Mississauga Halton LHIN Governance Training Case Study
Cambridge Memorial Hospital Governance Crisis
The Kitchener-Waterloo Record
December, 24 2003
It was a year of upheaval for hospital
CAMBRIDGE , ON -- Cambridge Memorial Hospital has come through 12 months of upheaval and
administrative turmoil -- and is just beginning to recover.
A provincially appointed supervisor continues to run the hospital after taking over in September,
when the chief executive officer was fired and the board of directors disbanded. A new board and
CEO should be in place early in the new year, supervisor Kevin Smith says. The new board chairman
is expected to be named Jan. 8.
A legal squabble between the hospital board and the hospital's fundraising foundation set off the
administrative crisis. Beginning in May 2002, the foundation hired lawyers to review its bylaws. They
recommend the foundation distance itself from the hospital corporation to protect foundation assets
from any liability suit that the hospital might lose. Hospital board members objected, claiming the
foundation should remain under their control.
Last December, a task force of hospital directors and foundation members came to an impasse. The
foundation initiated its reorganization plan, stripping hospital board and corporation members of the
right to vote on foundation business. The plan was to give more say to donors and volunteers. Here's
what followed:

Dec. 13, 2002: The hospital board asks for the resignation of all of the foundation board
directors, except its own representative, and threatens to remove them.

Dec. 19: Board Chair Mary Margaret Laing files an application with the Ontario Superior
Court of Justice to have hospital board members reinstated to the foundation board.

Feb. 7, 2003: The foundation invites the hospital board to mediation.

Feb. 14: The foundation and hospital boards begin negotiations.

Feb. 17: Court documents show hospital staff intercepted foundation e-mails, including
messages passed between foundation administrators and lawyers. Foundation lawyers file a
motion for a permanent injunction to stop hospital employees and directors from
intercepting e-mails. The motion asks that a forensic computer specialist study the
hospital's electronic files to determine which e-mails had been intercepted.
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
March 19, 2003: Laing says hospital's legal costs have reached $300,000. Two months
later, the foundation admits its expenses are about the same.

March 19: The foundation asks Health Minister Tony Clement to intervene in the dispute.

March 31: Fact-finder Geoff Davies suggests binding arbitration, but the two sides disagree
on the terms.

May 20: Clement asks the two sides to end the legal fight. Fearful that fund-raising will be
hurt, he announces a supervisor will take control of the hospital in 14 days.

May 30: Because of construction, the foundation moves into off-site office space.

June 3: Hospital board chairman Charles Wilson and past chair Laing resign. New
chairman George Sousa agrees to end litigation and endorses binding arbitration.

June 19: Clement relents on the naming of a supervisor. Instead, he appoints Tony
Dagnone of the London Health Sciences Centres to investigate.

June 20: It's revealed the hospital board's legal bills have surpassed $1 million. The
foundation board admits to similar expenses.

June 25: Dagnone arrives in Cambridge announcing he will meet confidentially with
anyone wanting to express their views on the dispute.

Aug. 22: Dagnone's report is released to the public, calling for the disbanding of both
boards, the firing of the hospital CEO and the demotion of the foundation's executive
director. He recommends a restructuring of hospital governance and says members of the
hospital and foundation boards should get training in corporate governance.

Aug. 25: The hospital and foundation boards announce they will disband and reorganize.

Aug. 26: Laing says she has no plans to drop legal action against the foundation.

Aug. 29: Hospital CEO Helen Wright is fired by the interim board. Chief operating officer
Marianne Walker is her temporary replacement. Sept. 10: Clement appoints Kevin Smith,
the CEO at St. Joseph's Hospital in Hamilton, as Cambridge Memorial Hospital supervisor.

Sept. 12: Walker quits to become CEO at St. Joseph's Hospital in Guelph. Karen Belaire,
vice-president at McMaster University, is the interim replacement.

October: Search begins for a full-time hospital CEO. The foundation accepts Smith's
invitation to move back into the hospital.

Dec. 3: Smith announces a new governance structure and invites the public to apply for
positions on a new 15-member hospital board.

