October

Board meeting – 76th meeting

Boardroom, Ville Saint-Laurent facility
Wednesday, October 15, 2008, at 8 a.m.

Present:
Mr. Jean-Pierre Allaire
Ms. Cheryl Campbell Steer
Ms. Martine Carré
Dr. Martin Champagne
Ms. Hélène Darby
Dr. Francine Décary
Ms. Carole Deschambault
Dr. Marc Dionne
Dr. Serge Montplaisir
Dr. Pierre Ouellet

Absent:
Mr. René Carignan

Hemovigilance Committee Observer:
Mr. Wilson Sanon

Guests:
Dr. Yves Blais, Vice-President, Research and Development
Mr. Yvan Charbonneau, Vice-President, Operations
Dr. Gilles Delage, Vice-President, Medical Affairs in Microbiology
Mr. Simon Fournier, Vice-President, Information Technology
Dr. Marc Germain, Vice-President, Human Tissues
Ms. Smaranda Ghibu, Vice-President, Legal Affairs
Mr. Guy Lafrenière, Vice-President, Administration and Finance
Dr. André Lebrun, Vice-President, Medical Affairs in Hematology
Ms. Manon Pepin, Vice-President, Public Affairs and Marketing
Ms. Suzanne Rémy, Vice-President, Quality and Standards
Mr. Gilbert Rodrigue, Meeting Delegate, Héma-Québec

1. Call to order
Jean-Pierre Allaire chaired the meeting.
He welcomed the members and guests in attendance.
Quorum was established, and the meeting was called to order at 8 a.m.

Dr. Martin Champagne announced that he may have a possible conflict of interest. He told the Board that he had signed an agreement with Héma-Québec to act as consultant on the issues of stem cells and cord blood. He will therefore remove himself from meetings when these issues are discussed.

2. Adoption of the agenda
It was motioned, duly seconded and unanimously resolved to adopt the agenda as presented.

3. Adoption of the minutes of the 75th meeting held on August 13, 2008, including the closed-door discussion
It was motioned, duly seconded and unanimously resolved to adopt the minutes of the 75th meeting of the Board held on August 13, 2008, and the closed-door discussion as presented.

4. Business arising from the 75th meeting held on August 13, 2008
The document was reviewed.

Item 12 – Conduct a follow-up on the Consensus Forum for blood bank directors.

The academic representative noted that there had been a symposium in April 2007 for blood bank directors. This event provided the opportunity to discuss the role of hospitals in the blood system and the lack of interaction with other blood system stakeholders.
A letter to this effect was sent to the Minister of health and social services and to the director of clinical prevention and biomonitoring at the MSSS. To date, no reply had been received.

It was agreed that Dr. Martin Champagne would follow up on the issue and inform the Board of any new developments.

The other items appear on the meeting agenda.

Dr. Marc Dionne and Dr. Serge Montplaisir joined the meeting.

5. Financial affairs
5.1 2009-2010 budget
The 2009-2010 budget was tabled and discussed.
The presentation included the following sections:

• 1. 2005-2010 vision
• 2. 2009-2010 issues and activities
• 3. HQ/CBS comparison
• 4. Presentation of budgets
  • 4.1 Operations divisions
  • 4.1.1 Labile products
  • 4.1.2 Stable products
  • 4.1.3 Reference laboratory
  • 4.1.4 Hematopoietic progenitor cells
  • 4.1.5 Human tissues
  • 4.2 Support divisions and Office of the President-CEO
• 5. Budget comparison
• 6. Product safety projects
• 7. 2009-2010 tariffs
• 8. Capital budget

The President-CEO presented the 2005-2010 vision, the 20072010 strategic issues and the 2009-2010 activities relating to these issues.

The Vice-President, Administration and Finance, presented the other subjects. He listed the major issues considered in the development of the budget:

• Exchange rate: high sensitivity has resulted in an impact of $1.25M per 1¢ variation;
• Inflation (CPI): set at 2.5% in the budget;
• Stable products: $1.1M discrepancy in Héma-Québec and MSSS forecasts;
• Retirement fund performance;
• Insurance: Bill 67 – Act to amend various legislative provisions concerning health and market progress;
• Interest rates: loans and investments.

