Price tag for rescuing Alberta's privatized lab services becomes clearer

Alberta's failed attempt to privatize lab services was an expensive and unnecessary lesson for the government, critics say, as the price tag becomes increasingly clear.

Numbers in Alberta's recent budget show the cost to buy out the Dynalife operations was $31.5M and the government says assumed liabilities are pegged at another $65.5M.

Wait times ballooned last year after Alberta Health Services (AHS) expanded its contract with Dynalife to include community lab services in Calgary and many other parts of the province that weren't already handled by the company.

The province ultimately reversed course on the privatization plan. 

A deal was struck to transfer all of the private provider's staff and operations in the province to Alberta Precision Laboratories, which is owned by AHS.

"It's the public picking up the pieces for the failed privatization project," said Chris Gallaway, executive director of Friends of Medicare.

"It didn't work. It made the whole lab system work less efficiently. It made the experience of patients worse. It made the experience of workers worse."

• Long waits for blood work leave Calgarians on edge after community labs privatized
• Lab waits in Medicine Hat drive patients to emergency room for tests

"This was a nightmare, said Dr. Jon Meddings, a professor and past dean of medicine at the University of Calgary.

He was personally affected by the backlogs after lab services transitioned to Dynalife. His wife, who has a malignancy requiring careful followup, had to travel outside of Calgary to get timely appointments.

"[She] was utterly unable to get lab tests done. So we left town to get those things done."

According to Meddings, the province's struggling health-care system could have put the $97 million to  better use.

"It's an unnecessary expense …how many nurses have we have forgone for that?"

Lorian Hardcastle, who teaches health law and policy at the University of Calgary, called it an expensive lesson for the government.

"It's a big number and it's one that could have been avoided with some foresight. A lot of people were sounding the alarms on this transition," she said, noting labs are not an ancillary service, such as laundry or food service.

Because lab services are such a critical and embedded part of the health system, according to Hardcastle, privatization was always going to be difficult.

"The government seemed determined to transition to Dynalife regardless of those concerns."

In addition to the $31.5 million to purchase the Dynalife operations, the $65.5 million in liabilities assumed by AHS include outstanding accounts payable, vacation liabilities and other administrative items, according to the provincial government.

Operational costs for 2023-24 amount to another $11 million and will be incorporated into AHS's budget moving forward.

There were no costs to Dynalife associated with the transition.

Hardcastle said it's unclear how much the entire process, including moving to and from the private system, cost taxpayers. She said Albertans deserve a breakdown of those numbers.

"What was the cost to transition it to Dynalife in the first place? And what resources did we spend making these deals happen?"

Lessons learned

Dr. Etienne Mahe, a Calgary-based pathologist, said lab services worked well in Calgary prior to the Dynalife takeover.

"I think if we had just stuck with that model or tried to improve it , perhaps with some sort of synergies between public-private, it wouldn't have been such a debacle," said Mahe, co-president of the Calgary lab services medical staff association.

One of the key lessons for government, he said, is the importance of thorough consultation before big decisions are made.

"The reality is if policy drivers and leaders were to approach the average joe — the cog in the system, like me — we would be happy to tell them how we think things should be done."

"I don't know that there was as much of an openness to consultation as there could have been."

The Health Sciences Association of Alberta (HSAA), which represents approximately 6,000 lab staff, including lab technologists, said the true cost and impact of the transition may never be fully understood.

"It will never, I don't think, be able to include the full impact of the change back and forth," said Leanne Alfaro, vice-president with HSAA, noting there was immense upheaval and stress for staff moving back and forth between employers. Various transition agreements had to be negotiated.

"The stress of that? Many people left and said 'I can't do it.' And so now we even have less staff [and] higher workloads."

A highly anticipated investigation by Alberta's auditor general could shed light on some of these questions, but it is now delayed.

The office of the auditor general said its examination of the contract with Dynalife continues but it has experienced delays getting interviews and information from AHS.

It is unclear when the work will be done.

Meanwhile, the Alberta government said it's continuing to work to improve lab service in the province.

"This change has been an important step to improve and grow lab services, and make sure Albertans have reliable and speedy lab testing in their own communities," said Andrea Smith, press secretary to Health Minister Adriana LaGrange, in a statement.

According to the ministry, the number of weekly appointments in Calgary increased 40 per cent between May and December of last year.