The following is a digital transcript of Lac Ste. Anne County Administration's presentation delivered by Chief Financial Officer Robert Osmond at the beginning of the Public Hearing regarding Establishment of Municipally Controlled Corporation - Onoway Regional Medical Clinic Inc.
In 2009 with the departure of the physician who operated the Onoway Medical Clinic and the clinic facing closure, Lac Ste. Anne County and 14 other regional municipal governments partnered to contract the Van Schalkwyk Professional Corporation to operate the Clinic. The contract required payment of an annual subsidy of more than $70,000 from the municipal partners to maintain the services of a medical clinic in Onoway. In 2015, as the contract was being renegotiated, two of the municipalities frustrated by the requirement for an increased annual subsidy withdrew from the partnership and two others gave notice of their intentions to do the same.
To prove that a medical clinic in Onoway could be sustainable without municipal subsidy the partners began to consider options with the assistance of Alberta Health Services, the Rural Physician Action Plan (now called the Rural Health Professionals Action Plan) and local physicians. Ultimately the Onoway Regional Medical Clinic Initiative saw six partners (Lac Ste. Anne County, the Town of Onoway and the Summer Villages of Ross Haven, West Cove, Silver Sands and Val Quentin) undertake the operations the medical clinic for an initial two year term to establish a business case for the operations of the Onoway medical clinic sustainable without ongoing subsidy from the taxpayers in the region.
The trial in 2016 & 2017, experienced such rapid success that only 60% of the initial investment from the partner municipalities was required. As a third physician, recruited by AHS, joined the clinic team revenue increased to the point that despite a 6-week closure of the facility due to building maintenance issues revenue exceed projection by 11%. In 2017 the Clinic’s revenue was forecasted to increase by 30%, a target that was surpassed by an additional 10%, leading the operation to a small profit in its second year of operation.
After successfully establishing a business case for a medical clinic operating without a subsidy from local government, it is now time to incorporate the Onoway Regional Medical Clinic as a Municipally Controlled Corporation. This incorporation will allow the Onoway Regional Medical Clinic to perform as an independent business, reinvest the profits of the initiative in the corporation and allow the Clinic to be sold should a party come forward with an interest in purchasing the business. Ultimately, as the municipal partners of the Onoway Regional Medical Clinic Initiative are only in the clinic business to preserve this vital community resource, this flexibility has been an important part of this initiative since its inception.
Some Items of Clarification
Alberta Health Services (AHS) does not approve, fund nor maintain private medical clinics. Although their role in the community brings an extensive list of medical services to the community, and they are a key Onoway Regional Medical Clinic partner in recruiting physicians, they do not hold oversight on the operations of physician clinics. AHS has been involved with the County and the other municipal partners on the various Clinic initiatives since 2012.
In addition to the additional services the Clinic currently provides including visits to the Lac Ste. Anne Foundation Lodge, evening hours and walk-in appointments, the Clinic is seeking adequate space for the two-and-a-half approved physician positions in order to pursue building on its success to improve access to medical services not currently available in the community. The Clinic is not going to pursue services already provided in the community whether through AHS or another private business.
Although the ORMC Board did investigate the feasibility of re-establishing x-ray services in Onoway, Provincial Legislation prevents a private medical clinic from owning and operating x-ray and so the investigation was terminated.
Although the original efforts to preserve the Onoway Medical Clinic included 15 municipal partners, there are only six that ultimately decided to participate in the Onoway Regional Medical Clinic Initiative. The choice to participate in the initiative in 2016 was made at a local level and was completely voluntary. Several municipalities, although they supported the initiative, were not prepared to invest financially.
The shareholding percentages were determined by population and are reflective of the investment required to participate in the initiative. Although the County holds control of the corporation with 82.5% of the voting authority, the partner municipalities participate because the County values their input in the direction of the ORMC and they find value in that participation. The shareholdings are expected to remain unchanged when incorporated as a municipally controlled corporation to stay reflective of the investment the municipalities have made to this project thus far.
The ORMC is approved for two-and-a-half physician positions. The addition of Dr. Salami in 2017, brought the clinic to a full complement of physicians. In just seven months Dr. Salami was able to build a panel of patients. This success was in large part due to advertising and service improvements made at the clinic over the same period, bringing back patients that use other services centres for their medical needs. As there was insufficient space in the facility for a two-and-a-half physician, Dr. Winterbach began to reduce his hours in Onoway and in January of 2019 left the Clinic permanently.
