12/18/2012 04:48 EST | Updated 02/17/2013 05:12 EST

Scandal-plagued McGill hospital hit with huge budget deficit

MONTREAL - The Quebec government has appointed an overseer to bring the finances of one of Canada's top teaching hospitals under control in the face of a staggering deficit.

That deficit — larger than that of all other Quebec hospitals, combined — is only the latest bad news to hit the controversy-plagued institution.

Government experts led by Dr. Michel Baron said in a report released Tuesday that the McGill University Hospital Centre is headed toward a $61 million deficit by next March that could balloon to $115 million by adding non-recurring deficits to the total.

"The findings of the expert group co-ordinated by Dr. Michel Baron are very worrying," said Health Minister Rejean Hebert in a statement. "It is urgent that we act. There is a new board in place at the MUHC. I trust it will respond quickly to the main recommendations."

The hospital has been embroiled in several recent controversies.

An ex-director of human resources is being investigated for allegedly defrauding the hospital of $1.6 million over a decade.

As well, Arthur Porter, the hospital's former head, is being sued by McGill University for $300,000, which McGill says Porter owes it.

A controversy-plagued $2.3 billion superhospital now under construction did not figure into the report. That MUHC project was at the centre of fraud charges laid late last month against Pierre Duhaime, the former chief executive of engineering giant SNC-Lavalin.

The arrest warrant alleges that Duhaime and Riadh Ben Aissa, another former top executive, also conspired to commit fraud and produced false documents in connection with a contract pertaining to the multibillion-dollar superhospital.

The infractions are alleged to have taken place between April 30, 2009, and Aug. 31, 2011.

The devastating report released Tuesday cites risky real estate transactions that that were done without approval from the provincial Health Department or Montreal's health and social services department.

It also says rules were broken and there was no regard for budgetary constraints. Its authors also say they can't justify 900,000 hours of unauthorized paid work logged by staff since 2009.

The hospital has announced plans to cut patient care to deal with the financial problems.

The institution is being criticized for refusing to implement the recommendations of a consulting firm that estimated in 2010 that it could save $40 million annually by bringing its practices closer to comparable hospitals.

The board has until Jan. 18 to come up with a plan to address the deficit.

"In June, if we don't see a major sign on the road to a return to fiscal balance, we will act quickly," said Michel Fontaine, an assistant deputy health minister.

However, Fontaine says no one is being targeted for possible sanctions.

"Our laws do not allow us, since we're not an interim administration of the establishment, to manage the institution internally," he said. "That's the responsibility of the board of directors and they've been asked to do their homework."

The hospital said in a statement that it is in a period of transformation.

"We appreciate the Baron Committee's findings and, on the whole, agree with the report's findings," said the statement from chairman Claudio Bussandri and director general Normand Rinfret. "We will study the report more closely in the coming weeks."

The statement also said the hospital believes the potential deficit will be "significantly lower" than $115 million.