03/01/2012 10:40 EST | Updated 05/01/2012 05:12 EDT

Nova Scotia takes scalpel to health costs, but critics say it's not enough

HALIFAX - Nova Scotia's health boards will merge administrative services such as payroll and laundry in an attempt to rein in costs of the province's $3.8 billion health care system, Health Minister Maureen MacDonald announced Thursday.

The move is expected to save between $7 million and $8.8 million over the next 18 months, and as many as 128 jobs could be cut, including 11 to 20 vice-president and director positions, MacDonald said.

"With less than a million people to care for, we cannot afford to be duplicating roles in administration that can be merged into stronger, leaner models," MacDonald told a news conference.

She said there could be as much as $52 million saved annually once services are fully merged.

"I feel very good about this initiative," she said. "But I will feel even better as I see the accumulation of the savings year-over-year and in health care, that's what we need to be looking for."

MacDonald said the nine district health authorities and the IWK Health Centre in Halifax would merge services including laundry, payroll, supply purchases and general administration. Information technology and human resources would also be merged at a later date, she added.

The changes were recommended after a three-month, $98,000 report by consulting firm Ernst & Young that was commissioned by the government.

The consultant concluded that savings could be found through the privatization of some services including laundry, where it said up to $2.8 million could be saved in the first year.

Instead, the government is opting to consolidate laundry services by creating so-called regional hub facilities that would serve a number of hospitals. That move is expected to save up to $600,000, the Health Department said.

MacDonald said she made that decision because she didn't want to see good wages and benefits eroded.

"That frequently is what occurs when you outsource a particular job such as laundry services," she said.

Danny Cavanaugh, Nova Scotia president of the Canadian Union of Public Employees, said his 3,500 members would be happy to hear that privatization has been dismissed as an option for now.

"But we are concerned about what the future holds," Cavanaugh said.

"Clearly with the Ernst & Young report, they are piecemealing stuff together ... and we will need to see what comes out of that."

Opposition Liberal health critic Leo Glavine said the merger was a "minor approach" to dealing with the larger issue of overall health care reform.

He said the district health authorities are already under orders to find $46 million in savings across the system.

"Essentially, this government is hoping that cuts are actually going to bring about reform, rather than the minister and government directing reform," Glavine said.

Conservative health critic Chris d'Entremont said the government's announcement amounted to "nickel and diming" the health care system, given it's massive budget.

He said more could be done by trimming the number of health authorities.

"When they went to one (health authority) in Alberta, they saved about $1 billion," he said. "I'm sure we can find more dollars in this kind of exercise."

Nova Scotia's largest expenditure is health care, taking up about 40 per cent of the province's budget.