Is there anyone left in the PC government with a lick of common sense?
Last week the NDP revealed that the government intends to outsource lab services to a private corporation and has initiated a Request for Proposal (RFP) process to award a $3 billion, 15 years contract to a single provider.
Leaving aside the utter lack of consultation—sorry Minister Horne, making a phone call to AHS in the morning and announcing to the Legislature that afternoon that 90 pathologists who are employed by AHS are fine with the project is not consultation—the business rationale for this project is non-existent.
A $3 billion Super Lab is a massive project on the scale of TCPL’s Keystone XL pipeline and Enbridge’s Northern Gateway pipeline. How would a board of directors in the private sector evaluate such a proposal? They’d demand a business case that would provide answers to the following questions:
Is there a shortage of lab service facilities? Minister Horne says Alberta’s population growth is driving a 6% increase in the demand for lab tests. This can’t be correct. A 6% population growth equates to an addition 240,000 people. Last year the population grew by 136,000. The average age of the newbies was 36 (which usually means less demand on health services, not more). So population growth alone is not causing the 6% increase in demand.
What’s driving the increased demand? Can it be met by other means? Who knows. Minister Horne will provide nothing but crumbs of information about this project and then only if pressed.
Has the government considered cheaper incremental additions to existing labs? Apparently not. It’s determined to saddle the Alberta taxpayer with a financial burden that equates to one-half of the $ 6 billion Bitumen Bubble deficit.
If the Super Lab is required, should it be publicly or privately built, owned and operated? Private corporations survive only if they grow. This means the Super Lab will strive to increase demand (and drain the public purse) from the day it opens its doors. Is this the right financial solution?
If the Super Lab is best realized by the private sector, should the contract go to a single provider and must the term of the contract run for 15 years? Smart corporations resist binding themselves to a sole-supplier long-term contract for fear that they’ll be trapped if the contractor provides sub-par service, goes bankrupt, etc. They might sign such a contract if it is extremely lucrative and contains off-ramps to let them terminate if things go pear shaped. Does Minister Horne’s RFP and precedent agreement include these terms? Once again Minister Horne isn’t saying.
If a sole-provider long-term contract is necessary, how on earth did LabCorp make it to the short list? The government pre-qualified three suppliers. One is LabCorp. LabCorp, a US company, billed US Medicare $187 million for unnecessary blood tests and was caught making $49.5 million in false claims to California state medicare.* A smart corporation would never allow a bidder with this track record on to the bidders list.
The Super Lab proposal illustrates the government’s gross incompetence at (1) figuring out whether a problem exists, (2) building a business case to come up with the right solution if indeed there is a problem, (3) consulting with all of the stakeholders prior to committing to billions of dollars of debt and (4) running a competent RFP process.
In the immortal words of Desi Arnaz: “Freddie you got a lot of ‘splaining to do!”
*Hansard, Oct 30, 2013