PUBLIC SELL-OFF, PUBLIC BUYBACK
Health officials sold the Holy Cross 10 years ago today, saying they didn’t need the old hospital. But Calgary’s medical system has been buying back health services at the site ever since.
Room by room, floor by floor, Frank Hunt auctioned off the remains of the Holy Cross Hospital. On the wards, he sold beds. In the morgue, he sold steel tables. The Calgary auctioneer navigated the hospital’s halls, accompanied by a throng of buyers, until the only signs of its former life were farewell messages from nurses, scrawled in felt pen across the walls.
The venerable Holy Cross, founded by nuns more than a century earlier, was dead, the victim of public-sector cuts.
“It was sad,” said Hunt, whose son Nathan received stitches as a child in the Holy Cross emergency department. “It was always my hospital.” The December 1996 sale of medical equipment, conducted by Hunt and his team, raised some $100,000 — pocket change for a medical system spending millions a day. But the Calgary Regional Health Authority had a bigger auction in mind.
Exactly 10 years ago, Calgary’s health body sold the Holy Cross buildings to Enterprise Universal, a company owned by local eye surgeon Dr. Peter Huang, his two brothers and their mother. At the time, a furor erupted as public health administrators said Calgary had too many hospital beds; closing both the Holy Cross and blowing up the old General hospital would save $40 million to $50 million a year in operating costs.
But controversy that dogged the Holy Cross sale in 1997 hasn’t died, with debate simmering over whether closing a hospital was a failed experiment in health-care restructuring and whether the buyers benefited from their staunch support of the governing Tory party.
The one certainty is that a decade since it was decided Calgary’s health system didn’t need Holy Cross, the facility still has lucrative contracts with the public sector worth millions a year.
Since its sale, the Holy Cross has treated 50,000 patients. Alberta taxpayers have bought back thousands of surgeries, services and space at the red brick buildings in Mission.
Documents obtained by the Herald reveal the extent of publicly funded medical care still delivered at the facility now known as Holy Cross Centre.
The documents, released through freedom of information legislation, show the Calgary Health Region awarded contracts worth at least $29 million to have eye surgeries, hernia repairs, dental procedures and other services performed at Holy Cross Centre during the past decade.
The contracts were with Holy Cross Surgical Services and Enterprise Universal, businesses controlled by Huang and his physician brothers, Ian and John.
“Selling the Holy Cross was a massive blunder,” said Kevin Taft, the Alberta Liberal leader.
“It’s almost certainly cost the taxpayers more money.”
CHR executives and the Alberta government defend the decision to sell the 400-bed hospital, saying they never could have anticipated the growth that Calgary has experienced.
And officials with the region and Holy Cross Centre insist it’s far cheaper to buy procedures at the private clinic because it doesn’t have the overhead costs of a major public hospital.
“It was not a mistake to sell the Holy Cross,” said CHR chief executive Jack Davis.
“At the time those decisions were made, they were made on the best information (available) and they made sense.”
Peter Huang, medical director of Holy Cross Centre, said his facility’s prices are low.
“We’re very efficient,” he said in an interview. “If you were to do the same procedure in the hospital setting it would be a lot more expensive.”
Despite assertions that taxpayers are receiving good value for the surgeries, the Alberta Liberals still question the Holy Cross’s price tag.
CHR sold the facility — valued as high as $20 million — for $4.57 million to Enterprise Universal, which has made several donations to the provincial Conservatives over the years.
Opposition parties have also made much of Huang’s doubleduty roles as CHR’s head of ophthalmology at the same time he was part-owner of a clinic that won major ophthalmology contracts from the health authority.
Last year, Huang quietly quit the long-time post.
Some physicians, meanwhile, argue the greatest cost of the Holy Cross’s sale has been the impact on the health system.
Dr. David Jenkinson, an orthopedic surgeon who warned government in the 1990s the closure of three Calgary hospitals was a “prescription for chaos,” said his prognosis was correct.
City hospitals now experience bed shortages and long lineups in emergency.
“Everything we predicted has come true, only more so,” said Jenkinson, who left Calgary for the U.S. because he was angry with cuts at the Holy Cross and General Hospital.
“They were going to save $50 million here or $20 million there, ridiculously small sums when you see what they’re spending now on trying to catch up,” he said.
As Lauren Morrison drove home with her mother from Holy Cross on a warm day this June, she literally saw the world through new eyes.
The nine-year-old girl had just undergone laser eye surgery to correct severe nearsightedness.
“On the way home from the hospital, she was pointing out things she had never seen before,” said her proud mother, Colette Morrison.
That same day, Huang headed out of surgery wearing white sneakers with his surgical scrubs.
As he stood in the Holy Cross hospital — his hospital — he described his work in pioneering the surgery for children like Lauren.
