| For a copy of a letter to send to Allan Rock re: HRG in Grace Hospital |
A BRIEF TO THE COLLEGE OF PHYSICIANS AND SURGEONS
written by Bill Blanchard re: HRG and the Future of Medicare in Alberta...
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A PLAN FOR THE ORGANIZATION
AND DELIVERY OF COMPLEMENTARY
HEALTH SERVICES IN CANADA=================================
April 1997
HRG |
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| Executive Summary A Private Company |
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| Executive Summary (cont'd) Service Populations HRG will provide medical, surgical and rehabilitation services in a manner interpreted as acceptable with the Canada Health Act. Programs and services will be designed to meet the needs of the following population groups: ˇ Clients of third party customers (e.g. WCB). ˇ Private and corporate customers who are seeking access to uninsured health services. ˇ Populations named within contracts and service agreements signed with authorized funding agencies who wish to contract for the provision of insured or uninsured health services (e.g. Regional Health Authorities, Hospital Boards). Start-up priorities will concentrate on third party and private, uninsured services. Contracts and service agreements with Regional Health Authorities will be considered in the future. Health Resource Medical Center - Calgary HRG is currently in the process of establishing its first operating facility in Calgary, Alberta. It has leased the third floor and a portion of each of the first and second floors of the original Salvation Army Grace Hospital on 8th Avenue and 14th Street N.W. In summary, this HRG medical center will operate 24 hours per day, 7 days per week, and will include: ˇ 22,000 sq. feet ˇ 37 medical / surgical beds ˇ 8 day surgery beds ˇ 3 operating theatres ˇ 6 post operative recovery beds Private Share Offerings HRG will raise a minimum of $6,000,000 through a private share offering to finance the planning, construction, equipping, and start-up of its first health care facility on the third floor of the Salvation Army Grace Hospital in Calgary. Of this amount renovation costs are projected to be $2.5 million, capital equipment $2.0 million and preopening, financing and contingency a further $1.5 million. Conclusion The health care industry in Canada continues to evolve and mature as it addresses issues of access, quality and cost. HRG has developed a realistic and implementable plan to enter this sensitive market in a manner which will support and complement the publicly funded health system For further information contact: Mr. Jim Saunders, President HRG Health Resource Group Inc. 1402 - 8 Avenue NW Calgary, AB T2NIB9 Tel: (403) 220-0410 Fax: (403) 220-0500 |
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TABLE OF CONTENTS |
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| Section | Title | Page |
| 1.0 | HRG Health Resource Group Inc. Is A Private Company | 1 |
| 2.0 | Privately Funded Health Services in Canada | 1 |
| 3.0 | HRG Will Operate Within The Canada Health Act | 2 |
| 4.0 | A Diversified National Company | 3 |
| 5.0 | The HRG Facility In Calgary, Alberta | 5 |
| 6.0 | HRG Corporate Goals | 7 |
| 7.0 | The Canadian Health Care System | 9 |
| 8.0 | Health Reform in Calgary | 10 |
| 9.0 | HRG Target Population | 6 |
| 10.0 | HRG Target Services | 14 |
| 11.0 | HRG Strategies | 15 |
| 12.0 | HRG Strategic Alliances | 15 |
| 13.0 | HRG Board, Management, and Medical Organization | 16 |
| 14.0 | Key HRG Personnel | 17 |
| 15.0 | HRG Phase-In Schedule | 22 |
| 16.0 | HRG Financing Plan | 23 |
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| 1.0 HRG HEALTH RESOURCE GROUP INC. IS A PRIVATE COMPANY HRG Health Resource Group Inc. (HRG) is a private Calgary based company which has been formed by a group of prominent and experienced health care and business professionals to provide facilities to allow a range of specialty surgical, medical, rehabilitation and other health-related services in a number of centers across Canada. HRG facilities will be developed and defined as medical centers. All services will be offered in compliance with the Canada Health Act. HRG was incorporated in the Province of Alberta on August 28, 1996 as 707742 Alberta Ltd. and changed its name to HRG Health Resource Group Inc. on October 11, 1996. The principals in the group include: Peter Burgener, Dr. Bill Cochrane, Mr. Frank King, Dr. Stephen Miller, Dr. Nigel Patchett, Mr. Jim Saunders, Mr. Tom Saunders, and Mr. Jim Viccars. Government funding has not been received or requested for any capital, start up or general operating costs. As a private company, HRG will raise 100% of required building, equipment, and start up financing through private share offerings. In the future, HRG will become a public company. HRG will be a leader in the complementary health services market. It will, either directly or in partnership with others, plan, fund, organize, and operate an array of health services, programs and facilities. Operating revenues will be derived from contracts and service agreements with health related companies, such as WCB and with direct funding agencies, such as governments and Regional Health Authorities. In addition, there will be direct charges to patients and private insurance companies for the provision of uninsured health services. 