09/26/2012 12:16 EDT | Updated 11/26/2012 05:12 EST

For-Profit Health Care Treats Shareholders First


This past week, a small family-owned medical facility just outside Toronto, the Shouldice Hospital, catapulted to the centre of the public-private debate in Canadian health care. Hernia repair, regarded as a relatively routine surgical procedure, is what the clinic built its sterling reputation upon. Even Atul Gawande, Harvard surgeon and staff writer for The New Yorker, has stated that "there's probably no better place in the world to get a hernia repaired." High praise indeed.

Such specialized success stories rarely go unnoticed. Centric Health -- a publicly traded company under American control -- has placed a bid to acquire Shouldice for over 14-million dollars. Given the anomalous history of the Shouldice as a "grandfathered" private hospital, such a deal would require approval by the Ontario Ministry of Health and Long Term Care. The Honourable Deb Matthews' most recent position was articulated as follows:

I can assure you that our commitment is to publicly funded health care; to public, not-for-profit care. We will not be adding any new for-profit beds in this province. Our commitment is to do what's right for patients.

The fact that Centric Health maxed out as a donor to the Ontario Liberal Party has muddied the optics. But this is not blasphemous, it's what profit-seeking firms are predicted to do. How exactly the sale of this 89-bed facility could impact patient care, however, has warranted the attention of the public.

There have been excellent op-eds in the Star, Healthy Debate and the Globe and Mail, that cover all the bases around the hospital's history and the implications of the transfer.

As the subject of a case study, there still could be some importance in clarifying what the Shouldice is, and is not.

The facility seems to maximize its efficiency and quality gains through its sheer volume of procedures. Basically, it's a self-proclaimed focused factory. The hernial surgeries themselves are fully reimbursed by OHIP. The required three-day hospital stay is not, and this what almost certainly makes the Shouldice experience more expensive. It's also not a typical for-profit clinic in Canada -- it receives an annual operating budget from the government in addition to the OHIP reimbursements. There is certainly truth to the clinic's costs remaining lower than comparable clinics to the south, but some of this must be credited to having primarily one payer: our provincial government.

Frustration with our current health system and the visceral reaction to contract it out is understandable. Family members hate to see a grandmother wait for an operating time, and should only demand the highest level of care for their loved ones. Yet the evidence for bringing investor-owned facilities onboard is not always favourable to the patient cause or public spending front. Such hospital and provider arrangements are accountable first to their shareholders, second to patients and taxpayers. Strong regulatory oversight is crucial, but how effectively we could exercise that over an American enterprise appears loaded with its own set of challenges. A lot of this concern would be softened if there was a clear relationship between patient care, profits and stock prices. Unfortunately, there isn't one.

With all the stories coming out about the Hospital Corporation of America's practices, we must be even more responsible in refraining from for-profit demonization. The Shouldice is different than the HCA, no doubt, as we have also been considering hernial repairs as opposed to more complex or risky interventions. But what if the for-profit modus operandi was extended, to say, the Ottawa Heart Institute? Would that change some of the thinking?

In his recent commentary, Andre Picard was absolutely correct in calling out the "the many vested interests that profit handsomely from the status quo" and stifle health care reforms. If one objective is curbing health care spending, how exactly we should accommodate the administrative monstrosities and poor cost control of investor interests remains unclear. The priority of returns may only add resistance to patient centred reforms, something the United States has yet to completely wrestle down.

It's not that the private market is bad, far from it. But when it comes to health care, countries with more government involvement have performed better on a certain range of measures. Sliding our mix of delivery in the private direction is also about a value gap. In an American report that identified non-profit brands as the best providers of care, Dr. John Santa's explanation is telling: "Investors have an expectation of getting a return and resources have to be devoted to that, and that creates a different culture."

Economists have come to recognize that health care delivery does not always fit as a conventional commodity. There is no simple solution. Successful reforms will not be entirely about economic models, rather the need for strong political leadership in ensuring a Triple E Health System; equitable, effective, and efficient.

Canadians are not a forgetful bunch when it comes to political promises. Minister Deb Matthews' commitment to keeping patient care provisions away from investor-owned companies is an important one. And if profit maximization is to become the rule rather than the exception, talk of the patient being first may become just that.

All views in this post are strictly of the writer and do not necessarily reflect those of any affiliated institutions or boards.