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Lessons from laundry privatization: Why freedom of information matters in the era of privatization

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A redacted copy of the K-Bro linens contract. All information related to price a

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Brad Wall is the latest premier to push a privatization agenda that is seeing public accountability and transparency take a back seat to corporate profits.

Everywhere privatization has occurred, public access to the facts and figures around privatization has been a challenge. Here in Saskatchewan, that challenge can been illustrated by the difficulty of getting information about the privatization of hospital laundry.

The cloak of secrecy was delt a major blow last week when the Saskatchewan Information and Privacy Commissioner recommended the disclosure of a 10-year contract for laundry services between K-Bro Linen Systems and 3sHealth. The Commissioner also recommended that the publicly-funded 3sHealth be brought under legislation as a health care organization and subsequently freedom of information laws.

In December 2013, Shared Services Saskatchewan, or 3sHealth, signed a 10-year contract for all hospital laundry services in the province with Alberta-based K-Bro Linen Systems Inc. 3sHealth claimed that shutting down six public regional laundry facilities and giving a 10-year deal to K-Bro Linen would save millions of dollars.

The decision to privatize hospital laundry services is a major restructuring of our health-care system. It means the loss of about 350 jobs in six communities and the loss of publicly-provided and local laundry services. University of Winnipeg economist, Hugh Grant, estimated a net loss in provincial income between $14 and $42 million over the next 10 years from laundry privatization.

The true costs of privatization cannot be verified because 3sHealth and the government of Saskatchewan have not disclosed critical financial information in the business case or its contract with the laundry monopoly. The full cost of the 10-year contract is not known but could be valued at $160 to $200 million and will be paid entirely by public dollars.

Disclosure is especially important in this case, since we're dealing with a 10-year contract in an industry notorious for cost overruns. The Hospital Employees Union in B.C. found that payments to two laundry corporations that hold the monopoly on service to health authorities in the Lower Mainland increased by a staggering 170 per cent over a seven-year period. Critics of the agreement with K-Bro in Saskatchewan have raised concerns about possible cost overruns because of unrealistic cost valuations.

For example, it is likely K-Bro won the laundry contract on the basis of its plans to pay poverty-level wages to workers. In 2013, the Saskatchewan Federation of Labour obtained a draft 10-year collective agreement proposed for K-Bro's plant in Regina with a starting wage rate of $10.75 an hour. What if K-Bro can't fill those jobs at such a low rate? Does K-Bro's contract with 3sHealth allow it to charge higher laundry service rates if it has to increase its wage bill?

What other built-in charges and costs are in the contract? These are critical questions that can only be answered with full public disclosure of the 10-year agreement. Both 3sHealth and K-Bro have fought every step of the way to prevent public access to their contract.

Freedom of information as a tool

Public access to documents through freedom of information legislation is critical to accountability and transparency. 

But privatization presents hurdles to public knowledge. In this case, 3sHealth and K-Bro Linen refused to publicly disclose the 10-year contract claiming the information was a "trade secret" and that its disclosure would cause economic harm.

In an attempt to get a public copy of the contract, CUPE filed numerous access to information requests to the Ministry of Health and five regional health authorities. 

The Ministry responded that "[t]he Ministry has performed a search for this record and has determined that this record does not exist within the Ministry of Health." Four of the health regions responded that "no record exists."

It is shocking that health regions who will have to monitor K-Bro's laundry services and pay the bills did not have a copy of the contract.

Only one health region felt it had a right to have a copy of the contract. Sunrise Health Region responded that the record contained third party information and that the record would be disclosed after consultation with the third parties (K-Bro and 3sHealth). The third parties, however, denied access to the contract. 

Both 3sHealth and K-Bro Linen refused to disclose the contract and made submissions to the Commissioner's office to prevent disclosure. Instead, they agreed to provide a redacted copy of the contract, which essentially blacked out any information related to price, charges and quality measurements. Not exactly a shining beacon of public transparency. 

Victory at the Privacy Commission

After months of back and forth, the Saskatchewan Information and Privacy Commissioner (IPC) has issued a long-awaited report on the Saskatchewan Ministry of Health's decision to withhold from the public important information related to privatization.

The Privacy Commissioner determined that the Sunrise Health Region has "control" over the K-Bro contract, signed by 3sHealth on behalf of all Regional Health Authorities, even though it did not possess a copy of the contract. They have reccommended that Sunrise release a full, unredacted copy of the contract. They have 30 days to comply or else the matter may end up in front of the courts. 

No more FOI exemption for 3sHealth

One of the issues with trying to get a copy of the contract is that 3sHealth is primarily responsible for negotiating and signing these contracts. As an arm's length organization, 3sHealth is exempt from freedom of information legislation -- even though it is directly funded by government and the regional health authorities.

This must change. 3sHealth plays a major role in the provision and restructuring of health-care services. 

CUPE is calling for 3sHealth to be included under freedom of information legislation -- a move in line with the report's recommendation that 3sHealth be made a "health care organization" under the Regional Health Services Act.

The public has the right to know the financial implications and true costs of this contract. Access to information is essential to any democracy, and we must continue to demand no less from our governments.

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