Dec. 11: Superior Court dismisses the former board's legal application to prevent the
restructuring of the hospital foundation.
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Tony Dagnone Report to the Minister of Health
Minister, in response to your request to carry out this assignment, I am advancing solutions
that will best serve the Cambridge community rather than individual interests. My
recommendations, I believe, are in keeping with your Ministerial responsibilities to ensure that
Ontario hospitals are governed with a professional sense of stewardship expected from hospital
boards.
My resolve has been to offer a solution to this long-standing, dispute between the Cambridge
Memorial Hospital (CMH) and its foundation. Regrettably, this dispute has engendered deepseated anger and resentment within the hospital setting and the community at large.
An important dimension to this investigation was to assess the capacity of the hospital Board
of Directors and Chief Executive Officer (CEO) to live up to their obligations of responsible
stewardship relative to fostering acceptable working relationships with the foundation.
Given the 60-day time frame and a sense of urgency to arrive at a resolution, I chose to take a
pragmatic approach to investigate this multi-dimensional feud. Although several approaches
were available to me, I chose to avoid a structured or formal hearing approach in favour of
soliciting solutions directly from those stakeholders who sincerely desire an end to this
unprecedented dispute between a hospital and its foundation. It is obvious to me, after almost
two months of review, that "half-measured solutions" are not sustainable if this proud
community and the 1,300 care providers associated with Cambridge Memorial Hospital are to
move forward.
Approach and Methodology
The nature and scope of the June 18 Order in Council was described to the key stakeholders
on June 24 and 25. Over 200 individuals attended briefing sessions aimed at communicating
my assignment and expressing my resolve to craft a solution that would best meet the needs of
the community. My purpose for meeting with the combined Board of Directors (hospital and
foundation), management, hospital staff and medical staff, was to set the stage for "openness",
a prerequisite to finding the best solution.
It was evident from these initial encounters that there was a great deal of reluctance for
individuals to speak out for fear of reprisals and intimidation. A confidentiality agreement,
which had been previously imposed on Board members, hospital professionals and medical
staff, was muzzling the voices that were deeply committed to their hospital and foundation. As
this fear was palpable, I publicly stated that I had an expectation that individuals should
express their thoughts to me in exchange for anonymity. At this point I reassured them that no
names would be attached to the contents of my report. To that end my report will not attribute
statements to specific individuals.
The covert e-mail surveillance that had occurred between November, 2002 and February, 2003,
destroyed faith and trust among hospital and medical staff. I announced, therefore, the
establishment of a secure e-mail vehicle where individuals were free to communicate with me
on a confidential basis. Over 100 e-mails and phone calls were received during the
investigation period.
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To increase the comfort level among the stakeholders, I announced that I would be directing
the investigation alone so that we could enhance confidentiality. The most valuable sources of
information and genuine solutions came from the over 70 one-on-one interviews with
stakeholders.
As investigator, I ignored seeking out any more legal views, as both parties had already
engaged in litigation that to date had contributed precious little to a resolution other than
differing legal opinions.
I specifically asked both parties in the dispute to terminate the expensive legal processes
associated with this feud. Regrettably, hospital representatives have not complied with this
directive, as legal activity appears to continue.
As investigator with the objective of offering you valued advice, it was important to meet with
key players and the adversaries entangled in this dispute. Equally, it was vitally important to
hear from the individuals who have a passion for their hospital work and fund raising
activities, and through no fault of theirs were entrapped in the circumstances.
This hospital versus foundation dispute has become so divisive that it is now public fodder in
the community. The wider fund raising community is aghast that this situation would be
allowed to happen.
To obtain an understanding of the chronology of this travesty and the positions taken by both
parties, I perused volumes of material. Individual stakeholders offered supporting material that
was made available for my eyes only for fear of future recrimination from hospital
representatives.
Minister, a recital of past events and actions on the part of both parties in this dispute over the
past year would not serve to strengthen my advice to you. I believe that the dispute transcends
the facts and opinions recorded in volumes of scripted Board minutes and legal
pronouncements. Rather, I contend that a resolution must go beyond who is right or wrong. A
win-lose outcome is highly suspect if an enduring resolution is to be found for this proud
community. What will be proposed for your consideration is a new beginning that brings the
hospital and foundation together in a symbiotic relationship that fosters successful
philanthropy. The ultimate goal is to forge a new working relationship that will lead to
successful fund raising to support priorities of Cambridge Memorial Hospital. At the same time,
an unequivocal confidence level has to be provided to donors that their generosity is yielding
good value for the benefit of future patients. The current dispute has cast dark shadows on
this philanthropic obligation that speaks to public trust.
From the outset of my task, I emphasized that the goal was to end this destructive strife by
challenging key players to take significant steps toward resolution. What I witnessed was a
quasi offering of masked willingness and provisos to resolve the dispute. I noticed a lack of
effort on the part of the hospital leaders to admit that this had been a fruitless exercise in
brinkmanship which had devoured almost $700,000 of precious hospital resources. The
foundation, which has expended a similar amount, acknowledges the futility of the issue, as
fund raising opportunities are vanishing before their eyes. Equally problematic is the funding
for Phase 3 of the hospital's capital redevelopment. This project now requires an additional
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Cambridge Memorial Hospital Governance Crisis
$5.8 million to underwrite 40,000 sq. feet of space that exceeds Ministry approved space
guidelines. If the hospital is to incorporate the additional space from its own funds, it adds
considerable financial strain on fund raising. This situation also lends a sense of urgency to
resolve this dispute.
The ideal outcome is to restore faith in the eyes of the community, and specifically donors, so
that the capital funding needs of the hospital enterprise can be achieved. Equally, hospital and