HQ/CBS comparative data are favourable for Héma-Québec, particularly with respect to the following:

• The total cost of labile products per equivalent unit shipped dropped 0.5% from 2007, whereas it grew 0.9% for CBS, a difference of 1.4% in favour of Héma-Québec;
• The per capita cost of labile products in 2008 was $16.28 for Héma-Québec, compared with $17.37 for CBS, a difference of $1.09.
• Total blood donations grew 3.6% from 2007, whereas they fell 0.3% at CBS.

It was suggested that the ratio of stable products be removed or that a note be added, since the figures are not comparable due to the different distribution by Héma-Québec.

Members discussed the method used by the MSSS to forecast volumes of units of packed red blood cells. The MSSS extrapolates the data from previous years and consults a number of hematologists. Héma-Québec also reviews the volume for reference purposes. The volume requested by the MSSS was 236,283. The budget was then developed accordingly.

Moreover, budget items that increased significantly, i.e. fuel costs, building rental fees (new Globule building in Laval) and 7.4 FTEs (net), half of which are temporary positions.

Finally, the capital budget was presented. It was established at $7,373,600. This figure represents a major increase over last year, due to several IT projects in the reference and stem cell research laboratory (SILAM) involving Quality and Standards and SAP in general, as well as a major project on the process of transforming labile products.

Members requested a follow-up of the business plan regarding human tissues, which will be presented at the meetings on April 29 and October 7, 2009.

In conclusion, the Chair of the Board briefly explained the $17M (i.e. 5.7%) increase in 2009-2010 over the 2008-2009 forecasts, 3.7% of which are due to higher demand.

In the absence of the Audit Committee Chair, the business community representative and committee member reported on the discussions that had taken place during the presentation of the budget to the Audit Committee. This presentation was more detailed than the version presented to the directors.

It addressed a number of aspects at risk, such as the exchange rate, insurance, pension fund performance and inflation. Nonetheless, the budget assumptions were maintained.
She also stated that the budget would be tabled at the upcoming CGAF on November 6, but that it could be reviewed if the exchange rate were to fluctuate considerably. Moreover, in the event such changes occur, the Audit Committee will hold a special meeting on the issue, and the administrative guideline on the exchange rate would be revised accordingly.

The Audit Committee therefore recommended that the 20092010 budget be adopted as presented, and that the capital budget and five-year forecast also be adopted.

It was motioned, duly seconded and unanimously resolved:

1. to adopt the 2009-2010 budget based on anticipated revenues of $314,013,000 including $127,301,000 for labile products, $168,654,000 for stable products and a subsidy of $18,057,000 for other services, including Synagis;
2. to approve the cost of a unit of packed red blood cells to $343.72, based on a delivery volume of 236,283 units in 2009-2010;
3. to approve the 2009-2010 capital budget of $7,373,600;
4. to adopt the five-year forecasts for 2010-2011 through 2014-2015 as submitted;
5. to review the set exchange rate (1.08%) on the Audit Committee's recommendation if circumstances warrant;
6. in the event the exchange rate is revised, to authorize the Audit Committee to approve the revised budget.

The Board recognized the excellent work of the Audit Committee, the President and CEO, the vice-presidents and directors, and the Finance team.

With the exception of the Vice-President, Legal Affairs, the Vice-President, Administration and Finance, and the meeting delegate, all guests left the meeting.

5.2 Operating statistics as at August 31, 2008
For August, the actual number of units of allogenic packed red blood cells delivered to hospitals was 95,768 vs. 96,025 in 2007, a decrease of 0.3%.

The actual percentage of losses during production of packed red blood cells collected was 4.95% vs. 5.74% in August 2007, a decrease of 13.8%.

The cumulative statistics as at September 30, 2008, show that the actual number of units of packed red blood cells delivered to hospitals was 115,448 vs. 112,916 in September 2007, an increase of 2.2%. The actual percentage of losses during production was 4.82% vs. 5.72% in September 2007, a decrease of 15.8%.

The actual number of FTEs was 1,098 vs. 1,064 in August 2007, an increase of 3.2%.

It was noted that the target of 100 donors per drive was not reached. This is due to the operation of small, targeted drives (approx. 60 donors) to refill stocks of specific blood types.
This strategy, while very effective, is the reason for the failure to meet the 100-donor target. Management will give some thought as to how to present these statistics to best reflect the new reality.

