Alberta Health erv�c

April 30, 2014

File: 2013-G-0391

Re: Freedom of Information and Protection of Privacy Act Request Response to Access Request

I am responding to your request of November 22, 2013 for all direction given in relation to the project known as the "proposed privatized $3-billion Edmonton medical superlab", including direction from the Minister of Health and Wellness, Legal and Privacy, CPSM and Executives and Managers at AHS. Additionally, you have requested the business case and the briefing notes for the project. We had an opportunity to discuss your request with you via telephone on December 9, 2013 when we agreed that your request would no longer include the direction given by Legal and Privacy in relation to the project.

A copy of the records is enclosed. Some of the records you requested contain information that is withheld from disclosure under sections 24(1 )(a)(d) and 25(1 )(c)(iii) of the Act. We have severed the excepted information so that we could disclose to you the remaining information in the records. A photocopy of the detailed sections of the Act is included for your reference.

Should you have any questions or concerns, please feel free to contact me, quoting the file number above, at 780-643-4605.

Section 65 of the Freedom of Information and Protection of Privacy Act provides you with the right to ask the Information and Privacy Commissioner to review any matter related to this request for information. You have 60 days from the receipt of this notice to request a review by writing to the Information and Privacy Commissioner, 410, 9925- 109 Street, Edmonton, AB, T5K 2J8. If you wish to request a review, please provide the Office of the Information and Privacy Commissioner with the following information:

1. The reference number quoted at the top of this notice. 2. A copy of this letter. 3. A copy of your original request for information that you sent to Alberta Health Services.

Legal & Privacy - Information & Privacy Suite 1220, 10405 Jasper Avenue, Edmonton AB T5J 3N4 Fax: 780-643-4559

www.albertahealthservices.ca

Yours truly, Alberta Health Services

�).J� Derek Wojtas Information & Privacy Coordinator FOIP & HIA Access Services

Enclosures: 108 pages

FREEDOM OF INFORMATION AND PROTECTION OF PRIVACY ACT RSA 2000

Advice from officials

Division 2 Exceptions to Disclosure

Chapter F-25

24( I) The head of a public body may refuse to disclose information to an applicant if the disclosure could reasonably be expected to reveal

(a) advice, proposals, recommendations, analyses or policy options developed by or for a public body or a member of the Executive Council,

(d) plans relating to the management of personnel or the administration of a public body that have not yet been implemented,

Disclosure harmful to economic and other interests of a public body

25(1) The head of a public body may refuse to disclose information to an applicant if the disclosure could reasonably be expected to harm the economic interest of a public body or the Government of Alberta or the ability of the Government to manage the economy, including the following information:

(c) information the disclosure of which could reasonably be expected to

(i) result in financial loss to,

(ii) prejudice the competitive position of, or

(iii) interfere with contractual or other negotiations of,

the Government of Alberta or a public body;

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APPL CANT COPY Executive Committee Meeting

II •

Alberta Health Services

Approved I Noted: February 19, 2013 Item 190213-14

Dr. Chris Eagle, President & CEO

BRIEFING NOTE Date:

Comments/Questions/Conditions:

Date: February 11, 2013

Title: Laboratory Services Procurement Update

Issue:

A global scan of potential clinical lab service providers for AHS's North Hub operation is complete. Seven high potential providers have been shortlisted and will be included in a non­binding indicative offer (NBIO) process to arrive at a final list of qualified vendors.

Recommendation:

This update be received by Executive Committee for information and feedback.

Key Messages:

• To ensure continued quality lab service beyond March 31,2015 (expiration of the existing Dynalifeox. Lab Services contract) and to support the new delivery model for Lab Services, a very detailed market assessment of laboratory service providers was completed by Boston Consulting Group (BCG) identifying six high potential suppliers. AHS completed an internal review of scoring to arrive at a final shortlist of seven potential providers: Quest (US), LabCorp (US), Sonic (Austrailia), Gamma Dynacare (Canada), LifeLabs (Canada), Dynalifeox (Canada) and CML Healthcare (Canada). Mandatory eligibility requirements and evaluation criteria are included in the attached slide deck for reference (Attachment 1 ).

• Dynalifeox. the incumbent service provider, is a joint venture between LifeLabs (owners Borealis) and Gamma Dynacare (owners LabCorp). We are uncertain about the bidding strategy of the related firms all having made the shortlist, therefore all will be invited to submit a bid.

• A request for information (RFI), that may include a non-binding indicative offer (NBIO), outlining the key terms of the engagement, including the investment of capital to develop and operate a new high volume high performance lab facility in Edmonton, will be finalized by February 28 and released to the shortlisted Vendors no later than the first week of March. Vendors will be given a month for initial responses, expecting an additional 3 months for the due diligence prior to initiating negotiations with the preferred vendor.

• Current cost to provide Laboratory Services in the Central, Edmonton and North Zones (North Hub catchment area) is $300M per year including AHS operations and contract with health service providers

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• Proposed term of the contract, given the initial required capital outlay, would be 15-20 years with appropriate exit provisions ..