medical staff are embarrassed at this expensive embroglio.
Unfortunately, no one wants to capitulate for fear of being perceived as admitting to wrong
doing. However, this drawn out feud should give neither side any solace that a solution will be
found without culpability or blame sharing. I was, therefore, left to identify bold
recommendations for you as Minister of the Crown responsible for hospitals. My advice is
framed within the context of how best to resolve this dispute for the overall "community good".
Minister, to those charged with responsibility of implementing whatever advice you ultimately
choose to accept from my review, at a bare minimum, a new partnership between the hospital
and foundation must reflect best practices in hospital governance and philanthropy. More
importantly, the right people need to fill the key leadership roles.
Failed Attempts to Reconcile
The material, minutes and numerous discussions clearly point out that several efforts had
been made to bring the disputing parties together, but to no avail. Over the past year,
mediation was offered on several occasions at the urging of community leaders and elected
officials. The concept of arbitration was also introduced as a potential settlement forum. The
"Work Group", a joint effort established in June, 2002, was ill-structured, as it centred around
the key figures driving the dispute. At best, this initiative was wasteful, as it added more
conspiracy tendencies and animosity due to lack of trust on the part of both parties. It should
have been obvious that intransigent positions on both sides would hamper reconciliation
through this flawed process.
A promising opportunity to end this damaging internal dispute was lost in May, 2003, when
hospital/ foundation officials failed to collectively embrace recommendations put forward by
Mr. Geoff Davies in his role as "fact finder". It is my view that although the foundation accepted
arbitration, hospital officials relinquished an opportunity to come to the dispute resolution
table in a timely manner because of their insistence on including specific legal issues within
the scope of arbitration. Many stakeholders in the hospital setting and the community have
concluded that the hospital's actions in prolonging the dispute are akin to righteous
indignation, and represent bad faith.
It is my view that these efforts were doomed for failure as the key central personalities in this
dispute carried personal vested interest. Finger-pointing, borderline ethical/unprofessional
conduct and personal affronts along the dispute journey further entrenched positions of both
parties. In the process, an abundance of legal opinions advanced by both sides served to
inflame the relationships. The central issue of "control" in this dispute was misinterpreted and
eventually led to a breakdown of communication, which resulted in total mistrust of each
other.
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To illustrate that there was little appetite among hospital Board members, where leadership
and genuine intent to end this dispute should exist, one only needs to read the February, 2003
Board minutes. When a motion to mediate was taken, both the Board Chair and CEO opposed
the vote, while four Board members voted in favour. Clearly this is a Board divided, and a
promising start to reconciliation was lost.
Unfortunately, in the process of feuding in public forums, everyone lost sight of what this
dispute was doing to the relationship fabric of a proud community and the hospital work place.
The relentless determination to win and the control-driven agenda was now becoming an
embarrassment among health care professionals and the donor fraternity. I question the
wisdom of governance and management personalities of both organizations for engaging legal
manoeuvres and allowing the situation to "spiral out of control". All of this at the expense of the
public purse and valued philanthropic principles. Simultaneously, the basic values and
reputations of the hospital enterprise and foundation were compromised when their actions
bordered on flagrant disrespect for community generosity. My considerate observation of these
squandered opportunities makes me conclude that certain hospital spokespersons were
determined to win at whatever price - - a situation I deem reprehensible.
An example of the toxic working relationship between the hospital and foundation follows.
CMH acted as host to the foundation's computer system. As host to an independent entity, the
hospital should have respected the privacy of foundation information, and particularly the
confidential e-mails exchanged between foundation staff and their counsel/advisors.
The decision by the CEO to open and retain copies of e-mails belonging to foundation staff,
without their knowledge, beginning November 25, 2002, and continuing through until
February, is incredulous behaviour which should not be permitted. Further, hospital staff
members were directed by the CEO to create a special network that would act as a repository
for all the captured correspondence generated by foundation employees. It appears that copies
were made so that they were readily available to the CEO office upon demand.
Despite expressed reluctance from staff, the CEO escalated the surveillance to include some
hospital employees. At considerable expense, two of the foundation's hard drives were
accessed, mirrored and copied. This process was expanded to access additional attachments to
e-mails, which in turn required that personal folders be retrieved.
This covert surveillance of e-mail and computer files by the hospital CEO is unthinkable and
unethical. I deeply sympathize with those hospital staff who were directed to carry out these
deeds, and thus became accessories to this electronic conspiracy.
Hospital CEOs who are members of the Canadian College of Health Service Executives are
expected to comply to standards of ethical conduct. Professional responsibilities to the
organization being managed by the CEO includes "serving in the public interest in ethical
fashion", and "ethical use of resources". Members also have certain responsibilities to the
community and society. For example, "Health Service Executives shall practice with honesty,
integrity, respect and good faith". These values and corporate ethics were all compromised.
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Issuing directives to covertly conduct indeterminate monitoring of foundation e-mail without
consent violates basic privacy principles, regardless of who owns the equipment. Further, the
decision to continue with this vindictive activity over several months shows the mean-spirited
management mentality. I regard this behaviour as a serious breach of privacy. It is my view
that when private correspondence between a client (in this instance the foundation) and its
solicitor/advisor is captured secretly, an ethical transgression is committed. It is inexcusable
for the hospital Board leadership to condone this surreptitious action on the part of the CEO. I
can only surmise that the Board was not adequately informed of this breach of trust that
involved a valued partner - the foundation.
The direct costs of this electronic infringement alone, including consultants, forensic experts,
and setting up the spy systems, is estimated to be over $70,000. This serves as another