5.3 Financial data as at August 31, 2008
The cumulative comparison as at August 31, 2008, indicated that the actual total of labile products was $48,187,000 vs. $52,997,000 in the budget, a difference of $4,810,000. The actual total of stable products was $57,384,000 vs. $61,830,000 in the budget, a difference of $4,446,000.

The surplus accumulated as at August 31, 2008, communicated to the finance controller is $10,085,057.

The Vice-President, Administration and Finance, left the meeting.

6. Safety of the supply
6.1 Pathogens under surveillance
The Vice-President, Medical Affairs in Microbiology, joined the meeting.

He presented the updates to the status report.

Héma-Québec and CBS each reported one case of West Nile virus.

The Vice-President, Medical Affairs in Microbiology, briefly presented babesia microti, a parasite that can be transmitted by transfusion, the mortality rate of which is approximately 25%.
Cases have been reported in New England, more specifically in Rhode Island and Connecticut. No transfusion-related cases have been reported in Quebec; nonetheless, this pathogen will be monitored.

The number of cases of Avian Infuenza (H5N1) appear to be decreasing.

6.2 Transfusion incidents and accidents in 2007
This discussion took place behind closed doors, since the report data have not yet been published.

The Vice-President, Medical Affairs in Microbiology, left the meeting.

6.3 Reflection on the blood safety costs
The Public Health representative discussed the costs of blood safety.
It is important to initiate a discussion process regarding this issue.
He noted that the cost-benefit study is integrated into the public health risk analysis. He gave as examples vaccines and folic acid for pregnant women.
He noted that this aspect is not included in the blood risk analysis. He recalled the recommendations of the Krever Commission regarding the precautionary principle and of the Consensus Forum in Toronto (2007) regarding the reduction of pathogens. The cost-benefit analysis was not included.

The members found the economic information interesting but there was no consensus on its relevance to decision-making. The final decision could be based on other criteria, including donor and recipient confidence.

Further to the discussion, members asked that an economic study be conducted for the safety projects (where appropriate) and to amend the decision document model so as to include this possibility.

7. Management report
7.1 Management statement
The discussion took place behind closed doors.

7.2 Follow-up on the future acquisition of Talecris by CSL
The President-CEO mentioned that the process is taking its course. She explained that the proposed transaction must be studied by U.S. antitrust authorities.

She also informed the Board that CSL representatives had visited Héma-Québec and confirmed that the contract with Talecris would be honoured. It is important to note that Héma-Québec already does business with CSL.

8. Board affairs
8.1 Governance Committee: follow-up of the renewal of the directors' mandates
The Chair of the Governance Committee informed the members that a letter had been sent to the Director, Clinical Prevention and Biomonitoring, at the MSSS on September 25, 2008.
The letter mentions that the Board was submitting the candidates it had selected for the positions of research community representative and transfusion specialists representative at the meeting on August 13, 2008.

Moreover, the current business community representative's mandate has expired.

The members read the résumés of candidates for the position of business community representative.
One of the candidates is currently Vice-President-CFO and co-CEO of a company operating in the gasification and biofuel production sector.

The other candidate is currently senior director of operating risk, compliance and governance for a pension plan management company.

The Board is of the opinion that the names of both candidates should be submitted to the government.

It was motioned, duly seconded and unanimously resolved to submit to the government the two candidates for the position of business community representative, approved by the Board of Directors.

8.2 Audit Committee: Report on the meeting of October 14, 2008
In the absence of the Chair of the Audit Committee, the business community representative and committee member summarized discussions that took place at the meeting held October 14, 2008.

8.2.1 Review of the guideline on the exchange rate
As stated in the presentation of the 2009-2010 budget, the committee will meet, as needed, by teleconference in order to determine which amendments to make to the guideline, based on fluctuations in the exchange rate.

8.2.2 Increase in the $2M revolving credit facility through term loans with matched funding to raise it from $20M to $22M
Having recommended that the Board approve the 2009-2010 budget, including the capital budget, the Committee also recommends the resulting $2M increase in the revolving credit facility.

It was motioned, duly seconded and unanimously resolved to approve the resolution entitled " 2M increase of the revolving credit facility through term loans with matched funding to raise it from $20M to $22M,” which is enclosed as an integral part of this document.

8.2.3 SILAM project – Implementation of a laboratory information system for Medical Affairs – Hematology: preliminary study
The discussion took place behind closed doors.

