Will That Be Raspberries With Your Rectal?

Posted December 10, 2012 by Ross Sutherland
Categories: Funding-Cost For-profit Delivery, Primary care

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The changing face of primary care is on special at Loblaws’.  Primacy, a for-profit chain of primary care clinics, has 112 outlets in Loblaw Stores. Most Loblaws’ also have in-store pharmacies.  The synergies are obvious.  Primacy’s web site says, “an on-site pharmacy provides expert advice and services to our patients.”  A recently signed preferred pharmacy agreement organized by international professional services company Towers Watson is also designed to boost pharmacy sales; and presumably traffic to the Primary clinics, and Loblaws’ vegetable aisles. The preferred pharmacy agreement aims to reduce drug plan costs for the companies covered.  A win-win for Towers Watson, Loblaws’ and the Companies’ benefit costs. Employees using the drug plans get convenience, if they go to Loblaws’, and “enhanced services” offered by the Loblaws’ pharmacies.

Rounding out their current suite of health services many Loblaws’ include a GoodLife fitness center. GoodLife is a different service in that it receives little, if any, public money for its primary business.  Mind you it did just receive a very generous tax credit for a 5 million dollar donation to the University Hospital Network’s Peter Munk Cardiac Center in Toronto.

The existence of the Primacy chain and its association with Loblaws’ is what caught my attention.  In days past, a physician, or a small group of doctors, would rent, sometimes buy, an office space and run their practice.  There were many problems with this model.  Doctors ran the show, there was limited integration of other health professions in patient care, and it was hard to provide after hours or 24 hour primary care.  But at least the public money trail was fairly obvious. Doctors received medicare payments, ran the practice, and paid staff, suppliers and landlords.  Community Health Centers are a non-profit alternative that improves primary care access and local  community control.

Chains like Primacy change some fundamental elements of this service provision. Primacy, with annual revenues of 3 million dollars, has 450 physicians providing services to 3.5 million patients per annum (from company media release).  It was recently purchased by Calian Technologies Ltd. (TSX:CTY). Calian is a diversified Canadian company with a high yield dividend – a good match with Primacy’s assured payments from public insurance.  Primacy is part of Calian’s  Business and Technology Services division which primarily provides staff outsourcing, consulting and contracted management services.

Is there something wrong with these changes?  The Doctor still runs their medical practice and Primacy just makes it easier? Good questions, and since we just starting to see the emergence of these significant for-profit incursions into primary care, the concerns are more extrapolation from past experience and reasonable assumptions until we obtain more information. We don’t even know the extent of for-profit primary care  and no one is monitoring it.

The lack of knowledge is a concern in itself. No matter how you cut it the bulk of the money funding these developments is public money going to provide a core service for Canadians.  And these changes are no longer trivial.  There are many primary care chains all across Canada, employing thousands of doctors and serving millions of individual patients. If nothing else, control is shifting to corporate boardrooms.

Since it is primarily public money providing an essential service, as a minimum we need to know the contractual arrangements between the companies, and between the companies and practitioners.  In the United States, where interlocking corporate structures governing various aspect of care are common, there have been many reports of misuse: over-referring being a central one.  In Canada there has been a long history of for-profit laboratories exchanging various perks, like cheap rent and subsidized staff, for increased or monopolistic referral patterns.

Then there is the cost.  What percentage of this public money is now being used for advertising, profit, and multiple layer of administration?  And what if Calian mandates the use of a proprietary technology in the clinics, or engages its clinic staff in labour practices which the health care providers are worried might affect care?  Are their confidentiality clauses?  Are their restrictions on staff employment patterns, like the one imposed by a private methadone clinic? Are their benefits to staff for referrals to the Loblaws’ pharmacy?

These questions are just the tip of the iceberg of concerns.  The initial step is to shift our gaze onto this changing landscape and determine what these changes mean for access, quality, cost and democratic control of primary care.  Is it really useful to have the long-term stability of frontline medicine determined by the success of the raspberry futures market?


