Audits zero in on budgeting, not bureaucracy, in diagnosing province’s resource-deficient patient care

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This article was published 06/02/2025 (260 days ago), so information in it may no longer be current.

If the NDP government was hoping a series of audits of health authorities would support its claim that bloated bureaucracies are contributing to poor patient care, it didn’t get it.

The Kinew government on Wednesday released the results of three independent audits of the province’s regional health authorities (except Southern Health). The main finding: most, including Shared Health and the Winnipeg Regional Health Authority, are running deficits virtually every year and it’s hurting patient care.

But it’s not because of high administrative costs, at least according to the audits. On the contrary, the consulting firm MNP — which audited Shared Health and the WRHA — found that Manitoba’s health authorities have among the lowest administration costs in Canada (eighth out of 12 jurisdictions).

Shared Health is an exception. It had the highest administration costs in Manitoba as a percentage of total spending, at 8.34 per cent in 2022-2023. One wonders why that level of bureaucracy even exists when each region of the province already has its own health authority.

CancerCare had the lowest administrative costs at 3.26 per cent of total spending, followed by Prairie Mountain Health at 3.85 per cent. The WRHA’s administration costs were 3.9 per cent of total spending. The provincial average was 5.16 per cent in 2022-2023.

That’s not to say there isn’t bureaucratic fat to cut. I’ve documented several times in this column how administration costs at health authorities have ballooned in recent years

Overall, they’re up 41 per cent over the past five years, from $218.5 million in 2019-2020 to $307.6 million in 2023-2024.

As a percentage of total operating costs, administrative spending has increased only slightly. It was 4.3 per cent in 2019-2020 and grew to 4.79 per cent in 2023-2024. Still, it is an increase, and the total dollar value is high.

But that was not one of the findings in this week’s audit reports.

The NDP campaigned on reducing bureaucratic costs in health care and ordered regional authorities last year to cut administrative costs by eight per cent.

And while Health Minister Uzoma Asagwara this week reiterated government’s claim that “bloated bureaucracies” within health authorities are taking resources away from front-line care, none of the audits made that finding.

They found the opposite.

“The WRHA has below-average corporate services expenses as compared to other (services delivery organizations) and other jurisdictions nationally,” the MNP report said.

The consulting firm even found that board members at the WRHA and Shared Health are underpaid and recommended they get raises to attract more qualified candidates.

What the audits did find is that most health authorities have extremely poor budgeting practices, which is the main reason they run deficits almost every year.

They routinely and deliberately underestimate costs and overestimate revenues in order to present government with a balanced budget at the beginning of the fiscal year. They also fail to take into account population growth and changing demographics. As a result, health authorities find themselves short of resources almost every year, the audits found.

“Deficits impede the ability of organizations to make the best decisions for patient care, plan effectively for future health care needs and support front line staff,” MNP wrote in one of its reports. “In addition, the ongoing deficits of the SDOs are incompatible with the government of Manitoba’s overall goal of a balanced summary budget by the end of its current term.”

The reports made several recommendations on how to improve budgeting, including adopting more realistic revenue and expenditure projections, building contingencies into budgets (which, shockingly, they don’t already do) and using modern software instead of manual entries.

“Shared Health lacks appropriate budgeting and forecasting software leading to resource intensive, manual budgeting processes and a lack of standardization,” MNP found. “Manual processes reduce time that can be devoted to investigative analysis to support operational decision-making, scenario analysis, and identifying efficiencies.”

Also, many health authority board members don’t have financial backgrounds and struggle to provide proper oversight on budget matters, particularly at Shared Health, MNP found.

“Given the complexities and financial oversight required, we found a majority of board members in key roles do not possess the necessary skills and experience to provide appropriate financial oversight,” the consulting firm wrote.

It also recommended that health authorities adopt zero-based budgeting, where all expenditures are thoroughly evaluated every year, rather than using budget figures from previous years.

The province’s immediate response to the audits was to announce new interim CEOs for both the WRHA and Shared Health. But it’s going to take a lot more than that to overhaul the financial culture at those organizations, many of which have been running deficits on and off for decades.

Sweeping changes to how they budget and how they allocate resources are desperately needed to improve patient care.

tom.brodbeck@freepress.mb.ca