By Dr. Braden Manns
On Aug. 18, the Alberta government announced it was ending its contract with DynaLIFE, just eight months after awarding it a 25-year contract to provide community lab services in the south half of the province. This is (perhaps) the end of a long experiment with private laboratory services in Alberta that began over 20 years ago, has impacted health-care services, and has cost taxpayers hundreds of millions of dollars.
Many health-care services, including surgeries, diagnostic imaging, and continuing care facilities are provided privately in Canadian health care. Contracting out to private for-profit companies is common. There is nothing necessarily wrong with contracting out these services – as long as they are publicly funded, they can be integrated seamlessly with other health-care services, outcomes can easily be measured (and are equivalent or better), and costs are lower than in the publicly funded system.
Since before 2003, community lab services in the Edmonton zone have been offered by DynaLIFE while Calgary Laboratory Services (a public/private arrangement that was purchased by AHS in 2009) has operated community (and hospital) lab services in the Calgary zone – offering a perfect natural experiment of the best model. In detailed publicly available reports commissioned by the Government of Alberta in 2016, the Health Quality Council of Alberta concluded that Calgary Laboratory Services was five to 10 per cent less costly per test (after taking into account relevant differences) compared to DynaLIFE, and was more nimble in implementing new technology and diagnostic tests (among other benefits).
This report recommended a robust strategic plan, a clear provincial leadership structure, and a single provincial lab information system. In 2018, Alberta Precision Laboratories, a wholly owned subsidiary of AHS, arose from these recommendations.
When the UCP was re-elected in 2019, a key component of Premier Kenney’s Public Health Guarantee was to commission a performance review of AHS. It sought to identify improvement opportunities, and to provide recommendations to enable long-term health-care system sustainability.
With the UCP having a political preference for privatizing health care, it was not surprising that key recommendations in this report included several areas for contracting out. Using this report as justification, the government moved ahead with privatizing non-clinical services like laundry and food services, and many different types of surgical services. In 2022 and 2023 alone, the AHS website indicates that 17 private surgical contracts were executed.
In that same vein, in 2020, a request for proposals was released for all community lab services in Alberta – to which only one company applied: DynaLIFE. As was announced by Minister Copping in June 2022, there would be savings of $36 million per year and enhanced laboratory services. What happened next is well documented. Wait times for getting simple laboratory tests skyrocketed in the Calgary zone, lab specimens were lost, and the time testing took in the lab (including for critical culture results) increased substantially, all leading to disruptions in health care and frustrated patients.
There’s a reason none of us moves between houses often. The transition costs are high and it is stressful. So one can only imagine the toll these transitions have taken on the laboratory staff of AHS, then DynaLIFE, and now AHS again, not to mention the amount of work and cost required for the transition in January 2023 and again this fall. The contract severance payments that Alberta taxpayers will make to DynaLIFE remain unknown but are likely very high.
This is an excellent example of what happens when contracting decisions are based on political ideology, rather than considering each decision on its own merits and the impact on access, quality, and cost. Health systems need to be insulated more from governments. They must be allowed to take a longer-range view of health-care delivery than the four years afforded each new government.
There is much to be fixed in health care, so rather than getting distracted with more attempts to privatize, can the Alberta government please get on with the difficult work of transforming primary care and ensuring access to care for rural Albertans?
Braden Manns is a physician and professor of medicine at the University of Calgary where he holds a research chair in Health Economics. Dr. Manns was also an interim vice-president for Alberta Health Services until he resigned on June 11, 2023.