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Lab industry in need of overhaul, say critics

Last Updated Dec 22, 2017 at 7:07 pm EDT

Smaller medical laboratories long locked out of the province’s multi-million dollar outsourcing deal to provide basic blood and urine tests say change is needed to update an overpriced and outdated system.

The sector is currently under provincial review for the first time in 18 years, leaving some labs jostling for an opening in what has been an industry historically controlled by two large privately-run companies.

Gerard Kennedy, CEO of Alpha Laboratories, says the system is currently operating as a legal laboratory cartel run by LifeLabs and DynaCare. The two companies have agreements to perform 90 per cent of community testing in Ontario.

“We’re 18 years working under a system that doesn’t put patients first,” Kennedy said. “And it’s been a decline, while slow year to year, it has been very significant.”

This month, Auditor General Bonnie Lysyk blasted the province for not promptly updating the nearly 20-year-old list of prices it pays private-sector community labs for tests, resulting in $39 million in overspending.

“At a time when the provincial health-care sector is being squeezed from all sides, savings of tens of millions of dollars a year could be used for other public services,” Lysyk said after her report was tabled.

From 2015 to 2016, LifeLabs received just over 63 per cent of all Ministry of Health funding for community labs, or $404 million, while Dynacare received more than 30 per cent, or $195 million, according to the AG.

In 2015-2016, the province spent about $2 billion to fund 260-million tests.

Since 1999, the Ministry of Health and Long-Term care has made no major updates to the list of prices it pays private-sector community labs to perform tests. Meanwhile, technological advances over the years have greatly reduced lab-testing costs.

What’s more, Kennedy, who is also a spokesperson for the Ontario Coalition for Lab Reform and former MPP, says the list of approved tests is also long out of date. He argues the $39 million in overspending could have been applied to include newer and more specialized tests being offered by labs across the province.

“There are people not getting the testing they deserve,” Kennedy said. “Everyone is not getting the testing they need. We haven’t had a new test in Ontario since 2000. Quebec has admitted 34 new tests in the last two years alone.”

Lysyk noted in her report that a consulting firm engaged by the Ministry of Health identified 16 medically necessary tests that are currently not funded by the Ontario government, although they are available in both British Columbia and Alberta.

Lifelabs did not return CityNews’ requests for comment. In a statement, DynaCare denied allegations of its cartel-like hold on the sector, saying it’s been leading the charge to modernize the system.

“Neither Dynacare nor any other laboratory has control over which tests are licensed in Ontario, whether government will pay for them or how much it will pay,” the statement reads. “The Government of Ontario maintains exclusive rights over all of these areas. We continually advocate introducing new and innovative laboratory, health and wellness services that meet the needs of Ontarians.”

Mark Nesbitt, spokesperson for the Ministry of Health, said in a statement the ministry is in the middle of modernizing the sector by updating list prices and undergoing consultations.

“While some community laboratories are of the opinion they should be able to offer more testing, the ministry is committed to identifying and reviewing new tests that will benefit patients and physicians,” Nesbitt said in a statement.

The Ministry is nearing the end of a nearly three-year process to update its community lab price list. The province is expected to have the new regulations in place sometime next year.