example of bad judgment in the use of hospital resources. Above all else, this intrusion breeds
disrespect and distrust that proliferates through all elements of the hospital enterprise.
Hospital stakeholders are horrified by what this senseless contest has done to the reputation of
CMH in the eyes of the community, region and beyond.
Governance Issues
Minister, my Order in Council mandate required of me to assess whether the hospital Board
and Chief Executive Officer were capable of living up to their corporate responsibilities, given
the divisive dispute. To do this I have reviewed the functioning of the policy making group
through minutes and material. Equally, as a result of the many one-on-one discussions with a
variety of stakeholders, I was able to discern the perceptions held of the Board of Directors and
Chief Executive Officer.
The paramount role of a hospital director is to represent and act in the best interest of the
organization by exercising fiduciary responsibilities, and to be accountable to its key
stakeholders, such as patients, hospital staff and the Ministry of Health and Long-Term Care.
My investigation, within the limitations of time, has found the hospital governance to be
lacking in a number of areas. For example, directors have not shown leadership as policy
makers. Rather, they have passively accepted strong management biases and executive actions
in this dispute that touch on brinkmanship. There are strong feelings by those who are familiar
with Board functions that Board members are unduly influenced by management, and not fully
informed on issues that require wholesome discussion. Disagreements over the handling of the
dispute, along with unethical actions, have led to several Board resignations. Today a number
of vacancies exist at the policy-making level.
During my interviews, a general theme that hospital management is determined to control
everything was expressed by individuals who have witnessed such dogged determination.
Sadly, many believe that if senior management cannot exert control over individuals, someone
will find a way to unceremoniously discard them. The feeling is that if all else fails,
management will threaten legal action, as witnessed by the latest writ filed by the Chief
Executive Officer against a physician who dared to publicly express his views. This toxic
atmosphere in the workplace would never be condoned by an effective Board of Directors.
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Views expressed by dedicated individuals who believe in their hospital have uniformly
expressed the quest that the CEO has for control at all levels. The impact of this management
style reverberates both within the hospital and with those agencies that come in contact with
this organization. The shackled effects of this domineering need to control is reflected in the
unprecedented management staff turnover, which has either escaped notice or been ignored by
the Board. This widely-known, unhealthy trend should have signalled to the Board that either
the selection process is flawed or the individuals simply could not function in the work
environment. Upon questioning, the Board appears to have minimal knowledge of why
individuals left through this revolving door.
The Board of Directors is expected to possess a collection of skills and attributes, and be
independent-minded so that it may challenge management to ensure the best interest of the
hospital is pursued. This passive governance group seems to be directed by the Chief Executive
Officer, who is employed by the Board. The Board appears to be overpowered by "green paper"
documents that denote confidential agenda items at Board meetings. When the majority of
agenda items are classified on green paper as confidential, it tends to dampen forthright
discussion and transparency at the governance level. Ostensibly, the overwhelming view from
internal stakeholders and community leaders points to a Board that is led, with decisions and
direction authored by the CEO. It is my belief that the Board appears to abdicate to the CEO or
the Executive Committee rather than assume collective governance leadership aimed at
directing what will best serve the corporation. In the material made available to me, and
supported by numerous respected individuals who participated in the interviews, it appears
that a former Board member, with the influence of the CEO, may have intimidated the Board at
the height of this dispute.
What exists at Cambridge Memorial Hospital (CMH), are Board processes which are poorly
aligned with, and in fact contradict, contemporary governance practices which demand
deliberation of issues by the entire Board.
The current stalemate begs the need to seek out the best governance practices, and the
creation of positive and effective hospital/foundation relationships. In my conclusions,
therefore, my intent is to position the hospital corporation so that governance is based on
principled, effective leadership and absolute integrity.
There is a misalignment between the current modis operandi at CMH and contemporary
governance practices expected of a mature hospital enterprise such as CMH. Progressive best
practices at the governance level require a director (trustee) to act, first and foremost, in the
best interest of the hospital organization. This characteristic is the essence of trusteeship that
supercedes all other responsibilities or concepts of representation and advocacy. Regrettably,
at CMH some directors' actions (past and current) run contrary to responsible governance, as
they have relentlessly defended this power struggle against a fund raising agency that exists to
support the hospital. The dispute was the Board's responsibility to resolve.
Board members (past and current) expressed concern that the Executive Committee, led by
several strong personalities, has been dictating the direction of this long-standing discord. The
Executive Committee has assumed all- encompassing decision-making power at the expense of
open debate at the Board policy-making level. This practice devalues the rest of the Board. It is
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ironic that after 35 special Executive Committee meetings held over a six-month period to
discuss this dispute, it appears that the majority of the scripted minutes were neither
circulated to the entire Board, nor subjected to healthy debate. The responsibility for not
allowing deliberation and transparency must rest with the Board Chair of the day.
The Board, in my view, has misjudged the almost irreparable harm that the continuation of
this dispute is causing to the hospital enterprise. For this it must be held accountable. Their
intent on duplicitous actions, such as the foundation e-mail piracy, illustrated their resolve to
win at all cost. I suspect that the e-mail deed was done without appropriate Board notification
and advice. Volunteer Board members deserve more consideration and respect before an action
of this seriousness is taken by management. Opening private mail, regardless of the ownership
of the mail channels, is contrary to fundamental ethics that should be espoused by a
responsible Board.
The relationship between the Board/Chief Executive Officer and the medical staff, a vital group
within the hospital, can best be described as lacking respect and trust. Numerous reputable
