The Eagle Has Landed–in the War Zone

Dr Chris Eagle has just landed the most dangerous job in Alberta.  He’s the new President and CEO of Alberta Health Services (AHS).  He will serve a 5 year term commencing on Apr 1, 2011—assuming he survives that long.  He’s been the Acting President and CEO since the unceremonious termination of his predecessor, Dr Stephen Duckett, in Nov 2010.  Throughout that time Dr Eagle has kept a low profile.  The health minister describes him as “thoughtful, engaging and responsive”*.  He’d better be “shrewd, resourceful and politically savvy” if he’s to have any chance of survival in the minefield known as AHS.  Why?  Because hovering over AHS like an ominous cloud is the health minister—Mr Zwozdesky.

To better understand the challenges Dr Eagle will be facing, we need to examine the political and legislative web underpinning healthcare services in Alberta.  Healthcare services are delivered via 2 interlocking channels:  (1) the Dept of Health and Wellness under the leadership of the health minister who is directly accountable to the Premier (and presumably the people of Alberta) and (2) AHS, the province-wide health region under the leadership of Dr Eagle who is directly accountable to the AHS Board of Directors, which is directly accountable to the health minister.  All roads lead to the politician, Mr Zwozdesky.

Mr Zwozdesky describes the relationship between the Dept of Health and Wellness and AHS as follows:  the Dept of Health and Wellness is the strategic arm of the government, responsible for policy, strategic direction, global budgets and physician’s compensation.  “Integral to that is the leadership that we provide for the entire government with respect to health and wellness…and that trickles down to our delivery arm, which is Alberta Health Services.  They are the delivery arm.  So we have a strategic arm, a policy arm—that looks after legislation, regulation and so on—and we have a delivery arm, that then puts it all into effect”.**  The brains and the brawn, if you will.     

To his credit, Mr Zwozdesky is working hard to enable the “delivery arm” to deliver.  Of the $14.9 billion budget allocated to healthcare services, $9.6 billion is going directly to Dr Eagle and AHS as base operating costs.  These costs include:  acute care services, support and administration services, diagnostics and therapeutic services, continuing care services, and community health.

What’s interesting about this $9.6 billion allocation is that not one of these costs is subject to Legislative scrutiny.  In fact, there are only 6 lines dealing with AHS in the budget, which apparently is 4 more lines than last year.*** In other words, the health minister has free rein to spend $9.6 billion in taxpayer dollars to deliver healthcare anyway he wants to.

Given the lack of Legislative oversight of the AHS budget, one must rely on the Auditor General’s audit process to ensure that the money is properly spent.  Unfortunately, the Auditor General lacks the power to force the government to comply with his audit findings.  It recently came to light that the government ignored 53 audit recommendations (about one half directed to the Dept of Health and Wellness and the other half directed to AHS) for as long as 7 years.  Mr Zwozdesky’s excuse is that these things take time.****

Bottom line:  the Dr Eagle is accountable to no one but Mr Zwozdesky and Mr Zwozdesky is clearly not accountable to the Auditor General or the people of Alberta.  Compare this to the usual CEO/Board of Directors relationship in the real world (yes, I know that politics is not the real world but we have to start somewhere, don’t we).

A CEO is accountable to a number of stakeholders.  First he’s accountable to the shareholders who invest in his company.  Here the equivalent would be the Alberta taxpayers who are coughing up $9.6 billion this year to fund AHS activities.

Second, he’s accountable to his Board of Directors and their outside auditor.  Here the AHS Board is made up of loyal Conservatives, appointed at the pleasure of the health minister, who are incapable of exercising the slightest shred of good corporate governance without his permission.  (You’ll recall that 4 board members resigned to protest the health minister’s precipitous dismissal of Dr Duckett).  We’ve already discussed the utter lack of oversight from the Auditor General.

Third, a CEO is accountable to his employees.  AHS employs 90,000 people, including the 6500 doctors urging the government to call a public inquiry into the culture of intimidation.  Dr Eagle’s response to this outcry has been to repeat the party line—the Health Quality Council review is sufficient—clearly demonstrating that his accountability to the health minister trumps his accountability to his employees.

So where does this leave Dr Eagle?  Well, he must deliver the 5 Year Health Action Plan (he’s already late out of the starting block) to a frustrated and angry population, using a disillusioned and demoralized work force, all the while not uttering a word that upsets his political masters.  The difficulty in working to a set of political goals instead of solid business principles is that political goals shift with political expediency and unless Dr Eagle stays in lockstep with Mr Zwozdesky he won’t know he’s stepped on a land mine until it explodes.

In return for taking this risk, Dr Eagle will receive base pay of $580,000 plus a maximum performance bonus of $145,000—a total of $725,000/year.  This is about 9% more than his ill-fated predecessor, the quirky Dr Duckett, and in my opinion nowhere near enough to constitute the appropriate level of danger pay.  So who do you think Dr Eagle will listen to—his stakeholders or the man holding the $9.6 billion cheque?

*AHS News Release, Apr 14, 2011

**  Hansard, Apr 13, p 645

***Hansard, Apr 13, p 651

.****Hansard Apr 18, p 689

***** Hansard, Apr 18, p 690.  

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