What’s the next move for Alberta health care?
We must learn from history or we could be doomed, Braden Manns writes.
The Herald recently reported the planned $8.4-million expansion of the Airdrie Urgent Care Centre was put on hold, and that the UCP was considering a third-party proposal from a local physician.
Speculation was rampant (though not as intense as the search for Kate Middleton), and Alberta Health confirmed that “renovations … are on hold while (it) evaluates a new proposal. Government is always looking for innovative ways to improve health-care delivery.”
The renovation is now back on, but Alberta Health says it is still considering Dr. Julian Kyne’s proposal, a partnership with Qualico Communities.
This proposal might not be too unusual — it’s possible that Qualico, a Calgary developer, would build the facility and lease it to AHS. This arrangement is called a private-public partnership (P3), which, despite experiences in other jurisdictions, Alberta seems keen to pursue.
The other possibility, which has only been hinted at, is that Premier Danielle Smith is looking to broaden private for-profit health care beyond continuing care, surgical clinics and labs. We know she wants to privatize health-care services, having written in a 2021 report: “The only way to make substantial and significant changes in the way programs are delivered is to allow contracting out, competition and choice.”
P3s are not new. They’ve been used to build schools and hospitals in Alberta. By partnering with private investors and contractors, provinces get infrastructure built that would not have been financially or politically feasible with the usual financing and contracting approach. While it locks governments into future payments, these payments don’t appear on the government’s balance sheet — as debt would —
A U.K. government report noted that P3s could be up to 40 per cent more expensive.
so annual budgets look rosier.
A P3 was used in Beaverlodge, which recently secured a new $170-million hospital, and is planned for part of the Red Deer hospital expansion. The buildings will be leased to AHS, but contractors aren’t charities. The lease payments will, over the life of the contract (30 years for Beaverlodge), be much higher than normal borrowing and building costs.
The U.K. used P3s a lot for a while. By 2015, nearly 25 per cent of its capital infrastructure projects were P3s. But on examination, serious problems were found: benefits are overestimated, costs are underestimated and project risk — meant to be put onto the private contractor — always ends up falling to the taxpayer.
When the U.K.’S second-largest construction firm, Carillion, went bankrupt, several P3 hospital projects were left in the lurch, needing a £375-million bailout. A U.K. government report noted that P3s could be up to 40 per cent more expensive, with little evidence that they delivered on promised operational efficiencies. The U.K. has changed direction on P3s.
Maybe we should take our learnings from what happened when Ontario aggressively pursued P3s, including for health-care facilities. In 2014, their auditor general reported on 74 P3 projects (around $23.5 billion in costs), finding that their use cost taxpayers an extra $8 billion compared with traditional government borrowing. Ouch.
Whether it’s a P3 or the rumoured private for-profit health facility, it would be nice if the government was more transparent so Albertans could be confident they are getting a good deal. It’s unclear why we think that lessons learned elsewhere don’t apply to Alberta. As Winston Churchill said in 1948, “Those that fail to learn from history are doomed to repeat it.”
It appears we may be doomed.
Alberta needs a long-term plan for health care, one that goes beyond the next two years, and it needs to use evidence and all of the tools that exist — how we pay and support family physicians, accountability agreements to ensure health-care systems achieve objectives, and maybe even contracting out — but please use it where it makes sense and has been shown to improve care and lower costs.
Braden Manns is a physician and professor of medicine at the University of Calgary where he holds a research chair in Health Economics. He was an interim vice-president for Alberta Health Services until he resigned on June 11, 2023.