DynaLife insolvent less than 90 days into contract for lab services, government documents show

When Alberta's United Conservative authorities contracted retired assemblage aesculapian laboratory investigating to a backstage institution successful December 2022, it said it would prevention tens of millions of dollars.

Two weeks earlier that declaration with DynaLife Medical Labs was acceptable to instrumentality effect, the institution told the state it needed further funding.

Less than 3 months later, DynaLife's owners said the institution was insolvent and needed an further $70 million. They soon asked the state to bargain DynaLife, which it yet did astatine a outgo of astir $100 million.

These revelations travel from documents obtained by CBC News done state of accusation requests, including Alberta Health emails and briefing notes prepared for Premier Danielle Smith and wellness ministers Jason Copping and Adriana LaGrange.

The documents capable a spread successful the nationalist communicative of what happened betwixt DynaLife taking connected assemblage laboratory services — specified arsenic collections of humor oregon urine for aesculapian tests — successful December 2022 and its acquisition by the authorities 9 months later.

Although accrued hold times and different issues played retired publicly, neither DynaLife oregon the authorities gave immoderate denotation of fiscal troubles.

"We person the payment of knowing however the communicative ends," said Fiona Clement, a prof successful assemblage wellness sciences astatine the University of Calgary who reviewed immoderate of the documents.

"But arsenic I was speechmaking through, I thought, it seems similar determination were tons of reddish flags astatine galore antithetic points on the mode here."

Documents picture insolvency

DynaLife was a large supplier of laboratory services successful Edmonton and bluish Alberta erstwhile the petition for proposals for the privatization declaration was issued successful December 2020.

Two companies were shortlisted: DynaLife and Australian steadfast Sonic Healthcare. Sonic aboriginal withdrew, according to the documents, "based connected timelines and Covid restrictions limiting travel."

In June 2021, DynaLife was selected. One twelvemonth later, the declaration had been finalized and was acceptable to instrumentality effect Dec. 5, 2022.

However, 2 weeks earlier that date, "concerns with the fiscal viability of DynaLife emerged," according to a briefing enactment prepared for the premier successful July 2023. The institution requested further backing "beyond the presumption of the contract. No ceremonial enactment was taken astatine this constituent arsenic the modulation was conscionable underway."

The handover of assemblage laboratory services from nationalist supplier Alberta Precision Laboratories (APL) to DynaLife was not smooth. Although the institution had operated successful Edmonton and bluish Alberta for years, it was recently establishing itself elsewhere successful the province.

In Calgary, laboratory hold times ballooned arsenic DynaLife struggled to negociate the measurement of tests. Based connected the documents, different problems were emerging down the scenes.

In precocious February 2023, DynaLife's owners — Labcorp, a ample American health-care company, and OMERS, a municipal worker pension program successful Ontario — "informally flagged fiscal concerns" astir the company, according to the briefing enactment to Smith.

That was followed by a ceremonial announcement connected March 1, 2023, notifying APL of DynaLife's insolvency position.

A March 30, 2023, email from lawman wellness curate Paul Wynnyk's main of unit to an AHS authoritative laid retired a summary of events.

It said the owners requested a one-time currency injection of $70 million, aft which DynaLife "met with the premier's bureau to sermon the situation."

Meetings betwixt AHS enactment and wellness curate Jason Copping produced a "consensus" that the petition should not beryllium granted.

The rationale, according to the briefing enactment prepared for the premier, was that DynaLife's explanations for its fiscal woes — peculiarly costs for pensions and wage parity betwixt its existing employees and those from APL — amounted to "issues that should person mostly been planned for by DynaLife."

A aboriginal briefing enactment for wellness curate LaGrange states that, successful summation to the one-time superior injection, DynaLife was requesting "a important ongoing summation to their yearly payment," which would destruct "all imaginable savings from the contract."

On March 10, 2023, APL informed DynaLife that the petition had been denied. Three months later, DynaLife's owners approached AHS requesting negotiations to extremity the declaration and merchantability DynaLife to AHS.

The 2023-24 AHS yearly study breaks down the fiscal details of the acquisition. The authorities paid $31.5 cardinal successful currency and took connected astir $66 cardinal successful assumed liabilities from DynaLife.

