You may have read or heard recent news stories about the financial insolvency of the Health Resources Centre (HRC) in Calgary. Although it receives funding from Alberta Health Services (AHS), HRC is a privately-operated for-profit health facility owned by Networc Health Inc. that provided services including joint, knee and hip surgeries in Calgary. It recently filed for bankruptcy protection after it was unable to
fulfill a real estate agreement. AHS filed an injunction and PriceWaterhouseCoopers has been appointed as HRCs Interim Receiver.
Many nurses at HRC also work at Calgary's public health care sites and are members of the United Nurses of Alberta. We wish to provide some clarity on this issue for our members and the general public.
You may also be aware of some recent comments made by politician Danielle Smith about HRC and Networc Health Inc. Some of her comments were inaccurate and possibly misleading.
Court and receiver documents available online provide more facts on the costs and commitments of the HRC contract with AHS.
Will nurses working at HRC lose their jobs?
Because of the company's insolvency, there are limited options facing staff at HRC. The company could completely close HRC and layoff the staff.
AHS has been seeking a better second option that would transfer staff and the surgeries from HRC to the nearly completed McCaig Tower surgical facility at the Foothills Medical Centre. This would allow AHS to quickly continue with the surgeries people are waiting for. It will also keep the surgeons and nurses working in Calgary. Under Alberta labour law, when a company is taken over by another, the employees have rights to keep their jobs.
UPDATE: Unfortunately, Networc Health Inc. rejected the AHS proposal and indicated that it is prepared to argue in court against any staff transfer from HRC to the McCaig Tower. As a result, AHS has withdrawn its application for a staff transfer from the courts. AHS will now post new positions for the surgical units opening in the McCaig Tower in November. These will be new AHS positions and will be posted in accordance with the existing terms of the Collective Agreement between UNA and AHS.
Was HRC a good deal for Albertans?
AHS has already absorbed over $2 million in extra costs because of the HRC bankruptcy, but surgeries at the facility were not a great deal to begin with. In 2005, Premier Ralph Klein admitted that privately contracted surgeries (most at HRC) were on average costing the system 10% more than those in public hospitals. HRC was also handling cheaper, less dangerous surgeries. The agreement signed with Calgary Health Region in 2004 stipulated that HRC would handle "uncomplicated" surgical services.
Did AHS have the contractual right to terminate the contract with Networc Health Inc?
According to a Court of Queen's Bench of Alberta affidavit from Chris Mazurkewich, Executive Vice-President and Chief Financial Officer of AHS, the agreement with Networc Health Inc. included a "contractual right to terminate the Surgical Services Agreement without cause upon giving 180 days written notice of termination to Networc."
The agreement also gave AHS the "contractual right to suspend or terminate the Surgical Services Agreement without notice should Networc become insolvent, bankrupt or is placed in receivership or commits any act of insolvency."
AHS did NOT push HRC into insolvency.
One piece of misinformation being circulated is that HRC became insolvent because AHS did not provide a minimum number of surgeries required by the contract. In reality, the contract did not commit to a minimum number of surgeries.
"The agreement between Networc and Alberta Health Services limits the maximum annual number of procedures that can be performed at the Health Resource Centre, but Alberta Health has no obligation to fund any minimum number of procedures." (Court of Queen's Bench of Alberta Decision, June 1, 2010)
Court documents also describe that Networc Health Inc. had not received a commitment on volume of surgeries before it signed a real estate lease with Cambrian Properties Corporation.
"Networc Health had admitted that it was no longer capable of meeting its obligations under the leases, relying on a letter from Networc that stated that, as Networc had received only partial commitment from Alberta Health with respect to business volumes for the budget year commencing April 1, 2010, Networc did not have the ability to pay lease costs on the two buildings that were the subject of the leases." (Court of Queen's Bench of Alberta Decision, June 1, 2010)
The court documents also show that HRC became insolvent not because AHS reneged on their contract, but because HRC signed a real estate lease with Cambrian Properties Corporation that they could not cover.
Who is Networc Health Inc. looking out for?
Networc Health Inc has presented a list of demands to AHS which they say would need to be met for HRC to continue as a privately-operated facility. - the current senior management of HRC must be maintained, - AHS must provide the maximum possible number of procedures, - AHS must pay for the legal fees incurred by Networc Health Inc.
Networc Health Inc. is also effectively holding the staff hostage by not allowing AHS to present conditional offers of employment to clinical staff at HRC and opposing the transfer of staff to the McCaig Tower. (Third Report of the Interim Receiver)
UNA believes that Networc Health Inc. should not use their staff as bargaining pieces in this legal battle. The evidence presented in these court documents and affidavits help provide clarity to the misinformation being perpetuated by individuals and groups who have a political and financial interest in keeping HRC open at any cost. The politically-motivated war of words launched by Networc Health Inc. has irresponsibly put business interests before staff job security and patient care. By transferring staff to the new McCaig Tower, they would have been assured continued employment and patient care will not be threatened. |
