Red Flags

As startling revelations emerged detailing the downfall of laboratory services provider DynaLIFE in the months before it was spectacularly “nationalized” by the Alberta government, the commentariat (of which I’m a proud, badge-sporting member) couldn’t help but point out all the red flags that were seemingly missed by Premier Danielle Smith, her ministers of health, and the staff directing procurement within Alberta Health Services. It is perhaps understandable, as so many of the players in this game have had their hands full intervening in for-profit health-care contracts over the last few years, that someone somewhere might drop a ball or two.

Indeed, speaking to her government’s termination of DynaLIFE’s contract for province-wide community lab services just eight months into a 15-year term, Premier Smith herself lamented that flags should have been raised. Imagine then, the frustration of those of us — laboratory workers, labour representatives, health-care advocates, and researchers — who have been frantically waving scarlet-hued banners from the outset.

In my 2022 report for Parkland Institute, I analyzed the elements of the laboratory services Request for Proposals (RFP) issued by the UCP government in 2020 — or at least, the details that I was able to access through a Freedom of Information request. My analysis found that the case to contract out community laboratory services to a private, for-profit provider was flawed from the start:

• The decision was based on problematic and disputed claims around potential cost-savings.
  
  
• It went counter to a third-party review that had consulted widely with existing evidence and lab stakeholders and was already underway.
  
  
• The government appeared to be basing decisions about the provision of services on profitability rather than best practices.
  
  
• Contracting services out risked reducing access and increasing testing turnaround times.
  
  
• Lab workers were not consulted and their needs and concerns were ignored; to add insult to injury, they’ve only learned about these critical policy changes via the morning news.
  
  
• The changes failed to account for staff overload amid ongoing challenges arising from the COVID-19 pandemic and staffing pressures following years of uncertainty in the lab workforce.

Above all, the contract process prompted concerns over what the lack of transparency and accountability would mean for Albertans if it all went wrong.

After the transition of service provision was delayed by six months, health-care advocates again raised concerns about imposing yet another monumental change on lab workers in such a short timeframe. As I wrote in December 2022 , “[Our research] surveyed laboratory professionals working in DynaLIFE and Alberta Precision Laboratories (APL), who expressed concerns about the sector’s capacity to adapt to yet another ideological makeover. Their fears appear well-founded, as the transition has placed more stress on an already overstretched workforce.”

And yet, these concerns were repeatedly dismissed. DynaLIFE CEO Jason Pincock and AHS executive Karen Horon boasted of the plan’s imminent success in their response to my op-ed on December 27, 2022, promising “not just a change in who is delivering lab services, [but] a transformation of how lab services are delivered across the province, for the better.” This was a mere six weeks after DynaLIFE had secretly requested additional funds from AHS.

With the release of previously undisclosed documents by CBC, all of the disasters foretold can be viewed in light of these unsettling facts:

1. DynaLIFE requested additional funding over and above their agreed contract, not once but twice: first just weeks before assuming responsibility for service delivery, and second less than three months later, to pay creditors and soften the company’s descent into insolvency. AHS (on the advice of Alberta Health, it appears) rejected the second request. Albertans have not been offered any accounting or justification for the approval of the first. In a briefing note prepared for Health Minister Adriana LaGrange on August 2, 2023, Deputy Minister André Tremblay emphasised that DynaLIFE’s request for additional payment in November of 2022 “reduced estimated savings over the 15-year contract (but still positive)” [AH_2023-G-0457FC2, p. 39/159]. He further noted that a second request, involving “a one-time capital injection and a significant on-going increase to their annual payment … would reduce all potential savings from the contract” [ibid.].
   
   
2. Six months before the official announcement, the premier and the minister of health knew that DynaLIFE’s fiscal position was unsalvageable and that the company’s ability to deliver lab services was increasingly compromised. The UCP government sat on this information amid a burgeoning catastrophe as wait times spiralled, access rapidly declined, labour disputes edged toward potential strike action, and patients and physicians alike struggled with delayed tests and dangerous errors. The briefing package obtained by FOIP refers to hundreds of test samples that were not processed within the necessary timeframe and required recollection. It was also noted that physicians had inadvertently treated their patients with incorrect antibiotics due to delays in confirming the nature of suspected infections [p. 40/159]. Even months after lab services were transitioned back to APL, doctors were reporting bottlenecks and ripple effects of the “chaos” continuing to impact patients. The offices of the premier and the health minister constructed a narrative for public consumption: the whole debacle was framed as an unfortunate death by misadventure, as DynaLIFE’s Icarus flew too close to the sun and failed by trying to do too much, too fast. In the briefing notes to Minister LaGrange, DynaLIFE’s “performance failures” are outlined as “underestimate[ing] the time and effort to transition services” [p.41/159] — an astonishing admission given that the other contender for the service contract, Sonic, declined to move ahead with a formal bid prior to June 2021 due to “concerns with transition timelines [and] strict covid [sic] restrictions limiting travel” [AH_2023-G-0458FC2, p. 17/399, "RFP Process and Timeline", 29 August 2023]. Despite these apparent challenges, DynaLIFE had insisted they were uniquely positioned to meet the moment. In April 2023, as wait times for patient collections were spiralling, samples were backlogged, and the company’s finances were dire, CEO Jason Pincock acknowledged merely that “The reality is yes, if you want to book a very specific time there is a challenge right now” and suggested that systemic, compounded staffing pressures could be addressed quickly by simply hiring and training more workers. Premier Smith, contradicting her own concerns about red flags, insisted that, “We had every reason to believe that DynaLIFE would be able to expand their services because they were already performing very well.”
   
