Analysis of public data showing startling increases in the cost of outsourced surgical procedures in Alberta that cannot be explained by inflation or input costs seem to corroborate claims of contract irregularities made by fired Alberta Health Services (AHS) CEO Athana Mentzelopoulos, says a new report on for-profit surgical costs.
The report, Operation Profit: Private Surgical Contracts Deliver Higher Costs and Longer Waits, by B.C.-based health policy researcher Andrew Longhurst, points to a “sharp increase” in the unit cost paid by AHS to so-called “chartered surgical facilities” – that is, private surgical clinics contracted under the provincial Government’s Alberta Surgical Initiative.
The average cost of outsourced surgical procedures has soared by 79 per cent since 2019, when the United Conservative Party Government policy of contracting out private surgical services through the ASI began, says the report based on available public data.
“Between the 2022-23 and 2023-24 fiscal years, the average cost of an outsourced procedure rose by 52 per cent,” Longhurst wrote in the report released this morning by the Edmonton-based Parkland Institute. “This represents a significant acceleration in cost growth, as the previous year saw only a 13-per-cent increase.”
The big cost jump is likely the result of negotiated contract prices with private surgical providers being ratcheted up, he said. But the magnitude of the increase “cannot be explained by inflation or other reasonable hikes in input costs.”
“It is also unlikely that there was a change in CSFs performing more complex procedures that attracted a higher rate, since these facilities only perform routine, lower complexity procedures,” he added.
While the contracts negotiated by AHS with private operators are shrouded in secrecy, the report noted, the researcher cited The Globe and Mail’s February 21 report by journalists Carrie Tait and Alanna Smith, which showed hip, knee and shoulder procedure costs at for-profit CFSs “were 57 to 133 per cent more expensive than the same procedures performed in public hospitals.” The Alberta Surgical Group showed the largest premium.
“The findings of this Parkland Institute analysis appear to corroborate concerns about the potential irregularities identified by Mentzelopoulos, which may have led to her dismissal by the government,” the researcher concluded. (Just to be perfectly clear, Mentzelopoulos alleged in her statement of claim, which has not yet been examined by a court, that she was fired because she was trying to investigate the irregularities she says she found and intended to stop.)
The conclusions of Longhurst’s report, however, are much broader. Not only do the data show how for-profit surgical contracts in Alberta have shot upward, they indicate the ASI has resulted in longer wait times for critical surgeries and diverted limited pool of qualified surgeons and other medical staff from public hospitals at the same time as the government’s funding of public hospitals has declined.
This diversion is not a surprise. It happens wherever right-wing governments experiment with privatized surgical services.
But the report makes it clear that, by any measure, the UCP privatization program is doing the opposite of what the government claims and making almost everything worse.
Wait times: Since the start of the ASI, wait times have increased for nine of 11 procedures tracked by the respected Canadian Institute for Health Information, among them knee replacements and all cancer surgeries. Median wait times for colorectal cancer surgery in Alberta rose 8 per cent; wait times for lung cancer surgery soared 48 per cent.
Impact on Public Hospitals: “Public hospitals are being starved of staff and funding, while private providers receive inflated payments for the lowest complexity surgeries,” Longhurst said. Meanwhile, from 2013 to 2022, only three provinces reported declines in real per-capita public hospital spending. Alberta’s 13-per-cent drop was the biggest. “Provincial hospital expenditure as a share of GDP in Alberta declined from 2.2 per cent in 2013 to 2 per cent in 2022, making it the lowest in the country.”
Public subsidies for the private sector: Since the ASI began in the 2018-19 fiscal year, the report notes, “public payments to for-profit facilities increased by 225 per cent.” But the ASI, it concluded, has “simply shifted surgical activity to for-profit facilities at the expense of public hospitals.”
Surgical activity: Over five years, the Alberta Government’s payments of $154 million to for-profit operators only added 16,493 procedures to the system.
“Albertans deserve accountability and transparency in how their health-care dollars are spent, Longhurst concluded. His report calls for a full public inquiry with the ability to summon witnesses to testify under oath.
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