Why Canada should care about the Shouldice Hospital deal
A version of this commentary appeared in the Vancouver Sun, Huffington Post and iPolitics.ca
Last week, the family that owns Shouldice Hospital announcedthat it would like to sell its facility to Centric Health, a for-profitcompany traded on the Toronto Stock Exchange.Shouldice, a Southern Ontario facility renowned for its care of patients with hernias, was founded by a surgeon in the 1940sand allowed to continue as a private hospital when Medicare wasestablished in the 1960s. Under provincial law, however, thetransfer of its license to another company cannot occur withoutthe approval of Ontario’s Minister of Health and Long-Term Care.Centric Health is a rapidly growing corporation that mostCanadians have probably never heard of. Its revenue tripled from2010 to 2011 as it embarked on an ambitious series of acquisitions across the country, purchasing pharmacies andphysiotherapy clinics, as well as surgical centres that operate primarily outside provincial health insurance plans.Some of these surgical centres focus mainly on cosmetic procedures, and others take advantage of a loophole in our public health care system that allows workers’ compensations boards to purchase expedited care for injured workers.Shouldice would be a very different kind of purchase, since the provincial government pays for most of its herniarepairs. One day, Shouldice would be a small family-owned hospital with a reputation for excellence. The next day, itwould be part of a large corporation with a responsibility to maximize shareholder return. Allowing for-profit companies like Centric to provide public services in Canada would make sense if they providedbetter quality and access at the same or lower cost than non-profit providers. In some instances, such as themanufacture of prescription drugs, for-profit companies frequently do a better job than non-profits or crowncorporations.But when it comes to providing complicated medical and surgical care that must be customized for each individualpatient, non-profits are generally better. P.J. Devereaux and his colleagues at McMaster University have reviewed thebest available evidence from the United States as it pertains to hospitals, dialysis facilities and nursing homes. Each
time, they have found that non-profit providers provide superior care.They have also f ound that non-profit providers are less expensive.
One reason why for-profit hospitals cost more is that they sometimes bend the rules to maximize their revenue. Another is that they sometimes also skimp on care. For example, last month the New York Times reported that theHospital Corporation of America, a large hospital chain in the United States, has been turning away “unprofitable”patients from its emergency departments. At the same time, the company has been figuring out how to creativelyclassify patients that it does treat so as to extract the maximum amount of money possible from the US federalgovernment.Let’s be clear that Shouldice is no Hospital Corporation of America. Shouldice has a very good reputation in themedical community and continues to be owned and operated by close relatives of its founding physician. Because of Shouldice’s focus and volume – its surgeons perform more than 7000 hernia operations each year – it is quite