Backgrounder on Laboratory Services

Alberta Laboratory Services Backgrounder

For years, successive PC governments have systematically neglected our current public laboratory system, leaving it without upgrades, understaffed, and under-resourced, to the point that privatization was presented as the only option. The lab services that we have in place are no longer able to meet the growing demands of this province, yet Albertans have been asked to accept a major change to our health care system on faith, without any evidence as to how the private, for-profit sector would provide better quality service than the public sector. In fact, what we have already seen is that for-profit delivery has led to decreased transparency and accountability in our health care system, as in the cases of home care and seniors’ care.

Privatization of health care is not a solution when it comes to public problems. The ethical implications of corporate involvement in our health care are of grave concern to Albertans because our current laws protect private corporations from the public disclosure of ‘confidential business information’. Unlike public health providers, private contractors will not have to disclose how our public health dollars are being spent, allocated, or collected. As we have seen time and again, the corporate sector’s motive to increase profits always negatively impacts patient needs and safety. The priority of for-profit companies is to make money – money that should be going into better public services instead of being paid out to corporate shareholders.

For years, many Albertans including front-line workers in laboratory services and pathologists have opposed the privatization of Alberta's labs, and will continue to do so in the future. Regardless of who ends up delivering laboratory services to Albertans, investments need to be made to improve outdated technology and infrastructure. However, the direction of health care in Alberta should be determined not by ideology and corporate profits, but by how we can provide the best possible care to everyone.

Friends of Medicare calls on Alberta’s government to accept the overwhelming existing evidence against the privatization of lab services. Albertans need to be presented with an honest and transparent business case that will provide the basis for an informed decision. The proclamation that "Alberta is open for business" should not apply to health care. Health care is not a commodity – no one should be able to profit from the poor health of Albertans.

A BRIEF HISTORY OF LAB SERVICES IN ALBERTA’S MAJOR CITIES:

Edmonton

  • In 1994, a $12-million “State of the Art Lab” was opened in the Royal Alexandra Hospital (RAH).
  • In 1995, various private, for-profit corporations amalgamated to provide lab services in Edmonton.
  • By 1996, the RAH lab was changed from full service to ‘stat’ or ‘rapid response’ when they contracted out the lab services to DKML (later renamed DynaLIFEdx).
  • The then-Chief of Laboratory Medicine at the RAH, Dr. John Jacques, quit his job to protest the shutdown of the laboratory, indicating that he had spent months trying to convince the government and the other players involved to centralize regional lab services at the RAH site. He was quoted as saying: “I made my ace, but it didn’t really help. The government was very determined to privatize and their decision had not much to do with economics or with patient care.”
  • In 2005, the privatization experiment was deemed a failure and all in-patient lab services in hospitals were brought back into the public sector, although DynaLIFEdx has continued providing testing outside of hospitals and urgent care centers

Calgary

  • In 1996, Premier Ralph Klein tried, and struggled, to get private, for-profit operators to take over lab services in Calgary
  • Due to lack of interest from the private sector, only three private corporations came forward, and they did not have enough capacity to take over the lab services from the public sector completely. The two corporations entered into a partnership with the Calgary Health Authority, which put up more than half of the funding and did much of the work.
  • By 2006 the experiment was deemed a failure. The corporations pulled out, and all lab services returned fully to the public sector under Calgary Laboratory Services, which is a wholly owned subsidiary of AHS

LEADING TO NOW:

Alberta Health Services began a plan to further privatize and centralize laboratory services in Edmonton and surrounding area, and moved quietly through the process of putting out a Request for Proposals (RFP) to secure a “preferred proponent.” In October 2014, Sonic Healthcare was chosen to be the private provider of lab services.

Throughout this entire process, the previous government failed to present a reasonable case to Albertans explaining why the further privatization of this essential and integral part of our healthcare system was necessary. There was a lack of public consultation and involvement leading up to the $3 billion, 15-year contract being awarded. Most importantly, the previous government had not answered either the question of who would make decisions about patient care, nor on what basis: the narrow interests of shareholders or the interests of patients and the public good?

Sonic Healthcare is Australia's largest provider of medical testing, with fifty subsidiaries operating in eight countries. AHS planned for the company to provide the medical testing for the public health care system, as well as perform private sector and out-of-province testing. As with all private-public partnership (P3) arrangements, Sonic Healthcare would have put up the financing for the land and the new lab facility, and Albertans would have repaid it with interest. If AHS did not extend the contract at the end of the 15-year term, Albertans would have been stuck with the bill to pay a lump sum for the unamortized portion of the land and facility built by Sonic, and we would have had to buy back the equipment.

Advocates, including pathologists at the University of Alberta Hospital, publicly condemned a new private facility as not being in the interest of patients, and said it would impair timely patient safety and overall quality of care. In the meantime, DynaLIFEdx who had up until this time been providing contract, was set to expire in the spring of 2015. DynaLIFEdx, whose contract was worth over $150 -million/year, appealed the decision to award this sole-contract to Sonic Healthcare, on claiming that the selection process was rigged. AHS set up its own “Vendor Bid Appeal Panel” to judge the procurement process and the appeal panel sided with DynaLIFEdx.

A 2017 report from the Health Quality Council of Alberta recommended creating a provincial lab agency and information system, and found that the majority of equipment in Edmonton's public lab was obsolete and that lab were outdated and cramped. Without modern equipment, samples are sometimes sent out-of-province, delaying diagnoses and treatment for patients.

In 2017, the NDP government established a Steering Committee to consult with stakeholders, and conducted a governance review of Alberta's laboratory system. They halted the previous government's move to privatize Alberta's laboratory services, and made the decision to reverse the privatization of lab services, and end the costly experiments with privatization that previous governments had been conducting. A new administrative board, Alberta Public Laboratories, was created as a subsidiary of AHS, merging Calgary Lab Services and labs with Alberta Health Services and Covenant Health. In early 2019, construction began on a $590-million centralized public lab facility in Edmonton, with plans for a $50-million buyout of DynaLIFEdx by 2022.

The centralized public lab would have allowed for integration of services across Alberta, and created a shared information system to the benefit of patients and medical researchers alike.

THE CURRENT SITUATION:

During his election 2019 campaign, Jason Kenney stated that if elected they would scrap a laboratory hub and revisit a plan to put all laboratory services under government control. Kenney’s announcement contained no arguments that would persuade Albertans that privatizing an integral part of our health care would benefit us or our families. He presented no plan other than to attack the work that health care professionals and experts have already done in this area to ensure that the policy driving this change is ultimately in the public interest.

By April 23, even before the newly-elected United Conservative Party had been sworn in, we learned that construction on the laboratory hub been put on hold until the new government had an opportunity to “review the project.” Ultimately, the government chose to cancel construction contracts on the laboratory hub, but neglected to reveal the costs associated with the cancellation, or how they plan to address the outdated technology and infrastructure in Alberta's existing labs.

$23-million has already been invested in the planning and construction, not to mention the costs incurred in compensation to cancelled contractors. With the cancellation of what was to be the first expansion of our public lab services in decades, Albertans have been left with no clear path forward for our fractured and crumbling laboratory system.

Now, Albertans wait to see the direction that this government will take, and once again we are being asked to accept a major policy change based on faith and not facts.