In the past decade, Huang and his family — including his brothers Ian and John — have turned the sprawling series of buildings on 2nd Street S.W. into a bustling enterprise.
The Holy Cross, founded in 1891 by Montreal’s Sisters of Charity, now houses more than a dozen private health-related businesses, including a pharmacy, doctors’ offices and a laser therapy company.
And the Huangs’ businesses, which include Holy Cross Surgical Services and Enterprise Universal, have won a wide range of taxpayer-funded contracts that have kept the facility’s operating rooms busy.
Documents show the largest health services contracts with the CHR include:
Eye surgery: The total value of several ophthalmology agreements over the past nine years was at least $17.8 million.
A nursing home: CHR paid Enterprise Universal to run a 42bed long-term care home for seniors at a total cost of $9.8 million over the six years it was open. The health region abruptly cancelled the longterm care contract this spring, alleging care concerns and fire safety problems.
The CHR has also contracted Holy Cross Surgical Services to provide minor operations at the facility during the past decade, including dental services, podiatry procedures, ear nose and throat operations, hernia surgeries as well as middle ear procedures.
Holy Cross Centre officials said the 50,000 patients they’ve treated over the years have had high rates of satisfaction and good medical outcomes.
“Talk to the people who live here and the staff who work here. They love it here,” Peter Huang told the Herald.
Yet, the fact the CHR continues to purchase surgery at one of its former public hospitals has been a bone of contention for opposition parties over the years.
“We’re now paying a profit to the people who were skillful (enough) to persuade the government of Alberta to part with a gem, an asset like the Holy Cross hospital,” Gary Dickson, a former Calgary Liberal MLA, told the Alberta legislature in 2000.
The business the Huangs built at Holy Cross is hardly limited to surgeries.
Governments have awarded contracts worth $9.8 million to develop seniors’ housing at the site, although the majority of the cash was recently returned because the projects never went ahead.
CHR, the Alberta Cancer Board and Mount Royal College have also spent at least $5 million leasing space at the former hospital during the past 10 years.
For instance, the cancer board, a government-funded agency that delivers cancer care in the province, has spent about $2.25 million on rent and operating costs at Holy Cross Centre since it began leasing space at the facility in 2003.
Cancer board officials were forced to move parts of their administration to the old hospital because the Tom Baker Cancer Centre was so strapped for space.
The organization recently asked the province for an undisclosed amount of money to renovate and expand their operations at the Holy Cross.
CHR, too, has been running out of room at its public hospitals.
Persistent bed shortages have plagued Calgary’s health system in recent years.
CHR blames the situation on Alberta’s population explosion; the health body has an ambitious capital expansion plan to address the problem, including the outlay of $1.25 billion for a new hospital in south Calgary.
Many of those working in the health system say the loss of the Holy Cross and other hospitals during the 1990s helped create the space crunch in the first place.
Emergency wards have been particularly hard hit by the squeeze and wait times last winter climbed as high as 13 hours for patients who needed a bed.
“The impact of closing the Holy and the General was just stupendous,” said Marie Sushelnitsky, a longtime Holy Cross nurse who gave the closing speech at the facility and now practices at Rockyview’s emergency ward.
“You go there some days and you’re just drowning.”
CHR officials say local hospitals are also short between five and seven operating rooms, making contracts with Holy Cross Surgical Services and other private clinics an important part of Calgary’s surgical program.
“We’re mitigating a fair amount of that shortage by sending that capacity to the private sector,” said Tracy Wasylak, a CHR vice-president.
But a former Calgary hospital boss said the health body wouldn’t need to buy services at Holy Cross Centre if the hospital had simply remained in the public health-care system.
“They’ve basically just sold the building off and they’ve been buying it back or leasing it back in small portions, not with a great result,” said Ralph Coombs, retired chief executive of Foothills Hospital.
CHR executives said Calgarians have been well served by the thousands of surgeries purchased at the old hospital. The operations are awarded through a competitive bidding process, they note.
“When you look at what it would have cost us to run the Holy . . . versus the one-time costs of contracting services, you’re much further ahead,” said Davis of the CHR, which declined requests to reveal figures on such savings.
If Holy Cross had simply closed its doors in the 1990s, the debate about restructuring the city’s health system may have ended there.
Instead, the hospital was sold for $4.57 million to Enterprise Universal.
The decision provided fodder for opposition party attacks that continue to this day, including questions about the Huangs’ support for the Tory party and the millions in taxpayer-funded renovations that were halted when the province announced the hospital’s closure.
“After putting $30 million into Calgary’s Holy Cross hospital, this government turned around and sold it to the Huang brothers, a private corporation, for $4.5 millions of dollars — a $25million-dollar-plus gift,” Liberal MLA Lance White said during a 1999 debate in the legislature.
