England Repeats Canada’s Lab Mistakes

England’s public medical laboratories are consolidating, increasing the use of competitive market management techniques like LEAN and Six Sigma, and contracting more for-profit companies as part of the neoliberal restructuring of the National Health Service (NHS).

Private laboratory corporations have existed outside the NHS to service England’s network of private hospitals. Under funding pressure and organizational changes to an internal market NHS hospital laboratories have begun entering into joint ventures with private firms. The largest of these, now the largest pathology service provider in Britain, is a partnership between the Guy and St. Thomas Hospital Trust, Kings College Hospital Trust and Serco.

Serco is a British transnational service company with revenues of 4.3 billion pounds, a 2009 profit of 258 million pounds and 70,000 employees. Government contracts account for most of its income. Serco owns a third of the joint venture with Guy-St Thomas-Kings College and is expecting an income from this partnership of 110 million pounds of government health care money over the next 10 years.

The British public-private laboratory partnerships seem very similar to that between MDS and the Toronto General Hospital in 1995. The public hospital does the bulk of the lifting: being responsible for staff, equipment, space and providing patients. Serco minimizes its risk and maximizes its income by helping with management responsibilities. A major difference between the British and Canadian ventures is that MDS was a legitimate private sector laboratory company whereas Serco’s main expertise is convincing government’s that it can manage essential public services better than public servants: an unproven ideological statement.

The MDS-Toronto General Hospital joint venture, called the Toronto Medical Labs, eventually fell apart in 2007 with all assets reverting back to the public hospital system. A similar fate met the partnership between Sunnybrook and Gamma-Dynacare in Toronto and the MDS-Kasper-Dynacare-Calgary Health Authority lab. Part of the explanation for the failure of these public-private labs is that they were not lucrative enough. MDS’ public reason for getting out of the clinical laboratory business in Canada was limited growth prospects. This is particularly true for inpatient work in a universal publicly funded system. Tighter financial controls on the public sector and the variations, stat requirements, and manual tests involved in hospital laboratories all lead to smaller profit margins for inpatient work. The private sector prefers to hive off the easier more routine work leaving the tougher stuff to the public providers.

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One Comment on “England Repeats Canada’s Lab Mistakes”

  1. Whitney Says:

    Thank you for sharing such valuable content! Great read!


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