Healthcare Reform and New Economic Policies, Part 5
A personal experience: Incompetence & Corruption of Healthcare Payroll.

November 22, 1998
By: Mario deSantis

In the late 70s, while Administrator of Employee Benefit Plans with the Saskatchewan Health-Care Association(1) (SHA), I came to know that Saskatchewan rural hospitals were funded on a line by line basis and that the related budgets made reference to the employment of a specific number of employees for each department or functional area. Further, I came to know that the processing of computerized payroll(2) was funded as a direct expense, irrespective of the number of people employed in the payroll department, as long as hospitals were rated as having 75 or more acute beds. Many administrators of smaller hospitals were complaining that this rule was not fair and therefore I took the initiative to write the paper "Recommendations for a Funding Policy by Saskatchewan Hospital Services Plan to Cover Payroll Computer Services of Smaller Hospitals". In this paper, I pointed out the artificiality of the 75 bed boundary, and I suggested that the funding of payroll administrative expenses for smaller hospitals could be set in terms of dollars rather than directly related to the number of administrative employees.

I separated from SHA in May 1982 and I became interested in healthcare payroll in early 1987 when I computerized the general ledger, payable and reporting functions of Radville Community Hospital and Marian Home, in Radville, through the Bedford(3) bookkeeping package. At this time, we were undergoing the microcomputer revolution and I realized the economics and business potential of implementing decentralized healthcare payroll on a microcomputer platform. My marketing work in the search for a facility willing to implement a decentralized payroll environment came to fruition in 1989 when Mr. Patrick Dumelie, then Director of Administrative Services at St. Joseph's Hospital/Foyer d'Youville in Gravelbourg, happily accepted my work for implementing at a fraction of standard costs computerized accounting through the Quicken & Transfer Utility packages, decided that I become the computer and business consultant for his facility. Payroll accounts for approximately 75% of operational hospital costs, this means that if a facility has an operational budget of 2 (two) million dollars, 1.5 (one and half) million dollars are allocated to payroll; therefore, it is easy to understand that in dealing with healthcare payroll there is zero tolerance for any mistake. We were able to finalize the testing of computerized payroll in late 1990, and in January 1991 St. Joseph's Hospital/Foyer d'Youville became the first facility in the province, and I believe in Canada, to implement a comprehensive decentralized payroll system on a microcomputer platform. St. Joseph's Hospital/Foyer d'Youville was able to manage on-line payroll, and save at the same time thousands of dollars per year. My work in Gravelbourg was completely ignored(4); there was no way to even think of healthcare decentralized payroll in a controlling and autocratic environment. I approached Mr. Bob Mills, Consultant with the Department of Economic Development, and he mentioned that the department has traditionally considered only mega projects and that usually projects costing less than $10,000 are ignored(5). Therefore, under the direction of a traditional leadership, be at SHA or in the Government, healthcare facilities continued their investments into obsolete mainframe computer systems to the extent of using and justifying such systems through the implementation of word processing functions!(6)

The healthcare districts were established in 1993, and therefore there was an understanding that such districts were now empowered to decentralize their healthcare services and be independent of making economic decisions. Healthcare payroll continued to be an expensive nightmare(7) and I focused my interest in this area. I approached Mr. Ron Reavley, Executive Director of Regina Pioneer Village, and with his support I was able to identify the payroll environment of this facility. As a consequence, I simulated few payroll runs for the facility through a customized software package(8). The result of my work was condensed in May 1994 with the paper "Healthcare Microcomputer Payroll through DigiPay: Payroll Simulation for Regina Pioneer Village". Notwithstanding the proven economics of my payroll services, I could not install a new single payroll system throughout the province. In the Fall of 1994, I was told by some healthcare administrators(9) that my business was running out of time since most healthcare districts were signing contracts with the participation of SAHO and HSSG with the specific understanding to implement payroll through the new payroll system "Stargarden", effective January 1, 1995. Stargarden payroll was not implemented on January 1, 1995 and I began again to market my payroll services to the districts(10). In a Spring 1995 meeting with the Provincial Auditor, Mr. Wayne Strelioff, I was reassured that the districts were independent agencies and he encouraged me to market my payroll services(11) before others would do the same. In the Fall of 1995, I came to know that after spending an undisclosed and significant amount of taxpayer money(12), SAHO mothballed the Stargarden payroll project(13) (14). On January 9, 1996 I contacted Mr. Urbanoski, Vice-President Members Services with SAHO, and he stated