• The procurement process outlined above is in accordance with the AHS contracting policies and applicable trade legislation. A Fairness Monitor has been engaged to oversee and provide expert advice during the entire procurement and contracting phase.

Background and Current Situation:

• AHS Laboratory Services has undertaken an exercise to determine the optimum Lab Services delivery model to address the need to have an efficient, high quality fully leveraged laboratory service capability for the long term.

• A public private dual hub and spoke model was presented to AFC June 2012. AFC was supportive of this direction and approved AHS Lab Services to proceed with the North Hub Lab procurement process and continued consultation and engagement on the model design.

• Key procurement project milestones include: • Market Assessment to identify viable Lab Services Providers ready and qualified/capable

of providing the necessary scope of services at the required levels of performance, quality and accreditation within the required timeframe for service readiness. Complete

• Formal Assessment of specific target market by AHS - to validate Market Assessment findings and seek a special Proposal(s) from the potential Providers(s) for the delivery of lab services. Target vendor responses by March 31, due diligence June 30.

• Initiate negotiations with the final two or three clinical lab service providers. • Implementation and transition of services to new Lab Services Agreement

Note: given the aggressive timelines of the procurement process, we may need to extend the existing contract for laboratory services for one year under the current terms and conditions.

• Laboratory model design is progressing concurrent to the procurement work and is required to build out the RFI/NBIO. A medical subcommittee of the of the Lab Model Design team is actively meeting to:

• Evaluate and recommend the medical governance, accountability and reporting structure within the new laboratory model

• Advise on administrative structure and shared supports within AHS • Advise on clinical delivery requirements • Define required supports for clinical research and teaching • Be available for consultation, on an as-needed basis, to administrative officers

responsible for contract negotiations • Advise on communications and change management strategies.

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Risk Management Considerations: s.24( I )(a)

Category I Description Likelihood Mitigation Action or Verified by Tactics (Name &

Severity Position)

Quality & Medium Patient Likelihood Safety

High Severity

Policy, A hub and spoke model Medium External represents a change in how Likelihood Environment Laboratory Services are & Public provided.

Medium Confidence

Severity

I Medium Likelihood

Medium Severity

Human Trained Laboratory Services Low (HR Staff) Capital resources are in high demand Likelihood

within the province;

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s.24( 1 )(a)

Category Description Likelihood Mitigation Action or Verified by Tactics (Name &

Severity Position) High Severity

Low Likelihood

High Severity

Low Likelihood

Medium Severity

Infrastructure Under the new agreement, a Low (IT/Facilities lab facility is required. Any Likelihood Staff) Laboratory Services provider (of inability must have the ability to to continue establish a state of the art care) laboratory facility in the Edmonton area within appropriate geographic proximity to service the community collection sites and hospitals by 2017. In the absence of a facility quality of

Medium services and patient safety could be compromised. Severity

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s.24(1)(a)

Category Description Likelihood Mitigation Action or Verified by Tactics (Name &

Severity Position)

Information used and held by Low the Laboratory Services Likelihood provider includes sensitive and confidential health information and personal information of Albertans which must be protected

AHS also requires a Medium Severity

Laboratory Services provider who is able to provide information technology and information management support to advance the province's long-term innovation agenda in health care information.

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s.24(1)(a)

Category Description Likelihood Mitigation Action or Verified by Tactics (Name &

Severity Position)

Finance High (Finance Likelihood Staff) (that costs will increase over time)

Medium Severity (with measures to constrain cost- i.e. demand utilization)

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s.24(1)(a)

Category Description Likelihood Mitigation Action or Verified by Tactics (Name &

Severity Position)

Medium Likelihood

High Severity

I Engagement:

Engagement Status What has been What is planned? achieved to date?

Internal 1. Lab Model Design • Prioritization of • Ongoing advice on potential Team subcommittee work contract framework (P3)

• Review and advice on • Subcommittee oversight the market assessment work to date and potential contract structures

2. Design Team • Agreement on Dual • Clear definition of Medical Sub Hub and Spoke Model medical/scientific roles and Committee • Initial review of responsibilities within the

potential new model Medical/ Scientific • Clearly define the Structure governance structure

Human Resources Labor Relations has been Link in HR on appropriate fully briefed on the new lab design subcommittees and delivery model negotiation strategy

development. Communications Communications are

participating on the procurement process working group

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APPLICANT COPY

Lab Medical and Update Participation on and regular Administrative Leads communication from the

design subcommittees External UofA and UofC • Discussion occurred

prior to presenting the model to AFC in June.

• Represented on both the Design T earn and the Design T earn Medical Subcommittee.

Alberta Health Preliminary discussion with Identified need for a P3 expert AH: Bill Trafford and Chris on the Deal team. Eagle. Recommend this knowledge

base come from GoA. C M O H advised of the Other TB D process and the intent to keep Prov Lab out of scope.

Covenant Represented on the Design Have requested a presentation Team to their S LT and Board:

Outstanding

Clinicians Local and professional consultations by the design teams TBD.

