Special Committee on Cooperatives Committee on July 27th, 2012

[Tim Archer]

I'm not as familiar with the primary care development model in Alberta. Certainly there's been a similar push in Saskatchewan towards development of primary care teams. Historically they have tended to focus on physicians being paired up with nurse practitioners, and it's really still quite physician driven. The cooperative model is somewhat distinct from that in that the physician is an integral component of the primary care model, whereas in the cooperative model the physician is only one of several providers. In the cooperative model, the physician is not higher in the hierarchy than nurse practitioners, RNs, community mental -health nurses, counsellors, outreach workers, physiotherapists, and on and on. Physicians are important, but they are only one of a number of different team members who are integral in providing the whole circle of care that's—

[Michelle Rempel, Conservative, Calgary Centre-North, AB]

It might be interesting to look at the primary care initiative model, because it does, at its core, have the principle of integrating different service providers. There are chronic-care clinics that have been established, urgent-care centres, to bring together those specialists, but also to reduce the burden of administration on some of these providers, be they physicians, etc. So just of note, there is another model that's being developed in Canada that I think is quite innovative and worth attention.

The rest of my questions are for Ms. Stark. Perhaps you could very briefly, as I don't have a lot of time, describe some of the key points that your organization uses in underwriting loans to your clients.

[Jodie Stark]

Thank you for the question.

Our loans are basically now facilitated through the credit unions themselves, so the credit union may have a client who is interested—whether it be a cooperative or a commercial client or whatnot—in having a loan put in place, but it's a loan that might be, say, $50 million or $90 million, and far exceeds what their regulatory capacity will allow. So what they'll do is come to Concentra, and we'll offer the additional funding, or we'll coordinate the effort between other credit unions, or we'll fund it and then syndicate the loan out so that we can actually spread the risk among various credit unions across Canada.

[Michelle Rempel, Conservative, Calgary Centre-North, AB]

Would you say that the credit unions that are utilizing these principles favour credit union governance? Would they use that as a criterion in evaluating loans preferably, perhaps, over other small businesses using different models of governance?

[Jodie Stark]

I don't think I can speak personally to what the credit risk policies are for specific credit unions, since they are all individually—

[Michelle Rempel, Conservative, Calgary Centre-North, AB]

In general.

[Jodie Stark]

One thing I can say is that they would understand the cooperative principles and the governance principles. I don't know how that weighs in their factors in looking at risk and a possible default on a loan, but they would understand it.

[Michelle Rempel, Conservative, Calgary Centre-North, AB]

Perhaps as a generality it wouldn't be accurate to characterize the credit union governance as an across-the-board preference in funding or allowing loans to businesses.

[Jodie Stark]

I think cooperatives probably would be able to communicate their programs and the way they're governed much better to a credit union than they would to a traditional bank.

[Michelle Rempel, Conservative, Calgary Centre-North, AB]

Great.

The point I'm trying to make is that governance structure, while there are merits to different ones, is perhaps not a key factor in assessing loan viability.

[Jodie Stark]

I would agree with that.

[Michelle Rempel, Conservative, Calgary Centre-North, AB]

Great.

I have another question. Regarding the growth of your clients or members over the last few years, obviously we've seen some recessionary times in Canada and we're starting to recover from that, but do you feel that those who operated without government assistance still saw that growth that you spoke about earlier, that credit unions have been successful in this country over the last few years, and that the growth was consistent across the board?

[Jodie Stark]

I think it really depends on which pockets of Canada you're looking at. Speaking from what I've seen in Saskatchewan, I'd say yes, in 2009 there were a lot of success stories with credit unions. But it depends on...because if it's a farming community and grain prices are high that year, you're going to see the credit unions having a lot of deposits. It's the same thing with potash and natural resources. When those prices are high and things are going well in the economy, you're going to see more deposits in credit unions in that particular region.

So I don't know that I can speak about what it would be nationally overall, but generally we saw an influx during that time. Also, we saw people leaving banks to become credit union members just because of the publicity about banks in the United States capsizing and going into bailout positions. People were angered by that, the consumer movement. Quite often they would take their money and go to a credit union instead, and keep it local.

[The Chair, Conservative, Blake Richards]

Thank you very much.

We'll now move to Mr. Allen for the next five minutes.

[Malcolm Allen, NDP, Welland, ON]

Thank you very much, Chair, and thank you to our witnesses for being here.

I'll start with Mr. Archer and Mr. Lapointe. The health networks or health teaming or cooperative teaming has been tried across the country in numerous provinces. As Ms. Rempel said, in Alberta they actually have a team approach to health care, which might not be a cooperative per se, but it takes on another form. And you're correct that it's a provincial mandate in the sense of those who run the health care dollars.

Can you give us a sense of how in Saskatchewan, specifically, you've attracted health care professionals to give up fee-for-service, in the sense of accepting a salary and wanting to do that? What's attractive to them? From your perspective, have you heard anything from health care professionals saying that it's an attractive model for them to come into, rather than staying in a traditional model? I believe Saskatchewan still has health care professionals who are fee-for-service. They aren't all in cooperatives, I would assume.

[Tim Archer]

You're absolutely correct.

We've actually had some great success in recruiting physicians into our model of care. I think one of the great attractions is the opportunity to work in a team environment. It's the opportunity to work with a number of other professionals of similar and different disciplines to address the whole person. It's not being driven by the number of patients you're seeing in a given hour to make sure you can bill what you need to pay your bills. They can spend more time with patients to address the chronic disease issues, which are becoming paramount in our country, and make referrals appropriately, without feeling that they're losing revenue.

