Alberta Primary Care Networks Governance Issues
Primary Care Toolkit for Family Physicians
The College of Family Physicians of Canada
Establishing the Primary Care Network Legal Relationship
Primary Care Networks are intended to be a joint effort between physicians and regional health authorities (RHAs) to establish an entity designed to provide a full and defined set of primary care health services to a patient population.
Pursuant to the Primary Care Initiative (PCI) Agreement, the Primary Care Initiative Committee (PCIC) commissioned the development of a contractual template for use by Primary Care Networks. After consultation with various experts, including legal counsel for the regional health authorities, the Alberta Medical Association and Alberta Health and Wellness, accountants and others, the model considered best suited was that of a joint venture between a non-profit corporation (the physician group) and the RHA.
Joint Venture Arrangement
The joint venture template is an agreement between the RHA and a non-profit corporation (NPC) controlled by the participating doctors. The model was designed with the intent that high-level policy decisions will occur at the joint venture level through a consensus driven governance committee comprising physicians and RHA representatives.
Under the joint venture agreement, the NPC takes on the responsibility of ensuring policies are implemented. The NPC also contracts with individual participating physicians and other healthcare providers to provide the service responsibilities the Primary Care Network committed to in its approved business plan.
While the joint venture structure gives the NPC and the RHA an equal role in policy setting, the use of the NPC minimizes the RHA's involvement in micro-management of day-to-day operational details of the Primary Care Network. The NPC also gives the RHA a single point of contact through which it can interface with physicians.
With the joint venture agreement, the NPC and the RHA each have an equal voice relating to fundamental business decisions involving the Primary Care Network, including the business plan, budget, service delivery models and contracts with non-arms length parties. All Primary Care Network funding will be devoted solely to Primary Care Network-related initiatives agreed to by the NPC and the RHA. Physicians retain control over individual patient decision-making and the RHA retains control over its programs and facilities.
The model is designed so that physicians will supervise the overall delivery of healthcare services within the Primary Care Network. The Primary Care Network may also establish a triage system to route patients either to a physician, or potentially directly to another healthcare provider (such as a nurse practitioner or therapist). This type of arrangement puts the daily operations of the Primary Care Network primarily within the control of the physicians, an issue that was deemed important by the physicians.
Non-Profit Corporation (NPC)
The NPC is a corporate legal entity, incorporated under Part IX of Alberta's Companies Act. An NPC is similar in many ways to a business corporation except that it does not operate to make a profit and the shareholders (called members) are not entitled to earn dividends from the NPC. Physicians will, however, be able to enter into contracts with the NPC to provide services and, in exchange, receive payment. An NPC's income will not generally be taxable under the Income Tax Act of Canada. The NPC will be a corporate entity with all the usual rights and responsibilities of any other corporation operating in Alberta.
The NPC reduces potential tax exposure to physicians if any Primary Care Network funds are not used in a given year (and are therefore carried forward). Had physicians contracted directly with the RHA and not utilized the benefit of the NPC, some or all of the unused funds might be allocated to physicians as income. The NPC also reduces liability of individual physicians relative to collective Primary Care Network-related contracts and responsibilities. Generally, the members of the NPC will also be protected from liability arising from contracts between the NPC and third parties.
The NPC is established by filing its constitution (called Memorandum of Association and Articles of Association), together with other prescribed information, with Alberta's Registrar of Corporations. The constitution sets out the NPC's objects, powers and internal rules of procedure. It also indicates that upon dissolution and windup of the NPC, the remaining assets of the NPC, if any, would, for example, be paid to another non-profit corporation or like entity and not to member physicians.
NPC Board of Directors
The NPC will conduct its operations through a board of directors. NPC directors are selected from the pool of participating physicians who are members of the NPC. Directors will have a fiduciary duty to act in the best interest of the NPC, distinct from any duty they may owe the physicians that appointed or elected them to hold office. Directors will ensure the constitution of the NPC contains an indemnity to protect themselves from lawsuits that may arise during the course of their duties as directors. Directors may also wish to acquire directors and officers' liability insurance to fund any claims under the indemnity.
The NPC will enter into an individual contract with each participating physician and other healthcare providers, in which they agree to perform certain Primary Care Network-related services. Except for any services to be attended to by the RHA, the entire menu of physician services together with all other service responsibilities referred to in the PCI Agreement would be allocated among the participating physicians and other healthcare providers and be documented using individual letter agreements.
Using these individual service contracts between the NPC and individual physicians and other healthcare providers is a clear-cut method of allocating Primary Care Network service-related responsibilities and related funds.
Letter agreements provide each physician and other healthcare provider with a level of insulation from the responsibilities of others involved in the Primary Care Network process, by providing certainty as to what each participant is individually responsible for.
Primary Care Network Operations
In the joint venture, a Primary Care Network governance committee, made up of physicians and RHA nominees, will make decisions on a consensus basis. Operations will be conducted according to the Primary Care Network business plan and the approved budget, which is funded entirely from AHW and not on a deficit basis. Disagreements, whether between the RHA and the NPC or between the NPC and a participating physician will be subject to a dispute resolution process contained within the agreements.
The NPC may wish to engage the services of a business manager to administer the NPC's letter agreements with physicians and others. An audit trail should reflect an individual physician or other service provider being compensated for services agreed to as reflected in his/her letter agreement.
Primary Care Network funds received from AHW will be held by one or both of the NPC or RHA, depending on how the Primary Care Network wishes to manage and administer the funds. The NPC and RHA may wish to include in their budget reserves for known and contingent liabilities. Continued funding from AHW will be based on the Primary Care Network's compliance with PCI policies and the Primary Care Network's business plan. Although it approves Primary Care Network business plans, PCIC retains the ability to halt funding to a Primary Care Network should it fail to fulfill its service responsibilities.
The joint venture agreement and the letter agreement also allow physicians to enter or leave the Primary Care Network arrangement without burdensome administration.
Finally, this model removes the RHA from certain aspects of administration which allows them to distance themselves from Primary Care Network operational issues.