Eastern Health's top executive admitted Tuesday that Newfoundland and Labrador's largest health authority is riddled with inefficiencies, as the organization defended the elimination of more than 550 positions.

President and CEO Vickie Kaminski said an efficiency review that launched in the fall of 2010 led to the revelation of a host of problems, including unnecessary overtime, excessive care for people who didn't need it and questionable costs for cleaning and laundry.

"First and foremost, we discovered that Eastern Health is in the worst performers financially and from an efficiency perspective, anywhere in the country," Kaminski told reporters Tuesday.

[MORE: See a full-length video of Kaminski's news conference.]

Eastern Health will eliminate the equivalent of 550 jobs as part of a sweeping cost-cutting program that will touch almost every aspect of service delivery.

However, the St. John's-based authority says it will be able to pull off the cuts without issuing pink slips to permanent staff, and will emphasize measures that save money without compromising the quality of care.

'We were inefficient and as a result we were wasting human and financial resources'—Eastern Health CEO Vickie Kaminski

"Failure is not an option," Kaminski bluntly told reporters during a news conference Wednesday, as she explained the "high expectations" she has placed on managers to control spending and improve the efficiency of care.

Eastern Health said about 385 of the positions are permanent jobs that will be lost to attrition, while other measures — including reducing hours for temporary workers and spending less on overtime for permanent staff — will add up to the equivalent of the other 165 jobs.

In all, the authority is reducing its workforce spending by $43 million.

The figures matched what the Opposition Liberals had revealed Monday in the house of assembly, in what party leader Dwight Ball described as an attack on public services.

In the house of assembly Tuesday, Health Minister Susan Sullivan said no permanent employees will be laid off.

'We do not have a bottomless trough'

Kaminski said the moves are necessary in the wake of a wide-ranging operational review that found significant cause for concern.

"We do not have a bottomless trough of money available to us," said Kaminski, who noted that the authority nonetheless has received significant spending increases for much of the last decade.

Kaminski said the review found that Eastern Health spends nearly $100 per year to clean each square metre of the floor at the Health Sciences Centre, compared to $119 in Bonavista and a national median cost of $70.

"There's no reason for us to be $30 to $50 more expensive to clean that same metre of floor space," she said. "It tells us that we're overstaffed, that we need to do things differently."

Among other things, the authority is turning over responsibility for a Tim Hortons franchise at the Health Sciences Centre to the private sector. The authority revealed the coffee shop lost about $260,000 last year. Cafeterias will also be fully privatized.

Kaminski at several points referred to the authority's desire to bring spending in line with the budgets in the rest of Canada.

"Caring for an acute care patient, cleaning a hospital room, providing cafeteria services or managing goods and supplies should not cost more here than it does elsewhere," Kaminski said.

"It is the same work in similar environments. The fact that it was costing us a lot more told us we had work to do to improve our operations. We were inefficient and as a result we were wasting human and financial resources."

In the house of assembly, NDP Leader Lorraine Michael said the operational review was not enough, and that an external review — something Michael has proposed for years — is needed for the entire province's health care system.

Premier Kathy Dunderdale mocked Michael's suggestions that the health care system needs more people working in it.

"We have to be responsible," she told the house of assembly.

"We pay more per capita in health care than any other jurisdiction in the country, and what do we hear from the leader of the third party in this house day after day after day? 'Spend more, spend more, spend more, spend more,' Mr. Speaker. It is not fiscally responsible to do so."

Nursing time up, severity of illness not

Eastern Health revealed several of the approaches it will take to save money. Much of the savings are expected to come from bringing nursing hours of care in line with a national benchmark.

The authority said it has seen an increase in the number of its patients who effectively need around-the-clock care, even though there has not been an actual increase in the number of overall patients or the severity of illness.

Eastern Health will also centralize some services, particularly laundry, and by "contracting out non-patient food services."

Health Minister Susan Sullivan insists the spending cuts will not affect the services delivered through Eastern Health, by far the largest of the province's four regional authorities.

With an annual budget of $1.2 billion, Eastern Health has about 13,000 employees and manages hospitals, clinics and community health centres in communities on Newfoundland's Avalon, Bonavista and Burin Peninsulas.

Union leaders did not expect broad losses

Leaders of the key unions in health care system were grim as they emerged from a meeting that detailed expected job losses at the province's largest health authority.

Eastern Health summoned the heads of CUPE, NAPE, the Association of Allied Health Professionals and the Newfoundland and Labrador Nurses' Union to a meeting with president and CEO Vickie Kaminski.

The union leaders revealed nothing about the details when they left.

"This just came out of the blue," said Nurses' Union president Debbie Forward.

Union leaders were told Friday that they were required for an urgent meeting on Tuesday, but were not given advance details.

Forward said while employees knew that Eastern Health was undergoing a budgeting exercise, there was no sense of a broad-based cuts on the horizon.

"No one was really expecting it to come, even though there's been a lot of talk in workplaces around budgets. There's no doubt about that," she said.

With files from David Cochrane and Carolyn Stokes