Communications Plan: Colleen Turner, VP Communications is participating on the procurement working group. A detailed communication plan is developed and communications planned as milestones are reached.. The following communications have been released to date:

• Communication BN to AH outlining the proposed laboratory procurement process: November 23, 2012

• Market assessment notification to vendors, including mandatory eligibility requirements: January 30, 2013

• Memorandum of procurement process to AHS Senior Leadership and Lab Staff: January 29,2013

• Informal notification of procurement process to HSAA and AUPE: January 29, 2013.

Compliance with Policy: Process is compliance to applicable AHS policies.

Next Steps if Approved: 1. Finalize the framework of the RFI/NBIO for release to the seven shortlisted providers:

o Type and scope of contract o Risk allocation o Price and service regulation o Governance

2. Pull together the Deal Team. In addition to Bill Trafford, Jitendra Prasad, Kevin Gault and Tammy Hofer, a P3 expert and experience financial resource will be required to support the bid analysis and negotiations.

3. Bid analysis

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APPLICANT COPY

4. Finalize negotiation strategy and begin negotiations

Individual Accountable: Tammy Hofer, VP Lab Services Jitendra Prasad, SVP, Contracts Procurement and Supply Chain Management

Legal Services Review: The processes and procedures are in compliance with applicable laws, regulations and trade agreements in force in Alberta and the federal laws of Canada as applicable.

PREPARED BY:

Name: Tammy Hofer, VP Lab Services

EXECUTIVE COMMITTEE MEMBER SPONSOR:

Name: Bill Trafford, EVP & COO

LEGAL & PRIVACY REVIEW:

Name: Kevin Gault, Legal Counsel

COMMUNICATIONS REVIEW

Name: Colleen Turner, VP Communications

Attachment(s): 1. Select slides from the Market Assessment 2. Select slides from the Demand Forecast

Confidential Ne for Circulation 9

APPLICANT COPY

Agenda

14. Laborato� Services Procurement U12date - B. Trafford • B. Trafford provided an update on the market

assessment conducted by Boston Consulting Group (BCG). Updated information provided.

• Current goal is to have a preferred vendor

identified within four months.

c-· Consent Agenda

Executive Committee- Meeting Minutes- February 19, 2013 Executive Committee Advice only - not for dl,tBbutlon

I

Action

Non-Responsive

Action

Non-Responsive

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3

Alberta Health Services

APPLICANT COPY

Approved I Noted:

Executive Committee Meeting April30, 2013 Item 300413-04

BRIEFING NOTE Dr. Chris Eagle, President and CEO

Date:

Comments/Questions/Conditions:

Date: April 25"', 2013 Title: Laboratory Services Procurement Update

Issue: The procurement process for a private laboratory services provider was Initiated on Monday April 8111 2013 with the release of a Request for Expression of Interest (RFEOI) to seven short listed providers.

Recommendation: s.24( I )(a)

Key Messages:

• •

•

•

•

•

•

A progress update briefing note (attached) will be submitted to Alberta Health following this EC update . This may be in person with the Minister and Deputy Minister or through Joint Executive Committee.

Following a comprehensive market assessment, seven laboratory services providers have been short listed as high potential suppliers to meet the future needs of AHS.

An RFEOI outlinin� the key terms of the service requirements was released to the seven short listed suppliers on April 8 2013.

DynaUfe Dx & CML Healthcare submitted interest in the RFEOI. The DynaUfe Dx partners (Labcorp, Lifelabs and Gamma Dynacare) opted to bid through the Dynalife Dx joint venture: Sonic Healthcare declined interest in the RFEOI. A personal follow up with Sonic will be conducted to better understand lack of interest.

Quest Diagnostics has expressed Interest but for legitimate reasons was unable to respond immediately . RFEOI will be extended to accommodate them as they are highly credible.

Notification to pursue a 1-2 year contract extension was sent to Dynallfe on March 21 81 2013. This extension will ensure adequate time to transition services should the incumbent not be the preferred vendor. Negotiations will begin on May 2nd 2013.

Lab model design continues concurrent to the procurement process. Sub committees of the design team continue to plan the required medical structure, support for academics, teaching and research, governance and regulation within the new model, human resource strategies, and the Provincial Lab for Public Health Mandate.

Confidential Not for Circulation 1 1 1

APPLICANT COPY

Background and Current Situation:

• AHS Laboratory Services has undertaken an exercise to determine the optimum Lab Services delivery model. A public private dual hub and spoke model was presented to AFC June 2012. AFC was supportive of this direction. A well planned procurement process has been developed to secure the prtvate north hub vendor.