Privatising Preventive Care – the For-Profit Flu Fight

Posted November 9, 2012 by Ross Sutherland
Categories: Funding-Cost For-profit Delivery, Ontario Government Policy

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Flu season is upon us, and it seems that the for-profit-health-care bug is infecting primary and preventative care.  The yearly campaign to increase the number people vaccinated against the flu is coordinated by the public sector though the Ministry of Health and Public Health Units.  After that it gets a bit murky.

Large multinational pharmaceutical companies produce the vaccine.  GlaxoSmithKilne Inc. is Canada’s largest supplier.  Putting the vaccine in the people’s arms has been primarily done by small family practice professionals or public health nurses.  To meet the challenge of increasing immunization rates – over 40% of Ontarians are not receiving the vaccine – the wide network of family practices and community health centers could be given more resources to, as one possibility, hire part-time nurses and nursing students to go into malls, set up tables and administered flu shots. Instead the focus seems to be shifting to for-profit providers.

The for-profit pharmacy chains recently got the nod to administer vaccines.  Also, in malls we have an expanding network of private urgent care clinics and for-profit fee-for-service primary care chains like, MCI: The Doctors Office, which are happy to administer flu shots.  A percent of each shot payment, $4.50 for the vaccination plus an administrative fee-per-visit premium of $5.10, go into the coffers of this for-profit health care management corporation.

The circle is now complete with private multinational corporations producing the vaccine and corporate chains injecting patients.  The yearly repeating cycle provides the opportunity for more and more for-profit involvement.

As a society we make decisions about how we want to organize our affairs.  The policies we adopt develop their own power. There is a political theory, called path dependency, which is based on this phenomenon.  But we really do not need a theory to recognize the strength of existing processes.  The NIMBY syndrome, or the common argument ‘we have always done it this way’ are daily experiences. More profoundly, we have a society based on using fossil fuels and moving to more sustainable energy sources is a major problem.  This does not mean that change cannot happen, it obviously does, but it is much harder when certain structures exist.

The same goes for how we deliver health care. As we allow more private provision the more we are inclined to use it, or for-profit corporations impose themselves on public policy in a way which expands their presence and makes us more reliant on their services. It can be a powerful self-reinforcing spiral.

The muddying of the health care waters with private-profit providers also has implications for reasoned discussion on the benefits of vaccinations. I believe that mass immunization programs have been very important to improving public health, but involving the profit motive in this valuable public policy opens up the programs to legitimate criticism that the need and claims of efficacy come from the drive to make profit and not improve health.  These arguments are at least partially correct and undermine public decision-making. The following post is one of many that make illustrate this muddying of the water: http://www.healingcard.com/politics-profits-pandemic-fear-mongering-national-vaccine-information-center/

Increasing for-profit corporate provision of primary care is a matter of significant concern as we move more services into the community and place more emphasis on prevention programs. Unfortunately we do not even know the extent of these changes, their public cost or their effect on quality or access: and the government, to the extent that it is tracking these developments, is not talking. If nothing else, placing larger swaths of primary care under corporate control removes valuable information from public discourse – business confidentiality – and limits both community control and physician control of primary care.

Quality Program Fee Increases and IHF Corporate Concentration

Posted October 29, 2012 by Ross Sutherland
Categories: Funding-Cost For-profit Delivery, Independent Health Facilities, Quality, United States

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This year Independent Health Facilities (IHFs) in Ontario will start paying an annual administrative fee to cover the costs of their quality control program plus a new fee for the direct costs of each quality assessment. Prior to June 2012 the Ministry of Health had paid the College of Physicians and Surgeons out of Ministry funds to run the quality program.

The administrative fee per license is set at 860 dollars for the first year. The amount per license is not large but it is continuous.  Many IHFs also have more than one license, for instance, they may be licensed for diagnostic imaging and pulmonary function testing, so their yearly increase will be thousands of dollars. The administrative costs, plus the new fees for each assessment, are on top of increasing costs for electronic medical records, more reporting, more in-depth accreditation and quality control measures, newer technology and a host of costs.

Moving the quality control costs off the government books is a bit of a shell game. IHFs are primarily funded by OHIP payments, or in other words, public revenues. Having IHF operators directly pay for quality programs means they are going to request more money from OHIP. Either way it comes from the public purse.

