While five of the province's six health authorities serve geographic regions, the sixth is known as the Provincial Health Services Authority, and it runs BC Children's Hospital, BC Transplant and specialized services such as trauma and chest surgery.
Until Friday afternoon, Lynda Cranston had been the authority's first and only president and CEO.
Wynne Powell, who chairs the health-authority's board of directors, said Cranston told him Tuesday about the raises that would have cost an additional $621,000 annually, and then addressed board members Friday.
"She came into the board ... made the presentation and said 'I made a mistake. I should not have authorized these and I did, and I think I put the board in a very difficult position,'" said Powell.
Powell said Cranston acknowledged that she had exceeded a 2012 government order freezing pay hikes to public-sector managers and executives and then offered her resignation, which the board accepted.
The pay hikes took effect on May 17 — three days after the Liberals won their majority government.
Powell said the offer by Cranston to resign was an "indication of her character," and that while her error was serious, it was one of very few she made during her long career of public service.
"This is one she understood was very difficult for the board, and being the consummate professional she (is) she acted in the appropriate manner," he said.
The announcement comes just days after Premier Christy Clark rescinded wage increases to top political staff, saying they sent the wrong message to the public and were not in step with a government determined to control spending.
Powell called Cranston's resignation a loss to the health system, but said the board of directors is very firm about policy and governance.
Because some of the pay increases violated government policy, the board is now reviewing its legal options and will be taking steps to ensure a similar situation doesn't occur again, he added.
Carl Roy, the authority's chief administrative officer, will assume the duties of president and CEO until a new executive is found, a process Powell said could take six months to a year.
The job pays more than $400,000 annually, he noted.
Cranston, meantime, will oversee the transition of key projects as she works toward her retirement on July 31, 2013 and will receive no severance, he added.
Powell said the board's decision to announce Cranston's resignation Friday evening was not politically motivated.
"It was not an attempt at hiding," he said. "We thought we'd be finished by noon and it just went on for hours. So I wanted to inform the public as soon as possible."
He said the decision to announce the resignation was his and he decided not to wait until Monday.
Health Minister Terry Lake said the government decided last September to freeze wages for all public-sector managers and executives because of a revenue shortfall and a desire to keep spending under control.
"As Minister of Health, I was disappointed to learn that the wage policy of government was not followed," Lake said in a statement. "I support the board's actions to respond to this matter, and I am pleased the board chair and members of the board of directors are acting to address this situation."
Lake said British Columbians must have confidence that finite health dollars are being directed to front-line care.
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