We don't solicit a cooperative way of doing that as the only way. There are certainly other models. There are many community health centres in Ontario, and Alberta as well, that provide an excellent model of care, with salaried physicians who provide comprehensive care in multi-disciplinary teams.

We're not saying that we're the only way to provide that care. We're saying it is an effective and efficient way. It engages members, is very client-centred, and it works, so it should be supported.

[Patrick Lapointe]

There are two other points to that.

One, our physicians are salaried, so they don't have to worry about generating enough volume of business to make sure they have an adequate income.

The second piece is that most doctors want to deliver services to their clients, and the business of doing it—the hiring of staff, etc.—is something they're burdened with. In a cooperative environment we can offer them the opportunity of providing care to clients primarily. They don't really have to worry about the business piece of it; we do that for them.

[Malcolm Allen, NDP, Welland, ON]

Ms. Stark, listening to you and reading through your presentation, I would have to say that you're unabashedly a fan of cooperatives, and from a very young age it would seem.

I, like Mr. Bélanger, am also interested in this piece about federal regulators having concerns about credit unions. I think we heard that one of their primary financial functions is placing mortgages with their members. It's a big a chunk of their business.

I live in Niagara. It's been one of the hardest hit manufacturing sectors in the entire country in terms of job losses. I haven't heard of any credit union going out of business—even some of the very smallest ones that are still basically one branch. Certainly some have moved on because they and their members have decided to, but none of them have gone out of business.

I'm curious about this piece in the way that Mr. Bélanger was. I wonder if we could—and perhaps with the analyst, as well—find out where that thought process from the regulators came from. Maybe they were just mixed up. Maybe they were looking at J.P. Morgan and some of the folks in the States. It seems to me that they weren't looking at credit unions in this country. Based on the statistics I've heard, credit unions have been growing. I know my own credit union, FirstOntario, just surpassed the billion-dollar mark in assets, I think two months ago. That was a one-branch place at one point in time.

From your perspective—because not all credit unions are members of your organization yet—do you see that type of growth? Are they looking to you as they get bigger and saying, “You know, we may need to syndicate some of these loans that we're doing.”

Are you seeing any uptick in the last couple of years as to the number of folks who want to join your organization?

[Jodie Stark]

Thank you for the question.

With the systematic approach we have, if a credit union starts to run into problems, they'll be absorbed by the system and another credit union will come in to assist. That's the cooperative nature of the system. That doesn't exist between competitive banks to the same extent; it's more by way of a hostile takeover, or something of that nature.

It's more of a cooperative, a joining of an association, when the credit unions run into difficulty. They join to become a bigger credit union. We've seen a lot of that consolidation, not because of financial problems, but because in order to have a competitive balance with the banks they're finding they need to join forces with neighbouring credit unions.

The role we play in that is basically.... We do see credit unions of all sizes coming to us for help with syndicated loans because of various factors, whether it's their own internal credit risk policies or because they're a provincial insurer, or because of laws and regulations in their particular provinces. Whatever restrictions they face, we try to overcome those restrictions by offering them a partnership. They can still do the business they want to do and compete at the same level as a bank without stretching any of their boundaries.

[The Chair, Conservative, Blake Richards]

Okay, thank you very much. The time has expired, unfortunately.

We'll move now to Mr. Boughen for the next five minutes.

[Ray Boughen, Conservative, Palliser, SK]

Thank you, Chair.

And thank you to our guests for sharing their day and information with us.

First of all, Jodie, perhaps you could expand a little on Mr. Lemieux's question when he asked whether a credit union or a co-op is over more than one operation. I'm thinking of rural Saskatchewan, with co-op stores that handle hardware, fuels, liquor, and the local post office being situated in there. It's the whole ball of wax.

Can you expand a little for us?

[Jodie Stark]

That falls into one particular grouping of co-ops, which is basically the consumer co-op kind of model. I don't know how much crossover there would be, for example, between producer or work co-ops and those kinds of things. All of the things you're mentioning are more retail product oriented. There are more retail co-ops, so you do see a variety of goods and services offered within that model certainly, especially with the federated co-op.

Being from Saskatchewan, yes, I'm a fan of co-ops. It's the only model I grew up with. That's why it's embedded in a lot of my history and my reality. So that's basically where I come from on that.

Those are one type of cooperative. But I'm sure you've heard from lots of other types of cooperatives, like producers and things like that, which would possibly be treated separately or not under the same umbrella as those that are consumer-oriented.

[Ray Boughen, Conservative, Palliser, SK]

Okay.

Perhaps you could expand for us the statement you made, Jodie, about having 164 members. Are those individual people or are those other credit unions across Canada? Where does that 164 come from?

[Jodie Stark]

We have the centrals as members, including the Credit Union Central of Canada, who have all helped with our formation. As well, we have a number of credit unions across Canada—and again, we're adding more to the numbers in 2012. There are people buying memberships and having a say in the governance of our company and what strategy we use to enable credit unions to service their members. So it is a wide variety in that respect.

[Ray Boughen, Conservative, Palliser, SK]

Okay, good. Thank you.

Tim and Patrick, I have a question for you. How do you meld into your operation the existing health care programs that are in the province? Do you bill for fee for service? How do you screen out potential problems? What's your mode of operation, especially when it comes to hospitalization?