Voir en Français

A version of this commentary appeared in the Vancouver Sun, Huffington Post and iPolitics.ca

Last week, the family that owns Shouldice Hospital announced that it would like to sell its facility to Centric Health, a for-profit company traded on the Toronto Stock Exchange.

Shouldice, a Southern Ontario facility renowned for its care of patients with hernias, was founded by a surgeon in the 1940s and allowed to continue as a private hospital when Medicare was established in the 1960s. Under provincial law, however, the transfer of its license to another company cannot occur without the approval of Ontario’s Minister of Health and Long-Term Care.

Centric Health is a rapidly growing corporation that most Canadians have probably never heard of. Its revenue tripled from 2010 to 2011 as it embarked on an ambitious series of acquisitions across the country, purchasing pharmacies and physiotherapy clinics, as well as surgical centres that operate primarily outside provincial health insurance plans. Some of these surgical centres focus mainly on cosmetic procedures, and others take advantage of a loophole in our public health care system that allows workers’ compensations boards to purchase expedited care for injured workers.

Shouldice would be a very different kind of purchase, since the provincial government pays for most of its hernia repairs. One day, Shouldice would be a small family-owned hospital with a reputation for excellence. The next day, it would be part of a large corporation with a responsibility to maximize shareholder return.

Allowing for-profit companies like Centric to provide public services in Canada would make sense if they provided better quality and access at the same or lower cost than non-profit providers. In some instances, such as the manufacture of prescription drugs, for-profit companies frequently do a better job than non-profits or crown corporations.

But when it comes to providing complicated medical and surgical care that must be customized for each individual patient, non-profits are generally better.  P.J. Devereaux and his colleagues at McMaster University have reviewed the best available evidence from the United States as it pertains to hospitals, dialysis facilities and nursing homes. Each time, they have found that non-profit providers provide superior care.

They have also found that non-profit providers are less expensive.

One reason why for-profit hospitals cost more is that they sometimes bend the rules to maximize their revenue. Another is that they sometimes also skimp on care. For example, last month the New York Times reported that the Hospital Corporation of America, a large hospital chain in the United States, has been turning away “unprofitable” patients from its emergency departments. At the same time, the company has been figuring out how to creatively classify patients that it does treat so as to extract the maximum amount of money possible from the US federal government.

Let’s be clear that Shouldice is no Hospital Corporation of America. Shouldice has a very good reputation in the medical community and continues to be owned and operated by close relatives of its founding physician. Because of Shouldice’s focus and volume – its surgeons perform more than 7000 hernia operations each year – it is quite possible that Shouldice has better outcomes than hospitals in the public system.

Yet what guarantees would there be that quality would be maintained if ownership were transferred to a large for-profit company? What if Centric decided that it wanted Shouldice to start doing more expensive and complex surgical procedures? How would the government ensure that Centric prioritized patients over profits?

Even now, in terms of total cost per patient, it is likely that Shouldice is considerably more expensive than public hospitals. Much of this cost is for a hospital stay of about three nights, part of which is paid for by government and part of which is paid for by the patient. For all the talk of inefficiency in the public system, it is worth noting that outside Shouldice, most patients in Ontario with straightforward hernias are admitted and discharged on the day of their operation.

Asking patients to pay for part of their care also raises the possibility that public funds are being used to subsidize expedited access for wealthier patients, a scenario that most Canadians would find objectionable.

The government does have another option.  It could consider converting Shouldice to a non-profit facility, which would operate either as a satellite of one of the province’s major hospitals, or as a standalone facility.  We have precedents for both models in Ontario.  A hospital dedicated to hernia care makes sense, both instinctively and empirically.

But approving the sale of Shouldice to Centric would open the door to other companies clamouring for a piece of medicare from coast to coast.  Such a major shift would likely result in higher costs and worse care for most Canadians.

Do we need to improve medicare?  Absolutely.  But selling it off, piece by piece, to large for-profit companies is the wrong approach.

Irfan Dhalla is an expert adviser at EvidenceNetwork.ca, a regular contributor to healthydebate.ca, and a member of the board of Canadian Doctors for Medicare. He practices general internal medicine at St. Michael’s Hospital in Toronto.

September 2012

This work is licensed under a Creative Commons Attribution 4.0 International License.