Alberta Health Services review says province could save up to $1.9 billion through reforms, but conditions apply

By Catherine Griwkowsky February 4, 2020

A review of Alberta Health Services (AHS) released Monday says the province could dramatically decrease its health-care spending if it reconfigures hospitals, reforms clinical services and overhauls how it compensates health-care providers.

The review, conducted by Ernst and Young (EY), proposed 57 recommendations for improvement and 72 money-saving measures.

Among the big ticket recommendations in the report is the potential for the province to save up to $146 million by outsourcing housekeeping, laundry, non-emergency transportation and food services in hospitals, and up to $100 million is proposed in savings by reducing the number of procedures that lack “clinical value,” such as hernia surgeries.

However, Health Minister Tyler Shandro immediately rejected two of the reports recommendations: closing some rural hospitals and consolidating urban trauma centres.

Shandro is giving the AHS superboard until May 13, or 100 days, to deliver a report on implementing recommendations from the $2-million review. The report must address plans for outsourcing contracts to the private sector, reducing compensation for frontline workers and reconfiguring underutilized hospitals. 

Achieving $1.9B in savings is a stretch goal
John Bethel
, national health-care leader with EY, cautioned that while the recommendations have a gross potential savings of $1.5 to $1.9 billion, those numbers are not likely to be achieved.

In order to reach $1.9 billion in savings, all of the review’s recommendations would have to be implemented immediately. The extensive costs associated with implementing the proposed changes are not factored into the projection. 

On the revenue side, the review suggests the province could offset some health-care costs by charging more for private hospital rooms and allowing advertisements in public health facilities. 

Hospital ‘reconfiguration’ 
Alberta currently has 83 community hospitals, and according to EY, 36 do not meet the threshold for sustainability while five should be considered for closure.

The report suggests converting underutilized hospitals in rural areas into long-term care homes or urgent care centres.

When asked for specifics about reconfiguring hospitals, Shandro told reporters those decisions would be up to AHS.

Contracting out services
The report recommends several privatization initiatives, including outsourcing and the potential sell-off of Capital Care and CareWest.

NDP Health critic David Shepherd said the devil will be in the details of implementation. He noted some of the recommendations were already underway under the former NDP government, but said others are cause for alarm.

“There is some language that’s concerning when it comes to recommendations — ‘optimize staffing levels’ and ‘work with independent partners’,” Shepherd said. “There are references to alternative delivery models, which is classic conservative language for job losses and wage cuts, which could particularly hurt rural Alberta.”

Recommendations from EY include outsourcing lab testing and health information management.

Shandro declined to confirm whether job losses in the health-care sector were on the horizon, saying this aspect of the reform would be addressed once the AHS determines its implementation plan.

Unions, public health advocates weigh in
Shandro was not shy about the government’s plan to bring forward arguments made in the EY report to the bargaining table as its negotiations continue with various health-care unions, a similar strategy to the one employed by the UCP following the release of the MacKinnon report. 

United Nurses of Alberta president Heather Smith said the release of the review was akin to the government negotiating in public.

“Cherry-picking health care pay and trying to use that as a club in bargaining to make nurses and other front-line health-care providers alone pay for big cuts the government hopes to make is unjust and certainly won’t impress our members, the majority of whom are women,” she said.

Alberta Union of Provincial Employees (AUPE) vice-president Susan Slade said cost cutting doesn’t work in health care, where decisions are a matter of life and death.

“AHS is planning on laying off thousands of front-line health-care workers starting in April. This year alone, Alberta is expected to grow by 70,000 people. That’s about the size of Medicine Hat. Who’s going to care for all those people?” Slade said in a news release. 

Public Interest Alberta executive director Joel French said seniors will be forced to pay for health services out-of-pocket if the province adopts a recommendation to move 1,300 patients from long-term care beds to designated supportive living, where they will lose coverage for pharmaceuticals, medical supplies and medical equipment that are covered by the public system.

French also contended the potential privatization of Capital Care and Carewest would mean reduced accountability, transparency and quality of care.

Alberta Federation of Labour president Gil McGowan accused the government of using a third-party review to justify “deep cuts” and an agenda of privatization.

“When they went to the polls last year, Albertans didn’t vote for Jason Kenney to wage an ideological attack on their public health care, yet that is exactly what the UCP is now delivering,” McGowan said, noting the premier’s much-touted “health care guarantee.”