2.0 PRIVATELY FUNDED HEALTH SERVICES ARE NOT NEW IN CANADA The health care market in Canada currently exceeds $80 billion annually. Of this amount, approximately 2/3 is funded from public sources and 1/3 is funded privately. The privately funded health services consist mainly of private insurance premiums, uninsured health services paid by individuals, corporations, insurance companies, or Workers' Compensation Boards, deductibles and expenses over ceiling limits. With current expenditures on privately funded health services in Canada exceeding $26 billion annually, this industry is a dynamic and growing market. 1 |
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| Private health care has developed very slowly in for a number of reasons
including government regulations, relative satisfaction with our publicly funded medicare
system, and easy access to the full continuum of health services. However, over the past
several years, there has been a decisive shift in thinking by governments, health
organizations, health providers, and the public concerning the delivery of health
services. This is causing major changes in the organization and delivery of health
services throughout Canada. The time is now appropriate to introduce a complementary, but privately funded range of health services and facilities in Canada. This Operating Plan will summarize the assumptions, plans and strategies of HRG as it moves into this new market. 3.0 HRG WILL OPERATE WITHIN THE CANADA HEALTH ACT HRG will not offer insured health services, to insured patients, on a user-payer basis. The Canada Health Act is clear in its intent to restrict the payment for provincially insured health services to the provincial governments or their authorized agents (eg. Regional Health Authorities in Alberta). Under this Act, patients who are insured within a provincial health insurance plan are not permitted to directly pay for, or to be charged for, any portion of the service delivered within their home province, irrespective of their ability or willingness to pay. HRG will operate within the terms and interpretation of the Canada Health Act. Unless otherwise licensed or contracted to do so, HRG in Alberta for example, will not accept direct referral or walk-in patients who are insured under the Alberta Health Care Insurance Plan (AHCIP) and who are seeking services which are covered by the AHCIP. HRG will only provide insured services to patients in Alberta where there is a valid service agreement or contract in place with an authorized body such as a Regional Health Authority to provide such services. Under these contracts, the RHA will pay HRG for the insured services rendered by HRG. HRG patients in Alberta will only be responsible for the payment of any services which are not covered by A.H.C.I.P. 2 |
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| 4.1 Provider of Health Services HRG will lease, own or manage health facilities which have been custom designed or renovated to meet the specific needs of the target populations they will serve in each selected location. Each facility will be accredited through the Canadian Council on Health Services Accreditation and will offer a variable range of medical and surgical inpatient and ambulatory health services. While each HRG facility will be strategically organized to complement the health services available in the unique catchment areas, all facilities will (if needed) operate 7 days per week, 24 hours per day. The range of services offered in each facility may include: * acute care beds and services * sub-acute care beds and services * rehabilitation care beds and services * day surgery * inpatient surgery * inpatient medical services * ambulatory programs * outreach and follow-up programs * on-site complementary health programs and services * x-ray services * laboratory services * leased space available to strategic partners 4.2 Strategic Partnerships and Alliances HRG will seek mutually beneficial strategic partnerships, alliances, and shared service agreements with public and private funders, organizers, operators, and suppliers in the health field. Such agreements will be designed to promote innovation, enhance the capabilities and capacities of the partners, and to share risk and investment opportunities. 4.3 Complementary Health Businesses HRG will initiate and/or invest in new and existing health businesses which further the values, principles and goals of HRG. Selection, timing and priority to initiate such new businesses will be based on well researched approaches to all of the key variables including: need, demand, 4 |
