to my director of finance,” he said, “but she hasn’t talked to me about us having an issue.”
Doug Kelly, grand chief of B.C.’s Sto:lo Tribal Council also chairs the First Nations Health Council, which advocates for the FNHA. Mr. Kelly called the multi-billion dollar transfer of responsibilities “a friendly takeover” but acknowledged that some Health Canada staff aren’t happy about it. “The government of Canada is very accustomed to doing business in a certain way,” he said. “They don’t know how to deal with us.”
He said the FNHA will do a better job ensuring that proper health care is delivered to B.C. aboriginals, about 60,000 of whom live on reserves. “You’ve got a service model that will change over time,” he said. Under the present system, services are not delivered “effectively and consistently at a high standard to First Nations…. I’m proud of the work we’re doing. We’re leading the way.”
bhutchinson@nationalpost.com
The First Nations Health Authority (FNHA) will soon replace Health Canada in delivering aboriginal health care in B.C., an unprecedented transfer of power and money that includes $2.5-billion in government payments over the next five years.
But the FNHA has already directed millions of dollars to programs that lack clear objectives, according to Health Canada documents obtained by the National Post. Numerous financial “discrepancies” and “differences” have also been identified.
The FNHA has received more than $80-million in start-up funds from the federal and provincial governments since 2007. To date, its role has been limited to building its own operations, holding community engagement sessions with B.C.’s 203 aboriginal bands and collaborating with B.C.’s regional health authorities on health services it will need to deliver after the historic transfer.
Internal Health Canada documents report that the organization has directed amounts as large as $5-million to programs with “no clear rational [sic],” and for activities “to be determined” later. The documents include a three-page regional-evaluation review written in October and forwarded to senior department officials in Ottawa.
The review also identified large amounts of unexplained “surplus” amounts left over from years of start-up funding, money that was supposed to be spent on health-related programs and consultations.
Meanwhile, more than $4-million received by the FNHA since 2007 could not be accounted for at all, says the Health Canada review.
The federal government announced 15 months ago that it would “transfer its programs and resources for First Nations health in B.C. to the First Nations Health Authority,” which operates out of an office tower in West Vancouver.
The government also said it “will provide up to $17-million to support B.C. First Nations in preparing for the transfer.” Ottawa had already given the FNHA $39-million to help get it running and create its own health-related programs. The B.C. government has to date contributed $20-million to the FNHA in seed money, out of a total provincial commitment of $100-million.
Health Canada currently funds and delivers comprehensive health-care coverage to approximately 127,000 status Indians in B.C., including $180-million worth of annual, non-insured health benefits such as dental care, vision care, drugs, counselling and medical-related travel.
People [within Health Canada’s B.C. branch] aren’t happy with the direction that’s been chosenStatus Indians in B.C. do not pay medical premiums of any kind.
First Nations groups in B.C. say they are best suited to direct health-care policy and services for aboriginals in the province. “That’s good in theory,” says one former Health Canada executive in B.C., “but the devil is in the details.”
The transfer from Health Canada to FNHA is to be completed in October. Total government funding to the FNHA is to increase 5.5% annually over the next five years, from $386-million in the first year to $482-million in 2019. If it proves to be a success, the initiative could lead to similar arrangements with First Nations across Canada. About 200 Health Canada employees in B.C. will lose their jobs within the department later this year; most will be offered work with the FNHA.
“People [within Health Canada’s B.C. branch] aren’t happy with the direction that’s been chosen,” says Jim Rogers, Health Canada’s regional dental officer for First Nations and Inuit Health. “This hasn’t been a transparent process. I’m very concerned about the way we’re moving forward with the delivery of health care for First Nations, but it’s politically incorrect to ask questions. I’m glad someone is finally asking them.”
A retired Health Canada executive who examined the department’s October 23, 2012 internal review says it presents “a real worry. This [FNHA] is an organization being groomed to take over a huge chunk of money, and in the run-up, they aren’t dotting the I’s. It’s not supposed to go this way.” The FNHA currently has a staff of about 60. It spent almost half of its $17-million budget last year on community projects, meetings and travel.
Ben Nelms for National Pos tFirst
Nations Grand Chief Doug Kelly is pictured in the offices of the FNHA
in West Vancouver, British Columbia on January 18, 2013
An FNHA spokesman said in an email Monday that the organization uses a different accounting method than Health Canada, suggesting that this may have caused confusion about “surplus” funds. The FNHA expects to have only a $1.8-million surplus when its current fiscal year ends in March.
Health Canada initially offered no explanation for the $4-million accounting discrepancy also identified in its review. Requests to interview department officials involved with the FNHA transfer were ignored.
However, in an email exchange within the department, leaked to the National Post, Health Canada officials discussed offering this proposed response to the National Post’s inquiries: “There are no funding discrepancies between Health Canada and the First Nations Health Authority. Health Canada has been working with accountants from both organizations and the $4 million in question has now been reconciled.”
In the same e-mail exchange, a regional Health Canada executive wrote that he was still “confirming the reconciliation of the 4 million which I hopefully get by tomorrow.”
“I would not be so specific regarding discrepancies,” advised a Health Canada communications advisor, according to the emails. “Suggest I would just indicate that discrepancies identified have been reconciled (I have modified the proposed message).”
I would not be so specific regarding discrepancies,” advised a Health Canada communications advisor, according to the emails. “Suggest I would just indicate that discrepancies identified have been reconciled (I have modified the proposed message)”On Monday, when the department finally issued its formal, written response to the National Post’s inquiries, there was no mention of the $4-million variation at all.
“There has never been an issue of misappropriation of funds or unaccounted expenditures,” reads Health Canada’s response, “but rather one of properly reconciling funds between two organizations who transferred funding and responsibilities. Independent auditors reported no concerns with the quality of documentation or accounting procedures and systems for either organization. Accountants from both organizations have been working on a detailed reconciliation report and Health Canada was recently advised by the First Nations Health Authority that the previously identified differences have been reconciled.”
But this came as news to the FNHA’s chief executive officer, Joe Gallagher.
He told the National Post in an interview that Health Canada has never raised any issues with him regarding a $4-million accounting variance.
“Health Canada might have been talking to my director of finance,” he said, “but she hasn’t talked to me about us having an issue.”
Doug Kelly, grand chief of B.C.’s Sto:lo Tribal Council also chairs the First Nations Health Council, which advocates for the FNHA. Mr. Kelly called the multi-billion dollar transfer of responsibilities “a friendly takeover” but acknowledged that some Health Canada staff aren’t happy about it. “The government of Canada is very accustomed to doing business in a certain way,” he said. “They don’t know how to deal with us.”
He said the FNHA will do a better job ensuring that proper health care is delivered to B.C. aboriginals, about 60,000 of whom live on reserves. “You’ve got a service model that will change over time,” he said. Under the present system, services are not delivered “effectively and consistently at a high standard to First Nations…. I’m proud of the work we’re doing. We’re leading the way.”
bhutchinson@nationalpost.com
Labels: Aboriginal populations, Canada, Economy, Health
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