News Coverage
January 9-15, 2003
Business Edge
Eye Surgery Team Refocused on Alberta
Gimbels buy back eye centres from former partners
Monte Stewart
As he sits in his Calgary office, Dr. Howard Gimbel squeezes his wife Judy's hand as a show of comfort.
"We're not used to failing," explained an apologetic Judy, who oversees the Gimbels' business operations while Howard conducts eye operations.
After watching their dream of becoming the "McDonald's" of eye surgery centres die, the Gimbels are focusing again on Alberta. The Gimbel Eye Centres now operate only in Calgary and Edmonton. It's more comfortable to be in our self-contained unit," said Howard.
The Gimbels have re-acquired their Calgary and Edmonton assets from their former partners.
According to public documents filed in conjunction with the agreements, the deal cost the Gimbels $1,557,365 plus interest.
The re-acquisition resulted after the Gimbels expanded from Calgary to Edmonton, Saskatoon, Toronto, Vancouver and Winnipeg, and then—to pay for expensive new technology—merged with Calgary -based partners who operated eye surgery centres in the U.S. and overseas.
"We didn't plan a big business," said Howard Gimbel, who has been in practice for 38 years. "It just grew because patients wanted our services."
Under the terms of the agreement, the public company, formerly known as Gimbel Vision Inc., now operates as Aris Canada Ltd., while the Gimbels are running Gimbel Eye Centres through a private company called I Care Services Ltd. The deal resulted after Aris was in arrears on loan payments to the Gimbels.
The public documents show the Gimbels agreed to forgive one loan of $721,643 plus interest and pay Aris$175 for each elective surgical procedure at the centres after May 29, 2002, until such time as the amount totals $835,722.
The deal does not apply to cataract surgery, which is funded by medicare. Winnipeg doctors have also purchased their centre, while the Saskatoon centre closed.
The Gimbels still own shares in Aris, but the stock has nose-dived in recent months and, according to the documents, Aris is still struggling to pay of debts.
Judy Gimbel blames their setback on bad timing and two rival companies that drastically undercharged for their services. But the Calgary couple's troubles also raise the question of whether Canadian healthcare providers can profit when most of their procedures are not government funded.
"Certainly, there (are) niche markets—and Gimbel has certainly demonstrated that in ophthalmology," said Richard Plain, a University of Alberta health-care economist. "I think there is a limit, though."
Plain said government-funded contracts allow doctors to build "good, solid bread-and-butter" businesses while they sell services that are not government-funded and introduce new technologies.
But in today's Alberta, doctors are not willing to depend solely on privately funded services.
Plain said an Alberta government report on de-insuring services, expected later this year, could lead to more "part-time medicare doctors"—and likely raise the ire of patients who fear the decline of Canada's health-care system.
Under the Constitution, health is shared responsibility between the federal and provincial governments. The Canada Health Act stipulates that government—not patients—must pay for medically necessary procedures.
Most patients at the Gimbel Eye Centre pay out of their own pockets because their vision problems can easily be corrected with glasses or contact lenses.
"I think that's the way it should be," said Gimbel, "because I don't think taxpayers would feel right about funding this type of surgery when there aren't enough taxpayer dollars to do the medically necessary things."
For laser sugary and lens implants designed to correct nearsightedness and farsightedness, Gimbel Eye Centre patients pay $1,200 to $3,300 per eye, depending on the type and complexity of the procedure.
But Gimbel, the province and the federal government do not see eye to eye on the funding of cataract surgery—once Gimbel's specialty—which is considered an essential service.
The province, through the health regions, pays $540 per eye for cataract operations. Where he once did more than 3,000 cataract procedures per year, Gimbel is now restricted to about 500.
According to figures provided by Gimbel Eye Centre spokeswoman Ingrid Ameli, between April 2001 and March 2002, the province funded 606 cataract procedures performed by Gimbel himself.
But the Calgary Health Region, which sets quotas on Gimbel, will limit him to 505 this fiscal year—a 20-per-cent cut.