medical voices commented on the gulf that exists between the Board, senior management and
medical staff. Examples of the current "we/they" conflict include deep resentment that the
Board and CEO have acted irresponsibly in dragging out this feud to the detriment of
advancing the real needs of the hospital. Strong lingering dissident views over the reengineering projects, coercion to sign letters expressing opposition to the Minister's notice of a
pending Supervisor, and the perceived gag orders inherent in the confidentiality agreement, all
contribute to a great deal of unrest among physicians and surgeons. An overwhelming number
of medical staff do not feel valued. They point to the control mentality within the executive
leadership, and have concluded that the "take no prisoners" approach is extremely detrimental
to long-term working relationships.
While my experience points to the reality that in many hospitals medical staff have high or
unrealistic expectations of the Board and management, the situation in Cambridge clearly
points to the need for swift reconciliation. My investigation shows that the medical staff and
management grossly undervalue each other, thereby leading to an inordinate amount of
tension and mistrust that impacts daily on the workplace. There is genuine worry that more
physicians and surgeons may abandon CMH.
In light of the foregoing, consideration must be given to not just resolving the dispute over
control of the foundation. The ultimate goal must be to assemble a unified team consisting of
Board, management and medical staff, all working in concert with the fund raising volunteers
for a laudable cause - quality patient care for Cambridge citizens.
Conclusions
Over the past two months, I have formed a number of conclusions that speak to the cogent
issues that swirl around this dispute, and impact the capacity of the Board/CEO. These
conclusions will be the basis of the recommendations and advice to you as Minister.
It is my contention that current working relationships between the hospital and foundation are
not reconcilable. The community has lost confidence. Key players have been accused of
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allowing this feud to hijack the caring mission of a proud hospital and its associated
foundation. On the other hand, the foundation Board and Executive Director do not escape
criticism, as their aggressive stances to change membership without appropriate consultation
and open debate was misdirected. It is apparent that actions initiated by hospital officials left
the foundation with no choice but to hold Board and management leaders with a great deal of
contempt. It was the "out of sight, out of mind" attitude shown by hospital representatives
against the foundation that bittered the already strained relationship.
If one accepts that the CMH Board has the obligation to act in the best interest of the hospital
enterprise, then it has failed by permitting this fierce, year-long divisive dispute to continue. It
is reprehensible that hospital officials did not curtail the legal manoeuvres early in the process.
To deliberately choose to fund questionable legal wrangling and court proceedings is akin to
flagrant disregard of responsible public stewardship; the hallmark of effective hospital
governance. This aspect is disconcerting, as the hospital Board Executive, particularly over the
past six months, appeared to be mesmerized by interests of control, domination, litigation and
personal agendas.
Unfortunately, the Board repeatedly succumbed to the Executive Committee when it should, as
a collective body, have exercised its governance and policy decision-making obligations.
In the final analysis, the Board has lost focus and devalued its accountability to staff, patients
and the Ministry of Health and Long-Term Care for responsible use of funds. It is regrettable
that the dispute, by its very nature, has diverted time, energy and precious resources away
from patient care. After all, the hospital Board has the primary duty to make best efforts to
offer quality services to all patients to whom it provides care within available resources.
Equally, hospital boards have a responsibility to their foundation and associated donors to
ensure all donations will be used for designated intentions rather than underwriting legal
battles with scarce funds.
Neither hospital officials nor foundation representatives escape criticism and blame that one
time or another they indulged in surreptitious scheming and acted in a manner that bordered
on duplicity. Certainly, this is unbecoming of the code of conduct for any professional group,
let alone when public trust is in play.
The actions on the part of certain foundation leaders has been less than transparent. Their
drive to amend their corporate by-laws can be misinterpreted as a move to disenfranchise the
hospital corporation, given the distrust among key players. Foundation leaders failed to
position their by-law revisions as steps to modernize the foundation corporation. Adopting best
practices in philanthropy is to be applauded. However, the strong, almost unilateral,
positioning around the Carter Report, and related membership issues tainted the foundation
players in the eyes of hospital leaders.
At the end of the day, both the hospital and the foundation must accede to the paramount
interest of the donor community. This appreciation appears to be wanting among key hospital
leaders, as evidenced by their drive to extinguish the current foundation mandate by filing for a
new foundation vehicle. If the CMH and its foundation are to rebuild an enduring philanthropic
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program, both must realize that giving on the part of most people is an emotional, caring
gesture. If fund raising is to succeed in the Cambridge region, programs must be jointly
developed to meet the many emotional needs of a variety of donors who desire to give. On the
contrary, donors will distance themselves from both hospital and foundation if they engage in
fruitless actions that illustrate public discord and irresponsible use of resources. Donors have
already shown the spectre of walking away from CMH's noble causes as a result of this
controversy. Notice has already been served by a leading donor that its significant, multi-year
gift will be directed away from the hospital unless the dispute is resolved immediately.
Raising funds for hospitals is not cost-free. The development and maintenance of the
infrastructure requires considerable resources. All the more reason why the hospital should
have embraced rather than rebuked foundation volunteers, whom I regard to be the lifeblood of
a successful hospital fund raising venture. For CMH to reach its full potential it must support
the foundation in every way, including offering a presence within the fabric of CMH.
Both organizations' behaviour and actions were driven by a desire for control and reliance on
legalities with no face-saving options readily apparent. Thus, the feud can be characterized by
upmanship strategies which touched on unethical and unprofessional actions. In the eyes of
hospital and community stakeholders, accountability was thrown to the wind in favour of
pursuing this damaging dispute. As such, blame must be apportioned to both the hospital and