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| 5.0 HRG WILL OPEN ITS FIRST MEDICAL CENTER IN CALGARY, ALBERTA HRG is currently in the process of establishing its first medical center in Calgary, Alberta. It has leased the entire third floor and a small portion of each of the first and second floors of the former Salvation Army Grace Hospital. This premium space, in this well maintained landmark building, became available when the maternity, surgical and women's health services formerly offered here were relocated to the Foothills Hospital site as part of the consolidation of hospital services in Calgary. The Salvation Army continues to own and to occupy a part of this building for a number of their social programs and for their regional administrative offices. This is an outstanding, purpose-built hospital building in excellent physical condition. It has longstanding credibility as a well respected, compassionate hospital. The site is strategically located immediately adjacent to the downtown core on a major traffic artery. Complete renovation of the third floor was started in November, 1996. The construction cost will be approximately $2.5 million. All new furnishings and equipment will add a further $2.0 million. The décor will be upscale with full carpeting, special lighting, and unique, decorative finishes. All specifications comply with current acute care hospital standards. HRG will open this first state-of-the-art facility in July, 1997. The HRG Grace Hospital site is already zoned appropriately for use as a full service medical center. In summary, the Calgary HRG facility on the third floor will include: * 22,000 sq. feet * 37 medical / surgical / rehabilitation beds (including 4 ICU enhanced observation beds) * 8 day surgery beds (of which 4 are designed for overnight stays) * 6 recovery beds * 3 operating theatres (1 large and 2 regular) * ambulatory and outreach services * rehabilitation area * x-ray equipment * laboratory services * other related services * 7 days per week, 24 hours per day operation HRG intends to expand its corporate operations by establishing similar facilities in 5 |
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| 6.0 HRG CORPORATE GOALS HRG will strive to add value to the health systems within which they participate, while at the same time, creating growth in shareholder equity and a reasonable return on investment. HRG will be a responsible leader and a good partner in the health system. In summary, HRG corporate goals include: Compliance with the Canada Health Act * Operate program and services which comply, with the Canada Health Act and which do not contravene the interpretation of this Act in the province of operation Complementary Partnerships * Maintenance of an open, positive working relationship with all Regional Health Authorities, Health Boards, governments, customers, payers, and other health service providers * Maintenance of a positive public and professional image and reputation * Active participation in regional and provincial health systems through sharing of information and participation in professional and medical teaching and research initiatives * Seek appropriate strategic alliances and partnerships Quality Service * Provide quality medical, surgical and rehabilitation services which meet or exceed local, provincial and national guidelines/standards * Commitment to continuous quality improvement * Commitment to evaluation and outcome measurement * Treatment outcomes which meet or exceed national practice standards 6 |
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| Customer Focus * 100% customer and client satisfaction for all clinical interventions, personal interactions, and physical facilities * Operation and maintenance of high quality facilities and equipment Valued Staff and Medical Staff * High medical professional and support staff satisfaction and morale * Recruitment and retention of well qualified, trained and dedicated staff at all levels * Commitment to staff education and training * Fair treatment and remuneration of all stair * Meet the needs and expectations of medical and multidisciplinary staff Sound Financial Investment * Meet or exceed annual financial objectives and projections including continuous growth in shareholder value * Strategic expansion and growth in all target markets 7 |
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| 7.0 THE CANADIAN HEALTH CARE SYSTEM IS CURRENTLY A BLEND OF BOTH
PUBLIC AND PRIVATE COMPONENTS Privately funded health services represents a rapidly growing $26 billion industry in Canada today. Organized appropriately, private health services will assist, enhance, and complement the publicly fielded services and facilities. HRG will be a responsible leader and a good partner in the future health system in Canada. The following chart briefly summarizes the organization of the public and private health care industry in Canada as it is organized today:
