Private Health Care In Canada a Political Risk

What is Political risk?

By Melvin J. Howard

As difined by the enclopeida broadly stated, political risk refers to the complications businesses and governments may face as a result of what are commonly referred to as political decisions—or “any political change that alters the expected outcome and value of a given economic action by changing the probability of achieving business objectives.”^[1] . Political risk faced by firms can be defined as “the risk of a strategic, financial, or personnel loss for a firm because of such nonmarket factors as macroeconomic and social policies (fiscal, monetary, trade, investment, industrial, income, labour, and developmental), or events related to political instability (terrorism, riots, coups, civil war, and insurrection).”^[2] Portfolio investors may face similar financial losses. Moreover, governments may face complications in their ability to execute diplomatic, military or other initiatives as a result of political risk.

A low level of political risk in a given country does not necessarily correspond to a high degree of political freedom. Indeed, some of the more stable states are also the most authoritarian. Long-term assessments of political risk must account for the danger that a politically oppressive environment is only stable as long as top-down control is maintained and citizens prevented from a free exchange of ideas and goods with the outside world.^[3]

Understanding risk as part probability and part impact provides insight into political risk. For a business, the implication for political risk is that there is a measure of likelihood that political events may complicate its pursuit of earnings through direct impacts (such as taxes or fees) or indirect impacts (such as opportunity cost forgone). As a result, political risk is similar to an expected value such that the likelihood of a political event occurring may reduce the desirability of that investment by reducing its anticipated returns.

There are both macro- and micro-level political risks. Macro-level political risks have similar impacts across all foreign actors in a given location. While these are included in country risk analysis, it would be incorrect to equate macro-level political risk analysis with country risk as country risk only looks at national-level risks and also includes financial and economic risks. Micro-level risks focus on sector, firm, or project specific risk.

Macro-Level Political Risk

Macro-level political risk looks at non-project specific risks. A common misconception is that macro-level political risk only looks at country-level political risk; however, the coupling of local, national, and regional political events often means that events at the local level may have follow-on effects for stakeholders on a macro-level. Other types of risk include government currency actions, regulatory changes, sovereign credit defaults, endemic corruption, war declarations and government composition changes. These events pose both portfolio investment and foreign direct investment risks that can change the overall suitability of a destination for investment. Moreover, these events pose risks that can alter the way a foreign government must conduct its affairs as well.

Research has shown that macro-level indicators can be quantified and modeled like other types of risk. For example, Eurasia Group produces a political risk index which incorporates four distinct categories of sub-risk into a calculation of macro-level political stability. This Global Political Risk Index can be found in publications like The Economist.^[5] Other companies which offer publications on macro-level political risk include Business Monitor International, Economist Intelligence Unit, and Political Risk Services.

Micro-Level Political Risk

Micro-level political risks are project-specific risks. An examination of these types of political risks might look at how the local political climate in a given region may impact a business endeavor. This type of risk includes project-specific government review (such as the Committee on Foreign Investment in the US (CFIUS) process in the United States), the selection of dangerous local partners with political power, and expropriation/nationalization of projects and assets.

So how do you go about minimizing political risk as a company entering a foreign country? There are a couple of ways first research this is what we did before deciding to enter the Canadian market in terms of riskiness by paying for reports from consultants that specialize in making these assessments. In fact we do this in every country that we may do business in. Then we went on the to the U.S. Department of State's background notes) and clicked on Canada. It goes on to talk about Geography, People, Government, Economy and US Canada relations. But what is totally absent from all of the publications is Canada’s health care system. Now you would think Canada a G-11 North American Country would not be considered  political risk when it comes to health care. That’s what underwriters in London thought to when I first approached them to underwrite our project in Canada. After months on collecting data and me making presentations one of which me power pointing to the piece meal and Hodgepodge approach that Canadian provinces are dealing with Private delivery of medical services. I pointed out it was unorganized with no rules or regulation nor framework to go by. Also the constant bickering between the Provinces and the Federal Government in the media. Only served to cause more political turmoil in terms of private investment in health care. So after months of negotiations I was the first one to be granted Political Risk insurance for a health care project in North America. One of many milestones that I have managed to create for this project. At the bottom you may see sample terms of the insurance. Of course I took out the relevant names for confidential reasons.

So some thought that a NAFTA claim was going to be launched by a huge multi-national corporation. Once again that was short sighted the multi-nationals would not have to lay a claim for NAFTA at this point. Since I will deal with most of the multi-nationals in terms of banking, insurance, vendor relations, legal, etc. They would not have to do this direct. It’s not about how big the dog is in the fight. It’s about how big the fight is in the dog. This claim will not go away my colleagues and I am adamant that we be adequately compensated for breach in trade rules. So I ask you if insurance underwriters whom job it is to know about risks. Thought that health care in Canada was a risk in terms of Private Investment. What more evidence does the international tribunals need?
 
