Bleeding Money: Alberta’s Private Health Shift

A favourite quote among conservatives is this one by former British prime minister Margaret Thatcher: “The problem with socialism is that you eventually run out of other people's money.”

In oil-rich Alberta, the irony is that successive conservative governments have seemed unafraid to run out of other people’s — taxpayers’ — money in their efforts to embed private, for-profit health care in the province’s public system.

And so it appears to be again with the Alberta Surgical Initiative, begun in 2019 under now-deposed United Conservative Party leader Jason Kenney. It continues, although enmeshed in scandal, under Danielle Smith, the party’s current leader, who has long been an ardent supporter of privatized health-care delivery.

Last week, the University of Alberta’s Parkland Institute issued a report, based on five years of public data, that concluded the UCP’s surgical initiative has not increased surgical capacity or reduced wait times.

The report contended it has instead — as forewarned — bled funding and a finite pool of critical staff from the public system, increasing wait times for cancer and other priority surgeries.

“The most troubling finding is that public operating room activity was actually lower in the most recent year than even pre-pandemic,” the report’s author, Andrew Longhurst, a B.C.-based health researcher, told a news conference.

“Provincial policy and funding decisions are encouraging the movement of limited staff, including operating room nurses and anesthetists already in short supply, into the for-profit sector, which, keep in mind, only performs the lowest-complexity surgeries, does not provide emergency care and does not provide followup care,” he said.

“This is having real consequences on how Albertans are able to access life-saving health care in the province, and specifically surgical care; median wait times under the [surgical initiative] are longer for most priority procedures than before its inception.”

Longhurst’s analysis shows that while provincial spending on public hospitals increased only marginally between fiscal year 2019-20 and 2023-24, spending on private surgical facilities nearly tripled to $55.8 million from $20 million.

The average cost of surgical procedures performed in private facilities increased nearly 80 per cent over that same five-year period while wait times for more complex procedures — performed only in public hospitals — increased, he said.

The timing of the report’s release is salt in the political wound for the UCP government, now under siege in the biggest scandal in Alberta politics in decades, following a series of revelations by the Globe and Mail.

The Globe first reported allegations of political interference in contracts with chartered surgical facilities, or CSFs. They are privately owned, for-profit facilities that do surgeries such as hip and knee replacements funded by taxpayers through Alberta Health Services, or AHS.

The allegations are now legally codified in a wrongful dismissal lawsuit filed by former AHS CEO Athana Mentzelopoulos. She alleges she was politically pressured to sign inflated contracts with some CSFs and that she was fired two days before she was to meet with Alberta’s auditor general.

The Globe obtained internal AHS pricing documents that showed two CSFs were negotiating surgical procedure fees nearly double those of other CSFs, which were also higher than what it would cost to perform those surgeries in a public hospital.

Alberta Health Minister Adriana LaGrange and the private surgical company have disputed those figures. Mentzelopoulos’s allegations, and those contained in the government’s statement of defence, have not been proven in court.

Apart from the lawsuit, the allegations also are now the subject of a review by a former judge, as ordered by Smith. Alberta’s auditor general is conducting an audit, and the RCMP have also launched a criminal investigation.

‘Government just pushes ahead’: expert

None of what has transpired surprises University of Calgary health law professor Lorian Hardcastle.

“We have known about these problems for years,” she said.

“We have seen it in other jurisdictions, yet the government just pushes ahead seemingly based more on ideology and rhetoric than evidence,” she said, without any attempt to mitigate the problems they had been warned would arise.

The government of Premier Ralph Klein undertook the first attempt to outsource surgeries to a private, for-profit surgical company. It ended in bankruptcy in 2010.

Danielle Smith was then the leader of the Wildrose Alliance. She sided with the corporation, Health Resources Centre, alleging the government had broken its contractual commitment to the company.

“It would be absolutely devastating if this facility was closed down,” Smith told the Edmonton Journal. “It’s incumbent upon the health minister to intervene.”

In the end, the government refused to bail out the corporation and AHS was left with the expense, and the task of absorbing hundreds of surgeries back into the public system.