• Key procurement project milestones include: • Market Assessment to identify viable Lab Services Providers Complete • Formal Assessment of target market by AHS to validate Market Assessment Complete • Forecast Demand & Financial Costing for North Hub model Complete • Initiate Negotiations with existing supplier on extension/transition May 2nd • Release of RFEOI to seven shortllsted suppliers Complete • Vendor conference and information session Complete • Evaluate RFEOI to limit RFP list to a maximum of three suppliers Planning May 2013 • Release directed RFP to three suppliers Planning June 2013 • AHS due diligence process and final negotiations with two suppliers

Up to September 30111

Communications Plan: Colleen Turner, VP Communications is participating on the procurement working group. A detailed communication plan is developed and communications planned as milestones are reached. The following communications have been released to date:

• Communication BN to AH outlining the proposed laboratory procurement process: November 23, 2012 • Market assessment notification to vendors, including mandatory eligibility requirements: January 30,

2013 • Memorandum of procurement process to AHS Senior Leadership and Lab Staff: January 29, 2013 • Informal notification of procurement process to HSM and AUPE: January 29, 2013. • Communication BN to AH to provide an update on the procurement process: Apr112013

Compliance with Policy: Process Is compliance to applicable AHS policies.

Individual Accountable: Tammy Hofer, VP Lab Services Jitendra Prasad, SVP, Contracts Procurement and Supply Chain Management

Legal Services Review: The processes and procedures are In compliance with applicable laws, regulations and trade agreements In force in Alberta and the federal laws of Canada as applicable.

PREPARED BY:

Name: Tammy Hofer, VP Lab Services

EXECUTIVE COMMITTEE MEMBER SPONSOR:

Name: Bill Trafford, EVP & COO

LEGAL & PRIVACY REVIEW:

Name: Kevin Gault, Legal Counsel

COMMUNICATIONS REVIEW

Name: Colleen Turner, VP Communications

Confidential Not for Circulation

1 2 2

Alberta Health Services

APPLICANT COPY

Executive Committee Meeting April30, 2013 Item 300413-04 {att.)

Briefing Note and Key Messages

Laboratory Service Delivery for Northern Alberta

Date: April 161h, 2013

Issue: Alberta Health Services (AHS) is seeking to establish a new "hub and spoke" delivery model for laboratory services in conjunction with the 2015 expiration of the Dyna LIFE Dx (DL) contract for laboratory services. This model is designed to ensure quality and cost of this essential service is sustainable over the long­term.

A new, privately owned, state of the art central facility ("hub") will be constructed in Edmonton with the private partner directly operating a network of laboratories ("spokes"), including hospital and community operations in North , Edmonton, and Central AHS health service Zones for a minimum term of 10 to 15 years.

The laboratory procurement and transition considerations are extremely complex. To ensu re a seamless transition, AHS will begin negotiations with DL to extend the current contract for up to 2 years under existing terms and conditions.

Actions:

• AHS has completed a comprehensive market assessment for Northern Alberta with the assistance of an external consultant to develop a short list of potential suppliers.

• AHS has released a Request for Expression of I nterest {RFEOI) to the seven short-listed providers to engage their interest.

• AHS has engaged an independent 'fairness monitor' to provide transparency oversight and compliance throughout the procurement process for laboratory services provision in Northern Alberta.

• AHS will assess the responses to the RF EOI with the opportunity to develop a Request for Proposals {RFP) for laboratory service provision in Northern Alberta.

• Expected completion date of contract planned for early 2014. • AHS will begin contract extension negotiations with DL May 2, 2013.

Background:

• AHS' contract with the current private laboratory service provider (DL) expires at the end of March 2015.

• A transition period of 18-24 months is planned to minimize risk.

Confidential Not for Circulation. Advice to Minister.

NOTE: This is a Communications Briefing Note for use by AHS and AH Communications Departments and the Government of Alberta.

1 3

Alberta Health Services

APPLICANT COPY

Briefing Note and Key Messages

• Almost one third of Alberta's current laboratory services are delivered by private laboratory service providers.

• AHS is using this as an opportunity to implement a new service model to ensure a patient-focused, high quality cost effective system that meets Albertans needs.

• The uhub and spoke" model, which incorporates a northern central uhub" in Edmonton and outlying community, regional and rural facilities, will be similar to the model currently being run in Calgary by Calgary Laboratory Services, which plans to expand and include Southern Alberta.

• An Edmonton central "hub" will ensure costs, quality, innovation and efficiencies can be delivered and continually improved to ensure sustainability and accessibility for a ll Albertans.

• The decision to do a market assessment with pre-defined criteria was made due to the size (current expenditure $250 million per year) & length of this contract (anticipated 1 0- 1 5 years) and its potential impact on patient care; the provider needs to be fully capable and experienced with delivering service of this size.

• The public-private partnership model was chosen as it keeps AHS accountable for laboratory services to ensure province-wide standard ization and best practice, makes use of the expertise available in private industry and creates healthy competition between public and private to help keep overall costs down.

• The scope of laboratory services for this model will include all routine and priority testing for screening, diagnosis , treatment, monitoring and prevention of disease . It will include specimen collection & analysis, and provide test results and interpretations for the medical treatment of all types of patients including: primary care, acute care, community facilities and in-home testing. The Provincial Laboratory for Public Health (PLPH) is currently out of scope of this model, however a co-located lease arrangement in the new facility will be considered .

