'Excessive' pay of Covenant Health executive questioned

Covenant Health eliminated Chief Executive Officer Patrick Dumelie’s bonus pay but sharply increased his base salary giving him total compensation of more than $800,000 a year, a CBC News investigation has found.

Health justify, at a time when we are dealing with some austerity across the province in human services, a nearly $150,000 pay increase, over last year?” Liberal health critic Dr. David Swann asked. “This is unacceptable.”

CBC News reported a year ago that Dumelie received a 24-per cent bonus on top of his base salary and benefits, a boost of $112,500 that bumped up his total compensation to $836,000.

Covenant Health’s financial statements for the past fiscal year show that figure remains largely unchanged. Dumelie did not receive a pay-at-risk bonus for the last year, but his compensation was $826,000, the result of a rise of $147,000 in his base salary.

Covenant Health receives the majority of its funding from Alberta Health Services (AHS). Covenant Health’s budget for the past year was roughly $768 million, while the budget for AHS exceeded $12.6 billion. Despite this difference in scale, Dumelie is paid more than his AHS counterpart, Chris Eagle, who earned $794,000 last year.

Dumelie also earns more than his counterparts at comparably sized health-care organizations in Western Canada. Saskatoon Health Region has a $1 billion budget. It paid its CEO about $386,000, less than half of Dumelie’s pay. Vancouver Island Health Authority’s budget is more than $2 billion. Its CEO is paid $418,000.

Covenant Health refused interview requests from CBC News. But in a statement issued on behalf of board chair W. John Brennan, Covenant said “attracting senior health executives is a highly competitive undertaking and to attract the quality of leadership needed requires adequate compensation within market conditions.”

Covenant also said executive compensation is reviewed by external consultants and “the compensation of every senior executive falls either within or below established compensation bands” for health-industry executives.

Health Minister Fred Horne called the topic of executive pay “a very real issue,” one that AHS administrator Janet Davidson is currently reviewing. Horne said he expects to receive her report sometime next month.

"These dollars, they all come from the same place - the taxpayer,” he said. “So it's important that they're reasonable numbers, that there are guidelines that are written down and that they apply to everyone. And that's what I'm going to make sure happens."

Created in 2008, Covenant Health is a Catholic health-care organization, which operates 18 hospitals and care facilities across the province. In Edmonton, these include the Grey Nuns Community Hospital and the Misericordia Community Hospital. It also operates the Banff Mineral Springs Hospital.

“I don’t think anybody is against people getting paid for the work that they do,” said Sandra Azocar, executive director of the health care advocacy group Friends of Medicare. “$826,000 seems a little bit excessive, when we’re talking about our public health dollars.

“If it was a corporation and the corporation wanted to pay their private, for-profit CEO [that], great, that is all the power to them,” she continued. “But this is part of our social program. And it is funded by our public health dollars.”

Alberta Health Minister Fred Horne fired the entire AHS board of governors in June after it refused to renege on pay-at-risk bonuses for nearly 100 of its executives. Horne said it was unacceptable for the board not to dump the bonuses at a time when front-line workers were being made to accept pay freezes.

But while Covenant eliminated its pay-at-risk bonuses for its executives, its financial statements show the board increased the base salaries for every executive except two. In one case, the salary was maintained and in the second it appears the position was eliminated.

The salary for Covenant’s chief human resources officer, for example, jumped from $235,000 to $279,000, an increase in overall compensation, even though the previous year’s bonus of $28,000 was scrapped.

Alberta Union of Provincial Employees president Guy Smith, whose union represents Covenant Health employees, said the executive salary increases are a slap in the face to frontline workers.

“We’re struggling to try to stop cuts to staffing,” he said. “We’re seeing layoffs everywhere. We’re seeing rollbacks in compensation in collective agreements.

“Yet obviously some people, such as Patrick Dumelie, aren’t suffering at all.”

Liberal health critic Dr. David Swann echoed that sentiment.

“We are not holding the line on some of these budgetary expenses,” he said, “and this autonomous, independent organization is using the public purse to provide unacceptable, rich salaries and benefits for people within Covenant.”

Smith said Dumelie’s compensation is symptomatic of a health care system out of step with the needs of the public.

“It’s part of the corporate mentality and culture, I think, that has come into the health care system over the past few years,” he said. “And it’s disturbing. I think Albertans should be concerned about it.”

Azocar said Covenant Health needs to reassess where it spends its funding, and direct more of that money towards patient care.

“We had flooding at the Misericordia,” she said. “In Bonnyville, we’re just going to lose two pathologists because the services are going to be centralized somewhere else. We have lost the maternity ward in Banff Springs Hospital.

“What is it that he is getting paid for,” Azocar added, “when we’re seeing cuts in services, when we’re seeing cuts in facilities, and we’re not seeing any improvement of services for the amount of money that he is getting paid?”

Swann went a step further, saying the issue calls into question the legitimacy of Covenant Health’s purpose. He said its board, along with the health minister, need to consider bringing Covenant Health under the auspices of Alberta Health Services.

“It looks like there are some people that are enriching themselves and their cohorts,” Swann said.

“More primary health care out in the community is what’s needed. Not higher salaries for unnecessary leadership in Covenant Health.”