A new report from Alberta’s auditor general details the provincial government’s attempt to privatize community lab services that failed to produce cost savings and ultimately saw the province spend tens of millions of dollars to buy a private company.\u00a0<\/p>\n
The report, released Wednesday, details a lack of due diligence by the provincial health ministry and Alberta Health Services regarding the 2022 contract with DynaLife \u2014 at the time a major provider of lab services in Edmonton and northern Alberta \u2014 to take over lab services for the entire province.<\/p>\n
The report from Auditor General Doug Wylie highlights many issues faced during the investigation, including a lack of co-operation from key officials, obstruction of information by AHS and the province, and the destruction of evidence sought by the auditor general.<\/p>\n
\u201cThat should be chilling to Albertans \u2014 not concerning,\u201d said Rebecca Graff-McRae, the research manager at the University of Alberta\u2019s Parkland Institute.<\/p>\n
The provincial government said the DynaLife contract would save millions of dollars a year, but instead cancelled it less than a year later after numerous issues with service delivery and DynaLife\u2019s own financial problems.<\/p>\n
The province ultimately purchased DynaLife in 2023 for nearly $100 million and absorbed it into the public provider, Alberta Precision Laboratories (APL). <\/p>\n
Key findings<\/p>\n
Among the key findings in the report:<\/p>\n
Minimal records were kept of important discussions between AHS executives, the minister and the health department \u2014including those where key decisions were made.Neither AHS, nor the department, followed its own processes to prepare a business case for outsourcing community laboratory services.AHS continued with the procurement despite knowing that the goal of cost savings was likely unattainable. AHS did not evaluate the assumptions and accuracy of DynaLife\u2019s financial proposals.Between 2013 and 2023, Alberta taxpayers paid $125 million in incremental costs for government-initiated laboratory procurements that were either abandoned or unsuccessful. <\/p>\n
Wylie\u2019s investigation found the province and AHS did not produce a business plan for the DynaLife outsourcing, relying instead on a 2019 report from Ernst & Young. That report, which estimated annual savings from outsourcing at $102 million, was later found by AHS to have a “calculation error” that reduced the savings estimate to $77 million.<\/p>\n
That estimate was further reduced to a range of $18 million to $36 million after analysis by AHS and APL \u2014 the same amount that the AHS analysis predicted would be saved if APL delivered all services across the province.<\/p>\n
The auditor general’s report notes that this would suggest the savings were due to “having a single organization delivering all services, rather than from outsourcing to a private provider.”<\/p>\n
“I think in this case, it is really problematic that there were issues around basic measures of accountability like proper recordkeeping,\u201d said Lorian Hardcastle, an assistant professor of health law at the University of Calgary.<\/p>\n
In a statement from a spokesperson for Primary and Preventative Health Services, the Alberta government said it identified DynaLife\u2019s inability to deliver adequate services \u201cimmediately following the general election\u201d in 2023.<\/p>\n
\u201cThat is why in June of 2023, we directed that the agreement with DynaLife be terminated and shifted services to Alberta Precision Labs, which has resulted in significant improvements to wait times across the province.\u201d<\/p>\n