   
3. They did so, primarily, to mitigate the fallout ahead of the May 2023 provincial election and to ensure Smith’s precarious political position was secure. A March 30, 2023 email chain from Ministry of Health Chief of Staff Carol Kallio to AHS staff member Isaac van Dyne emphasized the need for a “mitigation plan…particularly given we are so close to the election” [AH_2023-G-0457FC2, p. 1/159]. And they did so to explicitly undermine advocates of publicly-delivered health care who would — with all the evidence at hand — claim the DynaLIFE collapse as a failure of privatization [Advice to Premier: DynaLIFE Transition, July 19, 2023, p.35/159].

This exhausting chronology may, at this point, seem like distant history — almost quaint when compared to the current scandals rocking Alberta’s health-care politics in today’s headlines. They are, however, deeply connected; the past is present. The downfall of DynaLIFE and how the Smith government responded raise its own set of red flags for the future of our health-care system:

1. Evidence doesn’t matter. Despite the utter failure of the DynaLIFE contract — one in a string of eerily similar failed attempts at for-profit delivery in Alberta — the premier has refused to rule out re-privatizing lab services, and continues to actively divert public funding into for-profit delivery of surgical procedures, mental health and addictions treatment, seniors care, and acute care. The “nationalization” of lab services is seen as merely a stabilizing measure “for now.” The goal isn’t to have a system that works for Albertans.
   
   
2. Decisions are based on profit margins, not patient wellbeing. Even as access to services was reduced, diagnoses and treatment delayed, and dangerous errors were mounting, the decision to pull the plug on private lab delivery was taken when neither side could salvage their fiscal bottom line. For DynaLIFE, lab services delivery was only desirable when it was profitable, and it was only profitable when they were able to undercompensate their workers — as the CBC documents show, the final straw for the company was AHS’s refusal to compensate DynaLIFE for the additional costs mandated by the Labour Relations Board ruling. For the government, privatization was justified by reports of hundreds of millions in savings, which was revised to “between $18 and 36 million,” minus the costs of cancelling the Hub lab, minus that November 2022 additional payment … DynaLife’s attempt to renegotiate a higher payment after the fact was only objectionable as it “would reduce all potential savings from the contract” [Briefing note to Minister of Health LaGrange prepared by DM Andre Tremblay, August 02, 2023, p. 39/159].
   
   
3. “Fixing” health care is a cover for “breaking and remaking” health care. The premier looked at the DynaLIFE downfall as a lesson to be learned — but the wrong lesson entirely. During her radio propaganda show “You Province, Your Premier” on August 19, 2023, Smith blamed the failure on the nature of “sole-source contracts,” “monopolies,” and a lack of competitive bids. She drew a direct connection to her plan to “refocus” health care by reconfiguring AHS into four successor organizations — literally and metaphorically dismantling what she has long perceived to be a government monopoly on health-care delivery. Yet, amidst this deconstruction, she is also implementing a consolidation of power over health-care decision-making within the cabinet — and in her own office. The hydra-like procurement scandal isn’t merely problematic because of cronyism and kickbacks, but because at its heart are blatant examples of government interference in purportedly arm’s length agencies.

When we as Albertans look back on what the labs rollercoaster has cost us — the hundreds of millions wasted, the generational damage to our health-care workforce, the erosion of trust in the delivery of a vital service — all of it may be dwarfed by the long-term damage being wrought to our health-care system in its name.

Rebecca Graff-McRae

Parkland Institute's research manager Rebecca Graff-McRae completed her undergraduate and doctoral studies at Queen’s University Belfast (PhD Irish Politics, 2006). Her work, which interrogates the role of memory and commemoration in post-conflict transition, has evolved through a Faculty of Arts fellowship at Memorial University Newfoundland and a SSHRC post-doctoral research fellowship at the University of Alberta. She has previously worked with the Equality Commission for Northern Ireland and Edmonton City Council. Rebecca has authored several research reports for Parkland, including Misdiagnosis: Privatization and Disruption in Alberta’s Medical Laboratory Services and Time to Care: Staffing and Workloads in Alberta’s Long-Term Care Facilities.

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