The government is hoping that the IHF operators will simply absorb the costs.  Under current rules the extra charges cannot be passed onto patients because of the ban on extra billing.  Operators could ask for increased fees-for-services but in the short-term this seems unlikely given the recent fee cuts imposed by the government. Larger corporations with reserves and the ability to reduce costs through multi-site efficiencies will ride out the increases and recoup losses in future fee negotiations. Many smaller operators will simply feel the most pain.

An article in the October 2012 edition of Health Affairs pointed out an increased quality cost on the clinical side.  The authors make the argument that under the fee-for-service payment structure for surgeries in the United States improving quality outcomes can lead to decreased revenues.  Fewer complications from better quality control lead to fewer billing opportunities per surgery plus extra costs in prevention.  The logic underlying this research finding could easily be applied to other fee-for-service health environments, including most IHFs in Ontario.

In case I sound like a defender of millionaire IHF operators that is certainly not my intention. Nor do I think that quality assessment programs are not needed. They obviously are: though it would probably be better if the College did not run them with its conflict of interest – doctors run the College and are responsible for quality in the clinics – and the College’s history of questionable quality practices, at least in the laboratory sector where they are also in charge of quality.

The point is that the long-term provision of for-profit health services by small physician run facilities is a non-starter. As the costs increase to ensure quality it is more challenging for smaller operators.  Smaller operators also pay a disproportionately larger share of their expenses on the process of licensing and maintaining a separate administration to oversee the private market.  It is telling that in the fact sheet outlining the increased fees the last point discusses how IHF operators can give up their licenses. Licenses usually don’t disappear; they are taken over by other operators, more often than not IHF chains which are, in turn, often part of a larger health care conglomerates.

Small physician-run laboratories have long since moved into corporate giants, individual doctors’ practices are quickly becoming an historical artifact and IHF s are  amalgamating into fewer and larger corporations.  The dynamics of quality control and regulation among for-profit providers lead to long-term, non-competitive, corporate domination of these sectors.

The Health Affairs article can be found at: http://content.healthaffairs.org/content/early/2012/10/12/hlthaff.2011.0605

Health Facility License Auction Health Cost Driver

Posted October 19, 2012 by Ross Sutherland
Categories: Funding-Cost For-profit Delivery, integration, Ontario Government Policy

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It seems so obvious in hindsight:  if you want to know what is going on in business-side of community medicine look where doctors look – the classified section of The Medical Post.

After reading all of the articles, during a slow day at work, a big flashy classified ad for MCI: the Doctors Office caught my attention.  It is one of the expanding chains of family practice centers that are the face for-profit primary care in Canada.  The ad provided no further insights into the operations of the chain.

Below this ad was a more interesting offering: the sale of an Independent Health Facility (IHF) license.

Auction of IHF in GTA

A rare multi-modality IHF in Pickering, Ontario is to be auctioned

 The IHF license has the following modalities: Nuclear Medicine; In Vivo – General and SPECT; Diagnostic Ultrasound; General Ultrasound; Vascular Ultrasound; diagnostic radiology; fluoroscopy; Bone Mineral Density; mammography; and, Radiography

No other assets or liabilities to be sold with this.  This is strictly a license only sale.  Non-conditional sealed bids must be received by end of business hours on Thursday Nov. 1, 2012. Closing of the above transaction will take place no later than December 31, 2012.  A minimum reserve bid is in place.

Only serious principals send inquiry to ihfauction@yahoo.ca.

The ad is interesting because it puts no caveats on the sale except that it is a final transaction and that there is a minimum reserve bid:  standard practices in any estate auction. Unfortunately this is a sale of an essential health service.

The bid is to be non-conditional but this seems at odds with the Independent Health Facilities Act. The Minister of Health has the power to refuse the transfer of a license.  She ‘may’ allow the transfer if she is satisfied that the new owner will provide a quality service and “operate competently and with honesty and integrity”.  Now it seems to me it should take the Ministry longer than a few weeks over Christmas to assess whether a new owner meets these criteria.

Then there is also the concern about location.  The license is tied to a location and clearly there is nothing but the license being sold.  Is there a lease on the building?  Is it up?  And there appears to be no equipment or staff.  So the purchaser will be setting up a new business with a non-conditional bid and a closing date of less than two months. If the Minister rejects the transfer than we potentially lose needed services, and certainly the purchaser loses money: pretty high stakes for a non-conditional bid.