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| 8.0 HEALTH REFORM IN CALGARY HAS CREATED AN OPPORTUNITY FOR HRG's FIRST FACILITY 8.1 Fundamental Change Fundamental change is occurring in the organization and delivery of health services in all parts of Canada. Aggressive shifts are occurring in how health systems plan, organize, prioritize, finance, deliver, and evaluate their services. As these shifts occur, new opportunities are opening for innovative, alternative arrangements for the provision of health services. HRG is ideally positioned to offer quality, value-added services at competitive pricing in a fully equipped, staffed and accredited hospital and ambulatory care environment. Alberta has cut government spending on health by approximately 20% in the three year period 1993/94 - 1996/97. In Calgary this has had a dramatic impact: * merged 7 organizations into 1 * cut health spending in Calgary by approximately $143 million * closed 3 acute care hospitals * laid off 1500 + staff * created a new vision for health with new expectations, incentives and measures of success In Calgary, the Calgary Regional Health Authority (CRHA) is ultimately responsible for overseeing and funding all publicly funded health organizations including acute care, continuing care and public health. The CRHA is one of the most progressive health organizations in Canada today and have developed a system wide approach to regional health service management and governance. They are strong advocates for innovative health care delivery solutions. Within their drive for improved quality, access, coordination, integration, outcome measures and efficiencies, the CRHA have recognized the value of implementing new forms of public-private partnerships. 9 |
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| 8.2 Public-Private Partnerships Are Not New In Calgary Public-private partnerships and the concept of contracting out services to the private sector are not new in Calgary. Following is a list of health services currently contracted out (in whole or part) in Calgary. * private nursing homes * not-for-profit auxiliary hospital * laboratories * community rehabilitation services * home care * hospice care * cataract surgery * day surgery * cardiac rehabilitation * pregnancy termination Prior to regional governance in Alberta, the viability of opening a private acute care facility of the size and scope of the HRG organization would have been impossible. Today, given the right combination of vision, plan, attitude, approach to quality service, participation in outcome measurement, and willingness to share both management and risk, the opportunity is very real. HRG will be this kind of partner. We believe the CRHA, other Regional Health Authorities, WCB and other third party customers will respond positively to the availability of new HRG resources. HRG will add choice, capacity and a sincere commitment to quality and service. 8.3 HRG Will Provide A Choice And Add Value To The New Health System The capacity of health systems across Canada have been reduced below the level of demand. HRG facilities will offer a new and viable choice to a number of key stakeholders: to health regions to contract out selected services, to providers who require alternate facilities with the back-up of inpatient acute and sub-acute beds and to the third party customers such as WCB who require access to health services and facilities and who are responsible for payment of facility fees, and possibly medical fees as well. 10 |
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The 37 inpatient acute and sub-acute care beds and the 3 operating
theatres in the HRG Grace Hospital site represent a very small percentage of the hospital
capacity in Calgary. HRG will not upset the balance of bed and operating room
need-to-availability. Alternatively, HRG will add value, flexibility and capacity to the
health system.
The use of HRG facilities will free up valuable acute care beds and
operating theatres in the public system and will have the capability to assist in the
reduction of unreasonable waiting lists. 11 |
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| 8.4 HRG Will Have Some Competition There are 38 private health care facilities in Alberta offering services ranging from ophthalmology, pregnancy termination, magnetic resonance imaging (MRI), orthopaedic rehabilitation, oral and dental surgery, plastic surgery and day surgery services. It is estimated that over 300 private health care clinics currently are operating in Canada. In addition, there is evidence that Canadians are seeking private health care services in the United States in growing numbers. Although there are a number of other private facilities in Canada serving other sectors of the health care industry, HRG will lead the industry in the development of privately-funded, specially acute and sub-acute inpatient and related care. HRG will be a qualified alternative to public hospitals for the "third party" medical, surgical and rehabilitation workload. However, as noted earlier, the transfer of appropriate workload from the public sector to HRG will actually assist the very busy public system in coping more effectively with their urgent and emergent caseload, waiting lists and seasonal fluctuations. HRG will also compete with other private day surgery facilities for both contracted (RHA, WCB, etc.) day surgery cases, as well as for uninsured day surgery workload. The distinguishing feature of the HRG facilities will be the technical capabilities of the 0.R's, combined with the availability of acute care inpatient beds for overnight stay. There is currently no other private acute care, inpatient bed facility in operation in Alberta. 12 |
