Canada’s healthcare landscape is changing. New models of provincially funded care delivered outside traditional hospital settings are gaining traction. As governments accelerate policy changes to improve access and reduce wait times, interest from medical professionals and external, non-physician investors is on the rise.

I recently participated in a webinar with three experts to explain what this shift means for physicians, as well as the operational and financing considerations:

• 

  Marco Dolfi, Principal at legal firm Miller Canfield LLP

• 

  Nick Korhonen, Partner at accounting firm MNP

• 

  Dr. Brian Rotenberg, Co-Principal and Founder of Surgical Services Ltd., a consulting company specializing in non-hospital surgical facilities

The following is a summary of the discussion.

With an aging population, Canada’s healthcare needs are growing. But the resources devoted to healthcare haven’t kept pace. Rotenberg noted that the Western countries that lead in healthcare quality rankings have one trait in common: a robust private healthcare system working in parallel with a public single-payer system.

“Canada, until recently, has had nothing like that,” Rotenberg said. “But inroads have been made. Various provinces are now dipping their toes in the water to non-hospital-based surgical care.”

For the past 15 years, dental practices have benefitted from arrangements with dental service organizations, typically owned by private equity firms, that provide services such as advertising, procurement, and human resources. Similar arrangements are becoming available in the medical space.

“No provinces mandate that clinical entities must be owned by physicians,” Korhonen said. “This seems to be deliberate in policy design, as one of the purposes of creating these systems is to attract external capital to allow the investment in new surgical facilities, diagnostic centres, and equipment without further burdening our healthcare system and government coffers.”

But this type of structure requires careful planning to ensure they comply with regulatory requirements, as well as balancing potential tax implications with ownership flexibility.

Rotenberg added that many physicians have a desire to move care outside of the hospital environment. But that is a complex undertaking. In Ontario, for example, along with procuring a building, you’ll have to move through a rigorous regulatory process, including inspections, standards, policies, procedures, medical device reprocessing, procurement, and hiring.

“Surgeons and nurses, generally speaking, do not understand the basics of how items are procured, how surgical centers are developed, what regulatory pieces are needed,” Rotenberg said. “It takes a lot of time and expertise.”

That’s why it’s crucial to work with trusted experts—such as surgical clinic consultants, legal teams, accountants, and financial advisors—with experience in the various areas required to make the plan come together—from crafting a business plan to navigating regulatory requirements.

Your bank, for example, should be able to provide financing for equipment, leasehold improvements, and real estate acquisition. Your banking team should also have experience with these types of projects, including knowledge of the various regulatory requirements, provincial legislation, and commercial real estate development.

The possibilities for expanding into non-hospital care are growing. As Dolfi, put it: “Change is coming to the practice of medicine in Canada. More and more healthcare services, including medically necessary services, will be performed in surgical centers outside of traditional hospital settings.”

The physicians who are proactive and preparing for the future of Canadian healthcare now will be in the best position to take advantage of these emerging opportunities.

Contact Us

Pino Loverro, Director, Healthcare, BMO Commercial Bank, pino.loverro@bmo.com, 416-949-1282

Marco Dolfi, Principal, Miller Canfield, dolfi@millercanfield.com, 519-946-2130

Nick Korhonen, Partner, MNP, nick.korhonen@mnp.ca, 613-691-4200

Dr. Brian Rotenberg, Co-Principal and Founder, Surgical Services Ltd., brian.rotenberg@surgicalservicesltd.com, 519-851-3141