 May 7, 2004        

Mr. Melvin J. Howard Regent Hills Health Centre By Facsimile - 13 Pages

Dear Mr. Howard;

Re;       Regent Hills Health Centre Political Risk Insurance

We are now in receipt of written terms for Political Risk Insurance, as provided by our colleagues at Political Risk in London. The terms are provided on the basis of "Leader only", and will require that additional Underwriters be canvassed in order to provide 100% support for the full limit of $50,000,000, Terms are subject to agreement by all participating Underwriters, and could change if other participants require higher rates,

Brief details of the lead Underwriter's terms are: Political Risk Insurance

 $50,000,000

United States Dollars

Eighteen (I8) months from date to be agreed

$280,000 in respect of 18 month term, inclusive of xxx xxx xxxx fees

ie accordance with specimen policy wording attached and amendments thereto as

determined by Underwriters,

We will require evidence of the land purchase and payment of the full amount of the premium prior to effecting coverage. We would also ask you to note the policy is non-cancelable by either party unless specifically agreed at inception, in accordance with Clause 2.8 of the policy wording.

We will confirm when other Underwriters have authorized their support, and the terms thereof, and trust you find the foregoing in order in the meantime.

 

 

 

Your sincerely,

 

SPECIMEN POLICY WORDING

EXPROPRIATION INSURANCE - PERMANENT INVESTMENTS

Preamble

Section 1

Insured Events

 

Section 2

Conditions and Warranties

 

Section 3

Exclusions

 

Section 4

Definitions

 

Section 5

Schedule

 

Scctien 6

Endorsement for Currency Inconvertibility

ASSURED :

RISK : EXPROPRIATION INSURANCE - PERMANENT INVESTMENTS

WORDING ATTACHING TO POLICY NO:

Whereas the Assured has made to Underwriters a written proposal, the representations, particulars and statements of which, shall form the basis of this Policy.

SECTION 1; INSURED EVENTS

In consideration of the premium payable hereunder Underwriters agree to indemnify the Assured for the Insured Percentage of its Ascertained Net Loss (as hereinafter defined) up to but not exceeding the Policy Limit, caused solely and directly in consequence of the occurrence during the Policy Period of one or more of the following Insured Events but subject always to the definitions, exclusions, conditions and warranties below :

1.1.     Expropriation

Expropriation means an act occurring within the Policy period not limited to expropriation but including also confiscation, nationalization, requisition, sequestration and deprivation by law, order or administrative decree of the government of the Foreign Country which

i) expressly and permanently deprives the Assured of all or part of its shareholding in the Foreign Enterprise, or

ii) expressly and permanently deprives the Foreign Enterprise of all or part of its fixed and/or current assets, or

ill) expressly and selectively prevents or restricts the operation of the Foreign Enterprise so as to cause the permanent and total cessation of the Foreign Enterprise's activities.

1.2.     Selective Discrimination

Selective Discrimination means the imposition within the Policy Period of any law, order, decree, regulation or import / export restriction by the government of the Foreign Country which is applied against the Assured but is not applied against other entities with similar interest and standing, and which is beyond the control of the Assured and which

i) expressly and selectively prevents or restricts the operation of the Foreign Enterprise, or

ii)     legally prevents trie Assured from participating in the benefits of the joint venture agreement,

so as to cause the permanent and torn! Cessation of the Foreign Enterprise's activities.

Is Quebec apart of Canada not when it comes to health care

Man up BCAA

 

By Melvin J. Howard

It didn’t take long for BCAA to cave in from the labour unions for a plan to offer private medical insurance http://www.canada.com/vancouversun/news/westcoastnews/story.htmlid=f551ce2b-dfed-4afd-99a0-c2d877a8b22f. The 800,000 members of the B.C. Automobile Association (BCAA) were being offered a chance to purchase Canada's first "medical access" insurance. The insurance would have let them get expedited medical treatment in private Canadian, Washington state or other U.S. clinics if they are put on a 45-day or longer wait list. According to the B.C. Health Ministry's surgical waiting list website, there about 75,000 B.C. residents waiting for non-emergency or non-urgent (elective) surgery, many of them for far longer than 45 days. Hate to say it but BCAA you should have consulted me first. To bad I thought it was a good plan get your fender fixed and get a hip replacement. That tells me a lot about the state of affairs when a automobile association is trying to help its clients with its health care needs. If things don’t change soon I am afraid Quebec is going to get crowded with Canadians flocking to the Province seeking health care. That’s because in June 9, 2005, the high court struck down a Quebec law that prohibited people from buying private health insurance to cover procedures already offered by the public system. 

