BC’s LifeLabs Strike Highlights the Risks of Foreign Ownership

[Editor’s note: This article was first published by Healthy Debate.]

The months-long strike at British Columbia’s LifeLabs has raised questions about foreign ownership of medical services and Canadians’ health data.

American-owned Quest Diagnostics purchased LifeLabs in August 2024 from OMERS, a jointly owned pension fund company, for $1.35 billion. LifeLabs’ B.C. workers, who have been without a contract since last April, have been on strike since Feb. 16.

Ayendri Riddell, director of policy and campaigns with the BC Health Coalition, or BCHC, says the fact that such a large part of Canada’s health infrastructure is owned by a massive foreign company is cause for concern.

“As a company they’re not accountable to the Canadian workforce or to our health-care system and our patients,” she says. “It doesn’t seem like their striking conditions are having much of an impact on Quest.”

Quest is a multibillion-dollar diagnostic information services company with operations across the globe. It reported more than US$2.6 billion in revenue for the last quarter alone and is projected to earn US$10.7 billion in revenue for 2025.

On April 15, BCHC and the BC General Employees’ Union, the union representing striking LifeLabs workers, released an open letter to the provincial government imploring it to cancel its contract with Quest Diagnostics and reintegrate lab services back into the public system.

The letter arrived on the heels of the B.C. government’s April 10 directive to review and, where possible, eliminate its contracts with U.S.-based companies in an effort to reduce its reliance on foreign suppliers.

But whether this directive eventually will include Quest seems unlikely. The province has a 10-year contract with LifeLabs, which Quest inherited, that does not end until April 2031. The Ministry of Health told CBC News that “cancelling the province’s contract with LifeLabs right now would cause significant delays in basic lab testing and put patients at risk. It would also cost hundreds of millions of dollars and take resources away from frontline services elsewhere.”

Health policy researcher Andrew Longhurst says LifeLabs is a cautionary tale for governments. “[It] is basically a story of a very profitable corporation becoming very profitable on the public purse. The province created a very large corporate player in health care, and it became attractive enough for foreign acquisition.”

LifeLabs workers are paid substantially less than workers in the public laboratory systems doing the same work, for example labs run out of B.C. hospitals. Longhurst says that if Quest is motivated to cut costs, it won’t bode well for the workers. “Labour costs in health care represent 70 to 75 per cent of operating expenses,” he says. “The way you [cut costs] is by trying to cut your labour costs.”

Due to the nature of both privatization in the health-care space and the conditions set out by various international trade agreements, the province is in a difficult position when it comes to Quest, says Longhurst. “One of the problems with foreign ownership and health-care services is that once these corporations are in the country, it is very difficult to get them out.”

Costs and accountability under a private system

Ross Sutherland, retired nurse practitioner and author of False Positive: Private Profit in Canada’s Medical Laboratories, says the privatization of Canadian medical lab services has left us vulnerable to companies that may not have the best interest of patients, or their staff, at heart.

“The farther removed an employer is from the workforce, the more difficult it becomes to negotiate,” says Sutherland. “These are huge companies, and they would be driven by a more specific bottom line... that’s going to mean increased pressure on the workforce and those workers are absolutely going to feel it while they’re negotiating.”

LifeLabs is the biggest provider of laboratory services in Canada, followed by Dynacare (formerly Gamma-Dynacare Medical Laboratories). Dynacare Medical Labs, a branch of Dynacare, was likewise acquired by a U.S.-based company, Labcorp (the Laboratory Corp. of America), in 2002.

B.C. and Ontario, where LifeLabs has the biggest presence, are two of the most heavily privatized medical lab jurisdictions in the country. Sutherland estimates that about half of B.C.’s and Ontario’s respective medical lab sectors are now U.S. owned.

Sutherland says running parallel public and private medical lab systems tends to cause a wide range of issues, including but not limited to increased inefficiency and increased costs to the public, and gives an unfair advantage to private companies with limited accountability and transparency.

“Fifty years ago, when [the medical laboratory system] was largely non-profit, there was a lot of co-operation between different sectors. Now that we have big companies like LifeLabs and Dynacare [working outside] the hospital sector, the co-operation between them is worse,” he says. “We see the same thing in home care.... Our health-care system is becoming gradually more expensive and less efficient.”