• AHS Laboratory Services currently provides services through 162 accredited laboratory sites located throughout the province that includes partnerships with Covenant Health , DynaLIFE Dx, Calgary Laboratory Services, and Medicine Hat Diagnostics Laboratory. Laboratory Services performed 65.2M tests in fiscal year 201 1 /1 2 at a total AHS cost of $543M.

• AHS will maintain overall m anagement of the partnership to ensure province­wide policies and best practice to support consistent care for all Albertans.

Key Messages:

• Alberta Health Services is working to improve laboratory services for Albertans through a new model of delivering services for the northern half of the province that will be in place prior to 201 5.

Confidential Not for Circulation. Advice to Minister.

NOTE: This is a Communications Briefing Note for use by AHS and AH Communications Departments and the Government of Alberta.

1 4

APPLICANT COPY

Alberta Health Services Briefing Note and Key Messages

• AHS has hired an independent fairness monitor to ensure an open and competitive process.

• This process also ensures Albertans receive the best possible service once a long term agreement with a laboratory service provider is completed.

• This new model of delivering services will help expand services offered to patients , especially those in rural areas; standardize services province-wide; decrease wait times on tests and results; and red uce costs.

• During the transition to the new delivery model, patients can be assured that there will be little to no impact on the quality of their care, including access to services and the timeliness of their results.

• The Northern Alberta service delivery model will be similar to the one being operated in Calgary through Calgary Laboratory Services.

Contact for Follow Up:

Tammy Hofer Vice President, Laboratory Services 780.951.4168

Bill Trafford Executive Vice President & Chief Development Officer 403.943.0383

Confidential Not for Circulation. Advice to Minister.

NOTE: This Is a Communications Briefing Note for use by AHS and AH Communications Departments and the Government of Alberta.

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APPLICANT COPY

Alberta Health Services Executive Committee Meeting

June 11, 2013 MINUTES

In Attendance: Chris Eagle David Diamond

Stephen Gould (absent) Roman Cooney

Chris Mazurkewich Vema Yiu Dave Megran Gerry Predy (absent)

Kathryn Todd Duncan Campbell (absent) Deb Rhodes

Report Back ··-

Agenda 1. Lab Procurement Project- North Hub Uodate - C. Eagle

{Guest: Bill Trafford) • B. Trafford provided overview of project status and

work underway for issuance of the RFP in July. • Discussion of options for main lab facility in

Edmonton. Further follow up on location and discussions with the UofA are needed.

• Next steps for CLS discussed .

--- --- ---Executive Committee- Meeting Minutes- June 11, 2013 Executive Committee Advice only - not for dl1t3'butlon

Barb Pitts Deb Gordon (absent) Patti Grier Lorinda Prociuk Isaac Van Dyne (recorder)

Action

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Action

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APPLICA Executive Committee Meeting

Alberta Health Noted: June 11, 2013 Item 110613-01

.... . l>Bf\t ICeS

Dr. Chris Eagle, President & CEO

BRIEFING NOTE Date:

Comments/Questions/Conditions:

Date: June 5, 2013

Title: Lab Procurement Project- North Hub Update

Issue:

The current vendor agreement for lab services in North Alberta will expire in March, 2015. Currently an RFEOI has been issued for a new vendor for service and work is in progress to complete the RFP for issuance in July, 2013.

Recommendation:

The attached presentation (Attachment #1) is brought forward for information purposes as an update to the current status of the Lab Procurement Project - North Hub.

Background:

The procurement process for a private laboratory service provider to Northern Alberta was initiated on Monday, April 8th, 2013 with the release of a Request for Expression of Interest (RFEOI) to seven short listed providers. Four parties have expressed interest and are currently involved in vendor meetings with Alberta Health Services.

Key Dates:

April, 2013 July, 2013 November, 2013 March, 2014 March 2015 2016

PREPARED BY:

Name :

RFEOI issued RFP Issued Negotiations New Contract Finalized and Transition Begins Current Agreement Expires Transition Complete

Bill Trafford, Senior Advisor to the President & CEO

EXECUTIVE COMMITTEE MEMBER SPONSOR:

Name: Dr. Chris E agle, President & CEO

Attachment(s): Attachment #1 - Lab Procurement - North Hub Update/Risks/Issues

Confidential Nlt for Circulation 1

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II Alberta Health Services

Executive Committee Meeting June 11, 2013 Hem 110613-01 (att.)

LAB PROCUR NT- NORTH HUB

pdate/Risks/mssues

prepared by

Bill Trafford

Senior Advisor to the President and CEO

June 4, 2013 CONFIDENTIAL DRAFT

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Background 1 . Modernization of the AHS Laboratory Services:

0 Inefficiencies in current model (112 labs, 38 full function)

0 Sustainability issues

•!• Linear volume/cost relationship

•!• Utilization

•!• Professional staff

•!• New complex tests

•!• New Laboratory technology (point of Care testing, digital pathology)

D Edmonton needs major investment (space, equipment)

D Current provider (Dynalife OX) contract expires March, 2015.

