Laboratory workers are an integral part of the health-care system. The testing they do provides physicians with information necessary to complete diagnoses and choose treatment options for patients. Their role is criticalto patient care but because the patient rarely sees them, they are often a forgotten element of the health-care team.
As the first wave of COVID-19 hit the province in March and April 2020, Alberta’s medical laboratory professionals were finally heralded— deservedly — alongside other health-care workers as the heroes of the province’s pandemic response. The newfound attention appeared to affirm the necessity of a well-resourced and adequately staffed laboratory service during this public health crisis and to reinforce the important role of medical laboratories in patient care. This, however, wasn’t a lesson the provincial government was willing to learn. The professed respect for laboratory services and lab workers was superficial and short-lived.
Alberta’s laboratory services have been subjected to multiple experiments in privatization and fragmentation for the last three decades. Lessons from Alberta’s past and the experiences of other provinces demonstrate that the systemic neglect of public laboratories — under-staffing, under- resourcing, and lack of equipment upgrades — has been a tactic deployed to reduce the quality of service provided and to shore up the justification for privatization. Laboratory professionals have faced multiple rounds of destabilization and budgetary uncertainty, as well as seven consecutive years of wage freezes. The prospect of a unified, coordinated, and centralized public lab system — with the Edmonton Hub Lab at its centre — as negotiated by the Notley government in 2017 and the creation of Alberta Public Laboratories the following year promised a much-needed degree of stability for the sector.
But in September 2019, under direction from the United Conservative Party (UCP) government, Alberta Health Services (AHS) announced that it would be shifting direction: the majority of Alberta’s lab services which had been consolidated under Alberta Public Laboratories would now be contracted to a single for-profit corporation. Such a move goes against historical and comparative evidence and will result in minimal savings, yet the UCP government is committed to going ahead. In June 2021, AHS quietly announced that DynaLIFE was given the contract.
What is at stake?
While the UCP government has put forward several claims to support its intended transformation of the laboratory system, those claims must be evaluated through a public interest lens. Who benefits from yet another seismic shift in laboratory services delivery? What lessons can Alberta’s past experience, and the experience of other jurisdictions with privatized laboratory services, offer to this debate? And crucially, what can Albertans expect to gain from these plans, and what do we stand to lose?
To answer these questions, this report examines the privatization of Alberta’s medical laboratory system and the political dynamics and fiscal considerations underlying these policy decisions. A mixed methods study, this research uses data obtained through a Freedom of Information and Protection of Privacy (FOIP) request, a qualitative questionnaire of public and private sector laboratory professionals, financial data from AHS and DynaLIFE, and a political network analysis of DynaLIFE and its lobbyists. The report evaluates whether the current privatization proposal can provide the basis for a stable, sustainable laboratory service as defined by the workers who know the system best.
Who benefits from privatization?
The most obvious “winner” in this deal, politically and financially, is DynaLIFE. But it is also important to ask why and how that benefits the Kenney government. The political and financial webs of influence surrounding the lab services contract follow a clear path to conservative political organizations. Lobbyists with ties to conservative politicians played a prominent role in the route to contracting out laboratory services. DynaLIFE’s active membership in the Alberta Enterprise Group and the Business Council of Alberta — purportedly “non-partisan” groups that engage in lobbying and agenda-setting through links to conservative political networks — point to the political and financial interests that are underwriting lab privatization.
While the financial terms of the contract have not been disclosed, there is a clear monetary incentive for DynaLIFE: considerable profits are up for grabs to be passed onto shareholders in its parent corporations, LifeLabs and Labcorp. For Albertans, however, the financial benefits are not as clear, and it appears that the cost savings for the Province are far less than claimed by the UCP.
The claim of hundreds of millions of dollars in cost-savings made in the Ernst & Young (EY) AHS performance review and brandished by the UCP government is directly contradicted by AHS’s own internal calculations. Questions remain about the methodology used to obtain these numbers, and even Alberta Precision Labs (APL) executives appeared confused by the numbers presented, with several top executives requesting clarification from EY staff and AHS finance staff. The difference between the EY and AHS valuations: $102 million versus $18 million annually. These inconsistencies significantly undermine the premise of the UCP privatization plan.
