Renfrew hospital quietly transferring $9.6 million to not-for-profit sparks investigation

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For almost a decade, Renfrew Victoria Hospital has been quietly transferring millions of dollars in surplus funds to a not-for-profit corporation set up by former and current hospital executives and board members, among others, according to Canada Revenue Agency records.

The flow of money from the hospital to the not-for-profit organization called Renfrew Health is now the focus of an investigation by the province. The money transfers came during a period when many hospitals and health officials in the province complained about chronic underfunding. It also raises questions about financial transparency and how the 55-bed hospital amassed millions in surpluses from funds targeted to patient care and services.

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Since 2014, Renfrew Victoria Hospital has transferred more than $9.6 million to Renfrew Health, according to Canada Revenue Agency records. Some of those funds have since been returned to the hospital.

The longstanding payments from the hospital to Renfrew Health are among “concerning governance and management practices at the hospital” according to a statement released by the Ministry of Health. The provincial government took the rare step of appointing a supervisor to oversee the hospital at the end of June.

Altaf Stationwala, president and CEO of Mackenzie Health in the GTA, began working at the hospital at the beginning of July. He has since taken over financial control of both the hospital and Renfrew Health, according to government sources. He will supervise the hospital “to strengthen its governance, accountability, and ability to deliver the best possible care to Ontarians,” according to the Ministry of Health. The hospital’s president and CEO, Julia Boudreau, remains in place. The makeup of the hospital’s board of directors has recently changed.

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In 2021 alone, the hospital transferred $1.76 million to Renfrew Health, according to CRA records.

In board meeting minutes from March 25, 2021, the hospital appears to spell out the rationale for transferring that money to Renfrew Health. “RVH (Renfrew Victoria Hospital) would like to reduce the operating surplus to 1% of $300,000 by transferring it to Renfrew Health,” the minutes read in a section under the heading Year End. Those and other hospital board meeting minutes were previously posted on the hospital’s website but are no longer available.

In Renfrew Victoria Hospital’s annual report for that year, which is posted on its website, the hospital stated: “We are pleased to report that we have achieved a balanced budget for the 31st consecutive year with a small surplus for the period ending March 31, 2021.”

Hospital funds that are not used are generally recovered by the Ministry of Health unless special arrangements are made, according to government sources.

Boudreau addressed the relationship between the hospital and Renfrew Health in a memo to staff written in December 2023 after it came under scrutiny by the province. The internal document has been viewed by this newspaper.

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In it, Boudreau said Renfrew Health was established in 2014 “as a corporate vehicle to separate non-hospital activities from the hospital and the hospital’s foundation and to explore opportunities to further enhance healthcare in our catchment area.” It was set up jointly by the boards of the hospital and the foundation, she said, “guided by expert advice received from counsel. With great success it has filled the gaps between supports to the community and limitations on what the hospital itself could provide.”

To support activities of Renfrew Health – which have helped 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 this was possible.

“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 said.

Boudreau has characterized the creation of Renfrew Health as an innovative solution to supporting health care in the community. Until earlier this month, she was among the listed directors of Renfrew Health, according to federal not-for-profit documents.

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But after an anonymous group went to provincial officials with concerns about the practice, which led to an independent review, the hospital “took immediate steps to transfer funds that had gone to Renfrew Health back to the hospital,” Boudreau wrote in the memo to staff.

Its most recent financial statement (for the year 2023-2024) states that Renfrew Health transferred funds from prior years back to Renfrew Victoria Hospital. “The amounts were previously treated as an expense in the financial statements but were subsequently determined to be in excess of allowable non-HSAA (hospital services accountability agreement) funds available for transfer and were returned to the Hospital” – meaning transfer of the funds was not allowed under the hospital’s funding agreement with the province.

It is unclear how much of the more than $9.6 million was transferred back to the hospital.

Boudreau did not respond to multiple requests for comment. Through an assistant, she said she was unable to comment and referred this paper to a statement on the hospital’s website. Attempts to reach former board members and officials with the hospital and Renfrew Health were unsuccessful.

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The unofficial watchdog

Those longstanding transfers of money had largely flown under the radar until a group of “community-minded individuals located in Eastern Ontario” – as they describe themselves – became concerned at what they saw as questionable financial practices involving the hospital and Renfrew Health that lacked proper transparency. Members of the group, which purportedly includes financial professionals, have remained anonymous. Among other things, the group alleges that publicly available information suggests hospital administrators and the board purposely misstated the hospital’s financial results by understating surpluses and overstating expenses. They say financial statements and the minutes of the March 2021 board meeting support that. This newspaper has not been able to verify that claim and a list of emailed questions to Boudreau was not answered.

In a letter to an official with Ontario Health East, the group characterized itself as taking on an unofficial watchdog role over public spending. The group said its members “review publicly available information related to various government-funded organizations with the aim of assessing whether public funds are being used properly and related financial reporting is transparent and complete.”

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Members of the group contacted numerous provincial officials and others with their concerns about Renfrew Victoria Hospital after stumbling upon evidence of the payments from the hospital to Renfrew Health on the Canada Revenue Agency’s charity information website, which raised flags.

