Alberta’s auditor general estimates the government’s failed effort to privatize community lab testing services left taxpayers on the hook for about $109 million.
Auditor general Doug Wylie, in a report issued Wednesday after a multi-year investigation, said politicians pushed the deal forward, despite repeated warnings from bureaucrats the expected savings wouldn’t materialize.
He said existing procurement policy was largely ignored and there were failures with oversight, records management and financial analysis leading up to the signing of the deal with DynaLife, a private lab tester.
The 15-year deal, valued at about $4.8 billion, was signed in the spring of 2022, setting the stage for DynaLife to privatize lab testing services across Alberta. The company already operated community labs in Edmonton.
In a matter of months, wait lists ballooned and reports of testing errors emerged. The company requested additional funding so it could meet expectations, but was denied, leading it to ask that the contract be terminated.
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Auditor General review of DynaLife contract delayed as cost of failed lab privatization revealed
The province bought out the company in 2023 and returned lab testing to the public system under Alberta Precision Laboratories.
Wylie’s report pegged the buyout cost alone at $32 million including liabilities, while $77 million could be considered sunk costs.
The province initially expected to save $102 million through the endeavour, a figure derived from an Ernst and Young report the United Conservative Party commissioned to find ways to cut costs at Alberta Health Services, the provincial health authority at the time.
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Wylie’s report says the government directed AHS to move forward based on that report’s estimate.
Bureaucrats took that to mean “the decision to outsource had already been made,” and AHS skipped its own procurement policies requiring a business case to be developed and further financial analysis for such a major change.
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When AHS later did its own financial digging, the estimated savings started to tank. A calculation error was found in the Ernst and Young report, and AHS analysis pegged savings at around $18 million, with a maximum of $36 million.
But those savings would also be found by making the opposite decision and turning lab testing into a publicly operated service.
According to Wylie’s report, the health minister was briefed on the reduced savings but directed AHS to carry on.
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Alberta moves to de-privatize community lab tests in face of long waits, bottlenecks with Dynalife
Wylie found AHS raised further concerns when DynaLife was the only company to make it through the bidding process, but there was no change in direction.
After DynaLife was chosen as the preferred candidate and negotiations began, Wylie wrote, AHS determined — despite a faulty financial analysis that didn’t test saving assumptions presented by the company — that “even under the most optimistic assumptions, the costs under the proposed contract would be equivalent to current expenditures.”
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Again, the minister directed AHS to proceed, and the contract was signed.
Wylie, in an interview, said he had no reason to believe the government pushed ahead with outsourcing specifically to benefit DynaLife.
“Nothing came to my attention in that regard,” he said. “All I can do is give everyone the benefit of the doubt and view it from the perspective that I’m sure everyone was doing what they thought was in the best interest.”
Wylie said his investigation was somewhat hindered because some documents he requested were withheld or heavily redacted, including 1,200 that were completely redacted.
He said AHS and the government claimed legal and cabinet privilege over many documents, in some instances without clear reasoning.
Wylie also said some records his office requested were destroyed, including notebooks kept by a former chief executive officer of AHS fired in 2024.
His report says it’s not known what impact the redacted or missing documents had on his investigation or how they would’ve influenced what he reported.
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Alberta government resists calls for a public inquiry
The Ministry of Primary Health Care, in a statement Wednesday, said it couldn’t speak for AHS, but the government cooperated fully with the auditor’s investigation and “any suggestion to the contrary is incorrect.”
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It said that immediately following the 2023 provincial election, Premier Danielle Smith and Primary Health Care Minister Adriana LaGrange recognized DynaLife’s inability to deliver on its contract and took action, noting that wait times have improved in the two years since the contract was terminated.
“We will continue working to ensure Albertans have access to high-quality, dependable lab services across the province,” it said.
Wylie said he’s putting forward two basic recommendations for government: follow existing procedure and keep better records of decision-making.
The ministry did not address the recommendations in its statement.
Opposition NDP health critic Sarah Hoffman told reporters Wylie’s recommendations illustrate how unnecessary the whole situation was.
“The issue wasn’t government policy, the issue was interference and corruption and a government that cared more about moving privatization and being American-style in how they deliver health care than actually cared about patient well-being or the taxpayer,” Hoffman said.
© 2025 The Canadian Press
