However, profound change is happening. It just isn't the subject of debate in provincial, territorial or federal legislatures. There is no discussion about whether these changes are good or bad, will improve our overall health, what the evidence says about the direction we're moving in or what the impact will be on what Canadians refer to as "the five principles of medicare": universality, comprehensiveness, accessibility, portability, public administration.
These changes are mainly happening in corporate boardrooms -- which is why the public isn't at the table.
Centric Health
One such corporate boardroom belongs to Centric Health, a Canadian company based in Toronto but controlled by a venture capital firm in California called Global Healthcare Investments & Solutions (GHIS).
Known as Alegro Health until 2009, Centric is different from other private health corporations in Canada, which have tended to expand in "silos" and within provincial or even municipal boundaries. Instead of sticking to surgical clinics or physiotherapy or home care, Centric is sucking it all up, expanding across the entire spectrum in the health services sector: surgical clinics, rehabilitation, dental, home care, pharmacy, disability management, diagnostic services, medical equipment and third-party medical assessors.
This is known as "vertical integration," an investment strategy that could enable Centric to control multiple levels of care -- primary, secondary and tertiary -- under its corporate roof, mirroring, in effect, the public health care system (which is and should continue to be vertically integrated).
In 2007, GHIS -- which assures investors it is focused on "shareholder wealth creation" --formed a "strategic alliance" with Alegro, acquiring over two-thirds ownership of the Canadian company and changing its name to Centric. A 2012 Centric report outlined plans to significantly increase its size and position as an integrated health services business. An important part of that strategy is the development of a nation-wide Preferred Provider Network -- an arrangement in the U.S. known as managed care. In such a system, subscribers pay a fee to access hospitals, physicians and other providers who are all part of the same "network."
Nearly 1000 locations across the country
Centric's GHIS-backed buying spree brought 14 new health companies in seven provinces under its corporate roof between 2009 and early 2012. These include Surgical Spaces, Inc. (owner of Vancouver-based False Creek Surgical Centre and Maple Surgical Centre in Winnipeg) and Calgary-based LifeMark, Canada's largest rehab company with (so far) 120 clinics. On September 7, the company announced it was acquiring Shouldice Hospital, a private hospital established in 1945 in Thornhill, Ontario.
In 1973, private hospitals were "grand-parented" by Ontario's Private Hospitals Act, which specified that only those hospitals whose licenses were issued by the Ministry of Health before 1973 could continue to stay in existence. Further, the sale of Shouldice shares or transfer of license requires prior approval of the Minister of Health. Canadian Doctors for Medicare have called on Ontario’s health minister, Deb Matthews, to reject the sale of Shouldice to Centric but whether she will agree remains to be seen.
In 2005, Centric -- then Alegro Health -- purchased Don Mills Surgical Unit, which also needed -- and got -- the approval of then health minister, George Smitherman. With the purchase of some of the heavy hitters in the private surgical market, it appears that Centric is well on its way to achieving another unfortunate Canadian first, the establishment of a private "Surgical Centre of Excellence in 2012."
Today Centric is established in 980 locations across the country, including ownership of 19 surgical operating rooms. It is heavily invested in long-term care, with over 60,000 beds under the corporation's umbrella. It employs over 3400 health professionals, consultants and other staff. About 51 per cent of the company's revenue in physiotherapy, where it has the strongest market presence, comes from public payers, including workers’ compensation, while another 26 per cent comes from auto insurers (both public and private).
Follow the money
Centric's aggressive merger and acquisition strategy is supported by GHIS, founded in 2006 by Dr. Jack Shevel, currently the chair of the Centric board of directors. Shevel is known internationally as the owner and former CEO of Netcare, a company he took from being a relatively minor player in South Africa to the third largest healthcare services company in the world. Netcare has been credited with transforming South Africa's fragmented private health services to a consolidated market in which Shevel’s company played the lead role.
In 2006, Netcare acquired General Healthcare Group GHG), the largest private hospital company in the UK, for £2.2 billion, a deal described by the Financial Times as "the largest of its type in Europe." That same year, Netcare was awarded a five-year, £2.5bn contract by the NHS to provide a range of diagnostic and surgical services across the UK. Netcare now owns more than 120 hospitals in the UK, with 11,500 beds, 510 operating theatres and 37 pharmacies.
