Report finds governance failures, alleged fraud at London hospital

A new report from LHSC’s supervisor is shedding light on alleged fraud, financial mismanagement, and governance failures. Reta Ismail reports.

The Ministry of Health released a 40-page report by London Health Sciences Centre (LHSC) supervisor David Musyj Wednesday. It details reforms implemented since he was appointed supervisor by the Ontario government in September 2024.

Musyj outlined years of governance failures, financial mismanagement, leadership instability and an alleged fraud scheme that may have cost the organization tens of millions of dollars.

The report concludes that while patient care and research remained strong, the hospital’s governance and oversight systems deteriorated over more than a decade.

“Throughout all of this, our nurses, physicians, dentists, midwives, allied health professionals, researchers, support staff, volunteers and patient partners continued to deliver outstanding care,” Musyj said during LHSC’s monthly community update.

The report describes an organization that was facing a projected operating deficit of approximately $150 million by 2024, requiring funding advances from the Ministry of Health while struggling with procurement concerns and growing management costs.

Among the most significant findings is an alleged procurement and construction fraud scheme uncovered through a forensic audit in 2025. Investigators traced the alleged misconduct to a former vice-president of facilities who is accused of directing contracts to companies owned or controlled by an associate.

Musyj said the findings raised troubling questions not only about the alleged fraud itself, but about why warning signs were missed.

The hospital has launched two civil lawsuits totalling $60 million against former executives, individuals and companies allegedly connected to the scheme. The London Police Service and Ontario Provincial Police continue to investigate.

According to the report, the former board became increasingly reliant on information provided by management, limiting its ability to “independently challenge” decisions and identify risks. Musyj said leadership turnover further compounded the problem.

Over a decade, Musyj said, “LHSC cycled through six chief executive officers, six chief financial officers and 41 executives. That level of instability has consequences.”

Management compensation increased by 57 per cent between 2021 and 2024.

The report also revisits executive travel spending that generated public criticism before the province intervened. Among the examples cited was a 2019 international trip to Dubai, Oman and Qatar costing approximately $75,000. The report also references plans for nearly $470,000 in travel spending between 2022 and 2023 for trips to Portugal, the United Arab Emirates and Australia.

Musyj said the spending reflected a disconnect between leadership decisions and the financial pressures facing the hospital.

The report also identifies deteriorating relationships with key regional partners, including St. Joseph’s Health Care London and Western University, as contributing to organizational challenges.

Significant reforms

Since assuming supervision, Musyj said significant reforms have been implemented.

In September 2024, LHSC eliminated 59 management positions and demoted 71 others with salary reductions, generating an estimated $14 million in annual savings.

LHSC said it has also introduced new procurement controls, expanded whistleblower protections, restored an independent internal audit function and implemented stricter conflict-of-interest rules for executives and vendors.

According to the report, a comprehensive organizational review completed in 2025 generated 169 recommendations aimed at improving governance, operational effectiveness and financial performance.

More than 800 staff members are currently involved in implementing those recommendations.

The review also identified more than $100 million in potential savings through efficiency improvements and operational changes.

The report warns that financial recovery remains a work in progress.

Benchmarking studies found staffing levels in several programs exceed those of comparable Ontario hospitals, contributing to ongoing financial pressures. LHSC said future workforce adjustments will prioritize attrition, vacancy management and redeployment opportunities rather than widespread layoffs.

The report also points to aging infrastructure as a growing risk.

Musyj said that since May 2024, LHSC has experienced 30 infrastructure-related code grey events linked to failures involving electrical systems, generators, water mains, heating systems and air-handling equipment.

Several incidents resulted in service disruptions affecting emergency departments, operating rooms, diagnostic imaging and specialized care programs.

Musyj said infrastructure renewal will be a major priority over the next several years.

New board of directors

The report outlines a roadmap for continued recovery that includes recruiting a renewed volunteer board of directors, hiring a permanent chief executive officer, addressing infrastructure needs and strengthening regional integration with health-care partners.

“A strong board matters because strong governance matters,” continued Musyj. “It supports accountability, transparency, and the long-term success of LHSC.”

Applications for LHSC’s new volunteer board opened this week and will be accepted until July 31.

Hospital officials said the recruitment process marks the next step toward restoring traditional governance after more than two years under provincial supervision.

Musyj said the lessons learned at LHSC extend beyond London and offer important warnings for hospitals across Ontario.

“This work is about building the right board for where LHSC is going. A strong, well-rounded board supports leadership, reinforces public confidence, and helps ensure we continue delivering high-quality care now and into the future.”

You can watch the entire LHSC public meeting online.

LHSC will take a break from public community meetings for the summer, returning in the fall.