A decade ago, a “disposition” committee was charged with selling the hospital.
It initially rejected a proposal from the Huang brothers, who already ran two private medical clinics in Calgary, during preliminary stages of the selection process.
Paul Rushforth, who was chief executive of the former Calgary Regional Health Authority (renamed the CHR), said they didn’t want to entertain proposals where the old hospital would contract back medical services from the health body.
“If it was private it would have to be a totally private entity,” Rushforth said at the time.
Instead, the disposition committee spent the spring of 1997 looking seriously at two competing bids — worth between $2 million and $3.5 million — to develop condominiums, seniors housing or a private pharmaceutical research facility.
Then, in September, the committee members made a surprise selection, choosing the Huangs’ once-rejected bid, through their company Enterprise Universal, for the innercity hospital. Committee member Jon Lord, a former alderman and Tory MLA, now says the Huangs won the property because they made the best unconditional offer.
“It was the highest cash bid,” Lord said in a recent interview.
On Sept. 23 1997, Enterprise Universal signed an agreement to buy the old hospital for $4.57 million. Under questioning in the legislature, former premier Ralph Klein acknowledged he was contacted by the family about the Holy Cross.
“I recall vaguely seeing their proposal and saying ‘lookit, there’s a process in place. Go to the disposition committee . . . . Interesting proposal’,” Klein said in 2002.
That same year, the Alberta Liberals released a CHR-commissioned appraisal of the Holy Cross that pegged its value as high as $20.6 million, but the authority’s head described this as overly optimistic.
Another assessment suggested the property was worth only $4.5 million to $9 million.
Government officials have said most bids for the site were only in the $3-million range because of the cost of demolishing the buildings.
Klein said there were no irregularities related to the sale of the hospital and to suggest otherwise was an insult to “the community minded people who served on the disposition committee,” including a bishop.
The Huangs, through Enterprise Universal and their own professional corporations, have made significant donations to the long-governing Tories. Elections Alberta records show they donated $15,700 to the Progressive Conservatives between 1994 and 2000.
Their companies also donated to Klein’s Calgary-Elbow election campaigns, giving more than $4,000 over the course of the 2001 and 2004 provincial elections.
Indeed, Calgary party insiders say all three brothers were particularly loyal to Klein, and were regulars at premier’s dinners and party conventions. Klein’s mother, Florence Gray, was a resident at Holy Cross’s seniors facility before her death in October 2004.
Just this spring, Dr. John Huang — also an eye specialist — unsuccessfully ran for vicepresident of the Progressive Conservative party.
But Peter Huang says he wasn’t personal friends with Klein, saying he only knew the former premier from afar.
“I would say at least half a million people in Alberta feel they are friends with the (former) premier,” he said in an interview, noting his company won the property with the highest bid.
Klein refused requests to be interviewed for this article.
Alberta Health Minister Dave Hancock said there was no political interference in the sale of the old hospital.
“That’s just a spurious suggestion,” he said in an interview this month. “It was a public process. They sold it for the best deal they could get.”
The Huangs’ purchase of the old Holy Cross hospital thrust the brothers into a heated political debate.
But it was Peter Huang’s appointment as the CHR’s top eye surgeon that made the doctor the target of conflict of interest allegations in the legislature.
The Huang family had owned private clinics before the Holy Cross and had previously won a contract from the health region to perform 1,600 cataract surgeries annually.
By 1997, Huang was both the health authority’s clinical chief of ophthalmology and partowner of a major private surgical facility that won eye surgery contracts from CHR. Both sides insist he played no role in the awarding of these contracts.
Within months of his new appointment at CHR, the authority was examining whether Huang was in a conflict of interest.
The internal probe concluded there was no actual conflict because a committee — not the ophthalmology chief — allocated cataract surgeries to physicians.
The CHR review did find, however, that Huang could appoint members of the committees and approve its recommendations, leading the report to suggest several changes to “increase confidence” in the allocation process, according to the documents.
“There was no actual conflict, but there was always this perception issue,” said Jack Davis, chief executive of CHR, in an interview.
The perception issue, apparently, took a toll.
Indeed, relations between CHR and Holy Cross Centre eventually deteriorated.
In 2005, the brothers became so concerned they wouldn’t win a CHR contract to perform minor surgeries, Holy Cross Surgical Services took the health authority to court.
Their case wasn’t successful, but documents filed in the proceedings offer a rare glimpse at the rocky relationship between the two sides.
According to an affidavit filed by Ian Huang in the case, Davis called a meeting with Peter Huang in 2002, asking for his resignation as ophthalmology chief.
The region’s CEO told Peter Huang that he was an “embarrassment to Mr. Davis and the government since he had a perceived conflict (of) interest, being an employee of the CHR and an officer of the Holy Cross,” the document states.
