Alberta Health Services plans to privatize community lab services

Alberta Health Services intends to privatize all community labs across Alberta, despite new figures that suggest outsourcing could save far less money than originally estimated.

It's a move critics say puts timely patient care and a reliable laboratory system at risk at the worst possible time.

"We have a system that's working well," said Mike Parker, president of the Health Sciences Association of Alberta (HSAA), on Friday. "It is efficient. It is effective, and it takes care of Albertans' most critical needs. What we're doing today is the ripping apart of that system."

The union represents 6,000 workers in public and private labs across the province. About 1,400 of them now have jobs at risk.

Many, but not all, of the labs where patients walk in to get blood drawn or give fluid samples are run by Alberta Precision Laboratories, a wholly owned subsidiary of Alberta Health Services (AHS).

Last year, a government-ordered review of AHS concluded that outsourcing all remaining community lab tests would save $102 million a year. 

AHS has now done its own analysis, and pegs potential cost savings between $18 and $36 million a year, spokesperson James Wood said in a Friday email.

A call for expressions of interest last December yielded interest from 11 bidders, Wood said last week.

Come fall, AHS will issue a request for proposal for a private company to run community-based lab services across the province, he said. The work comprises about 60 per cent of the 81 million lab tests done annually in Alberta. It would also include the services currently contracted to Dynalife, which runs 36 private labs in the Edmonton area and northern Alberta. Dynalife's contract expires in 2022.

Wood said bidders will be able to apply to run lab services in the northern part of the province, the southern part, or both.

How this might change the location and number of community labs operating when the system changes , AHS does not yet know.

The EY report said there are 210 lab locations in Alberta, which employ 3,800 full-time workers and cost $800 million a year to run.

Public health labs and laboratories in hospitals and urgent care centres would remain public, he said. The private operator would also do "research and training."

Years of lab service uncertainty

The future of lab services in Alberta has been in flux for most of the last decade.

"It would be an understatement to suggest that lab services in Alberta have endured a sustained period of turmoil marked by interrupted and competing transformation agendas," the EY report notes.

The former PC government intended to outsource the whole system in 2013, and chose a proponent to do it.

Then the NDP government halted that plan, and in 2017, opted to amalgamate four public systems into one, which is now Alberta Precision Laboratories.

Faced with inadequate space and aging equipment, the NDP government also planned a $600-million public lab hub, dubbed the "superlab," in Edmonton.

When the United Conservative Party government was elected in 2019, it stopped the superlab construction, losing the $23 million that had already been spent on the project.

Critics pan privatization plan

Alberta's lab system has been the frequent object of politicians' praise since March, when the COVID-19 pandemic reached the province. It rapidly adapted operations to process thousands of coronavirus tests each day.

Public health advocates say it's galling the government would push for such a substantial change to the system when it has been the envy of the country in its pandemic response.

"We all take pride in our health care system in this province, and the last thing we need to be doing is offering up to a private, for-profit and putting us all at risk," the HSAA's Parker said.

The potential centralization of processing samples could slow down doctors and patients receiving test results, he said. Profits should be reinvested into health care, not sent to companies likely headquartered outside of the province, he said.

If for-profit labs offer lower wages and less desirable benefits, skilled workers could leave the province, he said.

NDP health critic David Shepherd said on Friday the government's push for privatization is based on ideology, not evidence.

He said the disparity between the EY and AHS estimates for potential cost savings calls into question the validity of the conclusions of the entire, $2-million report.

"To take what we have in the secure system in the public realm and basically sell it off to the highest bidder, (to) put ourselves in the position then when we are utterly dependent on that private provider, that comes with some substantial risk," Shepherd said.

For-profit providers must also make money, he said, which goes to shareholders and not into patient care.

Sandra Azocar, executive director of Friends of Medicare, called the move "nonsensical." She said Albertans deserve to see a detailed business case for the move before AHS goes any further.

"This government has spent the entire pandemic basically touting how Alberta Public Labs has been a great source of pride and how, of the great success that we've been able to see throughout this pandemic, in terms of how many tests have been able to be done in a timely manner," she said. "That has helped to flatten the curve and diagnose people earlier and get the outbreak under control."

Alberta's health minister referred all questions to AHS.

AHS intends to award contracts by spring 2021, with services becoming privatized in 2022.