Bad blood

A cautionary tale: How private lab companies came to dominate medical testing in Ontario

Ross Sutherland speaks to the final gathering of the Friends of Prince Edward County Memorial Hospital

Make a fist and let go,” says the phlebotomist, “this won’t hurt a bit.”With these words thousands of lab technicians draw blood for a variety of medical tests each and every day in Ontario.

For Ross Sutherland, the big business of community labs is serving people poorly and robbing the health care system of precious resources. More worrisome, he says, private lab corporations offer a warning of what happens when universal health care and the single- payer system is mixed with for-profit organizations.

Sutherland is a registered nurse and holds a master’s degree in political economy. Sutherland currently works at the Street Health Centre in Kingston. He has penned a book, False Positive, in which he seeks to expose how things went so badly wrong when the provincial government enabled private companies to take over medical labs and testing in this province.

He spoke to the final gathering of the Friends of Health Care in Prince Edward County last Thursday. He noted the challenges this community has endured with lineups, short hours and general indifference demonstrated by MDS, and now LifeLabs, at the blood and specimen collection facility at the medical clinic in Picton.

He is not hopeful for change until the fundamental way in which community labs are owned and operated is changed.

Sutherland traces the problem back to the inception of Medicare with the introduction of the single payer. Until then, family doctors paid for blood and specimen tests and passed these costs on to their patients. Doctors were careful to order only the tests that seemed necessary, to manage costs for themselves and their patients.

But with the introduction of the single payer—universal health care in the 1960s—this constraint was removed. Doctors could order as many tests as they wanted. The small community labs suddenly became quite lucrative. As the sector grew, a wave of consolidation reduced hundreds of firms to just a handful; today three firms—Life Labs, Gamma-Dyancare and CML Healthcare control more than 90 per cent of the commercial lab business in Ontario.

Hospital labs had always operated apart from their community counterparts serving the needs of the doctors.

In response to the changed landscape, many of these hospital labs formed non-profit community lab services facilities to better use their facilities and provide an additional revenue stream to the hospitals.

But as the private sector labs grew, so did their influence with the government.

Sutherland argues that with collusion from doctors at the time, the private lab operators were able to convince the government that they couldn’t compete on a level playing field with the hospital- based labs.

The province decided that Hospital In-Common Laboratories (HICL), as hospital-based community lab services were known, would be reimbursed at 75 per cent of the rate of private labs.

Despite the handicap several HICLs survived and even thrived. The cost of medical testing, however, was soaring. In an attempt to rein in costs the province introduced limits on the private lab corporations. In exchange for this concession the government agreed to phase out the HICLs—clearing another competitor from the marketplace. The private labs argued that they employed 15,000 people and that these jobs had to be protected.

Sutherland argues that the Mike Harris government caved into the powerful lobby—in effect killing a much lower cost system of blood and specimen collection and testing.

Currently the province spends more than $600 million on lab testing services to private corporations. It is the highest penetration of private companies in the lab business in Canada.

Sutherland warns the labs experience in Ontario provides a useful caution against further integration of private service providers into the single payer health system we use in this country.

“It’s a slippery slope,” said Sutherland. “Once the door is opened it becomes very difficult to close it again.”