Privatization & profiteering continues as K-Bro is awarded sole contract for laundry & linen services in Alberta

April 27, 2021
EDMONTON

Privatization & profiteering continues as K-Bro is awarded sole contract for laundry & linen services in Alberta

Today, K-Bro Linen Inc. announced that they had been named the successful bidders for the Request for Proposals put out by Alberta Health Services in October 2020. They will become the sole providers of laundry services for AHS across the province of Alberta. While this news comes as no surprise, it is a disappointing indication that this government is bent on perpetuating privatization experiments within our public health care system.
 
In March 2019, UCP leader Jason Kenney first announced his intentions to privatize laundry services in hospitals. His announcement took us back to the mid-1990s when, under the Progressive Conservative government of Ralph Klein, laundry services in Calgary were privatized. As a result, laundry workers went on a wildcat strike and garnered national headlines, but the contract was still eventually given to K-Bro Linen. Since this time K-Bro Linen has been providing laundry services to Edmonton and Calgary.
 
In his initial announcement, Kenney claimed that the Saskatchewan government’s laundry outsource to K-Bro Linen Systems would allegedly save $100 million over the course of the contract. However, this supposed savings has been refuted by University of Winnipeg economists, Hugh Grant, Manish Pandey and James Townsend, who studied the privatization proposal and estimated savings to be closer to just $17 million over the next decade. Further, while the Saskatchewan health system may see some savings in the short term, the citizens of Saskatchewan will bear the costs in the long term, as the economists predict that the loss of employment and income in the province will outstrip any savings, and will cost residents of Saskatchewan $31.5 million over the next 10 years, compared to the best public option.
 
On May 7, 2019, Premier Kenney appointed a Blue Ribbon Panel headed by Janice MacKinnon, to look into our province’s expenditures. MacKinnon, as a former Saskatchewan Health Minister, oversaw the closure of 52 hospitals in the province. To no one’s surprise, the panel’s final report was chock full of recommendations that would see a bigger role for the private sector in all areas, most concerning of which being health care. 
 
Of note, one of the other members of this Blue Ribbon Panel was Mr. Mike Percy, no stranger to Alberta’s political landscape as former chief of staff to Premier Jim Prentice. While he was sitting on the panel, Percy was also on the board of K-Bro Linen, and he continues to sit on the board today. 
 
On October 21, AHS put out a one-month RFP for all current rural laundry and linen services, and K-Bro Linen Systems, whose main source of revenues is contracts from public health care facilities, was quick to knock at the government’s door. Alberta’s Lobbyist Registry shows that on August 17 and November 2, 2020, K-Bro Linen met with the Ministry of Health about the linen and laundry contract procurement.
 
“Looking at their corporate profile and their stock values, it’s evident that their primary objectives are maximizing profits and shareholders values, all at taxpayers expense,” says Sandra Azocar, Executive Director of Friends of Medicare.
 
In areas like Medicine Hat, where approximately 1.2 million kilograms of laundry is processed every year at the Medicine Hat Regional Hospital, contract changes will no doubt impact surrounding communities such as the Brooks, Bassano and Bow Island hospitals, seniors’ residences in Medicine Hat, home care, and the residential detoxification centre, and will mean the loss of at least 250 jobs in the MHRH alone.
 
“Since the first leaked announcement to privatize laundry a few years ago, Palliser FOM has challenged the Health Ministry and AHS to prove the cost savings of such privatizing,” says, Avril Torrence, Chair of Palliser Chapter, Friends of Medicare. “Never has that challenge been answered. Now—after more than a decade of two different governments failing to maintain and upgrade machinery at the Medicine Hat Regional Hospital, making a fully functioning laundry service ripe for privatized picking—Medicine Hat will lose secure, public-waged jobs from our community: just one more loss to a city attempting to champion its vibrancy.”
 
What is never shared with Albertans when the government makes deals like this is how much contracting out our public health care will ultimately cost to the citizens of this province, nor any comparators of how much it would cost to instead increase in-hospital capacity or build on public infrastructure in the interest of the public good. Privatizers insist that contracting out is benign, because services are still paid for with public money; this is far from true. The government continues to pay for the administration of the contract, and the cost of monitoring the contractor. And as Albertans have bared witness time and again, services provided to the public suffer because the mandate of the private company is to maximize profits at the expense of Albertans.
 
“This government has no shame in spending our public money without accountability or transparency to the people of this province,” says Azocar. “Will Albertans ever know how much money K-Bro Linen will be making by becoming the sole provider of all linen services in Alberta? Will we ever know how this will affect the reported 428 workers impacted by this decision to privatize their jobs in the midst of a pandemic?”
 
We have seen from years of privatization experiments under previous provincial governments, and elsewhere in Canada, that outsourcing health services to private companies is both costly and ineffective. Yet Health Minister Shandro and Premier Kenney seem intent on repeating the mistakes of the past, without concern for the impact to Albertans, their communities, or the public health care on which we all rely.