Posted tagged ‘Canadian laboratories’

Edmonton’s Medical Laboratory Proposal: A Private Insanity

November 4, 2013

I wrote the following post as an op-ed in the Edmonton Journal, October30, 2013. I hope it plays a part in halting the privatization of Edmonton’s medical laboratories.

The Alberta government is proposing to give the private sector a 15-year contract to run medical laboratory services in Edmonton. This policy meets the popular definition of insanity: a condition where you do the same thing again expecting a different result. The government proposal has been tried many times before, twice in Alberta, and it has not worked.

In 1996, premier Ralph Klein sought a private-sector provider to deliver all laboratory services in Calgary. The trouble was that none of the companies wanted the work. In the end Klein cajoled MDS and Kasper Labs into partnering with the regional health authority to form Calgary Laboratory Services. The public sector put up more than 50 per cent of the funding, provided the administrative back up and all of the work. Even so, by 2006 all of the private-sector partners had left and Calgary Laboratory Services continues as an integrated fully public non-profit medical laboratory provider.

In Edmonton, Klein forced three local private-sector labs to join forces with the giants, Gamma-Dynacare and MDS, to form Dynacare-Kasper Medical Laboratories (DKML). DKML was given the contract for most of Edmonton’s laboratory services. All hospital laboratories, except at the University of Alberta, were turned into rapid response laboratories and managed by DKML.
It did not work. By 2005, all of Edmonton’s in-patient laboratory services were back under hospital management. DKML transformed into DynaLIFE, a partnership wholly owned by LifeLabs, the fourth largest laboratory company in the world, and Gamma Dynacare, a subsidiary of LabCorp, the second largest laboratory company in the United States. DynaLIFE continues to provide community laboratory services and run the laboratory in the Fort McMurray Hospital.

In the mid-1990s, MDS (now LifeLabs) and the Toronto General Hospital (now part of the University Hospitals Network), also tried a similar public-private partnership to serve both community patients and in-patients in downtown Toronto. The for-profit company gained access to public investment and the hospitals provided all the space, the staff and the administrative backup.The partnership was dissolved in 2009. The hospitals took over all laboratory work and the stand-alone community laboratory closed. Serious attempts to integrate hospital and community laboratories under a private-sector provider have also failed at Toronto’s Sunnybrook Hospital and in eastern Ontario.

These failed projects illustrate that commercial companies are hesitant about taking on the risks inherent in hospital care. Hospitals, by their nature, have fluctuating volume requirements and more individualized testing while private providers prefer a more predictable routine. Large hospitals need large, comprehensive in-house laboratory services to reduce turnaround times. This fact limits what can be effectively moved off site.

To compensate for these higher risks, private companies demand excessive payments to assure a reasonable profit return – an arrangement that has proved unsustainable for regional health authorities and provincial governments. Laboratory medicine is also evolving rapidly making long-term contracts difficult, if not impossible, to negotiate.

On the one hand, too many tests are currently ordered and, hopefully, with better protocols and changing health-care delivery organizations the number of tests will drop, in some cases dramatically. To ensure their profit, private companies would need to build capacity for the current volume and would, in a contract, rightly expect payments to reflect that volume for the life of the contract. This means if we meet the desirable goal of cutting unnecessary tests, we would end up paying for tests that are not done.

On the other hand, as our medical understanding grows, high quality care we will mean new tests and procedures. These tests cannot be anticipated and we will end up negotiating their adoption with a sole-source private provider for the length of a 15-year contract – a very serious problem for a system wishing to provide the best care at the best price.

Few governments could be more effective at bullying the private sector into an agreement than Klein’s and ultimately his solution did not work. Why repeat those mistakes? Alberta needs cost-effective, integrated, quality laboratory services. The sane choice would be to build on the public non-profit approaches that have been proven to work.

The Silo Strategy – Part Two

February 21, 2012

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.

Update on Thessalon and St. Joseph Island

February 10, 2012

The facts as we now know them:

Despite what the hospital web site says there are no lab facilities at the Mathews Memorial Hospital or the Thessalon Hospital. Neither has a laboratory license.

Blood is taken at these facilities by hospital staff and sent to the main lab at the Sault Area Hospital for processing.

Both hospitals have been taking blood from community patients for years under these conditions.

If there is now a concern about the legality of this service there is a simple solution: the Sault Area Hospital could apply for a specimen collection center license at the Mathews Memorial and Thessalon sites.  It is an easy process, with minimal cost – less than the cost of gas paid by all the patients that will now be forced to drive to the Sault each year for their blood taking.  The buildings are all ready there, the equipment is there, the skilled staff is there and the transportation network back to the Sault is in place.  It seems like a no-brainer.

If some solution using the hospitals is not found we could end up with one of those “fact is stranger than fiction” situations.  What we could have in these northern Ontario communities is laboratory specimens being drawn in Mathews Memorial and Thessalon hospitals and being driven numerous times a day back to the main Sault hospital laboratory for processing.  Simultaneously, community patients from these same communities are being expected to get in their cars and drive 80+ kilometres to the Sault so they can have their blood taken at a private lab. And, to add to the traffic on the highway 17, the new best interim solution is that Lifelabs will set up a one hour clinic once a week in these communities and drive the blood to the Sault.

On the way back to the Sault the Lifelabs drivers will probably pass the vehicle driving the blood from the patients in the satellite hospitals as well as all the community patients who were not able to make it to the one hour clinic. The big winners are the oil and gas companies and the private labs.  It is craziness for public resources, patient’s time and access to an essential medical service.

Competition and Quality

July 21, 2011

I submitted the following comment to a blog dedicated to medical laboratory quality.  One of the posts argued that more competition would improve quality.  The blog can be found at:

The argument that more competition would increase laboratory quality is, at best, weak.  Apple may have a more consumer friendly product, but is it of better quality? Blackberries work pretty well. More to the point, there are many examples in computers, cars, hedge funds and children’s toys, all competitive sectors, that have produced terrible quality: think pinto, Microsoft millennium 2000, dell batteries, firestone tires and cadmium.  Further to the point, health care is not like other consumer products and it is hard to argue sectors of health care that are not competitive, like hospitals or the NHS have poorer quality, though they certainly can be improved.  In the 1970’s when Ontario’s community laboratory sector was very competitive quality was poor, so much so that a series of conservative governments felt compelled to bring in regulations to improve quality and reduce competition.  Your example of Newfoundland pathology testing ignores the fact that similar problems have occurred in the United States with a competitive laboratory market and in Ontario, Manitoba and BC with multiple laboratory providers. The effect of more competition in the provinces with multiple laboratory providers has been increased secrecy, a barrier to improved quality, and decreased pre-analytic and post analytic quality.  Based on the evidence it is hard to sustain the argument that more competition will increase quality: the sounder argument
makes the opposite point.