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ackground

1. Dual "Hub and Spoke":

0 Accepted Model;

ontinued . . .

•!• High volume "hub"; scale, efficiencies, investment optimized

•!• Single investment for "esoteric" tests

•!• Local labs based on urgency of tests/nature of tests

0 Alberta Health Services would have 21abs (Calgary, Edmonton)

•!• Redundancy

•!• Private/Public

•!• Ease of implementation

•!• Natural referral paths

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ab Procure ent- North HIGH LEVEL MILESTONES

NEW CONTRACT

I RFEOI I FINALIZED '" ... - ...,...,._ I RFP I �

! NEGOTIATIONS I .-...:..&....-.;.. � .. --'r'"J�.;:'�-::_r I TRANSITION I Nov2013 March 2014

essence: • Two scenanos

)- DynaLife OX is successful proponent � New provider is successful proponent

o Scope is: • Red Deer and North • Acute labs in Edmonton Zone/Covenant/Community

Now world class facilitv in Edmonton

ub

TRANSITION TO NORTH

HUB COMPLETE

•••••

March 2015 DynallfeDX

Agreement Expires

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Location of Main Lab facility:

1.

2.

3.

Choices:

1. Edmonton - commercial/industrial area;

2. Edmonton- close proximity to U of A; 3. Utilize existing AHS facility with "shelled

in" space.

s.24( 1 )(a)

ADVANTAGE DISADVANTAGE

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La Procurement N h Hub Issues Requiring Guidance

• New North Hub provider will want opportunity to grow:

•!• Leverage investment

•!• Multiple dimensions

� Provincial

;.. Inter-provincial

-,. National

-,. Esoteric testing

� Private services (eg. Homeopathic)

• How do we position CLS in the South?

•:• Competitive playing field (quality, safety, cost)

•:• Opportunity to "merge"?

•:• Necessary skills.

• Overall Lab Services Governance:

•!• Academic

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FIN A

CONFIDENTIAL DRAFT- NOT FOR DISTRIBUTION

CIAL WORK STREAMS _. .......... -..-�--�---=m. .... �� .......... cm==================��m8-=��=-��========�

Current State

Current Costs Assets to Transfer Leases Human Resources Service Agreements Basis for Due Diligence

Pricing Mechanics

� --- - �- 1 j Model I See Next Page Concept of "Fair" return Stability over 10-15 years Incentives & Disincentives Expected efficiencies

Finance

���tion I Fairness opinion In context of non-current costs and predicted future changes vs. test of world Board/OAG document Key question - will this arrangement produce high quality/savings that we can do ourselves? Will provider be capable of sustaining (capex, etc.)?

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Alberta Health Services PRICING COSTING ANALYSIS

Allowable margins minus share of efficiencies = price

Margin

l=XPecreo EFF!C!ENC!ES

Additional Costs (eg. Academic Relationship)

Variable Cost of Producing Test- Normal Operating Costs

Capital + t (assume that reinvestment= amortization/depreciation over time)

Cost of Acquiring Assets and Staff (transition and one time costs)

Fixed Costs (cost of capital, depreciation, people transfer)

Years 1 2 3 4 5 6 7 8 9 10 11 12 13 14

:.

15

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APPLICANT COPY

____Qp_!nlng Remarks - C. Eagle (Guest BUI Trafford,

Non-Responsive

L

Agenda 1 . Lab Project Uodate (Engagement Plan} - C. Mazurkewich

(Guests: Bill Trafford and Tammy Hofer) • In its current form the Lab Services RFP has a scope

that includes all lab operations in the North half of the province (including Central , Edmonton and North Zones, excluding the Provincial Lab for Public Health).

• The contract with our current provider (Dynalife) expires March 201 5 and we must be in a position to ensure continuity of service. As part of this continuity, the current physical facil ity cannot be extended beyond 201 7 and therefore a new one must be built. The

timing to accomplish this is very short as the complexity and effort to develop a new facility and transition staff is very significant. An RFP must be issued for an undertaking of this magnitude.

• The recommendation is to reduce the scope of the RFP to the current services provided by Dynalife and the acute lab operations in Edmonton Zone (AHS and Covenant). As well , include an option to have the successful proponent expand into the North and Central Zone.

• Recommendations were approved and next steps will be to review with Minister and OA before proceeding. If approved, next steps will be to speak with the stakeholders (Covenant, PCNs etc).

• The RFP would be issued at the end of September .

Executive Committee- Meeting Minutes- August 20, 2013 Executive Committee Advice only - not for dl�tgbutlon

Action

Action

Non-Responsive

-----

2

APPLICANT COPY

r=-·- _ __ Agenda _ I Action I 4. Lab Service RFP Engagement Update- C. Mazurkewich

(Guests: Bill Traffordframmy Hofer) • Update provided on the RFP. • Discussion regarding the HR issues. M. Haley and

D. Diamond to work on some of the outstanding

issues with B. Trafford and T. Hofer. • Worse case scenario planning needs to be

completed.

