Operation Profit

 

On February 21, The Globe and Mail published surgical procedure costs in Alberta, showing that most for-profit surgical facilities have significantly higher costs for the same procedures than public hospitals. In the case of the Alberta Surgical Group — one of the for-profit surgical providers contracted under the Alberta Surgical Initiative (ASI) — hip, knee, and shoulder surgeries cost more than twice as much.

Athana Mentzelopoulos, who was removed as Alberta Health Services (AHS) CEO in January 2025, has come forward with allegations of political interference in surgical contract negotiations, claiming that the government pressured AHS to accept inflated prices. These allegations, coupled with the discrepancy in procedure costs, raise serious concerns about potential corruption and price gouging that may involve cabinet ministers, political staff, and for-profit providers.

Analysis of new public data adds to growing concerns about contracts with for-profit surgical facilities (called “chartered surgical facilities” or CSFs) and the Alberta government’s claims about the Alberta Surgical Initiative. Between the fiscal years 2022-23 and 2023-24, the average cost of an outsourced procedure increased by 52 per cent. This represents a significant acceleration in cost growth, as the previous year saw only a 13 per cent increase. In other words, the rate of increase between 2022-23 and 2023-24 was four times higher compared to the increase between 2021-22 and 2022-23.

This increase is likely the result of higher negotiated contract prices. The magnitude of this increase is unusual; it cannot be explained by inflation or other reasonable hikes in input costs. It is also unlikely that there was a change in CSFs performing more complex procedures that attracted a higher rate, since these facilities only perform routine, lower-complexity procedures.

The findings of this analysis seem to corroborate concerns and potential irregularities identified by Ms. Mentzelopoulos which may have led to her dismissal by the government. Unfortunately, the public is at a significant disadvantage since unredacted versions of contracts paid for with public dollars have not been disclosed by the government.

In addition to potential contract irregularities, analysis of data from the Canadian Institute for Health Information shows a troubling trend in declining investment in public hospitals even as public payments to private facilities increased significantly:

• From 2013 to 2022, Alberta was one of only three provinces where real per capita hospital spending declined (-11 per cent) — with a decline more than double that of Manitoba and PEI (-5 per cent). Meanwhile, real per capita spending increased in the largest provinces, Quebec (19 per cent), BC (six per cent), and Ontario (four per cent).
• Public spending on for-profit surgical facilities significantly outpaced public operating room (OR) spending under the ASI: between 2018-19 and 2022-23, public payments to for-profit facilities increased by 66 per cent while public OR spending increased by 12 per cent.
• Since the ASI started (2018-19 to 2023-24), public payments to for-profit facilities increased by 225 per cent.

The Alberta government continues to claim that the ASI increases provincial surgical capacity and reduces wait times, but the government’s own data do not support these claims. Between 2019-20 and 2023-24, the number of scheduled procedures performed in for-profit CSFs increased by 55 per cent (32,243 to 50,042 procedures) while hospital surgical activity declined by one per cent (175,608 to 174,302 procedures). After pouring $154 million in public funding to for-profit CSFs between 2019-20 and 2023-24, the ASI only added 16,493 of the least-complex procedures to the province’s surgical capacity – an eight per cent volume increase. The ASI simply shifted surgical activity to for-profit facilities at the expense of public hospitals.

As CSF surgical activity destabilizes hospitals, wait times under the ASI are longer for most priority procedures than before its inception. For nine of 11 priority procedures tracked by the Canadian Institute for Health Information, median wait times increased under the ASI, including knee replacements and all cancer surgeries. Cancer surgeries are performed in public hospitals only, providing evidence of the destabilizing effect of for-profit surgical centres on the hospital system.

Building on the findings of Parkland Institute’s previous report, Failing to Deliver (2023), this analysis shows that the ASI continues to shift the public sector workforce to grow a for-profit industry that is reliant on the same specialized workforce. Importantly, provincial policy and funding decisions are encouraging the movement of the public sector workforce to an industry that performs the lowest complexity and most profitable procedures, and does not perform emergency surgeries or follow-up care.

The Auditor General’s investigation into serious allegations of contract price-padding and corruption is urgent and should be met with full cooperation from the Alberta government. However, while the addition of an RCMP criminal investigation and a third-party review signals the gravity of the issue, these probes may still fall short of ensuring full transparency and accountability. A public inquiry — with the ability to summon witnesses to testify under oath — remains the best mechanism to uncover the full extent of these allegations.

This report draws attention to serious questions about transparency, prudent public spending, and government integrity. The Canadian and international policy experience, especially from the US, offers many lessons about the risks to patient care, taxpayer value-for-money, and fraudulent billing practices when for-profit interests and corporate lobby groups become entrenched. It is long past due that Alberta take these lessons seriously.