Dwain Lingenfelter

that my payroll services cannot be marketed since the districts have contractual obligations to receive payroll services directly through SAHO until 1998(15). In July 1996 I received unequivocal statements from the office of the Honourable Dwain Lingenfelter, Minister of Economic Development, and Mr. Brian Rourke, Chairperson of the Board of SAHO, mentioning that the districts have the individual responsibility to choose any payroll they want(16). In the 1997 Spring Convention of the Saskatchewan Association of Health Organizations, a motion was put forward for the development of a new centralized payroll system at a cost between one and three million dollars(17). These contradictory policy positions with respect to healthcare payroll are evidence of the corrupted behaviour of SAHO; yet this public agency has the nerves to hire private lawyers using taxpayer money and ask that I apologize for my supposed libellous statements(18).

1. The Saskatchewan Health-Care Association (SHA) was absorbed by the Saskatchewan Association of Health Organizations (SAHO) in 1993.

Computerized payroll was provided by Hospital Systems Study Group (HSSG) in Saskatoon. Later, Hospital Systems Study Group changed its corporate structure and was renamed Health Systems Support Group (HSSG). In 1995, HSSG was absorbed by the Saskatchewan Association of Health Organizations (SAHO).
3. The Bedford software was later bought by Computer Associates and was to become the blueprint of today's Simply Accounting package.
An extract of the paper "A Microcomputer Approach to Hospital Payroll", October 24, 90. Submitted to Honourable George MacLeod, Minister of Health. By Mario deSantis.
Items discussed at the meeting in Gravelbourg on March 4, 1992 between Mario deSantis, Patrick Dumelie, and Bob Mills.
"Economics of the new Health Services Support Group (HSSG) payroll system through Stargarden software". By Mario deSantis, January 24, 1995.
7. Healthcare payroll is currently run on an obsolete 20 year old centralized mainframe system.
This customized payroll package was going to be marketed under the tradename "DigiPay". This package was able to retain a comprehensive payroll database including any detailed record of any payroll pay to any employee. Further, this package included the feature to account for dozens of payroll fields; that is any type of formula based deductions, benefits and accruals.
These administrators included Mr. Patrick Dumelie, Director of Administrative Services at St. Joseph's Hospital/Foyer d'Youville in Gravelbourg, and Mr. Brian Martin, Administrator of Heritage Manor in Kindersley.

"Project: Implementation of Healthcare Payroll through DigiCare Systems Group", May 12/1995. By Mario deSantis. Submitted to Mr. Bob Mills, Sector Consultant with Economic Development, and to Mr. Vince Urbanoski, Vice-President with SAHO.
Letter dated July 20, 1995 from Mario deSantis to Mr. Vince Urbanoski, Vice-President of SAHO. Re: Economics of Healthcare Payroll through Stargarden Software.

There are sources indicating that 4.5 million dollars were allocated for the programming of this contractual Stargarden project. At this time of writing, SAHO has no clue of the notion of marginal cost, value added or what a global economic system means. The above mentioned cost of 4.5 million dollars doesn't include the mobilization of internal resources.
Letter dated January 25, 1996 from Mario deSantis to Mr. Vince Urbanoski, Vice-President of SAHO. Re: Macro Economics of Healthcare Payroll.
Letter dated March 19, 1996 from Mario deSantis to Mr. Vince Urbanoski, Vice-President of SAHO. Re: Healthcare Payroll.
15. Letter dated January 10, 1996 from Mario deSantis to Patrick Dumelie. Re; Saskatchewan Healthcare Payroll.
Letter dated July 26, 1996 from Mario deSantis to Chris Dotson, Ministerial Assistant with the Office of the Honourable Dwain Lingenfelter, Minister of Economic Development.
Letter dated April 28, 1997 from Mario deSantis to all Chairpersons and CEO of Saskatchewan District Health Boards.
Letter dated May 7, 1997 from McKercher McKercher & Whitmore directed to DigiCare Systems Group, attention of Mario deSantis.