Former Liberal health minister Michael Murphy defended his record on e-health contracts Thursday.

Murphy's comments follow the announcement that New Brunswick Health Minister Madeleine Dubé has ordered an independent review into the more than 300 contracts awarded in the creation of the e-health system after an internal audit discovered potential conflicts of interest in the way some contracts were managed.

"No minister of this government or any past government can be expected to investigate every company or every individual that works in every corner of the department," Murphy said.

An internal audit prepared by the Office of the Comptroller, which was obtained under the Right to Information Act by CBC News, lists a series of problems encountered with how contracts were awarded and managed within the e-health system.

The comptroller's audit looked at 15 contracts associated with the e-health project that were in place as of April 2009.

The province's health minister has since ordered an independent audit of all the contracts in the program, which amounts to roughly 300.

"It's clean. Everything's been looked at. Controls were put in place, procedures are now established. Tighter evaluation is being done," Dubé said in an interview.

"Those involved are not there. This happened not under my watch, so I can reassure people that e-health is in good shape and we're still going to continue on it."

She pointed out the contracts were signed under Murphy's watch.

"I've looked at the contract that was signed and his signature was always on the bottom of that. So he will have to respond for that. I cannot speak for him,"Dubé told CBC News.

The Office of the Comptroller, which is the government's internal auditor, was checking into the Department of Health when it realized the e-health system was an area it should focus on.

The comptroller's office reviewed the work being done by the branch of the health department that is overseeing the e-health initiative.

The report said the deputy minister of health was made aware of the concerns over conflicts of interest and procurement problems before the comptroller's review started.

Potential conflicts of interest

When assessing the e-health project's structure, the comptroller's office found a number of problems.

For example, external consultants were brought in as project managers and then sat on internal committees.

In those roles, they were able to see invoices and other documents from competing companies, which gave them an unfair advantage in bidding on additional contracts.

The audit says there were, "benefits to contractors beyond their remuneration for services provided."

Murphy said stricter laws and regulations would avoid such problems, though the audit found Health Department employees weren't even aware of existing rules.

He said he remembers telling staff the rules applied to consultants.

"They would be screened. I don't know in what specific fashion, but they would be screened so there would not be a conflict."

Murphy said Thursday the problems that happened while he was minister show the need for greater transparency in government.

E-health history

The e-health system was the project led by former health minister Michael Murphy.

mi-nb-murphy-ehealth-250

Michael Murphy, the former health minister, is shown releasing the details of the e-health program in 2007. (Govermment of New Brunswick)

At the heart of the project was the one-patient-one-record system.

The idea was that information about a patient — including prior medical history, medications they are taking, prescriptions they should not be taking — would be on one record that could be accessed anywhere in the health system.

Under the existing system, if a patient goes to a hospital those health professionals do not have access to the person's information that is held by their family doctor.

If those health records are needed, a doctor's office would have to fax the hospital the patient's records, which is not an efficient process.

The New Brunswick government said moving to the electronic patient record system would be more efficient, cut down on costs and deliver services more quickly.

The first phase of the project is finished and is being piloted in some hospitals in the province. Inside a hospital, a single patient record exists that shows lab results, MRI images, and emergency room visits, etc.

Contract cost increases

A number of external companies were working on the e-health project, including CGI, a national technology company based in Montreal but with offices in New Brunswick. Accreon, a Fredericton-based technology company, is working in partnership with Make Technologies, a Vancouver-based company.

Summary of audit recommendations

  • Employees should advise senior officials of any conflicts of interest.
  • Managers and directors should familarize themselves with the definition of an "apparent conflict of interest."
  • Contractors should not hold management positions within the department. When unavoidable, they should be restricted in ability to access financial information of competitors.
  • When contractors are sitting on committees, they should not take part in awarding of contracts.
  • Contractors should divulge business relationships with other contractors.
  • If a project manager or a member of a steering committee is associated with a company, the department should refrain from hiring other employees from the company on the same contract.
  • Contract managers should follow the Public Purchasing Act.
  • A purchase order should be obtained before making any payments and the value should not be exceeded.
  • A signed statement of work should be obtained before a project is started.
  • When projects are signed, only the provincial government's contracts should be used.

The Department of Health redacted all of the names of the companies and consultants that were being discussed in the audit. Officials from CGI and Accreon did not return calls for comment.

For instance, one contract for $395,000 was increased by $150,000 with no new purchase order and the contract later increased again by $1.45 million.

Another contract, which was for an upgrade of the Medicare billing system for doctors, was worth $3.1 million originally and then it was increased to $6.9 million.

This project's increase was due to cost overruns but the comptroller said the consultants underestimated the cost of the project and should have absorbed the extra cost instead of the taxpayer.

A third contract was signed without proper approval for $24,000 for three and a half months back in early 2007. That contract has been extended several times and is still going on now. The cost has reached $463,000.

Another contract was awarded without a competitive tendering process. The audit found the the steering committee cited an "absence of competition."

However, the comptroller's audit said there were other qualified companies and the Department of Health did not search hard enough for other companies interested on bidding on the project.

The comptroller's audit concluded the consultants were in a conflict-of-interest, or an apparent conflict of interest.

In the case of the e-health contracts, the consultants' roles as project managers, and on steering committees, gave them the ability to guide more contracts their own way.

The overall e-health initiative is still on-budget at $45 million; some of the funding comes from the federal government. The project is actually $840,000 under budget.

The largest cost overrun so far was the contract for the Medicare billing upgrade, which surpassed its initial budgetary target by $3.8 million.

Other projects, however, were under-budget so the Department of Health was able to move some money saved there to make up for the overrun.

Audit recommendations

A series of changes have been put in place since the comptroller's audit was finished.

The external consultants are no longer allowed to attend meetings or take part in discussions where their competitors' information is discussed.

As well, if a company is hired as project manager, it can no longer bid on other contracts that come under that project.

Further, the two consultants who were acting as project managers are no longer working on the project.

Audit into E-health contracts