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| 9.0 HRG TARGET POPULATION HRG will not offer insured health services, to insured Albertans on a user-pay basis. With the commitment to provide services interpreted as acceptable within the Canada Health Act, HRG will design its program and services to meet the needs of the three general population groups. Start up priorities will concentrate on third party and private, uninsured services. Contracts and service agreements (Group C) will be considered in the future. Group A - Clients of Third Party Customers (Purchasers of Health Services) Clients of third party customers who require medical, surgical or rehabilitation care which can safely be provided by the expertise, services, facilities, equipment and inpatient beds provided by HRG. Third party customers could include, for example, WCB, disability related insurance companies, private corporations with distinct health plans, provincial governments, the federal government, the Canadian Armed Forces and other payers who may qualify. The range of health services which could be provided to these clients is a very broad mix of medical, surgical and rehabilitation care. Group B -Clients Seeking Uninsured Health Services Private and/or corporate customers who are seeking access to uninsured medical, surgical or rehabilitation services. Examples of uninsured health services include elective cosmetic surgery, some dental surgery and some podiatry surgery. This group could also include services to uninsured individuals such as out-of-country visitors. Group C - Clients Defined InService Agreements With Funding Agencies Populations named within specific "Contracts" or "Service Agreements" signed with funding agencies and groups such as Regional Health Authorities, Health Care Boards, governments, Native Bands/Councils, and other organizations with funding who may wish to contract for services and facilities which can be safely provided by, or arranged to be provided by, HRG. The establishment of contracts or service agreements will enable HRG to provide insured health services to insured patients within their province of residence. These contracts would define all HRG service accountabilities for each patient group, plus the form and amount of payment from the funding authority, agency, or authorizing group. Individual patients will not personally pay for any service at HRG that they would not pay for in a public hospital. 13 |
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| 10.0 HRG TARGET SERVICES A comprehensive range and mix of medical, surgical, rehabilitation, and recovery services will be offered at HRG facilities. Current plans include the provision capability of providing services in potentially all primary and secondary medical and surgical sub-specialty areas. No tertiary or highly complex services will be offered. The services offered will not be restricted to a defined list. Alternatively, HRG will maintain ongoing flexibility to receive and make proposals for the provision of the full continuum of services which may be required at any given time. The key principle is that HRG facilities will be capable of offering the complete range of continuing, primary and secondary health services and will respond to changing needs in any manner necessary to meet the needs of its clients. Custom requirements in equipment, staffing, care plans, etc., will be accommodated. Some examples of potential services which may be offered if appropriate contracts are in place include: * orthopaedic surgery (eg: arthroscopy) * general surgery (eg: hernia) * cardiovascular (eg: pacemakers) * urology (eg: cystoscopy) * dental surgery * ENT surgery * plastic surgery * ophthalmology * medical and surgical interventions * other * Other contracted services including the care of longer stay inpatients transferred from public hospitals who are recovering from medical, surgical or rehabilitation intervention. * Other contracted or individually funded outpatient, outreach and ambulatory programs and services. The scope and complexity of services offered in each of the medical and surgical sub-specialty areas will be determined by the HRG Medical Advisory Board in accordance with all provisions for safe clinical practice. 14 |
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| 11.0 HRG STRATEGIES FOR SECURING MARKET SHARE OF TARGET SERVICES HRG will initiate a number of meetings and information forums with key stakeholder groups: 11.1 Discussion And Negotiation With Funding Authorities. * W.C.B. in Alberta, British Columbia, Saskatchewan, Ontario, and * Northwest Territories * Major insurance companies and other third party customers * CRHA and other Regional Health Authorities in Alberta * Provincial health departments in Alberta, British Columbia, Saskatchewan, Ontario, and Northwest Territories 11.2 Discussion With Care Providers: * Meetings with interested physicians in all medical and surgical subspecialties, health professionals and alternate care providers to discuss their ideas and proposals for services which could be offered at HRG, and which meet the goals of HRG * Regular forums for care providers to input in HRG operations and strategic directors 12.0 HRG APPROACH TO STRATEGIC ALLIANCES HRG will seek the development of partnerships and strategic services with other groups who may wish to consider some other form of formal relationship with HRG either on site or off. Examples of current discussions regarding potential strategic alliances include groups involved with: * gamma knife equipment and services * podiatry services * hyperbaric chamber * clinical research and investigation inpatient unit * day surgery * MRI 15 |
