The Silo Strategy – Part Two

On January 31, in “The Silo Strategy: Part One,” I wrote about the exclusion of the for-profit laboratories from Ontario’s regional health authorities, the LHINs, and the negative effects of this exclusion on recent attempts in Wallaceburg, Thessalon and on St. Joseph Island to control laboratory costs and maintain local access.

The silo strategy, securing all the community laboratory work for the for-profit laboratories, was first voiced in 2000.  It was a change from their 1997 position when the CEO of the Ontario Association of Medical Laboratories (OAML) argued for a competitive process to determine a single supplier for all medical laboratory services in each region.  A 1999 pilot RFP in three regions failed to produce a successful bidder. In part the for-profit labs realized that the competitive process meant “winner-take-all” and any one company could lose all their business: the big three private labs have a very comfortable oligopoly with stable incomes and profits.

So the private labs blinked and decided to limit their goal to providing, as a group, all the community lab work in Ontario. This strategy required that the private labs maintain their separate funding, have direct negations with the province and stop non-profit labs, primarily hospitals, from performing community work.

The first major legislative hurdle for the new silo strategy came in 2003 when the province introduced the Commitment to the Future of Medicare Act.  The initial version of the Act treated the private laboratories the same as hospitals and subjected them to the same financial, accountability and transparency provisions.

The OAML fought this inclusion.  They argued that the legislation was draconian, that it allowed the province to micromanage the health care system and they argued that all sectors should negotiate separate agreements with the province: the antithesis of an integrated system.

When the Commitment to the Future of Medicare Act was passed the private labs got most of what they wanted.  They were included in the provisions barring extra billing but they managed to escape the requirements on accountability and transparency.  This victory laid the basis for the exclusion of many for-profit providers from the regional health authorities.  It also limited the use of hospitals as providers of community medical services, even where it would clearly increase access and decrease cost, like in Thessalon, Wallaceburg and on St. Joseph Island.

For the OAML’s position see their brief, “Commitment to the Future of Medicare Act, Bill 8/2003: the Community Laboratory Perspective,” January 2004.

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