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Sale of for-profit surgery clinic hits snag, resignation of Dalton McGuinty partly blamed

November 4, 2012

National Post

Tom Blackwell

The unusual saga of a for-profit clinic that does surgery at taxpayer expense took a surprising turn Friday, as a U.S.-linked health corporation unexpectedly scuttled its purchase of the facility — and partly blamed the resignation of Premier Dalton McGuinty.

Centric Health, which owns surgery facilities and other health enterprises across Canada, announced it was terminating its tentative deal to buy the Toronto area’s Shouldice Hospital for $14-million, citing “political uncertainty.”

The news came weeks after pro-medicare groups complained that the well-respected Shouldice was falling into the hands of a foreign health-care conglomerate, and urged the province to nix the sale. Owned by two families now, the private hospital specializes in hernia operations, yet caters mainly to patients whose surgery is covered by the Ontario medicare system.

David Cutler, Centric’s CEO, said the collapse of the agreement came after a deadline for finalizing the deal passed without the government having given its required consent. Pointing to the hazy future of a minority Liberal government in the throes of choosing a new leader, he said a green light was not likely to come in the near future.

“We think it’s going to be a difficult time to get approval because of what’s happening at Queen’s Park,” said Mr. Cutler. “There is a bit of disappointment, but I don’t believe it will in any way harm the organization. There’s lots of opportunities out there.”

After an ambitious buying spree, Centric now owns several private surgery operations in Ontario, B.C., Alberta and Manitoba, as well as rehabilitation centres, home care services and pharmacies. The advocacy group Canadian Doctors for Medicare has called it “a vertically integrated company that looks to rival our public health-care system with its array of services and products.”

The Shouldice’s current owners announced in September they had sold the facility to the Toronto-based corporation, which in turn is part-owned by Global Healthcare Investments and Solutions (GHIS).

The U.S. firm, whose owner, Dr. Jack Shevel, is also Centric’s executive chairman, is considered the third-largest integrated health-care company in the world.

The deal, though, was subject to approval by the government, which had allowed Shouldice to keep operating as a profit-making enterprise long after it outlawed other private clinics catering to medicare-funded patients.

Deb Matthews, the health minister and a possible contender to replace the premier, did not comment directly on the decision, but said in an emailed statement that the government was doing its “due diligence” on the sale, and remained committed to public health care.

“No new private, for-profit hospitals have been or will be considered in the future,” she said.

Daryl Urquart, a Shouldice spokesman, said the firm is still working out the ramifications of the sale’s demise, but stressed that it was “business as usual,” with no change for patients.

He also said he believed that Centric’s decision stemmed in part from the Liberal party’s leadership transition, triggered by Mr. McGuinty’s surprise resignation.

“If there are variables out there that could influence the value of that transaction, you want to get them out of the way to reduce the risk,” he said. “If they happen to be distracted by a retiring leader, that could influence things, I suspect.”

Canadian Doctors for Medicare, which advocates for the public system, had pressed the province to kill the proposed deal, saying the fact Centric was a publicly traded company could undermine patient care.

“A company like Centric can’t be responsible both to its shareholders and to the Ontario government — at some point, accountability to the government will clash with the need to increase profits,” wrote Dr. Danielle Martin, the organization’s spokeswoman.

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