"Access to a waiting list is not access to health care," two of the justices wrote in their decision. The Quebec and federal governments asked the high court to suspend its ruling for 18 months. Less than two months after its initial ruling, the court agreed to suspend its decision for 12 months, retroactive to June 9, 2005.

In the provincial government's response in February 2006, Premier Jean Cherest said the private sector could play a role in health care in Quebec, but said he remained committed to public health care. He also said Quebec will introduce guaranteed wait times for procedures including some radiation treatments and cardiac surgery, as well as knee and hip replacements and cataract operations.  

The unions say they don’t want two-tier medicine can someone please explain that one to me? Is it two-tier when a person gets injured on the job and WCB pays for them to go to a private clinic to get diagnostic tests done? Or if a policeman, RCMP officer gets hurt on the job and WCB sends him to a private clinic to get MRI done. Oh it must be this when military personnel get hurt doing manoeuvres they get flown to the states to get immediate medical attention. No no I got it now it must be when a Canadian pro hockey player, football player or NBA player gets surgery done at a private surgical center. Instead of waiting for 2 to 3 months for treatment. See how ridiculous that sounds the reason it does is because the longer these folks go without treatment the more it costs society in the long run yes even the professional athlete. If the team owner has to many players out for medical reasons what do you think is going to happen to ticket sales? Can you imagine Canada without hockey I don’t think so. Or the really big question is it two-tier for members of parliament to get their treatment right away. Instead of waiting in the hospital line-up of course not who would run the country. 

To me two-tier is a made up word to spread fear because when you ask people what it means they really don’t know believe me I have debated this issue for years. I have kept quiet on the sidelines and watched how politics have been played back and forth with this issue. Listen no health care system is perfect just like humans there will be flaws. But using fear tactics to keep the status quo is playing God. Nobody really thinks about health care until they need it but when you need it you need it. I got into health care because I wanted to help people and I have done that. Until you had somebody that has called you to help them to get treatment outside of the country because the facilities are not available it becomes personal.You work day and night to make sure they get the treatment they need. But the downside is when you get the call that they waited to long through no fault of their own so they are sent home to die. With the downturn in the global economy how much more money do you think federal governments can pump into health care? My NAFTA issue is an important one. Because for the first time some serious issues will be addressed on a international level. I am not only an investor but I am deeply passionate about health care the world over. From India to Romania, Spain, Bulgaria, Hungry, Africa I have consulted in health care. This is not only about health care it’s also about trade fair trade free trade. Which hasn’t been and here is just one example I received a letter from the Mayors office in the City of Parksville endorsing the proposed hospital we were building. I even met with the Health Authority. We even started a feasibility study you make click on the link to view a copy http://sites.google.com/site/thehowardgroupagenda/ what do you think happened? Well you will have to wait because that’s the juicy part!

Obama's health plan not mandatory get the facts

Politics and US Health Care do we dare put them in the same room together?

By Melvin J. Howard

When I got a news feed this weekend that Gov. Sarah Palin said that Senator Obama proposes a universal, government-run program. Number one it alarmed me number two that’s not what I read in his health care plan. So ready to phone his campaign office and ask is this true CNN did it for me http://politicalticker.blogs.cnn.com/2008/10/04/fact-check-does-obama-back-a-universal-government-run-health-system Turns out that is not true Senator Obama proposes a structure that ensures everyone will be covered, not by a single government-run plan but by guaranteeing access to a mix of government and private plans. I think the Democrats understand that the vast majority of Americans are not ready to give up their private health insurance plans and that creates a political imperative to continue making private health insurance a part of any “unique American solution.” So lesson learned don’t make snap decisions in the middle of a political campaign get the facts. Wish that our politicians concentrated on the facts instead of making things up. That’s not politics its malice and I think it does more harm then good if your tying to make a political point. Because the next time you make a bold statement that was made from fiction instead of fact. People will start to ignore all of your statements.

See also:

The Hidden Costs of Single Payer Health Insurance: A Comparison of the United States and Canada.

http://www.fraserinstitute.org/commerce.web/product_files/HiddenCostsSinglePayer4.pdf

Privately Speaking

Do you really know what private health care really means? Or is someone else telling what it means?