More questions than answers

CBC News sent a database of questions to Alberta Health, astir each of which were not addressed successful a connection from LaGrange's property secretary, Jessi Rampton.

"Access to laboratory services indispensable beryllium speedy and efficient, and astatine the time, DynaLife was not gathering these needs," said the statement. "The determination to displacement from DynaLife to APL has led to a important betterment successful hold times for laboratory services."

According to the province, hold times successful Calgary for walk-in and scheduled appointments person fallen 76 per cent since May 2023. Provincially, hold times for the adjacent disposable assignment decreased from an mean of 9 days successful 2023 to an mean of 4.3 days successful 2024.

Alberta Health did not reply galore questions from CBC News, including:

• How overmuch backing DynaLife requested successful November 2022, and whether it was granted by the province.
• Whether the state was alert of immoderate fiscal concerns regarding DynaLife during declaration negotiations.
• Whether this acquisition altered the government's presumption connected privatization of wellness care, and whether it would question to privatize laboratory services again successful the future.
   

OMERS, 1 of DynaLife's erstwhile owners, declined to reply a database of questions from CBC News. The different erstwhile owner, Labcorp, did not respond to aggregate requests for comment.

Alberta Auditor General Doug Wylie announced successful October 2023 that his bureau would analyse the procurement and contracting practices regarding DynaLife.

The study was expected to beryllium released successful aboriginal 2024. However, the Office of the Auditor General said past twelvemonth that the study was delayed owed to difficulties accessing accusation and scheduling interviews.

CBC News requested clarification connected these difficulties, including what they were and whether they person been resolved. The auditor general's bureau declined to remark beyond stating that it hopes to merchandise the study successful aboriginal summer.

Alberta Health did not respond to a question from CBC News astir whether oregon not the authorities has co-operated with Wylie's investigation.

Long history between DynaLife, province

The Alberta authorities had a agelong and analyzable past with DynaLife.

The institution had been providing laboratory services successful Edmonton and bluish Alberta for years erstwhile successful 2014 the Progressive Conservative authorities of Premier Jim Prentice awarded a $3-billion declaration to Sonic Healthcare, an Australian firm, to regenerate DynaLife and infirmary labs operated by AHS and Covenant Health.

DynaLife appealed that decision, but erstwhile the NDP came to powerfulness successful 2015, it cancelled the woody with Sonic.

The NDP past decided to bargain DynaLife, absorbing its for-profit operations into the nationalist sphere successful a program that was estimated to outgo $65 cardinal — astir $30 cardinal little than the UCP would wage successful 2023. The authorities besides planned a "superlab" successful Edmonton that would location each laboratory processing nether 1 roof.

But aft Jason Kenney's 2019 predetermination victory, his United Conservative Party authorities killed those plans and ordered a reappraisal of AHS to find efficiencies and outgo savings.

That study — completed by Ernst & Young successful 2020 — recommended that AHS "further leverage backstage contracts" for laboratory services "with an archetypal absorption connected community-based testing." It estimated that doing truthful could prevention up to $102 cardinal annually.

AHS aboriginal did its ain investigation and revised that estimation to betwixt $18 cardinal and $36 cardinal per year.

The report's proposal yet led to the DynaLife contract, and was cited galore times successful the Alberta Health documents.

DynaLife 'unable to deliver' connected requirements

The documents amusement that DynaLife struggled to conscionable the level of work required by the contract.

August 2023 briefing documents for lawman wellness curate Andre Tremblay and subordinate lawman curate Darren Hedley authorities that DynaLife "has been incapable to present connected their declaration requirements." The institution was "failing connected astir each cardinal show indicators" specified arsenic averages for diligent hold times, laboratory investigating times and proscription times.

The briefing documents enactment that the impacts of these failures were being felt chiefly successful areas that DynaLife did not antecedently run in, particularly Calgary.

The laboratory delays and "transport and handling errors" had resulted successful "the request for re-collections," the documents say.

"Clinicians person reported attraction with incorrect antibiotics arsenic a effect of important delays successful microbiology testing."

Alberta Health did not reply questions from CBC News astir these errors and incorrect attraction reports.

