There aren't too many startup businessess that can claim to be cash-positive the minute they open. But Don Copeman, founder and CEO of Vancouver's Copeman Healthcare Centre, found himself in that enviable position when he launched Canada's first private, primary health-care centre last November. For $2,300 annually ($3,500 in the first year), Copeman's clients can access expert physicians and other health-care professionals who offer everything from unhurried appointments and annual screening to personal coaching and diagnostics. Business, so far, is booming.
Copeman estimates his centre will pull in about $16 million after a couple of years in operation, while profit margins range between 10% and 20%. He plans to open three new private clinics in Ontario (at a cost of approximately $2 million each) by this fall, eventually growing that number to 37 new facilities across Canada over the next five years. “Decima Research did an independent poll on our specific business and it suggested there's over an $11-billion industry [annually] for what we're doing,” Copeman says. “Roughly 23% of Canadians in that poll said they'd pay for what we're doing, for what we offer. It's a pretty huge industry, and right now we are the only Canadian company playing in that space.”
According to the Canadian Independent Medical Clinics Association (CIMCA)–a Vancouver-based advocacy group for Canada's private for-profit clinics–there are between 200 and 300 independent private clinics currently operating in the country, the majority of them private surgical and medical-imaging facilities in British Columbia and Quebec. “There's been a tremendous boom from 2001 onward–and we will probably see more and more,” says CIMCA executive vice-president Zoltan Nagy, who estimates annual investment in Canada's for-profit private health-care sector ranges somewhere between $10 billion to $40 billion a year. Experts predict the numbers will continue to grow, creating a major opportunity for private health-care entrepreneurs such as Copeman who are interested in catering to Canadians willing to pay out-of-pocket for medical services ranging from orthopedic and eye surgery to medical imaging and health screening. “The barriers to entry in that market aren't big, and they're starting to spring up,” says Brian Bapty, a Vancouver-based biotechnology analyst at Raymond James Financial Inc. “And that's, I think, the tip of the iceberg.”
In fact, The New York Times this past February suggested private clinics are opening up in Canada at the rate of one per week, although that estimate may be low. Many of the established players in the Canadian private health-care space–including Montreal-based corporate health-care and medical imaging provider Medisys Health Group (TSX: MHG.UN) and Toronto-based preventative health company Medcan Clinic–are in major growth mode. On the West Coast, Dr. Brian Day, medical director of the Vancouver-based Cambie Surgery Centre, also plans to open other private surgical centres in Ontario, Calgary and Montreal in the next 18 to 24 months. And in Quebec–considered by some to be the private health-care capital of Canada due to the sheer number of doctors that have opted out of the public system entirely–the province's largest private surgical eye centre, Lasik MD of Montreal, is hoping to open two new cataract surgery centres in Ottawa and Vancouver by next year.
Another sector that could eventually see a huge windfall from the private clinic boom: insurance. Although Quebec is currently the only province with plans to legalize the purchase of private insurance for knee, hip and cataract surgeries, Nagy believes it's only a matter of time before the “straitjacket” comes off in other provinces. “There are very few people who can afford to pay out-of-pocket for a $40,000, $50,000, or even $100,000 procedure,” he says. “But when you have insurance that would cover it, that's a whole different story. This has the potential to become a lucrative business–but it will take more than a couple of years to truly establish itself.”
Of course, there are risks associated with the private, for-profit, health-care sector. For one thing, two-tiered medicine continues to be extremely controversial–and for that reason, the entire industry remains at the mercy of Canada's ever-fickle political machine. This past April, Alberta temporarily shelved its proposed “third way” medicare reforms, legislation that would have allowed doctors to practise in both the private and public sectors. It would also have permitted patients to purchase private insurance for medically necessary services. Critics continue to claim that by allowing private clinics to charge for services already insured by the public purse, that more and more “medically necessary” services will eventually fall into the de-listed category. They say it will create a health-care system that puts profits above patients, catering to the rich and ignoring the poor. It could also end up attracting much-needed doctors away from the public system. All are legitimate concerns–and even supporters of two-tier medicine grudgingly acknowledge these concerns could have the ability to derail some of the progress made to date.
And finally, like any business operating in uncharted territory, there is always competition to worry about. Copeman, for example, cites the risk of “arrogant and cash-rich American firms moving in” and slashing their prices to undercut the new Canadian private clinics. Copeman's advice for businesses considering an entry into the private health-care field? “Grow a thick skin,” he says. “This business is fraught with controversy.”