The Kilshaw Report, a government-commissioned review of laboratory services in the 1990s, as well as a subsequent B.C. laboratory services review published a decade later, echoed many of these concerns.

In the latter report, experts found that because of the fragmented (and often competing) parallel private and public systems, B.C. residents were paying the highest costs for lab services in the country, with limited accountability for quality or cost across the system.

“These private companies spend a lot of energy figuring out ways to increase the volume of services they can provide,” Sutherland says, “and they really like providing [these services] in a public health-care environment because they always get paid.”

A recent example, he says, is the push from LifeLabs to encourage vitamin D testing.

“They keep saying that one-third of the population is vitamin D deficient, and everyone should come in and get their own tests... but what happens is that as more people start to [pay out of pocket] for these [unnecessary] tests, they’ll start to say, ‘Well, why are we paying for this when it’s needed?’ So [these companies] are creating demand [to pressure the province to cover an unnecessary service] and it’s just an exacerbation of the problem.”

Foreign ownership could amplify privatization issues

Dealing with issues around transparency, accountability to cost and quality and system integration become more complex when dealing with foreign ownership, adds Sutherland. “I’m quite worried about it.

“In terms of integration, the problem becomes bigger once again because you now have a company which is controlled in another country. If you’re trying to figure out how to integrate the various systems and do negotiations, you’re negotiating with a local management, but the local management ultimately is responsible to a foreign management.”

While foreign companies are subject to the same licensing standards as domestic companies, Sutherland says that spaces within health care that are highly privatized, and subsequently increasingly foreign owned, can be more vulnerable to neglect and limited accountability.

Two such examples are the long-term care and home care industries.

In 2016, Chinese insurance company Anbang purchased the biggest seniors’ care home chain in B.C. for $1 billion following provincial and federal government reviews. Some flagged concerns ranging from possible staffing changes and quality of care and the potential takeover of the company by China.

Not long after the sale, the Chinese government seized control of the company, saying Anbang had violated laws and regulations that “may seriously endanger the solvency of the company.”

Despite reassurances from then-minister of health Terry Lake that the quality and standards of these facilities would be upheld, health authorities have had to take over four of the 21 senior homes owned by Anbang for repeated failures to comply with standards of care.

Other spaces that Sutherland says are increasingly being targeted by private investors are within Ontario’s community surgical and diagnostic centres: private, for-profit clinics that handle diagnostic and surgical issues for services ranging from X-rays to cataract surgeries.

These clinics are often parts of larger chains of clinics, he says, many of which fall under the full or partial ownership of American companies. “There is a bit of a move across Canada to privatize these hospital services,” says Sutherland. “But as soon as they’re private, they can sell them to anybody they want.

“It’s sort of like what happened to the labs in the 1970s. They buy each other up and become larger chains and then all of a sudden [a foreign entity] is going to want to buy that [larger chain].

“If we continue doing this, we’ll see a lot of the community clinics, the for-profit clinics, controlled by American companies.”

What trade agreements have to do with it

The issues with foreign companies owning large portions of Canada’s health-care system are varied. But there are unique challenges specifically with American companies due to the nature of the Canada-United States-Mexico Agreement, or CUSMA, and other historic trade agreements between the two countries.

Matthew Sanger, the former manager of policy development for Health Canada, where his work focused largely on health products and international affairs, says under the current U.S. administration, a lot of the existing trade agreements are under threat.

“During [the first Trump administration], they renegotiated [the North American Free Trade Agreement] and took out a mechanism that was related to the investor-state dispute settlement,” Sanger, who is now retired, says. Instead of foreign companies challenging government measures in Canada, U.S. companies have to rely on their home government to leverage these disputes.

“Through this process, individual companies have much less direct leverage now that they have to work through their home government,” which Sanger says could be seen as a positive change for Canada’s public health-care system. However, he adds that “we now have such an unpredictable and seemingly hostile government in the U.S.... [that] may be much more willing to use those levers on behalf of particular U.S. investors.”

Sanger says if a province decided it no longer wanted to accept referrals to foreign-owned private clinics for a particular service and instead wanted that service processed through either the public sector or Canadian-owned businesses, under CUSMA that business could “go to the U.S. trade representative and say, ‘Hey, this is unfair trade practice in Canada and we want you to raise it with the Canadian government.’”

