The board of Alberta Health Services has voted to defy the provincial government and give bonuses to executives despite wage freezes and staff cuts across the system.

AHS said in March that cancelling the bonus payments so close to the end of the fiscal year would not be fair.

Officials also said the pay-at-risk component that is part of the overall compensation package for 99 senior leaders has already been budgeted for and covered in the 2012-13 budget.

"At the end of the day, it's a word called integrity," said board chair Stephen Lockwood about fulfilling contract obligations.

He expects the province will be disappointed, but the decision is from a board that is separate and arm's-length from the government.

AHS says it will scratch the bonuses, or “pay-at-risk” payments, for next year as part of its plans to cut 10 per cent from its administrative budget.

Review planned

Health Minister Fred Horne said earlier today he cannot accept the decision of Alberta Health Services to award bonuses to its executives when there have been numerous cuts to health care.

"At a time when we’ve asked our front-line providers — including doctors and teachers — to take freezes in pay, we cannot and will not accept AHS’s decision. It is completely out of step with the times," he said in a release.

Horne has issued a directive asking AHS to reconsider its decision to pay executive bonuses.

He also announced the government will immediately begin a review of governance for Alberta's boards and commissions, beginning with AHS. The findings for the AHS review are expected in September.

"Taxpayers expect us to safeguard limited tax dollars, and we’re going to do just that," he said. "Our government’s direction is clear — we will continue to ensure government, our agencies, boards and commissions live within their means."

But Lockwood says there was already a report completed in December 2012 on AHS governance, and it should be released before spending more taxpayers' money.

Budget pressures

There have been numerous cuts to health care, including staff layoffs, in recent weeks because of a tight provincial budget announced in March.

The Alberta government is facing a $1.97-billion deficit and is borrowing $4.3 billion to pay for capital projects and to make up what Finance Minister Doug Horner called a "cash requirement" of $6.3 billion in the 2013-14 provincial budget.

Liberal Health Critic David Swann said the AHS board needs to look at the optics of its decision.

"It doesn't fit in a system that is making weekly changes to the health-care system based on budget cuts to be handing out bonuses," he said.

"There is no basis for it, we've argued against it for a number of years. It is not necessary. It is demoralizing in the health-care system and they should change it. They should eliminate it from their contracts."

Opposition weighs in

Wildrose Party Leader Danielle Smith says Horne has lost control of Alberta's public health-care system.

"The decision by Alberta Health Services to ignore his weak directive to reconsider pay-at-risk for executives shows a fundamental failure of leadership and calls into question just who is calling the shots in the health-care system," she said.

Smith, Alberta's Opposition leader, says the health minister has two options: direct AHS to rescind the pay-at-risk bonuses for 99 executives or fire the board.

But Swann says the government is overstepping.

"The minister repeatedly intervenes in health-care assessment," said Swann.

"He says he is separate and quite apart from decisions about the services themselves and is only setting direction, but here he is once again interfering in the management of the health system. It's troublesome and I think it's going to threaten some of the stability in the health system if he keeps doing this."