Shouldice, a facility renowned for its care of patients with hernias, was founded by a surgeon in the 1940s and allowed to continue as a private hospital when Medicare was established in the 1960s. Under the Private Hospitals Act, however, the transfer of its license to another company cannot occur without the approval of Ontario’s Minister of Health and Long-Term Care.
Centric Health is a rapidly growing corporation that most Ontarians have probably never heard of. Its revenue tripled from 2010 to 2011 as it embarked on an ambitious series of acquisitions, purchasing pharmacies and physiotherapy clinics, as well as surgical centres that operate primarily outside provincial health insurance plans. Some of these surgical centres focus primarily 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 Ontario Health Insurance Plan pays for most of its hernia repairs. One day, Shouldice would be a small family-owned hospital with a reputation for excellence. The next day, it would be part of a large corporation with a responsibility to maximize shareholder return.
Allowing for-profit companies like Centric to provide public services makes sense if they provide better quality and access at the same or lower cost than non-profit providers. In some instances, such as the manufacture of pharmaceuticals or the provision of laboratory services, for-profit companies frequently do a better job than non-profits or crown corporations.
But when it comes to providing more complicated services, such as medical and surgical care that must be customized for each individual patient, non-profits are generally better. P.J. Devereaux and his colleagues at McMaster University have reviewed the best 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 found 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. Sometimes they also skimp on care. For example, last month the New York Times reported that the Hospital 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 creatively classify patients that it does treat so as to extract the maximum amount of money possible from the US federal government.
Let’s be clear that Shouldice is no Hospital Corporation of America. Shouldice has a very good reputation in the medical 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 possible that Shouldice does a better job than hospitals in the public system.
Yet what guarantees would there be that quality would be maintained if ownership were transferred to a large for-profit company? What if Centric decided that it wanted Shouldice to start doing more expensive and complex surgical procedures? How would the Ministry ensure that Centric operated the hospital efficiently?
Even now, in terms of total cost per patient, it is likely that Shouldice is considerably more expensive than public hospitals. Much of this cost is for a hospital stay of about three nights, part of which is paid for by government and part of which is paid for by the patient. For all the talk of inefficiency in the public system, it is worth noting that outside Shouldice, most patients in Ontario with straightforward hernias are admitted and discharged on the day of their operation.
The apparently mandatory hospital stay at Shouldice might also mean that patients who cannot afford to pay for their stay have to wait for their operation at a public hospital, while patients who have private insurance or deep pockets receive publicly funded medical and surgical care at Shouldice. This is the kind of situation that can easily lead to public funds being used to subsidize expedited access for wealthier patients, a scenario that most Canadians would find objectionable.
If the descendants of Dr. Earle Shouldice no longer wish to operate his namesake hospital, the Minister of Health should consider converting it to a non-profit facility. Shouldice could be operated as a satellite of a major hospital, like the Holland Centre, which is part of the Sunnybrook Health Sciences Centre and performs more than 2000 knee and hip replacements each year. Alternatively, Shouldice could be operated as an independent non-profit facility like the Kensington Eye Institute.
But of the options available to the Minister, simply approving the sale of Shouldice to Centric would be the worst.
Irfan Dhalla is a member of the board of Canadian Doctors for Medicare.