Sanger says this could be cause for concern as “[the current U.S. administration] seems to be really ready to shoot from the hip with launching all kinds of formal disputes on behalf of Republican-affiliated investors.”

Liability also becomes more complicated when dealing with foreign ownership, says Sanger.

“With a diagnostic lab, if there’s negligence, then the consequences could be pretty devastating for the individuals involved. And if the owners of the lab are U.S. investors, it may be more difficult for the government, an individual or group of individuals to go after that liability.”

Concerns regarding liability are not without merit. Quest has been subject to a number of controversies over the years.

Nichols Institute Diagnostics, a Quest subsidiary, manufactured and sold faulty tests to labs between 2000 and 2006 despite complaints of inaccurate results, putting hundreds of thousands of dialysis patients at risk. In 2009, it set a record for the largest settlement by a medical lab for a faulty product when it paid $302 million to the U.S. government.

In 2011, Quest paid $241 million to the state of California after it was alleged the firm had overcharged the state’s Medicaid program, providing illegal kickbacks as incentives for referrals from health-care providers.

In 2018, Quest was linked to inaccuracies in more than 200 women’s cervical screening tests in the U.S. and Ireland; in 2019, a billing collections service called American Medical Collection Agency was targeted in a data breach potentially exposing the “financial data, Social Security numbers and medical information” of nearly 12 million Quest patients.

What about patient data?

Sanger and Sutherland agree that the use and privacy of patient data also are key areas for concern.

“In some ways [data] is the biggest part of this. Now, all of a sudden these large corporations have access to all... the medical history of substantial portions of the population in Canada,” says Sutherland. “[We don’t know] how they want to use that... and [data] is money these days.”

Quest has said that it will aim to improve the data security at LifeLabs, particularly following LifeLabs’ own 2019 ransomware attack, after which the company was forced to pay out more than $7 million to patients in a class-action suit. Quest added that it would ensure that Canadian patient data remains in Canada.

But because Quest and Labcorp are both based in the U.S., they are subject to U.S. government regulations on privacy and information access.

“A foreign-owned investor could be obliged... to make that data available to U.S. authorities,” says Sanger, “whereas in Canada we have much greater protections. It makes a big difference in terms of where your data is actually housed.”

Where do we go from here?

The uncertainty around U.S. policy in the coming years adds a substantial degree of concern to trade relations and Canada’s health sector, says Sanger.

“The fact that the U.S. is gutting its whole infrastructure around research and science is really worrying,” says Sanger. He says the U.S., particularly in the health sphere, has historically set the global standard for the regulation of drugs, medical devices and diagnostic services.

Despite talks of integration over the years, Canada has operated independently from the U.S. Food and Drug Administration. Foreign health companies have to meet provincial licensing standards, and foreign products have to meet licensing standards set out by Health Canada.

However, Sanger says that given the changes in the science sphere in the U.S., “we’re likely to see a lot less common ground [between the two countries] regarding what is considered a safe product. That could lead to frictions, and it could lead to [Canada] not applying the same kinds of regulatory standards to these diagnostic clinics and the equipment and products.”

Newly elected Prime Minister Mark Carney has said Canada and the U.S. will initiate a new round of comprehensive negotiations on trade and security shortly after the election. Carney spoke with U.S. President Donald Trump a day after securing the win.

“The leaders agreed on the importance of Canada and the United States working together — as independent, sovereign nations — for their mutual betterment,” the readout from the Prime Minister’s Office stated.

Sanger says that it will be important for Carney to focus specifically on safeguards for health care, policies relating to Indigenous populations, and the environment.

“Past agreements have been very subject to interpretation. We’ll need to have much more explicit, unambiguous kinds of safeguards.... We’re not dealing with the same type of partner that we had in previous negotiations.”

For BCHC’s Riddell, policymakers must start making moves now to protect Canada’s health-care system.

“What we’re seeing is the slow erosion of our health-care system, where we’re spending more on public health care without getting better-quality services. Those profits [shouldn’t be] going to a U.S.-based company.”

Adds Longhurst: “We talk about the threat of U.S.-style health care, [but] we are in fact inviting U.S. health care into our country by allowing these kinds of acquisitions. Our legislation needs to be modernized and wake up to this reality.”