The Cameron inquiry heard testimony Thursday of drastic budget cuts at what would become part of Newfoundland and Labrador's largest health authority, now at the centre of public medical scandal.

Dr. David Haegert, a pathologist who was in charge of the pathology labs in the Health Care Corporation of St. John's in the mid-1990s, testified that his boss at the time, former chief executive officer of Eastern Health, George Tilley, told him in 1996 that he had to find $1 million in savings from the laboratory budget.

Haegert told the inquiry he felt the labs were an easy budget-cutting target, because they were costly to run, but the least visible to the public.

"Laboratory medicine is somewhat removed from patient care," Haegert said. "Pathologists don't think that, and obviously the commission of inquiry clearly is based on the fact that it is involved in patient care, but I think there was the mindset that this was more like housekeeping or laundry services and this was an area where you could save money."

Haegert said his lab laid off managers and did not replace people who retired.

Haegert testified that Tilley seemed disappointed when he was unable to reach the $1 million target and only cut $700,000.

The Health Care Corporation of St. John's was later merged with other health authorities in eastern Newfoundland to make the giant authority now at the centre of the inquiry, Eastern Health.

Tilley took responsibility

Tilley abruptly resigned from Eastern Health in July 2007 after being under fire for weeks over how the authority handled inaccurate laboratory tests involving hundreds of breast cancer patients.

Tilley testified at the public inquiry in May. At the time, he took responsibility for the haphazard way in which cancer patients were informed of the botched tests. He told Justice Margaret Cameron that he wished things had been done differently with what he suggested was an overwhelming problem.

Some patients were not informed by their doctors or the health authority that there had been a problem with testing spanning several years. Some patients admitted they learned of the mistakes through the media.

The public inquiry headed by Cameron is investigating how 386 breast cancer patients received faulty hormone receptor tests, meant to determine an appropriate course of treatment, between 1997 and 2005.

The inquiry has heard testimony that senior management at Eastern Health realized there was a testing problem in the summer of 2005. The problems began to surface in media reports in 2006.