Post-cyberattack, TransForm moves out of hospital supply chain business

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TransForm Shared Service Organization, which oversaw cybersecurity as hackers took down systems at five Ontario hospitals, including Windsor’s, has ceased supply chain services for the targeted institutions.  

The agency has handed over that responsibility, along with $5 million of its annual operating budget and a third of its full-time staff, to a larger shared service organization called Mohawk Medbuy.  

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But TransForm board chair Helga Reidel said the divestiture of staff and services was not related to the devastating cyberattack in October. She said TransForm’s board started discussing the transition with its member hospitals last summer. 

“Nothing to do with the cyberattack,” Reidel told the Windsor Star.

“In fact, there was a concern that the cyberattack work would keep us from bringing this through to fruition. But it didn’t. We met all our original targets.” 

Effective April 1, Mohawk Medbuy is the supply chain service provider for Bluewater Health, Chatham-Kent Health Alliance, Erie Shores HealthCare, Hôtel-Dieu Grace Healthcare, and Windsor Regional Hospital. 

These are the same hospitals that announced Oct. 23 they were under cyberattack, along with TransForm, their shared service provider. 

The massive ransomware assault shut down systems at all five hospitals, delayed procedures, and forced many patients to leave their hometowns for treatment. 

The hackers also stole mountains of sensitive information and posted it on the dark web after the hospitals refused to pay a ransom. 

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Reidel would not discuss the cyberattack. Officials with TransForm, including CEO Lyn Baluyot, have refused to talk publicly about the hack since it began. 

The CEOs of the five hospitals said during a joint media conference earlier this month that 326,000 letters were going out to patients whose information was stolen and posted online. 

Without addressing the cyberattack, TransForm said it will continue providing digital health and information technology services, as it has done since the five member hospitals founded it in 2013. No other divestitures are planned, according to Reidel. 

“Digital IT is still staying with TransForm and the hospitals have repeated that,” she said. “So there is no intention for any other changes.” 

During the last joint hospital media conference, Kristin Kennedy, CEO of Erie Shores HealthCare in Leamington, said the hospitals remain committed to TransForm.

“We are TransForm. The hospitals are TransForm,” Kennedy told reporters.

Reidel said the divestiture of supply chain services will mean a reduction in TransForm’s $25-million annual operating budget, which pays for things like office costs and salaries.

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“Our annual budget spend will be reduced by the amount that we used to spend on the staff for the procurement function, as well as any supplies they would have needed,” said Reidel. “So our budget will go down.” 

TransForm communications specialist Juhayna Helmy said the hospital-approved budget for existing supply chain and accounts payable operations transferred to Mohawk Medbuy is about $5 million. 

Apart from its operating budget, TransForm also spent about $749 million annually in taxpayer money, mostly on the supply chain services that Medbuy Mohawk is taking over. 

Those services include shared group purchasing, requests for proposals, tenders and accounts payable, along with any procurements for an individual hospital’s needs.  

“Medbuy will bill the hospitals directly for whatever amount they agree to and what services they perform,” said Reidel. “We will no longer receive that funding at TransForm.” 

Reidel said the transition of supply chain services follows a government directive to streamline processes. 

“The province was encouraging all hospitals to move to consolidated supply chains, even provincially,” she said. “Mohawk Medbuy was quite large, and they’ve taken over the procurement for a number of hospitals.

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“We were just one more piece of the puzzle to bring all the procurement consolidated provincially. So, it was really a direction from the province to move in this way.” 

Mohawk Medbuy currently lists more than 60 hospitals, long-term care facilities, and health authorities as members on its website. 

TransForm’s divestiture comes in the wake of Mohawk Medbuy’s acquisition of other shared service organizations, including Plexxus, St. Joseph’s Health System’s Group Purchasing Organization, Northern Supply Chain, Shared Support Services Southeastern Ontario (3SO), and Shared Service West. 

Reidel said the recent development with TransForm was not an acquisition. Mohawk Medbuy and TransForm remain separate entities, she said.  

But Mohawk Medbuy is taking on about 50 former TransForm employees.  

Before the divestiture, TransForm stated on its website that it had 147 full-time and 62 part-time employees. But the organization has also gone on a hiring spree since the cyberattack to fill positions for the other parts of its operations.  

“It was about 50 employees that were transferred to be employed by Mohawk Medbuy,” said Reidel. “They were all offered jobs. I think all but one accepted the position.

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“So they are all working for Mohawk now, and the salaries and all the funding for that is going to Mohawk Medbuy.” 

Reidel said Mohawk Medbuy is also taking over the lease for the office and supply warehouse in Chatham that TransForm previously operated.  

“The employees are still at the Chatham location, they just now work for Mohawk Medbuy,” said Reidel. 

“Staff is still working through this transition. Obviously, it doesn’t happen overnight with the flick of a switch. But we expect within the next month or so that it will be concluded and everything will be transferred and settled.”

twilhelm@postmedia.com

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