CALGARY — A private hospital teetering on the edge of bankruptcy will remain open to perform publicly funded surgeries in Alberta for the next 10 months.
But the province’s health provider ended up paying $1.3 million to one of the hospital’s creditors to bolster its legal case that the facility keep operating.
The Calgary-based Health Resource Centre has done about 1,000 hip, knee, foot and ankle surgeries a year — about a third of the total done in Alberta — for the last four years.
But an ongoing legal dispute between Networc Health Inc., which owns the centre, and creditor Cambrian Group of Companies had the hospital on the verge of shutting down.
Queen’s Bench Justice Barbara Romaine prevented that on Tuesday by appointing PricewaterhouseCoopers Inc. as the interim receiver until Jan. 15. She also stayed any bankruptcy proceedings against the facility until that time.
The move came at the request of Alberta Health Services, which was worried about a glut of cancelled surgeries if the centre were shut down.
“This is wonderful news for the patients who were waiting for orthopedic services within the city of Calgary and surrounding area,” said Chris Mazurkewich, chief financial officer for AHS.
“We’re very excited by this. It means uninterrupted patient care until January, which is exactly what we asked the court to do.”
Cambrian had been arguing that AHS was in no position to stall bankruptcy proceedings because it was a customer, not a creditor, so AHS bolstered its legal position by paying $1.3 million to the CIBC. The bank had claims against the centre’s assets and cash flow. The move made AHS a secured creditor.
AHS will also be on the hook for $114,000 a month in rental fees to the owners of the facility.
After the 10-month period, surgeries will be done “in-house primarily at McCaig Tower and some of the other hospitals within Calgary,” Mazurkewich added.
McCaig Tower is the new wing at Foothills Medical Centre. It will include operating suites, a new intensive care unit and medical laboratories.
The Health Resource Centre was originally the Salvation Army Grace Hospital, one of three Calgary hospitals closed in the mid-1990s.
One of the government’s harshest critics on health care said it’s an expensive lesson.
“Paying over $100,000 a month in rent for this building that we used to own really adds insult to injury for the public,” said David Eggen with Friends of Medicare.
“It has cost millions of dollars to bail these guys out. Do the math — this has cost us at least $3.5 million — $4 million. The irony of this situation is pretty thick down there in Calgary. This experiment to do public services through a private contract is an expensive, disastrous error.”
Tuesday’s developments came despite a move by Cambrian to have its bankruptcy application against the centre withdrawn.
“The insolvency situation is addressed,” Cambrian lawyer Michael Smith told court.
A review of the centre’s financial situation by PricewaterhouseCoopers Inc. found that while the centre was not “flush with money,” it wasn’t as bad as originally thought.
But Mazurkewich said the analysis suggested the facility needed protection.
“HRC as it currently exists is insolvent and so in order to protect patient rights to make sure they get treated we had to make sure nobody else went after HRC and wanted to put them into bankruptcy.”
“From our perspective we’re prepared to pay the price to make sure people get uninterrupted services and that’s what we’ve succeeded with at the courts today.”