Your Next Big Thing: Growth Market—Private health Care

Written by ProfitGuide Staff

First, let’s debunk a myth: Canada has never had an entirely public health-care system. The Canadian Institute of Health Information estimates 30% of the $130 billion spent on health care in 2004 was for privately delivered services such as eye care, dentistry and cosmetic surgery.

The Supreme Court of Canada’s landmark June ruling could sharply boost this percentage. The court deemed delays due to the ban on private insurance for treatments available via medicare unconstitutional under Quebec’s Charter of Rights. This opens the door for private clinics that would bill patients, not governments, for services rendered.

To spot opportunities, look for long lineups. Ann Kaplan, president and CEO of Medicard Finance Inc., a Toronto-based financier of elective surgery, cites “diagnostic procedures, hip replacements, podiatry-anywhere people are waiting.” A study by the Vancouver-based Fraser Institute shows orthopaedic surgery, non-cosmetic plastic surgery and ophthalmology as having the longest wait times.

Even before the court ruling, clinics in B.C. and Quebec were offering private care. Last year, Vancouver’s Cambie Surgeries Corp. provided 5,000 patients with services from MRIs to knee operations. (Some were foreigners, but most were Canadians exempt from the Canada Health Act, such as out-of-province residents and RCMP or military staff.)

“In our opinion, all provincial laws that outlaw private insurance and private payment for health care have been struck down, in practical terms, by this ruling-and that’s how we’re operating,” says Brian Day, Cambie’s president and CEO. He says that if private supplemental insurance is okayed, more health care will be delivered in total-“the biggest stimulus the economy has ever seen”-as firms such as his expand nationwide to offer everything up to open-heart surgery.

This isn’t a done deal. The Supreme Court gave Quebec a year to implement changes, during which appeals are expected. And NDP pressure on the federal Liberal government could slow or halt a move to a public/private hybrid system.

But you shouldn’t shy away from a nibble of the $130-billion pie. Even if private delivery is stymied, other opportunities will remain. The “medical tourism” sector that arranges travel and contacts with foreign medical facilities for those able and willing to pay for treatment will grow even faster if private delivery is blocked. Another hot area is public/private partnerships. B.C. and Ontario each have two pilot-project hospitals with private-sector involvement in design, construction, financing and operations. And Sharon Sholzberg-Gray, president and CEO of the Canadian Healthcare Association, says SMEs have been slow to exploit opportunities to offer the public system management advice, accounting, IT support, HR consulting and office management.

© 2005 Allan Britnell

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