By Melvin J. Howard

The more and more as I get questions about health care mainly private investment in health care. I now realize that the majority of the population do not get that without private investment in health care you just would not be living a more healthy productive life. So in order to educate those whom are really interested in health care on a global scale I have decided to give you a peek at some of the companies and their contributions. To save space and time I purposely left out. Asia, and Europe there are indeed hundreds of others in other countries. I have kept the list short but I have included Canada. YES CANADA has an investment arm in health care oh no call the national guard! Surely you jest no I do not you are benefiting from these investments whether you see it or not. Government cannot do it alone plain and simple changes in disease patterns and technology are so rapid and mobile if you do not keep up with advances you are selling your population short. So the next time you go to your doctor’s office take a look around and wonder how did all those things get there. When I go to the doctor’s office I actually listen to them what could make your job easier or more efficient. I take that into every decision I make.

Corporate strategies in health care are influenced by how private health care companies view potential demand for health care services. Venture capital and private equity capital are two sources of private sector investment that are used to develop private companies, which are not yet publicly listed companies. The priorities for this type of investment can be seen as an indicator of future trends in the private health care sector. An analysis of venture capital and private equity investment priorities in health care will show how health care is viewed by the private sector. An analysis of International Finance Corporation (IFC) health projects highlights the links that exist between sources of development finance, private investors, and health care companies.

COMPANIES AND INVESTMENTS IN HEALTH CARE

NAME	Country	INVESTMENT PRIORITIES
Credit Suisse Global Health care Fund www.csam.com	Switzerland	Worldwide, in mainly large to middle range capital companies - health care
Advent International www.adventinternational.com	USA	Early stage venture capital and later stage private equity operations. Target sectors include financial services, business services, specialty retail, chemicals, media, pharmaceuticals, software/information technology, telecommunications, health care/life sciences and energy.
MPM capital www.mpmcapital.com	USA	Bioventure and bioequities family of funds including health care innovations
Polaris Ventures www.polarisventures.com	USA	Capital partners investing in medical technology and life sciences
TA associates www.ta.com/investments/	USA	A growth capital company that invests in many sectors including health care services and health care technology
United Health Capital group www.unitedhealthgroup.com/uhcapital With some capital invested through Validus Partners (United Health Group is a partner).	USA	Invests in 5 venture funds including Validus Partners
Newbridge Latin America (NLA) Also Newbridge Andean Partners LP Link to Aqua Investment Texas Pacific Group linked to Oxford Health Plans NAP Acquisition/Newbridge Latin America	USA	Established in 1996 to make private equity investments in Latin America
Fidelity Ventures Far East (FVFE) http://www.fidelityventures.com/portfolio/busserv/frameshealth/asia_renal_care.htm encompasses all of Fidelity’s Venture Capital investing activities in Asia.		Based in Hong Kong, FVFE’s purpose is to extend the reach of US based venture activities to a part of the world that it considers has experienced unusual growth and produced a wide range of investment opportunities. FVFE has made investments in healthcare services, telecommunication services, pharmaceuticals, software development, and consumer service businesses.

VENTURE CAPITAL FUNDS

COUNTRY	COMPANY	FUND
UK	Independent Care Ltd – private hospital group	Advent International
Thailand, Bangkok	Thonburi Hospital Co. – private hospital	Advent International
Singapore	Transmedic Pte Ltd, - medical equipment, distribution and renal care services	Advent International
US and France	A range of health care companies including Hospital Group of America, Inc, a psychiatric hospital group, which was sold in 1999 to Universal Health Services, a large health care provider with hospitals in the US and France.	TA associates
Israel, Iceland, US	60 companies involved in biotechnology	Polaris Ventures
Brazil, Argentina	Salutia – a health care connectivity company.	Newbridge Latin America (NLA)
Chile, Brazil, Mexico	International Hospital Corporation	United Health Capital group/ Latin Health Fund
Health care companies, particularly biotechnology, biopharmaceuticals, and medical devices	US and Europe	MPM capital
Hungary, Poland, Bosnia	Euromedic – leading provider of diagnostic imaging services and distribution and tendering services in hospitals in Hungary	RPM Partners A privately held Dutch investment company GE Equity Dresdner Kleinwert Benson private equity fund
Hungary, Poland, Bosnia, Chile, Mexico, Brazil	Euromedic – leading provider of diagnostic imaging services and distribution and tendering services in hospitals in Hungary Hospitals, pharmacies and laboratories in Latin America	Global Environmental Fund
Argentina, Brazil	Salutia – a health care connectivity company	UBS Capital Merrill Lynch Global Emerging Markets
Philippines, Hong Kong, Taiwan, Japan, Singapore	Asia Renal Care Ltd	Fidelity Ventures Far East (FVFE)

