ehealth-sign

EHealth Ontario became embroiled in a scandal focusing on more than $5 million in untendered contracts. ((CBC))

The revolving door at eHealth Ontario has been spinning quickly since the provincial agency was first fashioned out of the rubble of its failed predecessor.

Premier Dalton McGuinty proclaimed the agency's creation last September and put Dr. Alan Hudson and Sarah Kramer at its helm, in hopes the two health-care problem solvers could turn the organization around.

But seven months later, Kramer became the first to take the fall for a mounting scandal focused on more than $5 million worth of untendered contracts, conflicts of interest and anger over high-price consultants nickel-and-diming taxpayers.

The agency's goals were lofty: create an electronic health record system by 2015, cut emergency wait times and increase patient safety.

Here's a rundown of the predecessor organization, key players and the companies who received untendered contracts.

First attempt

smart-systems-logo

Smart Systems for Health Agency, or SSHA, started operating in 2003 but was folded into eHealth five years later. ((CBC))

Before there was eHealth Ontario, there was Smart Systems for Health Agency. It went to work in 2003 with the goal of making a "secure, integrated, province-wide information infrastructure" to allow electronic communication between health-care providers.

But three years into operations, SSHA had little to show for its work and criticism began to mount. A scathing 100-page operational review by consulting firm Deloitte & Touche LLP in late 2006 detailed the agency's troubles as the following:

  • "Little or no meaningful progress" on creating an emergency health record.
  • Not well regarded in the health-care community and lacking strategic direction.
  • Privacy policies are "incomplete and not widely understood."

At its core, the agency was also struggling with the transition from being a consultant-based organization to an employee-based one.

In early 2007, Ontario's information and privacy commissioner also dug into the SSHA, criticizing it yet again for privacy and security issues.

Over the following months, the embattled agency sought to clean up the mess and get on with the task at hand. But in late 2008, McGuinty's Liberal government decided to scrap SSHA and start over with a new agency.

Dr. Alan Hudson

Days after the creation of eHealth, McGuinty placed one of his key health-care problem solvers in one of the lead roles on Sept. 29, 2008.

Dr. Alan Hudson accepted the volunteer position of chair of the nascent agency's board of directors. The neurosurgeon had an impressive resume: he'd overseen a restructuring at Cancer Care Ontario, served as head of Toronto's University Health Network and was in charge of the province's strategy to reduce wait times for key surgeries.

But with eHealth that steady record of excellence unravelled. As board chair, Hudson stood accused of signing off on untendered contracts and of having questionable connections to the firms that secured those agreements.

On June 17, 2009, he stepped down. A day later, he opened up to the media after weeks of silence. The neurosurgeon told the Globe and Mail that mistakes had been made, but he'd never told anyone to break the rules.

He added that he wished the agency had moved at a slower pace in its attempt to finish an "enormous task," focusing on one task at a time rather than all three of the agency's priorities: a diabetes registry, an eHealth portal and issuing prescriptions electronically.

Sarah Kramer

sarah-kramer

Sarah Kramer was the CEO and president of eHealth Ontario. ((CNW Group/eHealth Ontario))

When she was first hired in November 2008 as eHealth Ontario's CEO and president, Sarah Kramer was touted as a "veteran health-care innovator" who could unravel the agency's tangled mess with her "unwavering, passionate" commitment to concrete results and deep knowledge of health-care systems.

Hudson, a close colleague who'd worked with Kramer at Cancer Care Ontario, called her a "practical, results-oriented, health-care leader." The accolades were plentiful.

It all meant little when documents obtained by the opposition Progressive Conservatives through freedom-of-information requests found questionable expenditures.

A further CBC News investigation turned up more than $5 million in untendered contracts and suspected personal links between the agency and consulting agencies awarded lucrative contracts.

Kramer came under specific scrutiny for signing off on some of the contracts, while Hudson signed others. She also was lambasted for $51,500 spent on her office renovation, her annual salary of $380,000, plus a $114,000 bonus that was twice the agency's allowable rate.

After seven months on the job, Kramer was shown the door on June 7 in the midst of battling the scandal. She walked away with a severance package worth 10 months' salary, or about $317,000.

Even after the scandal began to subside, Hudson lauded Kramer's abilities but noted the enormous weight and urgency of the project may have caused her to make mistakes.