Executive Committee- Meeting Minutes- September 03, 2013 Executive Committee Advice only - not for di��ibutlon

Non-Responsive

Action

Non-Responsive

5

AP PLIGAN I GUPY Executive Committee Meeting

Alberta Health September 03, 201 3 Hem 030913-04

Noted:

BRIEFING NOTE Dr. Chris Eagle, President & CEO

Date:

Comments/Questions/Conditions:

Date: August 30, 201 3

Title: Lab Service RFP Engagement Update

Issue:

AHS is preparing to issue a Lab Services RFP to provide services for all lab operations in Edmonton Zone. The RFP will see a private provider deliver all lab services in the Zone, including community, hospital and acute care sites. The provider will take over services from AHS, Covenant and current private provider, Dynalifeox.

The contract with our current provider (Dynalife0x) expires March, 20 1 5 and we must be in a position to ensure continuity of service. As part of this continuity, the current physical facility cannot be extended beyond 201 7 and therefore a new one must be built. The timing to accomplish this is very short as the complexity and effort to develop a new facility and transition staff is very significant. An RFP must be issued for an undertaking of this magnitude.

A community engagement and communications strategy has been developed to engage key stakeholder in the process.

Recommendation :

The Briefing note, as well a s attached documents:

1. Calendar of Engagement (Attachment #1 )

2. Power point Presentations:

a) The Future of Laboratory Services - Staff (Attachment #2) b) The Future of Laboratory Services - Pathologists (Attachment #3)

are for information purposes.

Key Messages:

AHS is implementing a new plan for laboratory services in Edmonton Zone.

The contract with our current provider, Dynalifeox expires in March, 201 5, and we must be in a position to ensure continuity of service. As part of this continuity, we know we need a new lab

Confidential N�9or Circulation 1

APPLICANT COPY

facility within the next four years to handle current and future demand as well as higher volumes of new, complex tests such as genomics.

Because the timing to accomplish this is short, and the complexity and effort needed to develop a new facility and transition staff is significant, we plan to issue a Request for Proposals (RFP). RFP Bids will be solicited through an open, transparent and competitive process, overseen by an independent fairness monitor.

This new contract gives us an opportunity to review how we provide Lab Services in the Edmonton Zone, and will allow us to build a sustainable system that will meet current and future demands.

The current model, where Dynalifeox provides all community lab and hospital referral testing while Alberta Health Services and Covenant Health operate all acute hospital and urgent care labs, is unsustainable for a number of reasons.

With lab volumes rising at nearly six per cent year each year and demands for newer, more expensive esoteric tests rising even faster, we know that a major investment is required for a new highly automated state-of-the-art facility in Edmonton along with a sophisticate information systems to tackle appropriate lab utilization. We also know that with an aging workforce we are facing significant staff and recruitment challenges.

As such, the new service model will see one service provider handle all lab services in the Edmonton Zone. It is a similar model to what currently happens in Calgary Zone with Calgary Lab Services.

The plan will also take into account the importance of the University of Alberta Hospital lab and its close links to the U of A Faculty of Medicine, Department of Laboratory Medicine and Pathology teaching, research and clinical trials support.

A modem state-of-the-art lab in Edmonton will be dosely linked to this academic and research agenda. There is a well understood need for such a capability and utilizing expertise and capital from a well-respected lab services provider reduces risk and the need for directly funded capital.

AHS Lab Services will meet with all affected staff and stakeholders to answer questions about the new services model for Edmonton Zone.

Confidential N� lor Circulation 2

s.24( I )(a)

s.24( I )(d)

•

•

•

•

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•

s.24( I )(a) •

s.24( I )(a)

In 201 1 an evaluation of Lab Services across the Province was undertaken as four trends were identified:

1 . Growth in lab volumes increases at 5%-6%/year.

2 . Demand for new, more expensive tests (genomic, esoteric, and cancer) i s increasing at a much higher rate.

3. Workforce, particularly Pathologists will be in short supply for the foreseeable Mure.

4. New technologies such as point of care testing digital pathology are now offering significant cost and quality improvements.

Confidential ,.,:at\or Circulation 5

APPLICANT COPY

s.24( I )(a)

Next Steps:

Approval for the recommendations as presented to the Administrator and Minister was obtained on August 24111• Based on this approval the following will represent the next steps:

1. A communication/engagement exercise would be undertaken focused in Edmonton and on the following groups:

- Current AHS/Covenant lab staff;

- Current AHS/Covenant Pathologists;

- University of Alberta Faculty of Medicine. (Note: discussion on this topic have been ongoing with these groups, however, an opportunity for all involved staff to engage would be valuable); and

- The Edmonton Zone Primary Care Networks as the major user of community lab services currently provided by Dynalife0x.

- Other partners and stakeholders as outlined in the engagemenUcomms plan.

