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Experts raise alarm about proposed largest private surgical facility in Alberta history

Experts say the lack of transparency and the political lobbying surrounding a proposal to build what would be the largest private surgical facility in Alberta’s history is troubling given what they say could be a major upheaval of the province’s publicly funded health-care system.

Group behind $200-million proposed facility confident in its politically connected lobbyists

Sandra Azocar, executive director of Friends of Medicare, says a proposed private $200-million surgical facility would exacerbate staffing shortages within Alberta's public health-care system. (Sam Martin/CBC)

Experts say the lack of transparency and the political lobbying surrounding a proposal to build what would be the largest private surgical facility in Alberta's history is troubling given what they say could be a major upheaval of the province's publicly funded health-care system.

They say the project could represent the advent of the exponential growth of privatized health care in the province, a model they say ultimately would cost more and increase pressure on a public health-care system already under significant strain.

"It is concerning to me that we are pursuing [privatized health care] at such an aggressive pace and we really haven't seen much of anything from the government in terms of how this will reduce wait times or will save money," said University of Calgary health law professor Lorian Hardcastle, who has studied this issue.

"I am concerned that the easy cases, the people who are less sick, will get treatment quite quickly in this orthopedic [facility], whereas those with more complex medical needs will end up waiting longer for care in public hospitals."

On Monday, CBC News revealed a group that includes a developer, orthopedic surgeons and high-powered lobbyists, says it has gained tentative political support from Health Minister Tyler Shandro for its proposal to build and operate a private orthopedic surgery facility. 

Recording reveals political lobbying

CBC News obtained a recording from one of three presentations the group made to surgeons from the Edmonton region. For the proposal to be viable, the group needs the support of most of the region's 46 orthopedic surgeons.

During the meeting, the group expressed confidence in its politically connected lobbyists: Elan MacDonald, former deputy chief of staff to premiers Ed Stelmach and Alison Redford, and former senior Alberta Health bureaucrat Glenn Monteith. 

The lobbyists described what appeared to be ready access to government officials.

After a conversation between orthopedic surgeon Dr. David Sheps and Shandro, the minister directed Sheps to his principal adviser, Ivan Bernardo.

MacDonald told the surgeons Bernardo was "very warm" to the project and was personally handling the file. 

The group's lobbyists, which include former senior Alberta Health bureaucrat Glenn Monteith, said Health Minister Tyler Shandro and other UCP government officials were strongly supportive of the initial proposal. (Global Public Affairs)

Monteith told the surgeons their focus as lobbyists was on ensuring the surgeons controlled the facility's operation, something they couldn't do within the public health-care system under Alberta Health Services (AHS).

"Really what this project is about is to help you be basically the owners of your own means of production," Monteith said.

Shandro declined an interview request. In a statement, his press secretary Steve Buick said the minister and his staff "regularly meet with physicians and others to discuss concerns and suggestions to improve the system.

"This project is only a concept at this stage. The minister has not endorsed it," Buick said.

Opposition NDP health critic David Shepherd said the group's dealings with government officials, including Shandro and Bernardo, are troubling.

"I think we've seen pretty clearly this is a government that's not afraid to try to use whatever levers are at its disposal to put their thumb on the scale," he said in an interview Monday. "This is a government that is bent on doing favours for conservative friends, donors and insiders." 

Shepherd said the NDP will oppose any plans to push forward with privatized surgical care, which he said is not in the best interest of patients.

Strategy to keep AHS 'at arm's length'

There was no discussion at the presentation of any meetings with AHS, which is responsible for delivering health services in the province.

Another orthopedic surgeon behind the proposal, Dr. Paulose Paul, the AHS Edmonton Zone section chief for orthopedics, told the surgeons that while the group is working with AHS and wants to keep the health authority apprised, "we still want to keep them at arm's length. 

"Our strategy is to apply pressure from below — by being committed as a division and unified in supporting the project because we believe it will be better for delivery of orthopedic care for the patients in the zone — and applying pressure from above from the government, basically telling AHS that this is too good an idea or a venture to say no to and we need to make this work."

In a statement, Alberta Health Services did not directly respond to the lobbying strategy.

It said "proposals for chartered surgical facilities will be considered through a competitive public procurement process." They must then participate in a request for proposal to qualify.

One of the orthopedic surgeons behind the proposal, Dr. Paulose Paul, told the meeting of surgeons that the plan is to keep Alberta Health Services "at arm's length" until the project has gained enough political and bureaucratic support. (Nathan Gross/CBC)

In an interview with CBC News, Paul said AHS is "fully aware of the proposal and what we intend to do." He said the group responded to a request for expressions of interest from Alberta Health and AHS in February.

Buick said Shandro respects the formal process by which these projects will be approved and he said the minister "awaits the outcome of that process."

Group would seek contract too costly to cancel

As part of efforts to woo the surgeons at the presentation, the group highlighted the increased freedom they said the facility would bring.

Under the proposal, surgeons would control the facility's administration, their hours and the nature of their work. They could run operating theatres for up to 23 hours a day, employ non-unionized staff and work in one facility rather than several.

Kevin McKee, chief executive officer of Edmonton-based Pangman Development Corp, told the surgeons the service contract with the government would ensure the venture was profitable and could not be easily cancelled.

"The design of the contract would be such that it becomes financially very, very punitive for the government to rip it up," McKee said, assuring the surgeons that it would not cost them any money if a future government ended the contract. 

To the contrary, he said the contract would seek to ensure the surgeons would profit.

McKee did not respond to interview requests. 

At the presentation to surgeons, Kevin McKee, CEO of Pangman Development Corporation, said the group would seek a contract that would be "very, very punitive" for the government to cancel. (Pangman Development Corporation)

At the presentation, Paul told the surgeons the facility would be more efficient and provide better patient care but it was not explained how.

Paul told CBC News the goal of the facility is to provide comprehensive care at one site. 

He said discussions have been ongoing among orthopedic surgeons for at least a decade about consolidating the surgeries and follow-up clinics now done in six facilities across the region. And he said the facility may include other services, such as medical imaging and physiotherapy.

"Consolidating that orthopedic care will make access much better for all patients in the zone, will make it much more cost effective and will reduce wait times where it really matters," Paul said.

He rejected criticism that this sort of facility will lead to two-tier health care. 

"We're just changing the venue of where we are working but not how," he said.

The United Nurses of Alberta (UNA) and the Health Sciences Association of Alberta (HSAA) told CBC News they are concerned generally by the proposal, and specifically with the group's plan to employ non-unionized staff.

Both unions also said they would never be afforded the degree of access to senior government officials that the group behind this proposed facility has received.

Danielle Larivee, the UNA's vice-president and former NDP cabinet minister, said the union has made repeated requests to meet with Shandro but he has never agreed, "despite the fact that it has been well over a year since (him) coming into that role.

"So it definitely shows where their values are and what their priorities are."

HSAA vice-president Trudy Thomson said the UCP government has not been consulting with the organization or giving it advance notice on policy changes that affect members.

"The level of access is glaring between those that are in business and those that represent the people that provide the service," she said.

Up to 10,000 surgical procedures

The group told the surgeons the privately financed building is expected to cost at least $200 million. 

The preliminary design is for a 270,000-square-foot facility of five or seven storeys with underground parking for at least 400 vehicles. It is being proposed for the site of the current Ericksen Nissan auto dealership on 101st Street near Edmonton's Royal Alexandra Hospital.

Under the proposal, still in the formative stages, the Ericksen family and a corporate entity spun off from the Royal Alexandra Hospital Foundation would build the facility and lease space to the surgeons and potentially services such as medical imaging and physiotherapy. 

If built, the facility would perform, under contract to the government, all non-emergency orthopedic surgical procedures for the Edmonton region — as many as 10,000 a year, up from the current 6,000. 

The proposed $200-million facility would be privately financed and occupy the site of the Ericksen Nissan dealership near the Royal Alexandra Hospital north of downtown Edmonton. (CBC)

It is not clear if the Ericksen family stands to financially benefit from the project. Grant Ericksen did not acknowledge an interview request.

In a statement, the Royal Alexandra Hospital Foundation said a separate corporate entity of the foundation has been exploring an investment in that facility, but has not made a recommendation to the foundation or a request for funding.

Proposal would exacerbate staff shortages, critics say

The presentations to the surgeons occurred weeks before the government of Premier Jason Kenney pushed through Bill 30, which proposes to cut approval times required for private surgical facilities, and gives the health ministry the ability to contract directly with doctors and permit private companies to take over the administrative functions of physician clinics. 

The Opposition NDP and advocates of public health care believe the bill is designed to allow, and encourage, the exponential increase in privately provided health care in Alberta. 

Hardcastle, the health law professor, said most research shows private facilities generally deliver poorer quality of care and increase, rather than decrease, costs.

Both Hardcastle and Sandra Azocar of Friends of Medicare said they are concerned this project, and those that may follow it, would take resources from the province's public health-care system. 

"The more staff that you shift to the private system, the fewer people that will remain to treat the complex cases that aren't suitable to be treated in a private [facility]," Hardcastle said.

"And those are often the sicker people, the people with comorbidities, the people who often need treatment sooner and may end up waiting longer due to the sheer number of surgeons and other staff that will be potentially working at this facility."

Lorian Hardcastle, an associate professor of health law at the University of Calgary, said she is concerned by the level of access the group's lobbyists received from the UCP government, even as the Alberta legislature was debating the merits of privately delivered health law. (Tahirih Foroozan/CBC)

Azocar said there are already acute shortages of some medical staff in the public system.The proposal would require hiring surgeons, anesthesiologists, nurses and other support staff. 

"We can't make up anesthesiologists, we can't make up more orthopedic surgeons," she said.

"They are talking about bringing in staff that are non-unionized as a way of saving money. Where are you going to get the nurses? Where are you going to get the housekeepers?" she said, adding that other countries that created parallel systems did not have reduced surgery wait times because there weren't enough staff for both systems.

Earlier private orthopedic surgery facility failed

Hardcastle and Azocar both spoke about the failed Health Resources Centre (HRC) in Calgary, a privately operated orthopedic surgery centre that performed about 900 surgeries a year under contract to the government. A creditor forced it into bankruptcy in 2010. 

"We have seen this before," Azocar said. "Albertans were stuck with millions of dollars of having to prop that private facility up and then we had to bring hundreds of surgeries back into the public system."

Paul rejected the comparison between the facility his group is proposing and HRC. He said HRC only performed surgery, while the Edmonton proposal would provide total care, including assessment and follow-up treatment.

Hardcastle also expressed concern about the group's access to government officials, including Shandro and his principal adviser, in the weeks before the UCP government passed Bill 30.

"We were still discussing private delivery," she said. "And then while that was going on, and that democratic debate and discussion was happening, on the side it seems as though this was almost a foregone conclusion that this was going to go ahead.

"I'm concerned about that for democratic reasons."

If you have information about this story, or information for another story, please contact us in confidence at cbcinvestigates@cbc.ca.

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About the Author

Jennie Russell, Charles Rusnell

Investigative reporters

Charles Rusnell and Jennie Russell are reporters with CBC Investigates, the award-winning investigative unit of CBC Edmonton. Their journalism in the public interest is widely credited with forcing accountability, transparency and democratic change in Alberta. Send tips in confidence to cbcinvestigates@cbc.ca. @charlesrusnell @jennierussell_

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