“It’s a huge lesson to be learned about the pitfalls of contracting out essential medical services to business people,” David Eggen, former executive director of Friends of Medicare, said back then. Eggen is now an NDP MLA.

But that lesson wasn’t learned, according to Braden Manns, a former interim AHS vice-president, who said the UCP government did not heed recent warnings about potential problems that have now become reality.

In a March 20 opinion editorial published in the Edmonton Journal, Manns noted that Albertans elected the UCP in 2019 on a health-care privatization mandate. One of its first acts was to contract out laboratory services.

Within nine months, the UCP government went back to a public lab system, losing at least $97 million.

“Unbowed,” Manns wrote, “they turned their attention to contracting out other services, including surgeries.”

Manns said the government, unhappy with the pace of change, set up a joint Alberta Health-AHS committee. They reviewed the contract proposals now at the centre of the current controversy, he said, including CSFs in Red Deer and Lethbridge.

“AHS committee members recommended not proceeding for good reasons,” he wrote. Surgeries would cost more, there was a lot of unused operating room capacity in hospitals and there was already a critical shortage of anesthetists and surgical staff.

Which is exactly what Longhurst’s analysis found.

The Parkland study’s findings

Longhurst pointed out that the surgical initiative has failed to meet the targets set by the Kenney government. It was supposed to reduce wait times by funding an extra 80,000 contracted-out surgeries over four years. The UCP set a target for outside contractors to provide 30 per cent of all surgeries by 2023, double that of 2019.

Private facilities are performing about 22 per cent of surgeries while 42.5 per cent of patients are not getting their surgeries within the recommended time frame, according to the provincial government’s own data.

Longhurst’s analysis cites data from the Canadian Institute for Health Information. He said it shows median wait times for nine of 11 priority procedures — such as lung and breast cancer surgeries — have increased under the UCP government’s surgical initiative.

Health law professor Hardcastle said Longhurst’s analysis clearly shows CSFs have not, as promised, broadly reduced wait times and relieved the burden on the public health-care system.

But she thinks the situation is so complex that no causal connection can be drawn.

“I think that the shift to charter surgical facilities is potentially to blame for that, but I think there is not enough data to draw a causal connection,” she said. “There are too many variables that go into wait times to directly attribute it to this.”

Longhurst said he is not suggesting that the private surgical initiative is solely to blame for the increase in priority surgery wait times.

“It is multifactorial,” he said. While he said he respects Hardcastle’s assessment, “I do think we are at a point in time where we do have a number of data points where we can make observations about what is happening.

“And I think we can say that the focus on for-profit delivery is indeed having consequences on the delivery of other surgeries, namely those that are more complex and require staffing and resources and public ORs.”

LaGrange calls findings ‘ideological’

In an emailed statement to The Tyee, Health Minister Adriana LaGrange accused the Parkland Institute of serving as the “NDP’s unofficial research arm,” which is an accusation similar to many made by Ralph Klein, who once wrote a letter to the University of Alberta’s president demanding that the institute be shut down.

“The use of chartered surgical facilities has played a key role in reducing wait times and improving patient care,” LaGrange said in her statement, “yet these successes are often dismissed or downplayed in favour of an ideological stance that does not reflect the actual progress we’ve made.”

Longhurst said data shows improvements in only two areas: median wait times for cataract surgeries dropped 31 per cent, from 131 days in 2019 to 90 days in 2023; wait times for hip replacement dropped by one day to 140 days over the same period.

Hardcastle said the Parkland report and the wrongful dismissal lawsuit have ensured the UCP government can no longer ignore the surgical initiative’s glaring issues.

Still, she doesn’t think the Smith government will reverse course on chartered surgical facilities.

“I think the most we can kind of hope for is that the auditor general’s report and the [judge’s] third-party review will make some sound recommendations around how we can do it in a way that mitigates at least some of the issues, and hope that the government takes those recommendations seriously.

“But I'm a pessimist at this point. I think we all are — and justifiably so.”

If you have any information for this story, or information for another story, please contact Charles Rusnell in confidence via email.