Renfrew hospital gave interest-free loans to some employees

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For several years, Renfrew Victoria Hospital gave interest-free loans to some employees, according to its annual financial statements.

Some of the hospital’s audited financial statements dating back to 2018 contain references to interest-free loans going to “certain employees” or “a certain employee,” though it is unclear how many employees received loans. Other loans from the hospital were used for physician-recruitment incentives, according to the financial statements.

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Attached to the 2018 financial statement is a note saying: “The hospital has provided financing to new physicians and certain employees. The loans are over a six-year period with annual repayment amounts, they are non-interest bearing and will be paid back prior to 31 December 2020.”

The 2018 financial statement lists an amount of $466,667 under the line item “increase in loans receivable,” meaning loans were advanced by the hospital during 2018. It is unclear what proportion of those loans were used for physician recruitment and what amount went to employees.

Loans to employees were no longer mentioned in financial statements from 2022 onwards. The hospital’s audited financial statements from 2022 and 2023 include notes saying the hospital “has provided financing to Renfrew and Area Health Services Village for physician recruitment incentives.” There is no mention of loans to certain employees during those years.

Ontario government sources say hospitals cannot provide interest-free loans to employees with hospital-directed funds, nor can they use hospital-directed funds — money from the province to hospitals for support of specific programs and core services — for physician recruitment. The majority of hospital operating funds come from the provincial government for patient care.

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All the loans have since been repaid, according to the financial statements. The hospital’s most recent financial statement, for the year ending March 31, 2024, shows no loans receivable.

The hospital is currently the subject of a provincial investigation into financial irregularities. The province has appointed a supervisor whose mandate includes a review of all hospital finances.

Earlier this year, the provincial government appointed a supervisor to take over the operation and management of the 55-bed hospital after an independent audit uncovered “concerning governance and management practices at the hospital.” A spokesperson for Health Minister Sylvia Jones said all the hospital finances are under review, but did not specifically confirm whether the practice of giving loans to employees was part of that review.

That supervisor, Altaf Stationwala, who is president and CEO of Mackenzie Health in the Greater Toronto Area, has taken over financial control of both Renfrew Victoria Hospital and Renfrew Health, the not-for-profit organization that is also a focus of the investigation. He took on the role at the hospital at the beginning of July.

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Neither the hospital’s president and CEO, Julia Boudreau, nor Stationwala responded to requests for comment from the Ottawa Citizen about interest-free loans from the hospital to employees. This reporter was directed to a statement on the hospital’s website and earlier statements from the health ministry.

That statement, dated July 23, 2024, says Stationwala “will work closely with the current CEO, the board of directors and staff to address concerns about financial irregularities to strengthen RVH’s governance, accountability and the hospital for the future.”

In response to a question about whether police are investigating what Stationwala terms “financial irregularities” involving the hospital, Health Minister Sylvia Jones’ spokesperson Hannah Jensen said they could not comment “on any potential or ongoing investigations.”

Records of interest-free loans to some employees raised flags for a group of citizens who characterize themselves as unofficial watchdogs for the use of public funds. Members of the group, who have remained anonymous, brought their concerns to the government’s attention before the investigation was launched.

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The Ottawa Citizen reported earlier this month that the hospital had transferred more than $9.6 million in surplus funds over a decade to the not-for-profit corporation Renfrew Health. Minutes from a hospital board meeting in 2021, which have since been removed from the hospital website, describe the hospital wanting to “reduce the operating surplus to 1% … by transferring it to Renfrew Health.” Those payments are listed as “donations” to Renfrew Health in publicly available Canada Revenue Agency records.

Some of those funds have since been returned to the hospital. It is unclear how much of the more than $9.6 million was transferred back to the hospital.

Hospital President and CEO Boudreau, in an internal memo viewed by the Citizen, said the establishment of Renfrew Health in 2014 was “guided by expert advice received by counsel.” To support activities of Renfrew Health – which helps recruit physicians to the community among other things – she said part of the operating surplus of the hospital was transferred to the not-for-profit “in years when that was possible.

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“This practice was fully audited every year – in the financial statements of both organizations – and no concerns were ever raised by our independent auditors or the government authorities that received the audited statements every year,” she wrote in the internal memo sent to staff.

Many Ontario hospitals struggle to balance their budgets and complain about chronic underfunding. Members of the unofficial watchdog group, which describes itself as “community-minded individuals located in Eastern Ontario,” say it stood out that RVH was donating large sums of money to Renfrew Health over multiple years. It also stood out that the hospital was offering interest-free loans to employees.

Some Renfrew Victoria Hospital employees, who declined to speak on the record out of fear it could hurt their careers, have questioned how the hospital amassed a multi-million surplus during a period when they were often told there was no money for new programs or more staff.

Difficulty attracting new physicians to RVH and Renfrew has been a long-term concern for local health and municipal officials.

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In previous statements, including the internal memo to staff seen by the Ottawa Citizen, Boudreau characterized the establishment of Renfrew Health as an innovative solution to supporting health care in the community, including help in recruiting new doctors.

A document on the hospital’s website said Renfrew Health was created “for the sole purpose of benefitting RVH — to help improve health services in our community by supporting the operations of Renfrew Victoria Hospital, advancing the goals and objectives of the hospital and supporting the operations of people and entities that provide health care and social services in Renfrew Health’s catchment area.”

Another document says Renfrew faces severe challenges in attracting physicians. “Faced with this reality, RH (Renfrew Health) has attempted to fill the void by providing incentive funding and clinical space. With that support, we are fortunate to have recently attracted several new physicians to our hospital and catchment area.”

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