The vast majority of funding for public hospitals comes from the Ministry of Health. Around 40 per cent of that funding is linked to specific services, such as critical care, surgeries or specialized services. The remaining 60 per cent of ministry funding is non-targeted, which means hospitals can use the money “to support their core programs and services,” according to the ministry. “The services offered by each hospital will differ depending on hospital administrator decisions to meet the specific population/patient needs.”

Hospitals are usually on the receiving end of charitable donations, from hospital foundations, for example. It stood out to the group that Renfrew Victoria Hospital was repeatedly donating large sums of money to the organization Renfrew Health, about which very little was known. Typically, hospitals struggle to stretch their budgets to meet core health care needs and many hospitals across Ontario have recorded deficits in recent years.

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Group members say their concern about the practice was heightened when they found minutes of the March 2021 hospital board meeting in which the hospital explicitly stated a plan to reduce its operating surplus by transferring money to Renfrew Health.

In a letter to members of the hospital’s board, obtained by this newspaper, members of the group wrote: “… it would appear management, with the approval of the board, knowingly and purposely misstated the hospital’s financial results for reasons unknown. Regardless of the reason, it remains a fact the financial results and disclosure in the audited financial statements included manipulations of actual results.”

The hospital foundation, which raises money from the community, has also donated significant amounts of money to Renfrew Health in recent years – more than $1 million since 2019, according to records posted by the CRA.

Some sources inside the hospital, none of whom would go on the record because of concerns that it might negatively impact their careers, have questioned why the small hospital was amassing such large surpluses at a time when staff and doctors were being told there was no money to hire full-time nurses, for example, and other patient care expenses.

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What does Renfrew Health do?

Boudreau, in the internal memo, said Renfrew Health has been instrumental in attracting physicians to the community and supporting other health services, by helping to establish and manage health clinics that are located on the grounds of the hospital, supported by Renfrew Health. Attracting physicians is an ongoing concern in many smaller towns and cities across Ontario.

She said the aim of the money transfers to Renfrew Health was to: “fund initiatives to expand operations, build infrastructure, purchase equipment and support capital redevelopment projects, including at RVH over the next five years.”

Few people have been aware of the relationship between the hospital and Renfrew Health, or even know of Renfrew Health’s existence until recently. There was no mention of Renfrew Health in the hospital’s annual financial statements posted on their website – until this year, after the provincial government became involved. Previously, the payments to Renfrew Health were included in the hospital’s expenses and Renfrew Health was not named as a “related entity” in the financial statement, while other organizations with which the hospital had a financial relationship were listed, like Renfrew Victoria Hospital Foundation and the Eastern Ontario Regional Laboratory Association.

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Renfrew Health does not appear to have a website or a publicly available phone number. Only recently is information about what it is and what it does accessible to the public on the hospital’s website.

According to federal corporate records, the not-for-profit organization’s directors until recently included Randy Penney, a former long-time president and CEO of Renfrew Victoria Hospital who was in that role when the not-for-profit was established. Directors also included Marg McNab-Tubman, a recent chair of the hospital board; Julia Boudreau, the hospital’s current president and CEO and others who have previously been involved with the hospital and its board. Attempts to reach Penney, through secondary contacts, and McNab-Tubman, through Facebook, LinkedIn and phone calls were unsuccessful. No contact information is available on any Renfrew Health documentation.

The fact sheet about Renfrew Health that appeared online recently claims the overlap between the hospital and Renfrew Health executives and board members “helps to ensure transparency” between the two.

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“While Renfrew Health works collaboratively with RVH and the RVH Foundation, it has its own, independent, board of directors. In consideration of the close alignment of missions between RVH and RH, as well as the limited pool of volunteers in our small community, some current and past RVH executives have roles on the RH board. This leverages their experience and helps to ensure transparency between RVH and RH.”

As of July 1, when Stationwala took over as supervisor of Renfrew Victoria Hospital, the makeup of directors of Renfrew Health also changed. Stationwala is named as a director of the not-for-profit as is Rob Tripp, who was recently made chair of the hospital board. Neither Penney, McNab-Tubman nor Boudreau are currently listed among its directors.

The fact sheet goes on to say that Renfrew Health “has brought incredible benefits” to our community since it was created.

Among those, it says the “multimillion-dollar business” had funds to recruit new physicians to the community and fill vacancies and helped enable clinics to bring specialists to the community. It also says the creation of Renfrew Health allowed the hospital board and foundation to focus on their own mandates such as hospital services, programs and fundraising and protected the hospital from downturns related to rental space and lost revenue.

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It also said the hospital “can request funds from Renfrew Health at any time for new projects” and that the hospital is not always dependent on government funding to move ahead with projects. There are no CRA records of Renfrew Health transferring money to the hospital.

Its income, it says, comes from rent (from the health village of health-related services and businesses around the hospital, from parking revenues, net revenues of a sleep store, investment income and foot care).

It is unclear how many employees Renfrew Health has, but its name appears on the list of companies with employees who are part of the Healthcare of Ontario Pension Plan. Among other things, Ontario Health and a third party investigating compensation as part of their review of the hospital.

Stationwala, who was appointed supervisor of Renfrew Victoria Hospital, will provide regular updates to the Ministry of Health and write a final report that the ministry says will “strengthen and improve” the hospital’s governance.

Both the ministry and the hospital have emphasized that the appointment of a supervisor will not impact the delivery of patient care, or services delivered by the hospital.

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