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SOMBA K'E/YELLOWKNIFE - Health Minister Sandy Lee says the government will wipe out $2.9 million owed to Stanton Territorial Hospital by the Nunavut government, after the GNWT came to an agreement with the territory on how to charge for health care services provided to Nunavut residents.

Stanton provides a wide range of services to residents of Nunavut - the Kitikmeot region in particular.

Lee said in an interview on Thursday that Stanton was owed about $6 million in outstanding receivables since Nunavut split from the NWT in 1999, and the Nunavut government has paid about $3.1 million.

That money will go to help pay off Stanton's $11 million deficit.

"We collected half from them and we will be asking for writeoffs on $2.9 million," she said.

The nearly $3 million Lee is looking to write off may be the price of doing business with Nunavut, according to the health minister.

"It's agreeing to disagree and agreeing to move on," she said. "Instead of spending more time talking about what has happened for the last eight years, we have worked out the approach for going forward."

There had been no working agreement between Nunavut and the Northwest Territories on how to charge for health care services prior to July of last year.

Lee said both governments had pursued a block-funding approach, where they would agree to a core-funding deal with escalation costs factored in.

However, she said one side could potentially be short-changed if the services provided far exceeded or fell under the projected amount set out in the deal.

As well, a number of personnel changes over the years, especially in Nunavut, prevented any deal from getting finalized.

In July 2008, the government came to an agreement to charge Nunavut per service provided to its residents, which Lee said is customary with other jurisdictions in Canada.

"We are going to charge for every procedure that we are doing, and they have agreed to pay us accordingly and pay it on a timely basis," she said.

Yellowknife Centre MLA Robert Hawkins said he was happy to hear the territories had an agreement in place now but added he was shocked to hear the amount Lee planned to write off.

"$2.9 million is not laughable," he said. "It's acknowledged money that keeps getting lost."

He said Lee should show some leadership on the file and personally see to it that the government negotiate to get all the money back.

Hawkins said he completely disagreed with the move to start from a "clean slate."

"It's business," he said. "We are providing a service and that service costs money.

"It's crazy that we are picking up the tabs of someone else."

He said with the financial difficulties Stanton has been in recently, the money lost could affect the type of programs and services the hospital could effectively deliver.

Lee said the services provided to Nunavut residents are essential to the operation of Stanton.

"Serving Nunavut makes it possible for us to have some of the services that we have for the NWT residents. They are not only our neighbour but they are a really important client for us. They come here to have babies and they come here for cancer treatment and dialysis," she said, adding health workers also travel to the Kitikmeot to deliver services.

Lee said any writeoff will have to be explained and justified to MLAs and government accountants.

It will also have to be approved in the legislative assembly.