As Alberta Health has declined to make their business case public, these claims are not supported by the evidence available. Even the purported “savings,” rounded down to a possible $18–36 million per year, come at a steep price: any per test cost differential between public (APL) and private (DynaLIFE) sectors comes down to less generous wages and benefits for lab workers, reduced accessibility for patients, and increased automation.
Moreover, while the UCP claims that the cancellation of the Hub Lab — which was already under construction — “saved” $590 million, following the cancellation of the project the Province incurred $23 million in sunk costs, undisclosed cancellation penalties, and a further $12 million to remediate the site. The future cost in deferred maintenance and a prolonged infrastructure deficit for the Edmonton and Northern health zones will be even more detrimental.
Who loses from lab privatization?
While the Kenney government has hyped the potential (inflated) cost- savings of privatized lab services as a win for taxpayers, lab professionals, patients, and all Albertans stand to lose from this deal.
Impacts on staff
Of over 6,000 lab professionals represented by the Health Sciences Association of Alberta (HSAA), up to 1,400 will be impacted by the proposed contracting out. The most immediate result of the deal has been a wave of uncertainty and anxiety among lab workers — about the future of their jobs, their ability to meet patient needs under corporate management, and the medium-to-long-term direction of the laboratory system itself. Internal APL documents obtained via FOIP reveal that staff across the organization were caught completely flat-footed, and many expressed shock and confusion. The lack of transparency and consultation with workers about the proposals also exacerbated their unease.
Reduced quality of service for Albertans
The proposals outlined in the UCP’s request for proposals (RFP) differentiate between large (urban) testing sites and those handling small volumes — primarily rural communities outside of Edmonton and Calgary.
“Lab professionals, patients, and all Albertans stand to lose from this deal.”
This division will perpetuate the fragmentation within the lab systemthat the wholly public Notley government plan was intended to resolve. The lab professionals who participated in our questionnaire expressed deep concerns over impacts to quality and turnaround time for testing results. Several questioned whether a private provider would employ the level of skilled staff required to maintain quality standards and testing accuracy, citing trends in deskilling and automation that have occurred during previous privatizations in Alberta’s lab system. Many respondents felt strongly that the ethos of the private sector functions to shift priorities towards speed, volume, and cost-cutting, and away from accuracy and quality.
Each time the lab is renamed, reorganized, sold, or transferred, considerable sums of public dollars are unnecessarily spent on non-patient endeavours. Despite the rhetoric of the UCP government, the proposed changes do not prioritize a patient-centric service. While some workers expressed a hope that this contracting out might be the last disruptive change for the labs sector, for many the reversal of efforts that had gone into preparing for an integrated, public lab system was not only destabilizing and demoralizing, but also incredibly wasteful. Even as the Kenney government vowed that the purported savings from the Hub Lab cancellation would be redirected to “direct patient care,” lab workers were pouring thousands of hours of work and resources into changes that would be scrapped. Those resources could — and should — have been used to provide quality care to patients.
“The UCP’s disruptive transformation of laboratory services in Alberta rewards a large corporation and its shareholders over the current and long-term interests of Albertans.”
Albertans are net losers in this deal. Instead of a modern, sustainable lab system designed for Albertans, the DynaLIFE deal offers false economies, minimal savings, a smaller and demoralized workforce, a massive infrastructure deficit, and a fragmented system with little accountability. The UCP’s disruptive transformation of laboratory services in Alberta rewards a large corporation and its shareholders over the current and long- term interests of Albertans.
Regardless of the organizational and delivery model, laboratory services in Alberta need:
- Transparency. The UCP government has provided no evidence to support its claim that this contract will provide long-term value for Alberta’s health-care system. We call for the minister of health to release the full business case used to justify the decision, alongside a cost-benefit comparison to the wholly public plan.
- Respect for, and understanding of, the centrality of lab services to front-line medical care.
- A lab system where lab experts are at the heart of decision-making.
- Predictable funding, adequate capital investment, modern equipment, and stable organization.
- Patient care, workers’ well-being, and system stability that are prioritized ahead of political point-scoring.
The current trajectory prioritizes the exact opposite. Further privatization does nothing to resolve the challenges facing the laboratory sector. Infact, it creates new problems and exacerbates the existing ones. For lab professionals, the most demoralizing part of this process is that their voices continue to be unheard and public funds that should be directed to quality patient care are instead being siphoned into corporate coffers.