Operating with the equivalent of approximately 1.8 physicians in 2018 the clinic generated $194,200 in overhead revenue (the amount paid to the municipal partnership by the physicians to practice in our facility). As there is not expected to be any change in the equivalent physicians in 2019, revenue was estimated to increase only $2,800 (1%). In 2020, assuming the clinic will be situated in a facility sufficient to house two-and-a-half physician positions, an additional physician will be recruited. The additional revenue from this position was reduced by 15% in 2020 as the new physician establishes their panel realizing full revenue potential in 2021.
The ORMC is projected to see operational deficits in 2020 and 2021, and revenues following the move to a larger facility increase to full potential. The projected losses for the two years total of $3,860 and will be funded from the ORMC reserve balance. This reserve currently holds $85,050 and is not projected to fall below $80,000 before the ORMC returns to a net profit situation.
The following summarizes the public engagement and information sharing undertaken: February 13, 2019 Motions released to the public in the minutes of the meeting to proceed with the process to establish a Municipally Controlled Corporations to provide property development and facility management services desirable to the municipality and to manage and operate the Onoway Regional Medical Clinic so it may continue to provide medical services.
• 14 Bulletin Articles and Notices over the course of six weeks
• Cross-posting on www.lsac.ca, www.onowaymedical.ca, and www.legacymunicipal.ca
• LSAC Facebook – 6 posts reaching 9,000 with 1,000 engagements
• ORMC Facebook – 3 posts reaching 3,800 with 1,000 engagements
Other Questions & Answers
What obligations would the ORMC MCC place on taxpayers?
Virtually none. The Onoway Regional Medical Clinic (ORMC) is operating financially independent from the municipal partners that control it, having eliminated the need for the nearly $75,000 in annual subsidy paid by regional municipalities until 2017. The County and its partners have made a commitment to keeping this service in the community however its operations are financially independent.
Can We Get Enough Doctors in Onoway?
With a relationship going back more than ten years with Alberta Health Services (AHS), the Onoway Medical Clinic has been very successful in recruiting physicians. AHS has offered to recruit a physician to replace the one that left the Clinic earlier this year. Due to space limitations in the current facility, however, these plans have been delayed.
Why does Lac Ste. Anne County need the ORMC MCC?
Onoway Regional Medical Clinic (ORMC) is being organized to run the Onoway Clinic as an independent and self-supporting business. During the trial, the partners were able to eliminate the nearly $80,000 in annual subsidy paid by regional municipalities to the Clinic operator. The partners wish to continue the momentum of the Clinic’s significant success.
What costs are there to establish the ORMC MCC?
The costs to establish the ORMC MCC are limited as many of these costs were incurred at the outset of the trial in 2016/2017. There will, of course, be a cost for Advertising and Legal costs, both of which are included in the approved 2019 budget for the ORMC. These funds are included in Contracted Services and Advertising in the budget projections.
Why was a Market Impact Analysis not completed?
The purpose of the Market Impact Analysis is to review the impact of adding an additional competitor or additional services into a competitive market. In the case of the ORMC, there are no competitors. The lack of interest by private medical Clinic services providers and physicians is the reason that the County and its municipal partners acted to preserve the Clinic. Additionally, the two-year trial demonstrated a growing demand for in community physician services as access is improved with the reintroduction of walk-in availability, evening hours and the acceptance of new patients.
Why don’t the physicians purchase/operate the Clinic?
Over the last twenty years physicians, in general, have become less interested in the management of offices and buildings and more focused on the delivery of medicine. Although there was a time in the past when most physicians sought to open and run their own Clinic, those types of situations are now rare. This situation leaves many communities like St. Paul, Kneehill County, and Peace River to find new and innovative solutions, like ours, to address this widespread problem.
What additional services are being considered?
The ORMC MCC is working with AHS to ensure that we are working in concert, not competition. Services delivered by AHS in Onoway such as Laboratory Services are not being considered. However, Primary Care Network resources such as Nurses, Dietitians, Geriatric Support and Physiotherapy may be areas to investigate first. Additionally, specialized physician services may also be obtainable on an occasional basis.