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| 13.0 HRG BOARD, MANAGEMENT AND MEDICAL ORGANIZATION 13.1 The HRG Board of Directors HRG has formed a Board of Directors made up of six (6) shareholders. The current Directors are: Mr. Peter Burgener - Chair Mr. Tom Saunders - Vice Chair Dr. Bill Cochrane - Director Dr. Stephen D. Miller - Director Mr. Jim Saunders - Director Mr. Jim Viccars - Director The HRG Board will be reviewed and revised from time to time as required in the opinion of the Board and the major shareholders. 13.2 HRG Management HRG Management will include two levels: * Corporate Management * Site Management Corporate Management HRG Corporate Management will include a small number of executive and support staff to oversee all HRG operating divisions, programs and services. Corporate Management will also be responsible for the development of partnerships, alliances, new business ventures, and for initiating and maintaining government and key stakeholder relations. HRG has appointed two key corporate management executives to date. Their positions were effective February 01, 1997: President - Mr. Jim Saunders Chief Medical Officer - Dr. Stephen D. Miller 16 |
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Additional corporate positions in operations and finance
will be filled in the future. Other Corporate positions will be added from time to time to
support corporate growth, special projects and the development of new ventures.
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Peter has previously served as the Vice Chair of the Board of Calgary
District Hospital Group, as well as Chair of both Planning and Community Relations
Committees of the Board. He is presently a Governor of the University of Toronto, and has
served as a member of the Executive Committee of Governing Council for two years. He is
also a member of the Royal Architectural Institute of Canada and of the Council of the
Alberta Association of Architects, having served as President in 1995 - 1996. Other
current community activities include active participation as a member of. the Partners in
Health Steering Committee for Calgary Regional Health Authority; Expo 2005 Fundraising
Committee; and the Calgary 2000 Millenium Committee. Mr. Burgener has previously served as
the President of the Catholic Family Service Agency, President of Scarboro Community
Association, and as a member of both the City of Calgary Planning Commission and the
Development Appeal Board.
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Dr. Miller is an orthopaedic surgeon and is currently Chief
of Orthopaedic Surgery at the Foothills Hospital in Calgary. He is also an associate
clinical professor at the University of Calgary where he is actively involved in training
and education of the orthopaedic residency training program. Dr. Miller serves as Chief
Medical Officer for Columbia Health Care Inc. (Columbia), a national health rehabilitation
company that provides services in 33 centres across Canada. Dr Miller was co-founder of
the Western Occupational Rehabilitation Centre in Calgary in 1989 and was instrumental in
its growth and development.
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Mr. Saunders has also been very active at the provincial
and national level in health-related organizations including the Association of Canadian
Teaching Hospitals, the Canadian College of Health Service Executives and the Canadian
Healthcare Association where he served as National Board Chair in 1994/95.
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| 14.1 Design Construction Team HRG has retained HealthDesign Group Architects Ltd. to design the renovations to the Grace Hospital facility. Mr. Peter Burgener, a Director of the Company, and managing partner of HealthDesign Group is leading the Company's design team. Stuart Olson Construction is the General Contractor. HealthDesign Group have also had the benefit of direct planning and design input from a number of experienced hospital planners, administrators, physicians and nurses. 21 |
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| 15.0 HEALTH RESOURCE MEDICAL CENTER - CALGARY SITE OPENING SCHEDULE - ORIGINAL GRACE HOSPITAL LOCATION
The HRMC is planned to open in three stages. The opening schedule will be accelerated as demand is confirmed:
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| 16.0 HRG FINANCING PLAN HRG will raise a minimum of $6,000,000 to finance the planning, construction, equipping, and start-up of its first medical center on the third floor of the Salvation Army Grace Hospital in Calgary. A private placement offering has been approved and marketing activities have been initiated by the Company's agent, Research Capital Inc. The funds will be used as follows:
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