TORONTO - The "fix was in" at the Ministry of Health when it came to awarding lucrative consulting contracts to favoured vendors, auditor general Jim McCarter said Wednesday as he released a special report on the health-care sector.

There were "far too many examples" where consultants were hired by hospitals, local health networks and the Ministry of Health without tender or proper oversight, but they weren't on the same magnitude as last year's $1-billion scandal at eHealth Ontario, said McCarter.

"I’d have to say we did find many of the same problems (as eHealth) where consultants were being single-sourced, there was significant add-ons to original billings, and really just a lack of oversight," he said.

And while hospitals were singled out in the report for the worst examples of failing to keep a tight reign on consultants, the Ministry of Health had found a way around the rules when it wanted to hire a favoured consultant, said McCarter.

"It looked like there had been a competitive process, but it was very clear that there was a preferred vendor and that vendor was allowed to resubmit a bid even though they may have been the highest vendor," he told reporters.

"In auditing language, we essentially felt the fix was in in some of these contracts."

Health Minister Deb Matthews and Tom Closson, CEO of the Ontario Hospital Association, both apologized after McCarter issued his report saying hospitals continue to hire consultants without tender, and without properly monitoring consultants' fees.

"I'm not afraid to say I'm really sorry that this has gone on," Matthews said after the auditor's report was released.

"I don't think this is acceptable. I don't think that we have been as accountable as we ought to have been."

The hospital association said the auditor's report makes clear the institutions must do a better job of managing taxpayers' money when hiring outside consultants.

"We accept responsibility for this and I’d also say we apologize to the people of Ontario," Closson said in an interview.

When the auditor released his report on the use of consultants at eHealth last year — which forced the resignation of Matthews' predecessor, David Caplan — Premier Dalton McGuinty promised to close the loopholes around the use of consultants.

"Dalton McGuinty promised to clean up this, but he failed and the rot has spread," said Opposition Leader Tim Hudak.

"Things have become so bad in Dalton McGuinty’s government that even his scandals are having sequels. This is eHealth 2.0."

The New Democrats expressed outrage that health-care money was still being spent on consultants while the province reduced health services in some areas, calling it a "slap in the face" to families.

"It's a damning indictment of how well-connected insiders made off with millions of dollars at the same time as families in Hamilton and Niagara were losing emergency rooms," said NDP Leader Andrea Horwath.

McCarter was asked to investigate the rest of the province's health-care sector following his special report into eHealth, which found the agency tasked with creating electronic health records spent $1 billion but produced little of lasting value.

Matthews was at a loss to explain why hospital CEOs, who earn up to $750,000 a year, failed to learn from eHealth. She asked McCarter if he thought any hospital executives should be fired, but he said no, added Matthews.

"The government of Ontario does not hire, and cannot fire, hospital CEOs," she said.

"We are sending a very strong signal to hospitals today, to hospital boards, to hospital executives, that they better look very closely at what they are doing and we expect them to do far better."

As with the eHealth scandal, the auditor found consultants were once again billing taxpayers for expensive dinners, alcohol, huge phone bills and luxury hotel rooms around the world.

One hospital paid a consultant $170,000 for two years of expenses — on top of contracts worth $608,000 — but when auditors asked for receipts, the consultant wanted another $3,000 to produce them. The hospital wouldn't pay so it never got the receipts, said McCarter.

One hospital hired a former employee as a consultant a month after he quit his hospital job, at fees that totalled $240,000 annually — $100,000 more than his previous salary.

Yet another hospital single-sourced a consulting firm to develop a health information management system and for three years paid $398 an hour — $2.6 million in total — with no fixed ceiling price. The company then got another $975,000 up to February, 2010, and will get another $735,000 for other work this year.

The government has introduced new expense and procurement rules, and could dock the salaries of top executives at hospitals and LHINs if the rules aren't followed, said Matthews, who also promised to implement all of the auditor's recommendations.

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