Demand is still strong for the Gimbel centres' non-medicare services. Figures show that, in the last three years (up to Dec. 19, 2002), doctors at the Calgary and Edmonton centres treated 19,796 patients from Alberta alone. They treated 1,911 from other parts of Canada, 2,890 from the U.S. and 95 from overseas countries ranging from Iceland to Iraq.
In the past, several observers have accused Howard Gimbel of fostering a two-tiered health-care system—one for rich patients who can pay and another government-funded one for poor patients who can't pay.
But Gimbel contends the provincial and federal government have re-interpreted the Canada Health Act whereby fees for "certain physician services—and I would underline certain," must be paid by medicare. Gimbel argued the feds and provinces already endorse a two-tiered system for such services as podiatry, psychology, physiotherapy and optometry (non-surgical eye care).
"So we shouldn't say two-tiered health care," said Gimbel. "We should say two-tiered physician services. That's the argument. That's what I would like to get cleared up, because they love health care, but they love all these things within that umbrella to be two-tiered—except certain services in doctors' offices."
Years ago, he said, patients had the right to pay for cataract surgery ahead of time or wait in line for government funding. (In the mid-1990s, at the behest of then-federal health minister Diane Marleau, the Alberta government reimbursed patients who had paid Gimbel for cataract surgery.)
"This is where we were accused of promoting private health care," said Gimbel.
"Private health care goes on in many aspects of health care. My view is that the citizens of Canada, in buying into this line that there shouldn't be two tiers, don't understand the issue—or they don't understand the personal freedoms that they are sacrificing."
But the U of A's Plain, who calls Gimbel "quite an entrepreneur," disagreed. Gimbel challenged the system and the question of medical necessity, he said by offering enhanced cataract procedures above and beyond what medicare covers.
"He was very innovative in some ways before the regulators caught up to him," said Plain
Gimbel said medicare is "great", but patients should be allowed to pay for faster cataract service if they want it.
"You can take your dog down to the vet and you can pay for your dog's cataract surgery, but you can't bring your wife to me and pay for her surgery," said Gimbel.
"I think that's a loss of personal freedoms. And It's only in Canada, Cuba and North Korea that this happens. In every other western country, the patient does have that freedom, so I don't like the company that Canada keeps in that regard."
Gimbel said he could treat more poor patients if the wealthy ones didn't have to wait in line. But Plain said the waiting list will not get shorter if people pay for quicker cataract surgery, because the number of cataract patients is not set.
He added Gimbel's argument appeals to policy makers, but studies show that government funded patients actually have to wait longer if they go to doctors who spend most of their time on non-medicare procedures.
"So medicare patients that went to physicians that spent most of their time doing non-medicare services (waited) longer than if they went to clinicians that spent virtually all of their time just doing medicare services," said Plain. "Patients, of course, don't know that… but buying your way up the queue doesn't work because it just puts money in the pockets of the guys that are doing the service."
Gimbel has skirted the system by operating on some of his cataract patients at his alma mater, Loma Linda University in California, where he serves as a professor and chairman of ophthalmology. He said one man at the bottom of his waiting list, who lives within five minutes of his Calgary office, paid six or seven times what he would in Canada because his cataract condition was not considered as urgent as others.
Gimbel, who spends two weeks per month in California, would face fewer loopholes if he operated full-time in the U.S.- but he prefers to stay in Canada.
"(Moving to the U.S.) doesn't serve the patient that I want to serve," said Gimbel, who was raised on a farm in southern Alberta. "I grew up in this province, I love living in this province. For all of these years, I have done surgery for a fraction of what I could have made in the United States—but I don't do this because of a profit motive.
"I do it for the satisfaction of helping these people, and I enjoy helping the people of Western Canada, where my roots are—and I intend to stay here. But it's just painful that the patient can't have the freedom to choose the surgeon that they want without being penalized by a long wait."
Premier Ralph Klein's government may appease Gimbel if, as expected, it de-insures more services. But Plain said waiting lists are a necessary part of rationing health-care dollars.
If the province de-insures and excessive amount of services, he said, Canada's health-care system could return to the way it was 30 or 40 years ago.
"If you do that, you destroy medicare as we know it today."