The transfer cannot really be non-conditional unless the transfer is relatively free from ministerial interference: somewhat like what happened with the establishment of Specimen Collection Centers (SSC) under the laboratory licensing provisions.  The Ministry simply stopped fulfilling its obligation to protect the public interest in the location of SSCs. The indication is that now the transfer of IHF licenses and location of facilities also operates without any significant Ministry control and outside the LHINs, which were supposed to be integrating health care in Ontario.  This would be a good topic for the auditor when the office next examines IHFs.

The ad also shows that these licenses have a market value independent of quality, quantity or accessibility of care. A market price tied to a license only drives up the cost of care.  The private market in the sale of licensees would also facilitate the corporate consolidation of Independent Health Facilities in Ontario: creating a stronger force for more for-profit health care.

Those who doubt the primary business interests in family medicine should take a good look at The Medical Post’s classifieds and follow the money.

The Independent Health Facilities Act can be found at:

http://www.e-laws.gov.on.ca/html/statutes/english/elaws_statutes_90i03_e.htm.  The ihfacution-ad was in the October 9, 2012, print edition of The Medical Post.


Canada Health Act used in Zombie Defence of For-Profit Health Care

Posted October 14, 2012 by Ross Sutherland
Categories: Funding-Cost For-profit Delivery, Miscellaneous, Ontario Government Policy

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Andrew Duffy, in an article syndicated by Postmedia, made the logical equivalent of mixing metaphors when he used the Canada Health Act (CHA) to legitimize the use of private clinics. The result, as with mixed metaphors, is a “head-scratching” argument in favour of Centric’s takeover of the Shouldice Clinic.

Duffy uses a confidential government manual found by Jeffery Simpson, author of a recent book on Canada’s health care system, to argue that the CHA was not intended to prohibit the use of for-profit companies to deliver essential medical services.  This expose, complete with grainy pictures, is used to undermine what Duffy sees as a key argument of most who oppose private health care.

Unfortunately for Duffy he is not addressing those who oppose for-profit medicine nor is Jeffery Simpson’s revelation a revelation.  The existence of the manual is an interesting historical footnote but it is only necessary to read the widely distributed Romanow discussion papers to know that the CHA does not prohibit the use of for-profit companies.  As Duffy points out the CHA has been used to penalize provinces for extra billing and user fees, not for using private companies to deliver publicly funded services.

Duffy then mixes his political facts to imply that the opposition to the takeover the Shouldice Clinic by the health care conglomerate, Centric, is based in some misunderstanding of the Canada Health Act.  This is confusing. He has apparently read our letter to Ontario’s Minister of Health objecting to the takeover and it only mentions the CHA in the context that many for-profit companies extra bill, charge user fees, and allow patients to queue jump: all illegal. Duffy seems to think that because the CHA, as all pieces of legislation, is a compromise between different social forces and does not ban private companies, that it condones their use? Andrew, while we are scratching our heads, a quick trip to a logic 101 class might help.

The sale of Shouldice to Centric once again raises the issue of how best to deliver health care. Along with the well researched and documented concerns of increased cost and mortality and decreased quality and access associated with for-profit providers, which have been outlined in this blog and many other more reputable sources, Centric highlights the growing problem of corporate concentration and foreign ties in Canada’s private health care sector.

Centric is nominally a Canadian company but it has strong ties to transnational private equity firms. For-profit primary care chains, such as Appletree, AIM and MCI, are expanding their presence; laboratories and other diagnostic services have for decades been dominated by an oligopoly of multinational corporations; and Saskatchewan’s expansion into publicly paid for-profit surgery uses Surgical Centers Incorporated, a chain with facilities in Alberta and British Columbia.

Do these conglomerate chains increase the problems of for-profit care? Do they open Canada to trade challenges undermining public health care?  Do they place Canadian health care needs below foreign profit concerns?  All good questions which are hard to answer because we do not even have access to simple accountability data like, how much public money is paid to these for-profit companies?

There are problems with the CHA: one is that it does not require public non-profit delivery.

