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Reject sale of Shouldice to for-profit company

September 17, 2012

FOR IMMEDIATE RELEASE

Reject sale of Shouldice to for-profit U.S.-controlled company, say doctors

 

TORONTO - The Ontario government should keep its promise of non-profit delivery of health care and refuse to approve Centric Health’s acquisition of the Shouldice Hospital, said physicians from across the country today.

 

Centric Health, a for-profit company, recently announced that it intends to purchase assets of Shouldice Hospital, effectively becoming the new operator of Shouldice. Under the Private Hospitals Act of Ontario, the sale requires the approval of the Minister of Health and Long-Term Care.

 

“Earlier this year, we were happy to see Minister Matthews commit to non-profit delivery of health care in Ontario’s Action Plan for Health Care,” said Dr. Danielle Martin, chair of Canadian Doctors for Medicare. “We’re calling on the Minister to uphold that commitment, and reject this sale.”

 

Centric Health is a publicly-traded company controlled by the U.S.-based Global Healthcare Investments & Solutions. Centric is rapidly gaining market share in surgical facilities across Canada, acquiring 14 new companies in seven provinces between 2009 and 2011 alone.

 

“No matter the terms of this sale, Centric is a for-profit company with a profound incentive to find ways to profit from Ontario’s patients,” said Martin. “Bringing for-profit operators into the publicly funded health care system is rarely in the public interest.”

 

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BACKGROUND: Centric Health and Shouldice Hospital

 

Summary

Centric Health Corporation is a new player in Canada’s private health services sector. Centric is integrating its range of investments to cover not only one or two segments of the market, but rather a number of important components of the health system from rehabilitation to surgery to home care. On September 7, 2012, Centric announced its intention to acquire the operating assets of Shouldice Hospital, a private hospital in Ontario that focuses on hernia operations.

  

Centric Health Corporation

  • Centric is established in 980 locations across the country, including 19 surgical operating rooms. It operates over 60,000 long-term care beds, and employs over 3400 health professionals, consultants and other staff.[1]

 

  • Between 2009 and 2011, Centric acquired 14 new companies in seven provinces[2], including Surgical Spaces, Inc. (owner of Vancouver-based False Creek Surgical Centre and Maple Surgical Centre in Winnipeg) and LifeMark, Canada’s largest rehab company with (so far) 120 clinics.

 

  • Centric Health is a Canadian corporation based in Toronto, Ontario. It was known as Alegro Health until 2009.

 

  • In 2007, US-based Global Healthcare Investments & Solutions (GHIS) formed a “strategic alliance” with Alegro, acquiring over two-thirds shareholder ownership of the Canadian company and changing its name to Centric.

 

  • GHIS is a venture capital firm founded in 2006 by Dr. Jack Shevel, currently the chair of the Centric board of directors, as well as the company’s interim CEO.

 

  • Shevel is the founder and former CEO of Netcare – originally a minor player in South Africa, Netcare is now the third largest healthcare services company in the world.

 

  • The financial investments in Centric by GHIS are fuelling the growth of the company and supporting an aggressive acquisition strategy. This is a worrying development given the rights GHIS shareholders are granted under NAFTA.

 

  • Centric has acquired a broad range of services including surgical clinics, rehabilitation, dental, home care, pharmacy, disability management and diagnostic services. It also sells a range of medical equipment and other medical products and provides third-party assessments.

 

  • Centric uses a “vertical integration” model - an investment strategy that Centric hopes will enable it to establish a complete spectrum of care – mirroring, in effect, the public health care system.

 

  • Centric claims that its goal is to provide an opportunity for employees and health professionals “to invest in an industry in which they work, understand and are passionate about”. Over the long term, Centric physicians and employees will own between 30% and 40% of the Company” allowing “Centric Health to offer patients an integrated, multi-disciplinary, personalized unique brand of care”. [3]

 

  • Centric has developed “preferred provider networks,” designed to attract health professionals. To this end it is developing relationships with insurers, workers’ compensation boards and employers.

 

  • Centric has negotiated over 30 PPN agreements with these groups, providing 3750 assessors, including 600 physicians. Under these agreements the company provides “independent evaluations to insurers, workers compensation boards and employers across Canada”. [4]

 

Shouldice Hospital

 

  • Shouldice Hospital is a private hospital established in 1945 in Thornhill, Ontario. It is one of the world’s leading hernia repairs facility and approximately 7500 hernia procedures are performed there each year.[5] It is renowned for its high-quality care and success rate.

 

  • In 1973, private hospitals were “grand-parented” by Ontario’s Private Hospitals Act, which specified that only those hospitals whose licenses were issued by the Ministry of Health before 1973 could continue to stay in existence.

 

  • Under the Act, the sale of Shouldice shares or transfer of license requires prior approval of the Minister of Health.[6]

 

  • Shouldice is funded by the Ministry of Health and Long Term Care with annual funding. Patients are able to receive their medically-necessary procedures through OHIP. However, Shouldice recommends a three-day stay at the hospital following a procedure, which is not covered by OHIP.

 

 

 



[1] Centric Health, Management’s Discussion and Analysis For the Three Months Ended March 31, 2012 and 2011. Dated May 14, 2012.

[2] The provinces are British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Nova Scotia and New Brunswick. Approximately 66% of Centric’s revenue is derived from Ontario, followed by Alberta (16%) and BC (12%).

[3] Centric Health, Management’s Discussion and Analysis For the Three Months Ended March 31, 2012 and 2011. Dated May 14, 2012.

[4] Management Discussion and Analysis, op.cit.

[5] Centric Health. “Centric Health to Acquire Renowned Shouldice Hospital.” Press release, September 7, 2012.

[6] Shouldice Hospital Ltd.: An Anomaly in Health Care Delivery. Canadian Union of Public Employees (Ottawa), March 2000.