The Vice-President, Information Technology, joined the meeting.

The Vice-President, Information Technology, left the meeting.

8.2.4 Review of the protocol agreement between HémaQuébec and the Foundation (from the perspective of generally accepted accounting principles)
The review of the protocol has been postponed since the Canadian Institute of Chartered Accountants (CICA) has not yet developed recommendations on the standards for related parties and the control of financial statements.

The business community representative summarized the other subjects addressed at the meeting on October 14, 2008:

• Risk management: the exchange rate and performance of pension funds will be added to the list of risks monitored by the Management Team.
• Possibility of making pension adjustment for T4 and R1 internally: given that the current supplier offers a service at a lower rate and considering the work that would be required (including the reconfiguration of SAP), it was decided to maintain the current practice.
• Public Administration Act: There were changes to Héma-Québec's liability under the Public Administration Act. The implications will be presented to the Audit Committee at the meeting on February 11, 2009.

8.3 Human Resources and compensation committee: Report from the meeting on October 14, 2008
The discussion took place behind closed doors.

8.4 Research Ethics Committee: Renewal of Suzanne Courchesne's mandate as Committee Chair
The members read Ms. Courchesne's résumé.

It was noted that her mandate as a Chair of the Research Ethics Committee had expired. Ms. Courchesne agreed to have her mandate renewed for a period of two years.

It was motioned, duly seconded and unanimously resolved to renew Suzanne Courchesne's mandate as Chair of the Research Ethics Committee for a period of two (2) years.

9. Tabling of documents
The members read the documents.

The members' attention was called to the documents concerning the Héma-Québec 10th anniversary (see item 9.3)

9.1 Minutes of previous meetings
9.1.1 Audit Committee: June 25 and July 30, 2008
9.1.2 Human Resources and Compensation Committee: June 4, 2008
9.1.3 Recipient Representatives Advisory Committee: April 19, 2008
9.2 Info Héma-Québec

• Suzanne Rémy, finaliste au concours Femmes d’Affaires du Québec 2008 (August 26, 2008)
• L’équipe d’Héma-Québec est prête pour le marathon de Montréal (September 3, 2008)
• Il y a maintenant 10 ans… Héma-Québec démarrait officiellement ses activités (September 26, 2008)
• De la visite aux établissements de Québec et de Montréal (October 1, 2008)
• 2008 Support campaign. Nous donnons généreusement depuis belle lurette… continuons ça compte!
  (October 3, 2008)

9.3 Press releases and open letter

• Héma-Québec is ten years old! Ten Good Reasons to Give Blood.
• Héma-Québec celebrates ten years of giving blood!
• Héma-Québec 1998-2008. Never take trust for granted.

10. Discussion with management absent
The President-CEO and guests left the meeting.

Closed-door discussion.

The President-CEO and guests rejoined the meeting.

11. Other business
The President-CEO summarized some of the activities that took place during the AABB conference held October 4-7, 2008.

Events organized or sponsored by Héma-Québec: Héma Québec kiosk, golf tournament, reception with ABC.

• Héma-Québec presentations during plenary sessions.
• Issue of an emeritus award to the Knights of Columbus as part of the AABB Gala.
• 18 posters presented by the Vice-President, Medical Affairs in Microbiology, and the R&D researchers.
• Visit to the Montreal and Quebec City facilities by 212 people from various organizations, including:
  • Hemominas Blood Bank (Brazil)
  • Rio de Janeiro Blood Bank
  • New Zealand Blood Services
  • Scottish National Blood Transfusion
  • Sao Paulo Blood Bank
  • Korean Red Cross
  • Delegation of Chinese Blood Banks
  • Établissement Français du Sang
  • Tokyo Blood Bank
  • National Blood Services and Transplant of England
  • Taiwan Blood Services Foundation
  • Swiss Blood Bank
• Media: Radio-Canada newscast, 24 heures, Radio VilleMarie.

The President and CEO recognized the excellent work by all HémaQuébec staff who participated in the AABB conference and its organization.

The members congratulated the Héma-Québec directors for the success of the events.

12. Next meeting: December 10, 2008, 12:30 p.m., in Montreal
The next Board meeting will be held on Wednesday, December 10, 2008, in Montreal.

13. Adjournment
It was unanimously decided to adjourn the meeting at 3:40 p.m.