A problem with the health-care-delivery debate is that those who favour the use of for-profit companies tend to rely on fabricated arguments, for example, ‘activists oppose private delivery because they misunderstand the Canada Health Act.’  These fabricated arguments, like all other zombies, are hard to kill because their perpetrators won’t come into the daylight and address the real problems with for-profit delivery.

Duffy’s article can be found at: http://www.canada.com/health/Cabinet+document+shows+Canada+Health+open+private+clinics/7383633/story.html

Quality Problems Plague Britain’s Largest Privatized Laboratory

Posted October 1, 2012 by Ross Sutherland
Categories: Funding-Cost For-profit Delivery, Quality, United Kingdom

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The Guardian newspaper reported a decline in quality at the Kings College Hospital trust and the St. Thomas Hospital trust’s recently privatized pathology services.

The report cited in the article found an increase in clinical ”incidents” in the first year of the for-profit laboratories operations, and failure to reach “ agreed targets for the “turnaround times” for processing pathology tests 46 times in 2011, with “critical risk levels” breached 14 times.”

Serco, the multinational outsourcing corporation involved in the private laboratory, promised to upgrade the computer system which has also not gone well.

“In January 2012 a patient was given “inappropriate blood” when their medical history was not “flagged” up by the system. In May 2012 patients’ kidney damage results were calculated incorrectly after a “software fault”. The September 2011 performance review complains of the pre-operative blood transfusion interface failing at the same time every week… (GSTS’, the public –private-partnership running the for-profit lab) annual accounts show £2.7 million had to be written off in 2011 due to “potential clinical uncertainty” caused by its new [computer] system.”

The new for-profit lab has continued to lose money.  The joint venture lost 6 million pounds in 2011 which had to be covered by payments from the public hospitals involved in the partnership.  In other words, funding was taken from other public programs to pay for losses in the privatized laboratory services.

GSTS, the joint venture running the labs, is a partnership between Serco and the two hospital trusts. Serco is a British transnational company with revenues of 4.3 billion pounds, a 2009 profit of 258 million pounds and 70,000 employees. Government contracts account for most of its income.

While it is still early in the process, the largest laboratory privatization in Britain has started out poorly.

The information was uncovered by Corporate Watch, an organization dedicated to critical corporate research and is  “based on Freedom of Information disclosures, leaked documents, interviews with staff and an analysis of the company’s accounts.” Their report and the coverage in The Guardian can be found at:



Public Interest Duty Should Stop Shouldice Sale

Posted September 26, 2012 by Ross Sutherland
Categories: Independent Health Facilities, Uncategorized

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Can Ontario’s Minister of Health, Deb Mathews, stop the transfer of the Shouldice Clinic to the health care conglomerate, Centric?  Absolutely, it is within her powers under the Private Hospitals Act: as a friend of mine said, “they wrote better laws 50 years ago.”

The Private Hospitals Act mandates that the Minister stop the transfer of a private hospital where the new owners do not have the “good character and fitness” to manage and operate a private hospital.  The Minister, if she was to do due diligence, something all ministers should do, could also use wording which says that each director and officer of the corporation has to have the character to manage, operate and be associated with a private hospital. The Ministry’s staff would be ideally suited to undertake the research, including delving into the pasts of the directors with international backgrounds.

The easiest and most responsible grounds for the Minister to refuse to transfer Shouldice’s license to Centric is her obligation under the Act to protect the public interest.  The Private Hospitals Act includes in the public interest, “the proper management of the health care system in general and the availability of financial resources for the management of the health care system and for the delivery of health care services.”

This definition is broad enough to base a decision on the evidence that the use of for-profit companies costs more, increases mortality, adds to the complexity of the system and hinders integration: problems compounded by the fact that Centric is linked to an international health conglomerate whose primary corporate strategy is growth through acquisitions and mergers.

There are numerous legal options available to the Minister to stop the transfer of the Shouldice Clinic to Centric: a questionable corporation, dubious directors and/or the public interest. The best would be if she defended the public’s interest in having a strong public health care system, a fact recognized by the liberals in their election commitment to limit for-profit community hospital services.

A copy of the Private Hospitals Act can be found at: