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FOI docs on St Paul’s reveal push towards privatization, critics allege

Providence letter to former health minister lists potential revenue-generating activities

The BC Liberals have used the St Paul’s Hospital revitalization process as a way to push a privatization agenda while wasting millions in healthcare dollars, critics allege.

In an Oct 2, 2009, letter to then-health minister Kevin Falcon, Kip Woodward, who was then chair of the hospital’s operator, Providence Health Care, floated the idea of making hospital facilities available to make money from groups not covered by the Medical Services Plan (MSP).

“Allow Providence Health Care to use our assets to deliver services to and generate revenue from non-Medical Service Plan groups such as federal employees, status Indians, RCMP, MPs’ private insurers and WorkSafe BC,” Woodward wrote.

The letter also suggests allowing Providence to bid for contracts with private medical companies, to bill for elective surgeries for non-medically necessary procedures, to lease out excess MRI capacity to private insurers for contracted work, and to do extra billing for work not covered in the MSP guide.

The letter was among 100 pages of documents obtained by Xtra under the Freedom of Information and Privacy Act, a process that took 14 months.

Woodward also suggested attracting foreign patients to Canada as well as upgrading facilities at home using funds currently used to pay for Canadians receiving treatment abroad.

Woodward further suggested boutique health services for aging patients, an addiction treatment facility on the lines of the Betty Ford Center and the sale of specialty services in the areas of cardiology, HIV/AIDS, mental, health and eating disorders to foreign patients.

“With the resulting revenues, we can maintain the infrastructure and human resources we need to serve British Columbia patients in our public system,” Woodward wrote, adding that the focus needs to shift from cost containment to cost recovery.

Woodward said Providence could meet its obligations under the Canada Health Act while creating a more fiscally healthy process by which to manage its responsibilities.

However, Providence spokesperson Shaf Hussain told Xtra Sept 6, nothing has been done concerning those issues.

“I think they were just private musings,” he says.

Vancouver-West End MLA Spencer Chandra Herbert says not much has changed after almost a decade of debate about the hospital’s future. He calls the extra billing proposal a recipe for “queue jumping in a hospital that is already straining to breaking point.”

“It looks like an attempt to privatize big parts of it,” he adds.

The 115-year-old hospital’s future has been in question since 2003, when Providence first mentioned its intention to build a new hospital on the False Creek Flats rather than renovate the existing site on Burrard St. The plan was up in the air for years until June 3, 2010. Then, former health minister Kevin Falcon, now deputy premier and finance minister, suddenly announced the project would proceed on the current site.

Current Health Minister Mike de Jong confirmed that June 29, 2011.

The possible relocation of health services to the perimeter of the downtown core led to the formation of the Save St Paul’s Coalition, which supported a revitalized West End hospital.

Coalition member Brent Granby says the information obtained by Xtra indicates the government was encouraging Providence to find market solutions to public policy issues.

“It demonstrates there has been a covert policy direction from the provincial government that private healthcare is the way we’re going to go,” Granby alleges.

An arm’s-length subsidiary of Providence, the Esperanza Society, still owns 18.5 acres of False Creek Flats land, once touted as the hospital’s future home. Providence purchased an 18.5-acre parcel of land on False Creek Flats at a cost of $24.5 million in 2004, the FOI documents show.

Providence had asked the government for direct funding to buy the land but was refused, the documents show.

Providence said it could be exempt from the taxation under the Vancouver Charter if it, rather than Esperanza, owned the land. One month after the purchase, the non-profit Esperanza gave Providence the right of first refusal to buy the land. And, at least $2.4 million of  $4.8 million used to pay property taxes on the vacant piece of land has come out of that health authority’s budget as a targeted allocation from Victoria.

“They’ve been spending a million dollars a year [on land taxes] on an empty lot,” Chandra Herbert says. “That isn’t helping anyone who has a heart attack or has diabetes.”

Xtra began looking into the land issue when it was revealed in May 2010 that the province was paying $800,000 a year in municipal taxes on the site.

Government documents support that finding. Ministry of Health files for the years 2008, 2009 and 2010 show funds in that amount for each of those years marked as a “one-time only” funding item.

“This grant does not set a precedent for future funding requests,” says Gordon Macatee (then deputy minister of health services, now BC Ferry commissioner) to Providence CEO Diane Doyle in letters dated March 3, 2009, and March 13, 2009.

Documents show the payments were to come out of the Vancouver Coastal Health Authority’s (VCHA) budget allocations from Victoria as targeted for the tax payments.

“That money should be used for healthcare,” Granby says. “That’s crazy.”

A similar letter using the same words as Macatee’s was issued Feb 10, 2010, by deputy health minister John Dyble (now deputy minister to Premier Christy Clark, secretary to the cabinet and head of the public service).

By comparison, according to the VCHA’s 2009/2010 budget, Providence had $2.6 million to spend on critical infrastructure upgrades at various facilities.