According to the briefing documents, the reasons DynaLife gave for its show failures included:

• Underestimating "the clip and effort to modulation services."
• Seeking to instantly statesman "optimizing workflows, destabilizing the system."
• Staff not being backfilled erstwhile disconnected for grooming connected Connect Care, the province's caller integer wellness records platform.
• "Unanticipated costs for labour parity," including an other bereavement time and the imaginable for a "higher than planned" leader pension contribution.

Labour issues

When assemblage laboratory services shifted to DynaLife successful 2022, truthful excessively did 1,300 workers from APL.

Employees astatine APL and DynaLife were represented by the aforesaid union, the Health Sciences Association of Alberta (HSAA), but had antithetic corporate bargaining agreements with their ain wage scales and pension plans.

The APL workers were paid much for the aforesaid jobs they would beryllium doing alongside DynaLife employees. But DynaLife resisted wage parity, which would mean matching that wage for its existing employees.

Under Alberta's Labour Relations Code, a institution receiving a transportation of employees is obliged to honour the existing corporate statement of those employees. However, DynaLife wanted to debar the disbursal of maintaining the APL employees' existing pension plans, offering enrolment successful a radical RRSP instead.

The quality ended up earlier the Alberta Labour Relations Board (ALRB), which denied DynaLife's petition to beryllium exempted from the ineligible request successful February 2023.

"DynaLife made an presumption ... that they didn't person to wage for the pension and they didn't person to lucifer the wages arsenic these workers were coming over. Well, lo and behold, we took a objection to that," said HSAA president Mike Parker.

The documents marque plain the government's stance that DynaLife ought to person foreseen these labour-related costs. The March 30, 2023, email from lawman curate Wynnyk's main of unit explained wherefore the authorities was denying the company's petition for a bailout of $70 million.

It said the petition for proposals required DynaLife to instrumentality connected each APL unit connected their existing terms, and that corporate agreements and pension accusation had been provided to the institution during the RFP process.

The email besides noted that the labour relations committee ruling "is accordant with the ALRB's past signifier and is not unusual."

Privatization qualms

Alberta Health told CBC News that the hold times for laboratory services person greatly improved since being brought backmost into the nationalist wellness system.

The July 2023 briefing enactment for Smith states: "While the determination to terminate was initiated by the owners, this whitethorn beryllium utilized arsenic an illustration of failed 'privatization' by immoderate nationalist involvement groups."

Clement, the University of Calgary professor, is skeptical of the thought that privatization leads to outgo savings.

"Any clip we're talking astir a antithetic supplier being capable to supply attraction much cheaply … than the nationalist health-care strategy that's already established, I deliberation a truly just question to inquire is, well, why?" she said.

Rebecca Graff-McRae, a researcher astatine the University of Alberta's Parkland Institute who authored a 2022 study examining privatization of Alberta's laboratory services, echoed that sentiment.

"DynaLife based their bid disconnected of the presumption that they could wage 1 radical of their workers less," she said.

Advocates for nationalist wellness attraction "have said for a agelong clip that if you physique a nett borderline into 1 of these contracts, you either person to chopped corners somewhere, you person to complaint more, you person to wage your workers less, oregon you person to present less," said Graff-McRae.

Public, employees kept successful the dark

Neither DynaLife nor the authorities ever gave immoderate nationalist denotation of the company's fiscal troubles. Notably, this play besides included a provincial predetermination connected May 29, 2023, wherever the UCP won re-election nether caller person Danielle Smith.

The March 30, 2023 email from lawman curate Wynnyk's main of unit to an AHS authoritative reflects the government's sensitivity to the insolvency concern arsenic a imaginable governmental issue.

It requests an update connected "what 'mitigation plan' AHS has successful spot should this declaration quality escalate, peculiarly fixed we are truthful adjacent to the election." No reply is included successful the documents CBC News received.

The July 2023 briefing enactment for Smith states that DynaLife employees, speech from leadership, had not been told of the situation.

Former DynaLife CEO Jason Pincock declined to talk with CBC News for this story, directing each questions to the Office of the Auditor General.

On April 18, 2023, weeks aft the state had been fixed ceremonial announcement of DynaLife's insolvency, Pincock appeared connected CBC Calgary's Calgary Eyeopener to code the ballooning hold times for laboratory services.

"It's a precise analyzable issue," helium said connected the program, "but we are precise committed to the Calgary region."