The Real Cause of Alberta's CorruptCare Scandal
The normalization of for-profit health care in Canada is opening the door to rising costs and conflicts.
This piece was originally published in The Tyee.
Allegations that the United Conservative Party government pressured Alberta Health Services to accept exorbitant contracts to operate chartered surgical facilities in Edmonton, Red Deer and Lethbridge have dominated the news in Alberta since February.
Former AHS CEO Athana Mentzelopoulos’s allegation that she was fired for scrutinizing these contracts has created a scandal dubbed “CorruptCare” by the NDP Opposition.
But largely lost in the conversation over the AHS procurement scandal is how Alberta’s increasing reliance on for-profit service delivery got us here.
Rather than being an isolated incident, the CorruptCare scandal represents the result of the contracting out and hollowing out of public health care in Alberta.
Whether it’s chartered surgical facilities, privatized laboratory services or contract nursing agencies, repeated instances of introducing the profit motive to the provision of public health-care services show that privatization tends to increase health-care costs.
And why wouldn’t it? Corporations exist to maximize profit, not to provide public services.
Once making room in the health-care budget for profit margins became normalized, it was only a matter of time before allegations like those made by Mentzelopoulos would emerge.
The CorruptCare scandal is a direct product of the Alberta Surgical Initiative, which sought to double the share of procedures conducted at the private centres to 30 per cent. Former premier Jason Kenney, who promoted the scheme, later said this was intended, at least in part, to ensure surgeries wouldn’t be done in “union-run hospitals.”
Three months after the initiative was announced in December 2019, a group of anesthesiologists at the University of Alberta established the Alberta Surgical Group, which operates a chartered surgical facility in Edmonton that opened in November 2022.
While AHS typically pays $4,044 per hip, $4,036 per knee and $4,833 per shoulder surgery, Alberta Surgical Group charged $8,303 per hip, $8,510 per knee and $11,243 per shoulder surgery prior to contract renewal negotiations, according to documents obtained by the Globe and Mail.
This trend, a recent Parkland Institute report suggests, isn’t confined to Alberta Surgical Group.
Between the 2022-23 and 2023-24 fiscal years, the average cost of surgeries at for-profit chartered surgical facilities increased by 52 per cent, compared with 13 per cent between 2021-22 and 2022-23.
But despite the value Canadians place on their public health-care system, publicly subsidizing private health-care companies’ profits is as Canadian as maple syrup. Federal Canadian legislation includes no prohibition on contracting out public health-care services to the private sector.
The 1984 Canada Health Act, which guarantees Canadians “continued access to quality health care without financial or other barriers,” requires only that basic health-care services be publicly funded. It doesn’t require that these services be publicly delivered.
This means that as long as the government is footing the bill, it can pay private providers however much it sees fit, opening the door to governments providing juicy contracts to their friends, even if a less costly option for the same service is available.
More than just surgery
It isn’t just privately provided orthopedic surgeries that have increased costs in Alberta’s health-care system.
In December 2022, the UCP contracted out medical lab testing from the publicly owned Alberta Precision Laboratories to the private DynaLife Medical Labs, which had previously operated lab testing in parallel with the public system.
Within three months of the contract, DynaLife’s owners said the company was broke, asking the government for a $70-million bailout, which was rejected, according to reporting from Taylor Lambert at CBC.
In August 2023, Premier Danielle Smith, who since her days as a Fraser Institute intern in the 1990s has been a proponent of health-care privatization, opted to buy DynaLife for $100 million.
As was the case with the chartered surgical facilities, there was an element of union-busting in the privatization scheme.
The Health Sciences Association of Alberta represented workers at Alberta Precision Laboratories and DynaLife, with the APL workers having higher wages and a better pension plan in their collective agreement.
Contrary to provincial labour laws, when the government privatized Alberta Precision Laboratories by selling it to DynaLife, the private company attempted to ignore the APL collective agreement, cutting the 1,300 former APL employees’ wages and refusing to pay into their pension plan.
The Alberta Labour Relations Board ordered DynaLife to honour the existing Alberta Precision Laboratories collective agreement in February 2023.
Uber for nurses
Smith has repeatedly said that she sees Uber as a model for the delivery of public services in Alberta. There’s no better example of the gigification of public health care than the increasing use of contract nurses by provincial governments of all political stripes.
Since the peak of the pandemic, demoralized nurses across the country have sought better pay, flexibility and travel opportunities by working for contract nursing agencies.
Instead of hiring nurses for hospitals and other centres, governments have paid the private agencies to provide them — at much higher costs to the public.
According to a report from Queen’s University nursing scholar Joan Almost, provincial governments paid at least $1.5 billion to for-profit nursing agencies in the 2023-24 fiscal year — six times more than in 2020.
In my reporting for the Progress Report, I found that from April 2021 to April 2024, Alberta Health Services spending on contract nurses increased from $5 million to a peak of $150 million.
Agencies have historically been used to fill positions in rural and remote communities, but I found that 20 per cent of agency nurses were sent to hospitals in the Calgary and Edmonton metropolitan areas, reflecting the extent of AHS’s inability to recruit and retain nursing staff.
Sahara Staffing, one of the top recipients of AHS nursing contracts, advertised travel nursing as an opportunity to take home “more pay per-hour than union wages.”
The agencies aren’t doing anything corrupt or illegal in Alberta. They’re offering a service and governments are choosing to pay.
Quebec is the only province to use legislative muscle to limit the growth of contract nursing, with the national assembly unanimously passing a bill in 2023 to phase out publicly funded nursing contracts by the end of 2024 for major cities and the end of 2025 everywhere else.
Alberta’s government is keen on adopting Quebec’s combative approach towards the federal government.
If the UCP were serious about getting value for health-care expenditures or guarding against corruption, it would emulate Quebec’s approach and protect its public health-care system while banning profiteers.