the foundation leaders. Consequences must follow if we are to suspend unacceptable
behaviour on the part of individuals who abuse public trust.
When questioned, the hospital Board Chairman/CEO believe that they demonstrated good
faith in their actions, and are working in the best interest of the hospital. I disagree. As a
governance body, they have allowed legalism to overtake prudent judgment and responsible
stewardship. I regard the hospital corporate actions as confrontational. Brinkmanship
initiatives have been ill- advised and counter-productive in achieving "community good". It
must be emphasized once again that the hospital Board ignored its fiduciary responsibilities
when one considers the significant cost of this dispute, plus the lost opportunities for fund
raising, which are critical to the hospital redevelopment.
There is a widely held perception that hospital officials perverted "community good" to serve
suspect vested interests. An estranged relationship between and among leaders was observed
throughout my investigation. Hospital officials have lost sight of the fact that the foundation
serves as an important conduit through which the Cambridge community at large participates
in the life of its hospital. Today's ever-increasing need for donations and legacy gifts has
significantly increased hospitals' reliance on foundations. Issues surrounding the dispute, for
the most part, have resulted in controversy and community divisiveness. The latest iterations
in June led to the issuance of notice that a Supervisor would be appointed under the Public
Hospitals Act (Ontario). In earnest, both sides began to voice their biases to gain public support
for their respective positions.
Pursuing a legal solution through the courts at this time to determine who is right and who is
wrong is counter productive, given the indignation between and among key leaders. I believe
that the community may recoil against the hospital and foundation unless this discord is
resolved with haste. The current environment does not bode well for a meaningful resolution
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unless drastic steps are taken immediately upon the filing of this report. Given the climate and
intensity of the feud, half-measured solutions are not sustainable. If the situation is left
unchecked, both organizations, in time, will implode, as confrontational tactics will persist.
In the interest of offering a pragmatic relationship, I will include thoughts that reflect best
practices in philanthropy. A "di novo" working relationship between the two organizations that
reflects progressive, best practices needs to be crafted and implemented without delay
I have publicly stated that no single person or organization has a monopoly on blame inherent
in this dispute. Rather, many leaders, past and current, must share responsibility in creating
this precarious situation that threatens to derail the best interests of the community, the
hospital and its foundation. The bold prerequisite to an enduring solution is to ask the key
leaders of both the hospital and the foundation to stand down from their corporate positions. A
clean leadership slate is imperative, as I have concluded that key relationships are beyond
repair, and the community must see tangible change among the antagonists. What is required
Minister, is a fresh start to redefine and rebuild effective relationships that will best serve the
collective needs of the hospital and its foundation.
The ultimate outcome should be based on how to best craft the most successful enduring
philanthropy program for the benefit of tomorrow's patients. Given the long-standing dispute,
the focus of attention must be on restoring faith in the eyes of all stakeholders in an
expeditious manner. It is my contention that it will not be feasible to regain credibility in light
of the acrimony and spitefulness that has existed among the opponents over the past year. A
constructive relationship will not be possible unless a new agreement reflecting best practices
in philanthropy is formulated to suit the specific needs of the Cambridge regional community.
It is my belief, based on experience, that a "shared leadership" model between the hospital
Board Chair, foundation Board Chair, hospital CEO and the foundation Executive Director is
the most effective way to strive for partnership success. Regrettably, many leaders have
difficulty in sharing power, as they mistakenly believe that by doing so means giving up
control. I regard power sharing as a means of enhancing the collective drive and desire to
realize the organization's vision.
The hospital Board is where responsibility for maintaining accountability and safeguarding
trust resides. Directors of non-profit corporations like hospital foundations are subject to the
same standards of care and stewardship as directors of profit enterprises.
The real power of a board comes from the knowledge of its directors, their cohesion as a team
and the advice received from the Chief Executive Officer. However, the over riding governance
imperative is that the hospital Directors must retain ultimate control of the organization.
Circumstances around the dispute at CMH provide serious doubts that this Board was
governing. It brings into question whether they acted in the best interest of the organization.
The primary principle governing members of the Board is to exercise the care, diligence and
skill that a reasonably prudent person would do. Ultimately, they are expected to make
informed decisions. The Board for all intents and purposes, surrendered its governance
responsibility to the Executive Committee, who saw fit to hold countless meetings during 2003
on this dispute. The apparent absence of reporting back to the entire Board, and the lack of
debate forces one to conclude that a small inner circle is in power.
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In the eyes and minds of hospital staff and community stakeholders and leaders,
accountability was sidelined in favour of expensive litigation. They believe that the key
opponents should be held accountable by accepting responsibility for this embroiled state of
affairs.
Through their own admission, both hospital and foundation spokespersons have both declared
that the current dispute has seriously prejudiced the hospital's reputation and the foundation's
ability to raise necessary funds. A guess estimate of the monetary loss, when one calculates the
combined legal fees and lost fund raising opportunities, would exceed $2 million. The question
becomes who should be held to account for this expensive public confrontation, which is at
cross-purposes to the mission of CMH.
A Perspective on Hospital Foundations
In today's dynamic health care sector, hospital foundations are a quintessential means for
connecting people to each other in a community that truly believes in its hospital. By working
together on projects of mutual interest and benefit, a sense of trust and co-operation with each
other can be translated into a lasting relationship for "community good".
Today's successful hospital foundations are corporate entities with legal , moral and fiduciary
responsibilities to their donors, hospital constituencies, and the general public. Although selfgoverning, foundations have many points of intersection and accountabilities.
At a minimum, hospital foundations are accountable for:



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effective governance and organizational structure
developing appropriate vision and strategic direction that best serves its hospital
prudent stewardship of all donated funds
ensuring their relevance in today's fast-paced world of philanthropy and volunteerism.
In searching for an ideal relationship between a hospital and its foundation, it is important to
accept that they are in different yet complementary, dependent "worthy businesses". That is,
CMH exists to provide quality health care, while the foundation is in a perpetual fund raising
and stewardship mode. Simply stated, the hospital provides the rationale and case for
community giving, while the foundation provides the vehicle by which fund raising takes place.
It is through a mutually understood and beneficial association between the two entities that
greater benefits result for both. Thus, by working together, the resulting hospital/foundation
partnership is best able to generate more synergy, which in turn will yield more philanthropic
support.
The above dependent relationship brings responsibility to each other. The hospital must work
to create an environment for success by offering unequivocal support to the foundation, which
positions the fund raising entity as a "valued partner". With such undivided support, the
foundation will be better able to champion the critical, ongoing case for giving to CMH, and in
turn advance its aspirations.
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Having heard directly from over 70 stakeholders, all of whom support CMH, I believe that a
new relationship between the foundation and the hospital must be created and nurtured. The
issue of how many members are associated with the foundation corporation, and who appoints
them, in my estimation, is of distant importance. It is regrettable that one of the central issues
in this dispute has been membership appointment prerogatives. Given the intense feud over
control and self determination, I question the need for voting membership in today's world of
fund raising. Rather, energy should be devoted to searching for and finding the most effective
governance model and bringing together Board members with the required skills, acumen and
passion to direct successful fund raising and stewardship.
Thus, the foundation's proposed General Operating By-law No. 1, in my opinion, will not
address the root causes of this dispute. Rather, a di novo relationship must be forged in an
expedient manner. I would propose, therefore, that the following new "shared leadership" model
be developed and adopted by both organizations in their respective by-laws.
Fund raising leadership is ideally shared between the foundation Board, vis a vis Board Chair,
the hospital's Chief Executive Officer, and the foundation Executive Director (commonly
referred to as the Development Officer). Shared leadership implies properly placed power and
joint authority. When leaders collaborate effectively with others to accomplish a worthy cause,
such as hospital fund raising, their collective power is enhanced in every way.
The foundation Board Chair, through the entire Board, has a special role that ensures that a
shared leadership concept will enhance fund raising. The Chair has the power to hold each
Board member accountable, and ensures all Directors provide best efforts as volunteers to
achieve successful fund raising. Effective Board Chairs, through persuasion induce Directors
to reach consensus and take collective action.
The foundation Board cannot delegate the ultimate accountability for successful hospital fund
raising to staff. The core business of the foundation is fund raising. Thus it must be under the
direct leadership of the Board. It is important that the staff not supplant the Board's
governance prerogative in setting strategy, policy and corporate direction. The Board has an
obligation to serve as the strategic instrument responsible for delivering fund raising outcomes.
As policy maker, it has a duty to be a resource and mentor to the Executive Director.
It is my contention that the foundation Board Chair must have a strong congenial relationship
with the hospital Board Chair and hospital CEO. In a shared leadership concept, such
interfaces will build relationships and promote transparency and goodwill. The foundation
Board Chair, in my view, is a key community stakeholder whose opinion should be valued by
all hospital leaders.
As a partner of the shared leadership model, the hospital CEO has an obligation to create an
environment for fund raising success within the hospital corporate vision. This leadership
model mandates the CEO to work with the hospital Board, the management team and medical
staff leaders to embrace the foundation's role and stature within the overall hospital setting.
Today's best practices dictate that the engaged involvement of the CEO in the philanthropic
mission is deemed paramount if fund raising is to succeed. Presenting philanthropic
opportunities to prospective donors in co-operation with foundation representatives, making
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"asks" to donors in the presence of foundation spokespersons, and relationship-building with
the donor community are examples of the expectations of the CEO. Thus, in keeping with best
practices, the CEO should be a full fledged member of the foundation Board.
The Executive Director of the foundation is the third partner in the proposed shared leadership
model. My experience informs me that this is the most challenged role, given the dual reporting
relationship inherent in the nature of this pivotal position. Within the proposed shared
leadership model, the Executive Director is the operational leader who is regarded as the
"knowledge professional" with the most resident experience in philanthropy pursuits. The
foundation Executive Director is expected to provide best options to dedicated volunteer Board
members and staff. Also, the Executive Director has the opportunity to demonstrate leadership
by articulating the organization's vision, and ensures that the foundation's game plan is in
sync with the hospital's philanthropic priorities. Often in the fund raising world the Executive
Director role is best defined as leading from behind. In other words, leadership in this instance
is seen as supporting both the foundation Board Chair and hospital CEO.
The reporting structure to support this shared leadership concept is critical to lasting interrelationships. For an enduring partnership to survive between the Executive Director and the
hospital CEO a coherent reporting linkage is vital. Thus, the physical location of the foundation
enterprise is an important enabler in creating ongoing, working relationships. The interactions
and communications among the leaders must be no less than congenial at all times to
maintain integrity of the fund raising portfolio.
When one points to best practice, it also refers to having the Executive Director regularly
invited to meetings of the hospital senior management team. Such presence would speak
volumes about the import of fund raising within the hospital setting.
Foundation Board members have ultimate responsibility for governance of the foundation's
assets and operations. An important part of this mandate is accountability to each and every
donor. As trustees of philanthropic donations, members have a duty of trust to ensure wise
and prudent utilization of donated funds. It must also be underscored that the foundation
Board members are accountable to the public for both dollars raised and dollars spent. This
duty of care has been delegated to the foundation, and is guided by legislative rules.
At the risk of repetition, I note that the governing power of the foundation Board members is
fiduciary, and includes both a duty of care and a duty of loyalty. In addition, Board members
are required to act in good faith in the best interest of their corporation.
Best practice within the shared leadership configuration also calls for cross-representation at
the policy making level between the hospital and its foundation. It is progressive thinking to
have the foundation Board Chair sit as ex officio on the hospital Board. In the spirit of
reciprocity, the hospital Board Chair or designate should assume such an ex officio position on
the foundation Board.
When a high degree of integration, as noted above, is embodied, a constructive working
relationship can be effectively established between the two interdependent organizations.
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Philanthropy, in support of CMH, will flourish as the work place environment will be nurtured
by leaders who share a common vision and pursue mutual goals on behalf of Cambridge
citizens.
However, a prerequisite to the proposed shared leadership model is the element of mutual trust
between the hospital and foundation. Leaders in a hospital-foundation best practice
relationship must demonstrate unequivocal respect for other leaders in the tri-leadership
arrangement. Success of the shared model is reliant on the character and leadership styles of
the three key leaders (foundation Board Chair, hospital CEO and Executive Director of the
foundation). If personal relations among these three are at odds, any devised organizational
relationship is doomed to failure, as evidenced by the current dispute. Donor confidence will be
shaken if relations among the three main actors on the fund raising stage are seen as