The main investment areas of equity investments this year are:

1. e-health / health connectivity – use of internet and information communications technologies

2. Telemedicine – using information communications technology to transmit information and advice about treatments

3. Biotechnology – gene therapy

4. Pharmaceuticals – drugs needed for chronic conditions, CHD/CVD, cancer treatments, mental illness

5. Medical devices / diagnostic equipment e.g. treatment for kidney diseases

6. Health care services

Multinational health care companies also invest funding in private investors, for instance, the UnitedHealth Capital group invests in 5 venture funds and some is invested through Validus Partners, of which United Health Group is a partner. UnitedHealth is a health care company based in the US with some international operations.

Some more specific examples of how private equity investment is linked to health care companies are:

• CDP International
• Latin Health Fund
• Asia Renal Care Ltd – Fidelity Far East Ventures
• Euromedic
• Medicover – Oresa Ventures
• Salutia

CANADA CDP INTERNATIONAL - GSSLA

Caisse de dépôt et placement du Québec (CDP) CDP Capital www.lacaisse.com C$105 billion of assets under management Subsidiaries : CDP Private Equity CDP Real Estate CDP Global Asset Management	Three categories of activity: Negotiated investments Portfolio managements Real estate management	CDP Capital invests in public companies (publicly traded shares – “societies ouvertes”) including: Aetna Inc Fresenius and Fresenius Medical Care AG HCA The Healthcare Corporation Health South Corporation Companhia Saneamiento Basico de Sao Paulo (SABESP).
CDP PRIVATE EQUITY Subsidiaries include:
CDP Capital d’Amerique Financing for medium to large businesses	CDP Capital d’Amerique offer financial services and support to Financial institutions, distribution and services, manufacturing, energy, infrastructures and natural resources	In 2000,CDP Capital d’Amerique in conjunction with BC Partners, made a $89m investment in General Healthcare that manages a network of private hospitals in UK
CDP Capital International offers services to Quebec companies involved in international expansion projects CDP Capital International set up – CDP Access Capital International which offers financing arrangements to Quebec companies wanting to operate globally	CDP Capital International invests in funds and directly in growth companies in Europe, Asia and Latin America. It also manages private equity funds in emerging markets in partnership with local teams. CDP Capital International has a portfolio of 56 investments valued at more than C$1.3 billion	CDP Capital International, through Accès Capital International, is investing U.S.$2.5 million in GSSLA Inc., a Latin American subsidiary of Générale de Services Santé N.A. Inc. (GSS), which owns and operates eight long-term health care facilities and senior citizen homes in Québec in addition to offering home care and support services.

CDP International

Caisse de dépôt et placement du Québec (CDP) International is one of the largest investment companies in Canada. CDP International is one of its private equity subsidiaries. Access Capital International was set up by CDP International. It is investing in GSSLA through GSSNA, a subsidiary of Generale de Sante, one of the largest health multinational companies based in France. GSSNA – North America – operates eight long-term health care facilities and senior citizen homes in Québec in addition to offering home care and support services. GSSLA is a subsidiary of GSSNA and operates in Venezuela and Chile. This presents an interesting example of an investment fund investing through subsidiaries of a multinational healthcare company.

This investment was explained by CDP Capital International’s President, Jean Lamothe who said "The World Bank has identified health care in Latin America as a sector suited for restructuring and development. Our investment, through Accès Capital International, will enable GSSLA to position itself competitively by forming strategic alliances with local partners to take advantage of management opportunities as they arise." (CDP press release, Wednesday December 27th 2000 http://www.cdpcapital.com) GSSLA intends to pursue its development, notably by expanding into Argentina and Mexico over the short term as outlined in 2001.

GSSLA Inc. operates various hospitals and clinics in Venezuela and Chile on its own behalf or for third parties. For example, in 1997 it obtained a contract to manage Venezuela's Coromoto Hospital, a 150-bed multidisciplinary establishment owned by the oil company Petroleos de Venezuela SA. In Chile, GSSLA is the sole manager of the largest private hospital in the country's second-largest health region.

An example of CDP’s investments in European based health care companies can be seen in the investment by another private equity subsidiary of Caisse de dépôt et placement du Québec called CDP Capital d’Amerique. In 2000, together with BC Partners, it made a $89m investment in General Healthcare, a company that manages a network of private hospitals in UK. CDP also has a large property portfolio and has recently started to rent office space in Paris to Vivendi Privately Speaking.