Insights (Essays)

Insights (Essays) October 2014

Ontario keeps its secrets as hospital labs may face more privatization

Rick Janson

The Ministry of Health has only promised to release a redacted version of a Deloitte report that may shape the future of lab services in Ontario. (Canstock Photo)

The Ontario government has been less than transparent when it comes to the future of its public medical laboratories.

A recent Deloitte Review of Ontario’s public lab system has been the subject of much discussion in the lab world. We’ve been told by those who have seen it that it sets the stage for the next phase of privatization within the sector. Not content to take volumes generated by community-based health care providers, the big laboratory companies are now seeking to siphon off more of the hospital work. One laboratory company – Lifelabs – represents about 70 per cent of all community lab work in the province.

Ontario is very selective about who it will let see the Deloitte report contrary to Premier Kathleen Wynne’s heartfelt election promises to be more transparent.

As the largest representative of laboratory professionals in the province, OPSEU sought the Deloitte report through a freedom of information access request earlier this year. We were told that the government had the right to withhold the report given “advice to government” was exempt from such requests. Early on in the process we were promised that a redacted version would be available pending an opportunity by an undisclosed third party to intervene. Months later we are still waiting.

Given the policy discussion the Deloitte report is generating behind closed doors, it’s time to let the public in. This is a critical piece of the health system that is being largely discussed in secret.

Kathleen Wynne likely has good reason to be worried about the light of day being shined on such discussions.

Private labs have been far from a success story.

With the increasing concentration of community-based lab services in the hands of one private company, it has also meant fewer access points for Ontarians.

The Ontario Coalition for Lab Reform – made up of smaller owner-operated labs, non-profit organizations, allied service groups and “concerned” professionals – issued a fact sheet last year stating nearly 180,000 Ontarians walked away from a private collection center in 2012 without having their test done.

The OCLR says that eight of 55 GTA official lab centers inspected last October were found to have left patients waiting up to two hours in overcrowded conditions. Three of those centers had other issues, including no disability access.

For those in more rural locations, the distance to travel to have samples taken has increased.

The frustration is that most of these communities have fully functioning labs close by at their public hospital. Most of these labs have closed the doors to testing ordered by community doctors outside the hospital.

When Ontario essentially created two parallel lab systems – public hospital and private community — many smaller communities complained that sending samples to distant labs would only delay results. Doctors also preferred to be able to contact their local hospital laboratory technologist if they had questions rather than be referred to a large central lab facility outside the community. Hospitals also made the case that community volumes would allow them to maintain 24-hour staffing and support testing that may not be otherwise feasible with only in-house volumes.

A pilot project was established by the Harris Tories in 1997 in which 12 rural and northern hospitals were given global funding to perform community-based testing, in some cases working in cooperation with a private lab collection facility. As the government increased rates paid for each test performed by a private lab, hospitals saw no additional funding for seven years despite increased costs and ballooning volumes.

By the time the project was evaluated in 2008, two hospitals had abandoned the project because their costs exceeded what the government was transferring in funding for community work.

The remaining 10 pilot hospitals were performing the tests at a cost well below that of the private sector according to a commissioned report prepared by RPO Management Consultants. Initially hospitals were given a discount rate – 85 per cent of what OHIP was paying for the private lab work. However, with the lengthy freeze and no consideration given to expanding volumes, that price gap widened. In 2005/06 average funding was $22 per community patient visit in the public hospital model, $33 in the private provincial model. That means the public hospitals were performing the same tests for two-thirds of the price paid to the private sector.

RPO tried to suggest the comparison was not fair given hospitals had overhead and capital reinvestment costs covered under their global funding. The Ministry vigorously denied to us that they were asking the public hospitals to subsidize this work. Nor would taking away these volumes save hospitals any money given they had to maintain these labs for in-house use.

So what was the government’s response? At first it said it would evaluate each individual project, but it wasn’t long before the community volumes were taken away from the public hospitals and given to the private sector. At Muskoka Algonquin Healthcare in Bracebridge and Huntsville, the lost volumes initially meant closure of the overnight lab shift at the hospital (it has since been restored).

Long before integration became the Ministry’s favorite word, a group of Ontario hospitals established In-Common Labs (ICL).

ICL is a not-for-profit brokerage that uses the hospitals excess lab capacity to perform testing for about 450 clients across Canada and the United States — about 90 per cent of these clients are in the public sector.

These additional volumes have returned about $100 million over the last eight years to ICL’s hospitals and it does so for about 25-30 per cent less than the price Ontario pays to the large private labs.

ICL once maintained public collection sites, but was forced to divest its last one in 2010.

Now the government is looking at increasing the rate paid to private labs to collect specimens in underserviced areas. We are told the recommendation in the secret Deloitte report is to double the present fee of $7.50 per person to $15 per person in these underserviced locations. ICL tells us that with they could operate at a discount to the current $7.50 cost. Not only that, ICL could open specimen collection centers in various Ontario communities in very short order.

If government were serious about addressing the bottleneck, they could re-open all hospital labs to the public and quickly establish more than 200 access sites – including many in underservices areas.

When Ontario decided to create parallel lab systems, the Ontario Hospital Association suggested that it had capacity to do it all.

Clearly the decision to hand over $700 million annually in medical laboratory tests to the private sector was motivated by something other than cost, efficiency, or quality. Without the Deloitte report we don’t know what is being said to possibly justify a further transfer of publicly funded lab work.

The new deputy Minister of Health says his goal is to make Ontario world-class in quality at the best possible price. If he truly means that, he needs to take another look at this. He also needs to open the discussion up to all stakeholders, not just the well-connected ones.

About the Author(s)

Rick Janson writes DiaBlogue, a project of the OPSEU Health Care Divisional Council. The Council represents more than 45,000 professional and support staff in Ontario’s Health Care System.


Reprinted with permission from DiaBlogue 


Be the first to comment on this!

Note: Please enter a display name. Your email address will not be publically displayed