Alberta Health Minister Fred Horne sacked the entire board of Alberta Health Services on Wednesday.

Horne made the announcement at a news conference in Lethbridge, one day after the board defied a directive from the provincial government asking AHS to reconsider its decision to pay executive bonuses.

Horne said Tuesday that he could not accept the decision of AHS to award the pay-at-risk compensation when there have been numerous cuts to health care.

"This is not about reinventing the entire health-care system. This is about correcting a situation that had become intolerable," Horne said.

No severance pay

The dismissed board members, including chair Stephen Lockwood, will not receive severance pay, he added.

"At a time when we’ve asked our front-line providers, including doctors, teachers, and support workers to take freezes in pay, the unwillingness of the AHS’ board to reconsider its decision on pay-at-risk is completely out-of-step with the government’s priorities — and more importantly, the priorities of Albertans," the minister said in a release Tuesday.

Janet Davidson will step in immediately as the official administrator of Alberta Health Services to act in place of the board, Horne said.

The minister said he will direct Davidson — a veteran health-care administrator who has worked in B.C, Alberta and Ontario — to review the decision made by the AHS board to award bonuses for 2012-13.

Executives not allowed to refuse bonuses

"We understand that some AHS executives offered to forego their bonuses. I understand, though, that the board refused to allow these executives that option," Horne said.

"We don’t think it’s fair these bonuses are payable. Our position is clear."

The outgoing AHS leadership had defended the pay-at-risk model, saying it is only paid after clearly defined performance-related targets — such as reduced wait times for surgery — are achieved.

The board said cancelling the bonus payments so close to the end of the fiscal year would not be fair and that it had to live up to its contract agreements.

Political interference, says former chair

"I wasn't prepared to back on my word," said former board chairman Stephen Lockwood in reference to a previous decision by the board to proceed with the bonuses.

He says the board's dismissal amounts to political interference.

"I've always thought that the way the government should be handling Alberta Health Services is somewhat arm's-length. The decision we made was clearly an operational decision, but the political winds were blowing in a certain way."

Former board member Fred Ring said the health minister was aware of the bonus situation as early as February and chose not to do anything.

He said there's always the potential for dismissing board members any time there is a directive issued by the government, but he still would make the same decision today.

No other option

Duane Bratt, who chairs the policy studies department at Mount Royal University, said the board’s actions left Horne no option.

"When you give a public order like that and it’s defied, what choice do you have," he said.

But the government has placed itself in an awkward spot, he said.

"By intervening it shows clear political interference into Alberta Health Services, which is supposed to be at arm's-length from the government," he said. "And it asks the question, why even have a board."

Future impact questioned

The United Nurses of Alberta wants to meet with Horne and Davidson. President Heather Smith says she wants clarification on the impact of today's firing on the delivery of health-care services.

Smith also wants to discuss what the move means for negotiations now underway between the nurses' union and AHS. She notes that 200 front-line registered nurse positions have been eliminated, adding there are rumours more layoffs are coming.

Dr. Michael Giuffre, the president of the Alberta Medical Association, says today's decision caught most people by surprise.

"I think the instant thought of most physicians is will this interfere with us moving forward with some of the big parts of the agreement we just finished signing with the government," he said, referring to the recently-signed agreement between Alberta's doctors and the provincial government.