Auditor general slams Alberta’s handling of DynaLife, says taxpayers lost over $100M

Alberta’s Auditor General has released a sharply critical report on the province’s short-lived experiment with DynaLife, the private provider of community lab services.

In a 48-page limited review, Auditor General Doug Wylie outlines a series of costly missteps in the transfer of services to DynaLife, saying the failed effort cost taxpayers around $109 million.

The report notes that Alberta Health Services (AHS) blocked some of the Auditor General’s requests for information, but even with limited access, Wylie identified significant concerns.

Among the findings was a lack of due diligence in the transfer of services, poor risk assessment by AHS, and the decision to proceed despite knowing the main objective of saving money was unlikely to be achieved.

The report points to then-health minister Adriana LaGrange as having pressed for the move, with her department accused of undermining AHS in the process.

In the spring of 2022, the Alberta government signed a 15-year contract with DynaLife to fully privatize lab testing services in the province. Less than a year after the transition, the province bought out DynaLife in a multi-million dollar deal that returned the lab contract to Alberta Precision Labs (APL), which is part of AHS.

At that time, LaGrange admitted there were problems. She was tasked with fixing lab service delays in her mandate letter from the premier following the spring 2023 election.

A memorandum of understanding between DynaLife and the province co-ordinated a transfer of staff, property, and equipment by the end of 2023.

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.

“In 2023, immediately following the general election and the appointment of Minister LaGrange as Minister of Health, Premier Smith and the Minister identified DynaLife’s inability to provide adequate service for Albertans,” reads a statement from the Ministry of Primary and Preventative Health Services to CityNews.

“Although we cannot speak for the conduct of Alberta Health Services in this matter, the government did, in fact, cooperate fully with the auditor general’s investigation and any suggestion to the contrary is incorrect.”

In his recommendations, Wylie urged the government to adhere to its own safeguards designed to protect public funds and to ensure that major changes are properly documented.

Health policy analyst Lorian Hardcastle calls the saga a cautionary tale amid ongoing health care changes in the province.

“We find out yesterday that we are forging ahead with allowing physicians to work in both systems,” she says, referencing the government’s plan to introduce legislation to let doctors choose to work in the public and private health systems simultaneously. “Again, we’re not doing so in a way, putting regulations in place, to protect the public system.”

Auditor general tasked with examining failed privatization

Shortly after the news Alberta was abandoning its contract with DynaLife the auditor general was selected to investigate what went wrong.

Doug Wylie’s report was initially supposed to be made public in early 2024.

He has also been looking into the healthcare contracting scandal.

Ousted AHS CEO Athana Mentzelopoulos filed a wrongful dismissal lawsuit earlier this year, alleging she was fired for raising the alarm on health contract procurement. The government has denied these allegations, saying she was fired because she wasn’t sufficiently performing her duties.

A government-commissioned report found no evidence of wrongful interference from Premier Danielle Smith, her ministers or staff.

In early November, the province said it wouldn’t be renewing Wylie’s contract; his eight-year term is set to expire in April. He had offered to stay an extra two years to finish what he started, but the government didn’t take him up on that proposal.

The Opposition NDP has accused the government of pushing Wylie out before he’s able to complete his current work.

Wylie’s office is also looking into the restructuring of the province’s healthcare system and conducting an audit of the government’s books. However, he has asked for an additional $977,000 to complete that work.

That request was deferred by the government until Wylie submits budget information in December.

With files from The Canadian Press