Centric's growth and expansion mirrors that of Netcare, not surprising given that both companies share a common mentor. In 2005, GL Faber, then-Vice President of GlaxoSmithKline, described Shevel as a kind of magician who turned Netcare into a global corporation.
Shevel's growth strategy for Netcare included very rapid expansion through acquisitions, specific incentives to enlist the support and loyalty of physicians and nurses, and the sale of shares in the company to employees, a move helped counter "labour unrest" among union activists. In 2003, Netcare spearheaded the introduction of managed care to South Africa.
Shevel's other key players on the Centric board include Darren Youngleson, a fellow South African, chief financial officer at GHIS, and the person credited with Netcare's successful acquisition of GHG in Britain. Also part of the team is Robert Wardell who sits on the boards of several gold mining companies, including Katanga, Elgin and Allied Nevada Gold Corporation.
Aggressive growth strategy
There is no doubt that the investments in Centric by GHIS are fuelling the growth of its Canadian company and supporting an aggressive acquisition strategy. This is a worrying development given the rights that U.S. investors can realise under NAFTA and the WTO.
An important aspect of Centric's growth strategy is to ensure it has access to "the necessary professional medical and support staff to support its expanding operations." Taking a page from Netcare, its first public offering was, in fact, "strategically focus[ed] on staff and healthcare professionals."
Similarly, the development of preferred provider networks is designed to attract health professionals and to this end it is developing relationships with insurers, workers' compensation boards and employers. Centric has negotiated over 30 PPN agreements with these groups, providing 3750 assessors, including 600 physicians. Under these agreements the company provides “independent evaluations to insurers, workers compensation boards and employers across Canada”.
Centric’s 2011 Prospectus describes its own review of legislation, regulations and ethical codes in Canada’s provinces. It found that “applicable legislation, regulations, standards of professional practice, professional codes of conduct, guidelines, ethical rules and protocols…governing healthcare professionals do not prohibit the purchase or ownership of securities of the Company by such persons”.
A study done by the Independent Medicare Payment Advisory Commission in the U.S. found that "physician-owned hospitals tend to be more costly, treat healthier and more profitable patients, increase the number of surgeries, and treat fewer Medicaid patients than community hospitals."
This led the United States Congress in 2010 to pass the Affordable Care Act which prohibited physician referrals to hospitals in which they were invested, a move that would save U.S. Medicare an estimated $500 million over 10 years. There are no similar conflict of interest laws anywhere in Canada.
What is to be done?
Canadians have very little experience dealing with an aggressive and acquisitive private health sector. Most of the companies in the Canadian health care market -- for example, Cambie Surgery Centre in Vancouver -- are privately-held and access to information about who invests in them, how much money they make, and where the money is going is hard to come by. But compared to Cambie Surgery, Centric Health is an open book. That's not because Centric is necessarily a "nicer" company, but rather is due to the fact that it's publicly traded and so different rules apply. That provides health activists with a lot more information -- and as Francis Bacon said, knowledge is power.
We are facing a new landscape in health care, a landscape that has been shaped, in part, by years of governmental failure to enforce laws to uphold not only the public interest, but also the public will. Such failures have created an environment in which medicare in Canada is shrinking and fragmenting, while the private sector is expanding and consolidating.
Health activists and researchers -- both academic and non-academic -- need to focus more of their skills on the corporate health and insurance sectors so we can better understand the companies and investors who are playing a larger role in the health care system. We need to understand how such companies operate in Canada, as well as the legislation that governs -- or more accurately fails to govern -- both the companies that are set to "grow the market" and the physicians who do double duty as investors. And we need to unite across the 49th parallel with American activists who are fighting against many of the same companies and investors that we now are confronting in our own country.
If it survives the debt load it is carrying as a result of its acquisition strategy, Centric will be a force to be reckoned with.
Original Article
Source: rabble.ca
Author: Colleen Fuller
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