The consulting firms

Three companies in particular came under the media's microscope during the eHealth scandal, as did a former provincial deputy minister for a verbal agreement she had with the agency. Courtyard Group:

courtyard-group

Courtyard Group, a management consulting firm, received three untendered contracts worth nearly $2 million from eHealth Ontario during its first months of operations. ((CBC))

This management-consulting firm received three untendered contracts worth nearly $2 million from eHealth during the provincial agency's first months of operation:

  • A $915,160 contract dated Oct. 24, 2009, for help with strategy, executive assistance and transition support.
  • A $519,760 contract was awarded on Jan. 6, to manage the diabetes project.
  • On Jan. 30, eHealth granted an extension of the first contract, worth $562,296

The sole-sourced contracts came under a cloud when CBC News discovered personal links between Courtyard and two members of the board, which had approved the hefty first contract.

Sources described Hudson as an old colleague and mentor to Michael Guerriere, a founding partner at Courtyard. Guerriere was also related through marriage to another eHealth board member, Matthew Anderson.

Guerriere's ties to Hudson dated back at least to the mid-1990s, when the neurosurgeon recruited him to join the University Health Network. Hudson was widely believed to be grooming Guerriere to succeed him as head of the organization. In the end, another person got the job and Guerriere left to help form Courtyard.

While Courtyard was on contract with eHealth, Guerriere also served temporarily as the provincial agency's senior vice-president of strategy, billing more than $3,000 a day in his capacity as a consultant. The work also granted him access to overseeing Courtyard's work and advising Kramer on the agency's future consulting needs.

Guerriere's ties also extend to another company that won sole-sourced contracts from eHealth - his wife, Miyo Yamashita, heads Anzen Consulting.

Anzen Consulting

This consulting firm specializing in privacy issues received an untendered contract on Oct. 6, 2008, worth $268,000 to develop a transition communications plan for eHealth.

The firm's founding partner, Yamashita, who charges about $300 an hour, billed the agency for such tasks as reading New York Times articles obtained from her husband, Guerriere, reviewing a holiday voicemail message and debriefing during a subway ride.

Accenture Inc.

A global consulting firm, Accenture received three untendered contracts worth nearly $1.1 million during eHealth's transition period to work on the organization's design, work stream and develop new mail and network services.

Accenture's senior partner Will Falk had connections to Kramer through his wife, Kate Filion, a childhood friend of the former eHealth CEO. Falk served as a personal reference for Kramer when she applied for the eHealth job in late 2008.

Two of the contracts secured by Accenture were signed on Oct. 29, 2008, during a period of time when Kramer hadn't assumed her eHealth post but was advising the board in an unofficial capacity on contracts. The third contract was granted in January.

Penny Ballem

Questions arose within eHealth Ontario when the agency suddenly received a $30,000 bill for Ballem's 78 hours of work. Unbeknownst to some, Kramer had made a verbal agreement with Ballem, a former deputy health minister in B.C., to work on the agency's diabetes registry.

The verbal contract was expected to last for months if not years, but ended abruptly when Ballem got an offer she couldn't refuse to serve as Vancouver's new city manager starting Dec. 12.

Ballem said such verbal contracts are not unusual and noted the risk was hers. And like others, she questioned whether eHealth took on too much, too fast.

"They were trying to make the best choices they could to actually deliver the product and meet those aggressive targets that the government had set for them," Ballem told CBC News.

McGuinty administration

caplan-cp-6925052

Premier Dalton McGuinty shakes hands with David Caplan after he was sworn in as health minister in June 2008. Caplan resigned in October 2009. ((Adrian Wyld/Canadian Press))

Even in the beginning, Premier Dalton McGuinty acknowledged, "There are some facts that have been brought to the fore which do not sit easy with us."

Almost from the get-go, opposition parties were calling for the resignation of Ontario Health Minister David Caplan.

But McGuinty stood by his minister, even when he shuffled his cabinet.

Caplan resigned on Oct. 6, the day before a scathing report tabled by the province's auditor general.

Jim McCarter

Ontario Auditor General Jim McCarter began examining the finances of eHealth and its predecessor, SSHA, in the fall of 2008 and released his findings a year later.

His report was a bombshell, claiming successive Ontario governments had wasted $1 billion in taxpayer money. 

McCarter's report also said the board of directors at eHealth Ontario felt it had little power over Kramer, the former CEO, because she had been hired by Hudson "with the support of the premier." That, said McCarter, gave Kramer the impression she had approval to ignore normal procurement procedures.

Just minutes after the release of the report, McGuinty announced that Children and Youth Services Minister Deb Matthews would take over the health portfolio.