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AG review of DynaLife contract delayed as cost of failed lab privatization revealed

Data released in the 2024 Alberta budget indicates how much the money was spent on the transfer of labs run by DynaLife back to the public system, but according to public health care advocates, there are still unanswered questions.

The months following the change to DynaLife saw numerous complaints from the public regarding long wait times and cancelled appointments.

Calgary resident Michelle Archer saw it first hand in late 2022.

“I noticed there was terrible long wait lines for getting an appointment or getting a walk-in.  Two or three hours to do a walk-in and six weeks to get an appointment. Things have definitely improved now,”  Archer said on Monday.

“I do wonder about why they made the decision to go to this private company and how did they decide that was going to be a good idea?”

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AHS announced in 2022 that it had expanded its contract with DynaLife which already operated labs in Edmonton and some northern Alberta communities.

Former health minister Jason Copping said at the time the deal would save up to  $36 million.

But last August, the province announced that DynaLife was no longer the province’s lab service provider.

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Government-owned Alberta Precision Labs (APL) is back to being the province’s lab services provider after the contract went to DynaLife in December 2022.

The transfer of labs run by DynaLife back to the public system is costing the province about $31. 5 million

“The $11 million going forward is what it will actually cost health AHS to operate those facilities going forward, so the increased operational cost of what they took over,” said Alberta Finance Minister Nate Horner in Calgary on Monday.

The $11 million is the projected operational spending for DynaLife’s operations for fiscal 2023-24, according to the Health Minister’s office.

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“Sometimes the government sees it as a win if they can contract something out regardless of whether it does improve service or whether it does actually save money,” said Dr. Braden Manns, a professor of medicine at the University of Calgary where he holds a research chair in health economics. Manns was also an AHS executive until he resigned in June of 2023.

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He said contracting out to for-profit providers can work for certain high-volume, low-risk tests and procedures, where outcomes and costs can be easily measured.

“Labs simply don’t fall into that … It seems that at times there’s a knee-jerk reaction by the government, that the solution to any problem is privatizing,” Manns said.

“What worries me is that I don’t think we have learned a lesson here. The premier’s comments coming out of this six months ago when the contracts were cancelled was that they’re going to have to take into account some lessons, but my impressions from those discussions were that we are not finished seeing the end of contracting out laboratory services in Alberta.

“Conservative parties tend to be with the ideology that contracting out services to private firms can increase efficiency and lower cost and better quality and that’s something we see in most areas, except health care breaks those rules all the time for a variety of reasons,” Manns said.

In October of last year, the Office of the Auditor General of Alberta  confirmed it would be “examining (the province’s) procurement and contracting processes with DynaLIFE as part of a report it expected to be released in early 2024.

But on Monday, the Office of the Auditor General of Alberta said the investigation has been delayed.

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“We have experienced delays in our ability to interview people and gather the necessary information needed to complete our examination work. At this time, we are not able to establish a specific target completion date, however, we are doing everything we can to complete this work,” read a statement to Global News.

Health-care advocates are demanding more transparency from the province.

“We don’t get to see the contracts. We don’t know the full cost that happened and governments generally aren’t forthright and giving those out especially when it goes poorly,” said Chris Gallaway, Friends of Medicare’s executive director.

“We’ve probably spent far more than they claimed we were going to save to not have a lab system.  We didn’t build the much-needed lab in Edmonton. and they didn’t even rule out privatizing again. So are we going to spend tens of millions of dollars again to try this again or have we learned our lesson and we’re actually going to build a public lab system that works?”

In a statement to Global News, Alberta Health Minister Adriana LaGrange said the province is continuing to focus on improving lab services for Albertans and having a lab services system responsive to Albertans’ needs.

“Alberta Precision Laboratories continues to add more workers and lab appointments to improve access to lab services in all regions of Alberta,” she said.

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Since Aug. 3 of last year, APL has provided thousands of additional community lab appointments in Calgary, significantly reducing wait times.

Appointments in Calgary increased from 16,766 weekly in May 2023 to 23,445 weekly in December 2023, a 40 per cent increase in appointments.

Manns says there was a human toll that occurred as a result of the lab changes.

“It was an incredibly stressful transition for people working in the labs, but also for the microbiologist the pathologists,” Manns said.

“Maybe it’s worth the stress if we’re going to save a lot of money and we’re going to improve services but if you do your due diligence on some of these things, it’s pretty clear that those are not real expectations so putting people through a whole bunch of stress, when you’re not likely to achieve the kind of goals, seems like a waste of energy.”

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