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The High Costs of For-Pro T Health Services in Alberta

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The High Costs of For-Pro T Health Services in Alberta $$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$ DELIVERY MATTERS The High Costs of For-Prot Health Services in Alberta $$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$ A PARKLAND REPORT | APRIL 2012 delivery matters: t h e h i g h c o s t s o f fo r - p ro f i t h e a l t h s e r v i c e s i n a l b e r t a Published by the Parkland Institute April, 2012 contents a b o u t t h e a u t h o r 3 acknowledgements 3 a b o u t t h e p a r k l a n d i n s t i t u t e 4 introduction 5 c o n t e x t 6 1. h rc c a s e s t u d y – a d e e p e r l o o k 6 a s p e c i a l relationship : h rc a n d a l b e r t a h e a l t h s e r v i c e s ( a h s ) 7 h rc e x p a n d s a n d g o e s b a n k r u p t 10 t h e g o ve r n m e n t i n t e r ve n e s 10 2. t h e a l b e r t a h i p a n d k n e e replacement p ro j e c t 11 3. r i s k s a n d opportunities o f h rc 12 h rc s u r g e r i e s c o s t s m o re 12 international e v i d e n c e o n h i g h e r c o s t 14 i nve s t o r - o w n e d h a s o t h e r r i s k s 15 4. c o m p a r i n g fo r - p ro f i t t o n o n - p ro f i t 17 c o n c l u s i o n 19 tables To obtain additional copies of this report or rights to copy it, Table 1 | s u m m a r y o f g o ve r n m e n t o f a l b e r t a co n t r a c t s w i t h please contact: h e a l t h r e s o u rc e ce n t re i n c. ( b y ye a r ) 9 Parkland Institute, l b e r t a e a l t h e r v i c e s o m p a r i s o n o f a s e o s t s University of Alberta Table 2 | a h s : c c c 11045 Saskatchewan Drive ( b y p ro c e d u re ) 12 Edmonton, Alberta T6G 2E1 Phone: (780)492-8558 Fax: (780) 492-8738 http://parklandinstitute.ca Email: [email protected] ISBN 978-1-894949-33-0 About the Author Diana Gibson is the Research Director of the Parkland Institute, a social policy research centre based at the University of Alberta. She has worked as an edu- cator, researcher and program director nationally and internationally. She has an extensive record of publications as a political economist in areas of health care, inequality, trade and energy policy. She is co-author of the book The Bot- tom Line: the truth behind private health insurance in Canada. Jill Clements has a Masters degree in Governance and Development from the Institute of Development Studies in the United Kingdom. She has worked as a policy researcher internationally, providing research, analysis and advice to senior management, donors, government and community partners across South Asia, as well as countries in Africa, Latin America and Europe. Acknowledgements The authors would like to thank Regan Boychuk and David Thompson for research and Trevor Harrison and Ricardo Acuna for comments. Also thanks to Jes Elliott for layout and Scott Lingley for copy editing. 3 About Parkland Institute Parkland Institute is an Alberta research network that examines public policy issues. We are based in the Faculty of Arts at the University of Alberta and our research network includes members from most of Alberta’s academic institu- tions as well as other organizations involved in public policy research. Park- land Institute was founded in 1996 and its mandate is to: • conduct research on economic, social, cultural, and political issues facing Albertans and Canadians. • publish research and provide informed comment on current policy issues to the media and the public. • sponsor conferences and public forums on issues facing Alber- tans. • bring together academic and non-academic communities. All Parkland Institute reports are academically peer reviewed to ensure the integrity and accuracy of the research. For more information visit www.parklandinstitute.ca 4 Delivery Matters: The High Costs of For-Profit Health Services in Alberta introduction In Alberta and across Canada, the private for-profit healthcare sector is being positioned as a solution to wait times and the financial challenges facing the health care system. Consequently, for-profit delivery of healthcare is increas- ing. The provincial and federal governments are also increasingly referring to public healthcare as a publicly funded health system, under the premise that it does not matter who delivers the services. This report explores the implica- tions of this trend with regards to costs, wait-times and other issues associ- ated with healthcare delivery. The Alberta government promised to provide a cost-benefit analysis to demonstrate to Albertans the value of utilizing for-profit service providers in the delivery of publicly funded health care.1 To date this has not been com- pleted or published. This report provides some of the information necessary to do that cost-benefit analysis on the basis of information and data garnered through the Freedom of Information and Privacy (FOIP) request process. This report is the second in a new series by the Parkland Institute: Delivery Matters. The first report examined delivery of long-term and continuing care services and provided a solid body of evidence that quality is significantly poorer in investor-owned facilities. Similarly, this report explores the delivery of clinical services, specifically arthroplasty or total hip and knee replace- ments, through private, for-profit clinics. It includes a case study of Calgary’s Health Resources Centre (HRC) that specifically examines the cost, quality, access and other implications of expanding this form of provision and places it in the context of national and international research. It also examines a wait-list reduction pilot project, the Alberta Hip and Knee Replacement Project, which includes for-profit and not-for-profit providers, allowing for a comparison of the two models. 1 Legislative Assembly of Alberta. 2011. Alberta Hansard. March 3, 2011. P. 178. 5 parkland institute | april 2012 c o n t e x t In 2000, Alberta passed Bill 11, also known as the Health Care Protection Act.2 This bill enabled public payment for surgical services at private surgeries in Alberta. The bill was introduced after heated debate over the difference between private surgeries and hospitals and the risks of allowing investor- owned surgeries to operate, a debate that has continued both provincially and nationally. Understanding what ‘private’ and ‘public’ mean in the Canadian health care context is essential. There are two distinct elements that require clarity and appropriate languaging – the financing of health care (how it is paid for) and the delivery of health care (how it is provided). Both financing and delivery can be public, quasi-public and private. This report will focus on the delivery side of the issue. The delivery of hospital and other medically necessary services has tradition- ally been done by either public hospitals or not-for-profit ones. Including for- profit facilities in the delivery mix is relatively new. Private for-profit com- panies are a rapidly growing entity on the health care landscape. They tend to be referred to as ‘focused’ because they deliver a specific clinical services such as MRIs, long-term residential care for seniors, laser eye treatments, cosmetic surgery and similar procedures that are either privately purchased or publicly funded.3 Increasingly, private surgeries have figured into the mix. It is this change and the question of for-profit verses not-for-profit/public delivery that is the focus of this study. 1. h rc c a s e s t u d y – a d e e p e r l o o k The Health Resource Centre, based in Calgary and owned by Networc Health Inc., was Alberta’s flagship private surgical facility until it went bankrupt in 2010. Networc Health Inc. (Networc) was an Alberta based and run company that provided surgical services to a variety of third-party payers such as out- of-province or federal insurers. Networc was founded in 1997 by President and CEO Tom Saunders, an accountant who positioned the firm as a leading private rehabilitation and treatment company. Alongside the President were Chief Medical Officer for Networc Dr. Stephen Miller and COO, Bernie Simp- son. Dr. Miller is a long-time vocal advocate in Canada and abroad of private, for-profit delivery of health care. He is also the former orthopedic site chief at 2 Government of Alberta.
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