On May 26, 2010, Falcon told the BC legislature that the government has paid $800,000 in taxes each year for the last six years “to keep those [False Creek] lands in reserve for a potential health facility.”

After confirming St Paul’s would be revitalized on Burrard in June 2010, Falcon did not rule out using the land for another hospital.

An Aug 31, 2009, briefing note for Falcon in advance of a September 2009 meeting with Woodward notes Providence’s desire for a change in its status in the health authority structure to take it out from under VCH and put it in direct connection with the ministry.

It also discusses Providence taking the provincial lead on issues such as cardiac and renal care, HIV, mental health and addictions, seniors, urban health and emergency departments.

“The renewal of St Paul’s capital infrastructure is viewed by Providence as a key enabler of this vision,” the briefing note states.

The new $1-billion hospital on the False Creek land was meant to be part of that infrastructure.

In October 2010, Doyle told a public meeting that Esperanza was created to buy the land. Woodward is an Esperanza director.

Attendees at that meeting were told by Providence officials that the revitalization of St Paul’s Hospital on Burrard St could be complete by 2016 and will include the demolition of several buildings and the addition of a 10- or 11-storey tower at the corner of Comox and Thurlow streets.

But the False Creek land has remained a contentious issue.

A Dec 12, 2007, Providence fact sheet provided to the Ministry of Health notes that the requirement of the creation of Esperanza to buy the False Creek land “continues to create a level of discomfort among many stakeholders and constituents because the transaction was not straightforward and transparent.” The fact that PHC [Providence Health Care] has secured its interest in this property through the use of Esperanza continues to be exploited by those interest groups opposed to P3 (public-private partnership) as a demonstration of a lack of transparency and clarity and gives those groups an opportunity to reinforce a cynical view of the process,” the fact sheet states.

It further states that a previous FOI asking for details around the creation of Esperanza “will continue to provide fodder to such groups until the property transfer to PHC is concluded and Esperanza is dissolved.”

Granby says the note demonstrates that “even they are acknowledging the whole process is lacking transparency and accountability.”

An October 2009 ministry memo notes Xtra had asked what happened to the creation of a business case for the redevelopment of St Paul’s.

The memo notes the ministry, VCHA, Providence and Partnerships BC signed a memorandum of understanding (MOU) for the development of such a plan with the ministry providing VCHA $1 million for the work.

“There’s never been anything produced from that million dollars,” Granby says. “They don’t even want to talk about it.”

Providence’s Hussain says that plan was done but focused on renewal around the False Creek land. “I think a draft document was done, but it wasn’t forwarded to government.”

Woodward’s Oct 2, 2009, letter suggests working with private healthcare providers.

“Allow Providence Health Care to bid for services from private clinics,” Woodward wrote to Falcon. “The introduction of competition for healthcare service delivery is the single best tool for cost management, and yet we are prohibited from doing this currently.”

Hussain says surgeries have been outsourced to private companies to meet the hospital’s short-term needs.

A June 2010 Xtra investigation into Esperanza revealed connections between its directors and the chairs of VCHA, Providence, venture capital outfits, development and construction firms, hospital and for-profit health providers.

Elections BC records show both Woodward and a family member made contributions to the BC Liberal Party. So did businessman Hugh Magee, also a director of Esperanza.

Magee is chair of construction company GWIL Industries, which donated $7,500 in 2005, while its crane service division donated $13,500 to the Liberal Party between 2005 and 2009, according to Elections BC.

Magee personally donated $300 in 2006. He is also listed as a principal officer of Canada Diagnostic Centres, which donated $500 to the BC Liberals in 2009.

Magee was also listed as a director of Cambie Surgeries Corporation, a private, for-profit Vancouver healthcare facility headed by Dr Brian Day, who donated $2,000 to the Liberal Party, Elections BC records show.

Woodward is the principal officer of Woodcorp Investments Ltd, a venture capital company, which donated $45,000 to the BC Liberals between 2006 and 2008, according to Elections BC.

In April 2010, CKNW radio reported Falcon saying Woodward had an interest in Cambie Surgical Centre through a family company but was not involved in the day-to-day operations of the centre.

Together, Esperanza’s principals have links to land development, construction, hospital equipment and privatized medicine businesses.

Canada Diagnostic Centres’ website says it provides private CT, MRI and ultrasound services. Cambie Surgery’s site bills it as “one of the largest and most technologically advanced private surgical facilities in Canada.”

When asked June 9, 2010, if there was a conflict of interest in the situation, Falcon dismissed the idea as “silly.”

“It shouldn’t be a surprise to anyone that you’ve had prominent Catholics step forward as part of the Esperanza Society and put up dollars to preserve options for delivering care in Vancouver,” Falcon said at the time. “I can’t believe that people would try and construe that as conspiracy. It’s kind of sad,” the minister added.

Falcon appointed Woodward as head of VCHA April 12, 2010. PHC’s board appointed former attorney general Geoff Plant as head of Providence.