adversarial. Leaders within the shared leadership model must, therefore, put donor and
"community good" front and centre.
Recommendations: Prescribing a New Era
I now offer you my best-efforts advice to respond to the June 18, 2003, Order in Council, aimed
at resolving the damaging dispute between Cambridge Memorial Hospital and the Cambridge
Memorial Hospital Foundation. My advice is based on my 20-years of experience in
successfully working with hospital foundations, together with relying on numerous discussions
with hospital, foundation, community and philanthropic stakeholders. It must be stated that
an overwhelming majority of stakeholders are morally outraged at the events of this travesty,
which they believe has tainted both the hospital and the foundation. Throughout my
experience I have never witnessed the vitriolic feelings that are in play between hospital
spokespersons and foundation leaders. Intractable positions of winning at all cost are
poisoning relationships and inviting adversarial behaviours.
Minister, after two months of review, my considered, over riding conclusion is that both parties
to the dispute must account to the community at large (patients, staff and donors) for
permitting this rancour to evolve into a "crisis of public confidence" within the Cambridge
region. By pursuing this public feud, over $1.4 million of precious hospital and foundation
resources have been squandered for legal fees, consultant fees, e-mail surveillance and other
related costs. To me, in an era of scarce resources, and in the face of many patient care needs
at CMH, this lack of stewardship is unconscionable.
Based on my investigation, the litany of affronts to each other with legal opinions anchoring
opposing sides, led me to conclude that a "clean slate" must be considered. I do not make this
statement lightly or casually, as drastic consequences would follow. However, my strong
conviction, after reviewing the tattered relationships between and among key leaders, is that
changes in leadership at both the hospital and the foundation are prerequisites for an enduring
resolution.
I advance to you and your Ministry, therefore, a course of action to address how to best serve
the future interest of a proud community that, I believe, will rally to support philanthropy if a
prescription for leadership change is ordered by your Ministerial authority. What is at stake is
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the need to show the over 1,300 hospital employees, medical staff, volunteers and past and
prospective donors that decisive action will be taken by you.
I offer the following recommendations, which can be directed by whatever best means you have
through the Public Hospitals Act. Other government agencies, such as the Public Guardian and
Trustee, which oversee foundation conduct, can take action within the provisions of legislation
such as the Charitable Gifts Act (Ontario), and Charities Accounting Act (Ontario). Federal
agencies that determine the status and fate of charitable organizations can also play a role in
realizing an end to this dispute.
1. That the current CMH Board of Directors be asked to immediately relinquish their
governance role. This action will allow the governance level to be reconstituted afresh
with individuals who will bring necessary skills to the hospital policy table.
Given the complexity of directing hospitals in today's challenging environment, it is
imperative that CMH attract experienced citizens who will challenge management.
Today, the current Board has minimal trustee experience, as twelve of the fifteen Board
members have tenure of three years or less. It is my understanding that the CEO unduly
influences the selection process of new trustees and the Board succession plan. The new
selection process for new Directors must reflect "best practices" in governance.
Given the desire to pursue "best governance practice", a formal recruitment process
should be initiated to assemble a new slate of Directors on the basis of required skills to
live out governance responsibilities. I would suggest that the process should invite the
Chamber of Commerce and outstanding citizens to participate in the search and
selection process. Further, the reconstituted Board should include cross-representation
of one Director from one of the neighbouring hospital boards so that communications
and hospital services planning can be enhanced within the region.
An essential prerequisite to being appointed to the successor Board is attendance at a
governance orientation program. It is suggested that the Ontario Hospital Association be
approached to organize and deliver such a program.
2. That the current foundation Board members be asked to relinquish their governance
responsibilities.
Plans should be made immediately upon resignation of the Board to reconstitute its
governance within the new framework of this report. New leaders and new governance
composition is required if the community is to regain confidence and public trust. A
mandatory requirement of Board membership would be attendance at a governance
orientation program similar to that being proposed for new hospital Board members,
with emphasis on philanthropy.
3. That the current CMH Chief Executive Officer be asked to resign immediately. Failing a
resignation, termination should be initiated through your powers under the Public
Hospitals Act.
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Unless a new leadership style is put in place at CMH, the organization will continue to
lose excellent individuals who work in an environment that prevents them from reaching
their full potential. The unprecedented turnover of management personnel signals a topdown leadership style that has gone unchecked. Hospital stakeholders are privately
voicing the need for a more liberating style of leadership that will maximize the hospital's
full potential within the region.
4. That the Executive Director of the foundation be asked to relinquish her management
duties.
Similarly, to regain the confidence of current donors and the donor community, it is
critical that a new leader signal the implementation of a new framework for fund raising.
5. That the new framework model to govern fund raising at CMH be developed and adopted
by both successor governance structures.
Experienced hospital foundation leaders in Ontario are available to offer their expertise.
Consultants should be avoided at all cost in establishing the new model, as Ontario has
a mature philanthropy infrastructure that can offer prototypes and expert advice.
6. That both successor Boards (hospital and foundation) take steps to incorporate the new
relationship framework within their respective by-laws on a timely basis. This initiative
will signal formal ownership of the new partnership model into the future.
7. That both the hospital and the foundation disengage and sever from all court actions
and related debates. Further, that the hospital and foundation should publicly declare a
moratorium on spending valuable, scarce resources on legal/consultants' opinion
associated with this dispute, and publicly communicate in a transparent manner this
willingness to the Cambridge community.
8. That the hospital be directed to relocate the foundation within hospital premises,
indicating a strong signal of this new beginning. Further, the hospital should offer
collegial assistance to foundation staff to ensure they are welcome as a valued partner.
By reducing overhead costs more funds will be available to support hospital priorities.
9. That Ministerial consideration be given to provide copies of this report, without
prejudice, to not only the Chair of CMH Board, but to all Board members of both
governing bodies (hospital and foundation) and appropriate community leaders, as you
deem necessary.
10. That a communication strategy be developed to share your Ministerial action in a
transparent way among community leaders so that the healing of relationships can
occur throughout the community.
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Minister, I realize the magnitude and implications of the recommendations calling for a "new
era". I believe the current leadership has mismanaged the dispute, and as such leaves you no
option but to exercise your Ministerial powers. I believe that the power of persuasion from
community voices will encourage the foundation leaders to accept these recommendations in
the spirit of achieving closure. I do not for a moment undervalue the volunteer leaders who
became involved and attempted to draw this saga to a logical end.
I wish to specifically acknowledge and thank the over 120 individuals who took the time to
make representations to me, either in person or through correspondence. They have a genuine
interest in seeing this travesty resolved. The overwhelming expectation is that you, as Minister
of Health and Long-Term Care, will act on this report in a timely manner.
Minister, although my task is complete under the Order in Council, I offer my time to you, or
any of your Ministry staff, to discuss this report as you deem necessary.
Questions in Preparation for Session Two
Please come to Session Two prepared to discuss the following questions:
•
What was the primary problem that caused the Ministry to step in at Cambridge
Memorial Hospital?
•
What governance-related symptoms resulted from this problem?
•
How do you guard against a similar problem from occurring at your HSP?
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