Peter Huang refused to resign, saying he had no role in awarding CHR contracts and wasn’t in a conflict, the affidavit said.
He continued as the CHR’s chief of eye surgery for four years.
But last year, Davis again asked Huang to resign, sending the doctor a letter in June 2006.
The letter said Huang was in a “conflict position” because of a CHR bylaw prohibiting those with an influencing interest in a private facility from holding a position as a medical officer.
“The effective date of resignation should be no later than July 1, 2006. If such a letter is not forthcoming, the region will have no option but to immediately terminate your appointment,” Davis wrote in the letter.
That summer, Huang quit the post.
Huang told the Herald he left the voluntary position because his term was finished and he was too busy with a project he started at the University of Calgary for training ophthalmologists.
“As required by the Calgary Health Region, I declared any conflicts of interests on an annual basis,” he said in a statement released Wednesday.
“I was never in a conflict of interest.”
Further problems between the two parties were yet to come.
This spring, CHR officials became concerned about care at Holy Cross’s 42-bed nursing home and alleged the facility was violating fire safety codes.
Holy Cross Centre representatives said the care at their long-term care home was top notch and they addressed any fire code issues, but the CHR moved all 42 residents to other facilities in a move the region called unprecedented.
Davis insists the decision to cancel the long-term care agreement was not related to any problems between the two parties.
“It’s not so much a relationship issue,” he said. “It’s compliance with standards around specific programs with specific contracts.”
Peter Huang said Holy Cross has maintained a good working relationship with CHR, regardless of any conflict.
“Our goals are the same. We want to look after patients,” he said.
The Huang companies’ dealings with other levels of government, meanwhile, have also had their challenges.
Both the federal and provincial governments have awarded some $9.8 million in grants to build housing projects, such as assisted living spaces for seniors, at the old hospital.
Many of the projects, however, never went ahead.
One project — a $4.5 million federal-provincial grant for affordable housing awarded to Enterprise Universal two years ago — fell victim to the skyhigh costs and labour shortage associated with Calgary’s booming construction market.
The development, intended to provide 130 seniors’ housing units, was never completed.
Representatives with Holy Cross Centre said Wednesday they’ve paid back all the government cash.
This week, Holy Cross Manor also paid back the majority of a $2.147-million provincial grant, awarded in 2003, to create assisted living spaces for seniors.
“They’re moving in some other direction,” said Katrina Bluetchen, a spokeswoman with Alberta Seniors.
Despite the challenges Holy Cross Centre has faced over its 10-year history, the facility still has lucrative contracts with the public sector worth millions a year.
Indeed, the clinic remains one of the CHR’s top four private providers of surgery with two ongoing contracts — one for eye surgeries and the other for foot operations.
Holy Cross Surgical Services’ ophthalmology agreement is worth $3.7 million in 2007-08, while CHR says the podiatry contract is valued at $150,000 a year.
Both private businesses and public organizations continue to lease space at the Holy Cross Centre including Mount Royal College, CHR and the Alberta Cancer Board.
The Holy Cross is so busy, an estimated 1,300 Calgarians visit the site every day for a long list of medical services.
The facility’s prime location, meanwhile, has attracted interest from developers who want to put condos on the site. Peter Huang said he has resisted the temptation because he believes in the health services his companies provide to Calgarians.
“We could blow it all up, knock it all down, put condos in and make a fortune, but that’s not what our interests are,” he said.
“We believe this site can be used to benefit the city. We deliver so many services to so many people,” Huang added.
Whatever the future of the Holy Cross Centre, the provincial government doesn’t regret the past.
Looking back on the sale of the hospital a decade ago, Health Minister Dave Hancock said the facility was closed because officials believed they didn’t need the capacity and because the Holy Cross was in the wrong location.
He argues the planned south Calgary hospital, slated to open in 2011, will better serve the city’s fast-growing southern end.
“I would assume they looked at that hospital (Holy Cross) and said, ‘Even if we need bed capacity, it’s in the wrong place and it doesn’t serve the type of delivery that we’re going to be moving into,’ ” said Hancock.
Dr. David Jenkinson isn’t so sure.
The orthopedic surgeon, who now practices in Kentucky, said the sale of the old hospital has come at a steep price for Calgary’s health system. He said the city has been trying to catch up on beds and operating rooms for a decade.
And government is now paying more than a billion to build the south hospital, he noted.
“It’s upsetting that, basically, government got away with it. They made this enormous mistake, which they were warned about over and over and over,” said Jenkinson.
“But no one ever paid any political price for it.”
Frank Hunt helped auction equipment at the old hospital.
Surgeon Dr. Peter Huang says surgeries at Holy Cross Centre are cost-effective.
Lauren Morrison recovers from surgery at Holy Cross Centre.
Former premier Ralph Klein says there were no irregularities related to the hospital’s sale.