Alberta Politics

Who’s the boss? Fred Horne and Stephen Lockwood spar over AHS performance pay.

“Regardless of how people feel about the decision of the AHS board, I don’t think anybody would want me or a colleague to interfere with the terms of their employment they’ve agreed to. It’s a decision for the AHS board.” – Health Minister Fred Horne on Alberta Health Services performance pay (Edmonton Journal, March 28, 2013)

Health Minister Fred Horne did exactly the opposite yesterday when he issued a statement calling on the Alberta Health Services Board to withhold performance pay for its executives. In response, AHS board chairman and trucking magnate Stephen Lockwood rebuked the minister’s statement and the appointed board voted to move forward with the performance payments at a meeting in Calgary.

Fred Horne

This issue has become a political problem for Premier Alison Redford‘s government. Unlike the government’s relationship with school boards, Albertans do not seem to perceive a difference between AHS and the Government. This has left many Albertans confused as to why the health authority is eliminating frontline staff while senior executives collect bonuses.

When it comes to picking his battles, I am not sure that Mr. Lockwood could have picked a issue where he was more off-side with public opinion.

But will this burst of independence last? The political showdown could come to an abrupt end this morning, when the government is expected to hold a press conference in response to AHS’s decision to approve the payments. The Calgary Herald’s Don Braid writes that Mr. Lockwood’s time as board chair could end today.

Of course, this is not the first time the government has demonstrated its influence over the supposedly arms-length agency.

Stephen Lockwood Alberta Health Services
Stephen Lockwood

In 2010, then-Health Minister Gene Zwozdesky pressed the AHS board to fire CEO and President Stephen Duckett after his infamous “I’m eating a cookie” incident. Dr. Duckett’s departure helped deflect other criticisms the government was facing at the time over Emergency Room wait-times and the suspension of its former legislative assistant for health, Raj Sherman.

The chairman of the AHS board at the time of Dr. Duckett’s firing was Ken Hughes, who is now a Tory MLA and Minister of Energy.

Remind me again why some people perceive the government and AHS as being the same thing?

UPDATE: I guess we now know who the boss is. Minister Horne has fired the entire AHS board over the bonuses issue.

4 replies on “Who’s the boss? Fred Horne and Stephen Lockwood spar over AHS performance pay.”

This all goes back to the entire recruitment regime of AHS, and indeed its predecessor health authorities, which is founded on the concept that “you need to pay for quality”, and accepts the private-sector corporate model for the compensation of senior executive leadership. Much of the AHS board comes from the corporate world, including Mr Lockwood, and so see nothing wrong with pay for performance contracts, which is what these are. (As a matter of fact, these “pay-at-risk” contracts date back to the Dr Duckett era at AHS, and so are not new).

An alternative regime for compensating senior leadership would be that this is a form of public service; promote from within, and pay people just a bit more (say 5-10%) than those reporting to them. Instead of “pay at risk”, set key but achievable performance targets and just make it “job at risk”.

All of that said, the government needs to back down on this, or else it might as well just dissolve AHS altogether and assign the governance and operation of the health care system to the department (i.e. Alberta Health), with a Deputy Minister in charge. They appointed this board to govern AHS; they chose them for the “business acumen”, and need to live with the consequences of those appointments.

Not that I’m an expert in administering the public health system, but I don’t know that Mr. Lockwood picked a battle so much as found himself between a rock and an extremely hard place.

The government wants the bonuses suspended to save money and (probably) more importantly, because of the optics of paying at risk pay while slashing frontline staff. Unfortunately, you can’t have both – with-holding money that someone is contractually entitled to are nice, neat grounds for civil suits that will likely result in significant financial settlements.The AHS board has legal responsibilities that prevent them from making decisions that would knowingly open the organization to that kind of risk (legal responsibilities that trump their political ones, which is why organizations like AHS are governed by boards and not by opinion polls).

While I absolutely agree that the executive compensation structure needs radical revision, I don’t think they really have the option to renege on existing contractual commitments – that’s why frontline staff get laid off rather than take paycuts. So I’m not sure that this is a big dramatic ‘last stand’ on the part of the AHS board as much as it’s legally dangerous for them to do anything else.

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