Thursday, May 13, 2010

qotd: Canadian private, for-profit hospital files for bankruptcy

May 11, 2010
Bankrupt beacon of privatized health-care
By Gillian Steward

A Calgary for-profit hospital, once a beacon of hope for medical entrepreneurs across the country, declared bankruptcy last week. And who will have to pick up the pieces? None other than the public health-care system and ultimately Alberta taxpayers.

For years, critics predicted that this experiment in privatized health care would prove unreliable and expensive. But no one imagined a scenario in which publicly funded Alberta Health Services would go to court in a bid to keep the lights on over the operating tables in an investor-owned hospital. No one imagined that AHS would be paying receivership fees in order to keep the doors open. But this is, in fact, what has happened because Calgary's public health-care system is so reliant on private partners.

The private hospital, Health Resource Centre, was once the focal point of premier Ralph Klein's health-care strategies. It was for the benefit of HRC and its bevy of investors and orthopedic surgeons that in 2000 the Alberta government passed the Health Care Protection Act, which allowed private surgical clinics to keep patients overnight, thus allowing HRC to perform hip and knee replacements that had previously been permitted only in public hospitals.

The Klein government had already closed three public hospitals in Calgary as it pared its budget in order to eliminate the deficit. So there was indeed a shortage of operating theatres, a shortage HRC was quite prepared to fill. It had taken over space in one of the hospitals that had been closed and sold off. And it had been lobbying government ministers and local health authority administrators in an effort to secure contracts to provide surgeries for publicly insured patients who could not be accommodated in the public hospitals.

In 2004, HRC finally hit pay dirt. The regional health authority awarded it a two-year contract worth $20 million for the provision of 2,500 hip and knee surgeries. The health authority acknowledged that it was paying 10 per cent more than what it would cost if the surgeries were done in a public hospital but, given the shortage of operating theatres, it didn't have much choice.

The contracts continued and HRC became so successful that it decided to expand and rent expensive space in a new development. That's when HRC ran into trouble. Before it had even moved in, the developer claimed HRC had defaulted on payments. HRC claimed that Alberta Health Services had cut back on promised contracts, and declared bankruptcy.

AHS then went to court to try and save HRC, for without it there are not enough operating theatres to accommodate all the patients scheduled for surgery.


Calgary Herald
May 12, 2010
Clinic rescue costs $2.8M
By Colette Derworiz

Alberta Health Services will spend at least $2.8 million to keep a financially troubled private surgical centre operating for the next eight months, sparking outrage the Stelmach government is using taxpayer money to prop up a for-profit enterprise.

Health Resource Centre -- a private facility owned by Networc Health Inc. -- will stay open to perform publicly funded knee and hip replacement surgeries after the Edmonton-based medical superboard took the unusual step of filing legal action to fend off a possible bankruptcy.

But the intervention comes with a price tag for taxpayers after AHS ended up buying $1.3 million of the company's outstanding bank loans (at full value) to bolster the superboard's legal standing in the case as a secured creditor.

In addition, AHS agreed to pay $600,000 in interim receivership costs and the clinic's monthly rent -- which will work out to nearly $960,000 from now until January -- to Northwest Healthcare Properties, the landlord

"You have to wonder how many times taxpayers have to pay for the same service," said Liberal MLA Kevin Taft. "Taxpayers seem to be on several hooks at once for this debt. It's expensive for the taxpayers, unnerving for the patients and it's gotta be difficult for the staff. This is just lose, lose, lose."

Proponents of public health care said it's an expensive lesson.

"AHS paying $100,000 a month on a building they sold for a song just rubs salt in the wounds of the paying public," said David Eggen of Friends of Medicare.

Dr. Tom Noseworthy, a health policy expert at the University of Calgary, said the region "needed some breathing room" to continue delivering the surgeries.

"For practical purposes, that private enterprise has become an extension of their business, or shall we say, our business," he said. "Private health-care delivery is never cheaper, it's never of better quality and you don't get better outcomes. I don't know how many times we have to say that."


Calgary Herald
July and August 2005

Premier Ralph Klein:  "Let me be blunt. We have unacceptable waiting lists in our publicly funded, rationed health-care system, and all the money in the world is not going to eliminate them."

Don McCanne:  "Ralph Klein states that 'all the money in the world' is not going to eliminate waiting lists, unless the source of the funds is private instead of public. What nonsense."

Comment:  Right-wing ideologues, such as former premier Ralph Klein of Alberta, have continued to push for more privatization of Canada's health care system. They claim that the private sector provides greater access and higher quality at a lower cost. As if they didn't have enough contrary evidence from the United States, they have continued with their experiments in privatization.

The experience with Health Resource Centre - a private, for-profit hospital - reinforces the proponents of the public system who use health policy science to sound the alarms over the ill-advised march toward further privatization. 

The current saga began with Premier Klein's notion that public hospitals had to be shut down because the taxpayers couldn't afford them, yet private hospitals should position themselves to address the problem of excess queues which were further exacerbated by the failure of the government to appropriately adjust capacity in the system. He seems to imply that private funds manifest some sort of magical quality that public funds lack.

The results of this experiment would suggest the opposite. The for-profit Health Resource Center not only provided the same orthopedic services at a 10 percent greater cost, the center is now going to cost the taxpayers much more money in an effort to bail it out. This could have been prevented if Klein and others of his ilk had provided appropriate stewardship of the public program. Tweaking a public system is far less expensive than establishing a parallel private system.

Dr. Tom Noseworthy, health policy expert at the University of Calgary, states it well when he says, "Private health-care delivery is never cheaper, it's never of better quality and you don't get better outcomes. I don't know how many times we have to say that."

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