Bad week for private companies mining for profits in health care

This hasn’t been a good week for private companies mining big profits in Canada’s health system.

Quebec police are probing a hospital private-public partnership deal awarded to SNC Lavalin Group Inc according to the Globe and Mail.

Police raids took place at the McGill University Health Centre headquarters on Tuesday in what the Globe suggests will “threaten to tarnish one of Canada’s landmark private sector bids to build public infrastructure.”

The newspaper reports that up until recently, the project had been “overseen” by Riadh Ben Aissa, the former head of SNC’s construction division. Ben Aissa is presently in a Swiss jail in regard to allegations of corrupt payments to public officials in Africa.

SNC Lavalin is involved in P3 projects across Canada, including the new North Bay hospital here in Ontario.

The raids come during a week in which private sector involvement in the health sector has been repeatedly questioned.

Yesterday it was confirmed that the Minister of Health is in fact scrapping the electronic diabetes registry for eHealth. The Registry was contracted out to CGI Information Systems.

Health Minister Deb Matthews maintains that she has saved taxpayers $46 million in spending by cancelling the project, although the opposition is doubtful.

Matthews says CGI will be on the hook for $10 – $15 million spent on the $46 million six-year contract. The Diabetes Registry was supposed to be up by June 2011 – a year after CGI began work – but the Toronto Star reports that CGI “apparently failed to meet deadlines imposed by eHealth.”

The McGuinty government says they are cancelling the registry because it has already become obsolete with eHealth’s EMR 4.1 system which is already in use.

NDP Health Critic France Gelinas told the Star that she would be surprised if this didn’t end up before the courts. “I don’t want taxpayers to be on the hook, but I have a hard time believing that.”

Also in The Toronto Star today Dr. Danielle Martin, Chair of Canadian Doctors for Medicare, warns that Centric Health is gobbling up surgical centres, diagnostic clinics, medical equipment companies, and Lifemark, the largest rehabilitation company in Canada. Now Centric is making a bid to buy the Shouldice Hospital, one of the last private hospitals in Ontario. The Shouldice clinic is a private family-owned business that was grandfathered upon the introduction of Medicare.

Martin warns that if the sale goes through, the acquisition by U.S. investors of a provider of publicly insured health care services could expose Canada to sanctions under the investment provisions of NAFTA. Under those provisions, Centric could claim damages should Ontario regulate services in a way that would diminish profitability.

Martin points out that private provision of public health care means the public does not have the same level of scrutiny over how health dollars are being spent. She points to the Pan Am Clinic in Manitoba, a private for-profit facility that is now operated publicly by the Winnipeg Health Authority. When the clinic was private for-profit, Pan Am had the advantage over government officials negotiating contracts to provide medical services because Pan Am knew the real costs and the government didn’t. The same clinic, under public control, charges $700 for a cataract procedure they used to charge $1,000 for while under private ownership.

The Shouldice deal is not a big one – Centric has offered to make the purchase for $14 million. That’s chump change even for the cash strapped McGuinty government. By comparison, it’s a fraction of the $180 million Ontario will likely be on the hook for over the cancelled Mississauga gas plant deal.

If Shouldice is in effect grandfathered, how can the McGuinty government in good conscience approve the sale to Centric?

The lessons of this week would suggest for all its flaws, problems in the public system are far easier to fix than untangling the complex webs surrounding private provision of public health care services.

It also suggests that the grandiose claims of privateers should be taken with a massive grain of salt. Instead of being awestruck by what the private sector says they can do, government should be far more wary. Across Canada governments have returned to more publicly delivered health care following private failures, like the Pan Am clinic. It’s about time the McGuinty government do the same.