The specifics of these discussions would be to hear, understand and to share content of the RFP and answer any questions. Concerns would be addressed to the extent possible and where possible changes to either the RFP or transition plan would be made.

Engagement/Communications launch day is Sept 1 1 , 2013.

1 . Based on the engagement exercise, refine the RFP if necessary and then issue it to the four qualified providers. This would be targeted for early October.

2. Continue with face to face information sessions to continue to answer ongoing questions and issues.

3. Evaluation of the RFP responses would be completed by Feb/March 201 4 and award/negotiations to commence immediately thereafter.

4. Transition work needs to begin by July/August 2014

Individual Accountable: Bill Trafford, Senior Advisor to the President & CEO

PREPARED BY:

Name: Bill Trafford, Senior Advisor to the President & CEO

Tammy Hofer, Vice President. Laboratory Services

Confidential N�r Circulation 6

APPLICANT COPY

EXECUTIVE COMMITTEE MEMBER SPONSOR:

Name: Chris Mazurkewich, EVP and COO

Communications

Name: Colleen Turner, VP Communications

Attachment(s):

Attachment #1 - Calendar of Engagement Attachment #2 - the Future of laboratory Services - Staff Attachment #3 - The Future of Laboratory Services - Pathologists

Confidential N�qor Circulation 7

APPLICANT COPY - - -

I Executive Committee Meeting September 03, 2013 Item 030913-04 (att. 1)

September 201 3 CONFIDENTIAL DRAFT - SUBJECT TO CHANGES

SUO · Monday Tuesday Wednesda Thursday Friday Sat 1 2 3 4tb 5 6 7

1 2:30-2:00 7:00 - 8:00 a.m. l :00- 2:00 PM Regular RFP Mlv EZ Ex..:uttv. Mtg Dr. �

Mlke Conroy & Confirmed 2:110 - 3:00 Dr. Madot EZ Lab Engagement Confirmed Cancer Care Discussion Conlnned

8 9 1 0 1 1 1 2 1 3 1 4 S:JO- �:00 p.m. lBA 1 0:00 - 12:00 10:00 - 11 :30 RFP Draft Review COEC RAH slalf Mtg MIS llall meeting location: Boardroom A ....................................... Ill & Tammy In (Covenatll SSP ... person attending) Confirmed TBA -------··----------- ani r. Tammy In -·-----···· .. ··------ ------- - Edmonton ... person 4:30- 5:00 p.m. Pathologbl 1 :00 - 3:00 ····-------------···--· Edm Zone Senlot ............................... _____ UoiA llall Mtg ..

Leadenhlp Team ... a• r. rammy ln 12:00 - 1 :30 ASLP Bnl & Tammy In penon TBA pllflon BIU & Tammy ConftrfTied Union Meeting tor VIdeo conference Location 1 J2.47WMC at Head'o Up UofA ...........................................

...

JliC ........................................... 5:1 5 - 5:45 p.m. Coni' call wllfl

Edm ZMAC crtallable HAC

lnl & Tammy In person rMm� (2 HACI

fending Conflrm"llon anr atrecled)

Location: 1 J2.47WMC at --·-·------·-

UoiA Info Memo and FAQ out to key elolcltltolden. Including AH! senior leaden. all lab sew/co: efotr. palhologllb, HAC, AMA and AAI1. U ol A. foundofiOM. rural commun/ly /eadetJ, ··················---...

lruHe pGges launch ..........................................

..................... .....

1 5 1 6 1 7 1 8 1 9 20 2 1 10:00 - 12'()() 1 .. • - 12-M 8:30 - 9:30 Leduc: stall meeting UoiA llall meeting Edm. PCN'1 Reply to a• r. Tommy In •• r. Tommy In ....................................... Engagement penon p��roon ·-.... ........... ............................ ........................................ 1 ·- - 3 · 1 :00 - 3:00 ... Slvrgeon stall GNH llall meelfng 1 :00- 3:00 meeting a• r. (Covenant RAH lfall meeflng Tammy In penon A/lending) IDI I. Tammy In ...................................

BIII & Tammy ln penon ...

penon ............................. _ .. _____ 6:00- 9:00 ... Greater Edm HAC

(held In Fl Salle.) 22 23 24 25 26 27 28

Update to IIA COEC

EC .........................................

.. . Updole lo: Dr. Eagle Admlftlltratar/Minlst er

29 30 1 RFP Released

--

37 Version 3 - August 7 DRAFT

11,11 Alberta Health • Services

ExecUtive Committee MeetiRg September 03. 2013 ltern �90913-04 {att 2)

The F uture of Laboratory Services Del ivery

VJ (X)

CON F I DENTIAL

NOT FOR

D I STRI BUTI ON

�.

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11111 Alberta Health • Strvices

Better Quality, Better Outcomes} Better, Value

The C ha l le n ge

• The chal lenge of Laboratory Medicine and Pathology (LM P) is to provide u n iform service i n the face of shrinking fund ing , scarce capita l , an ag ing workforce

� a nd ris ing demand .

• This chal lenge wi l l be exacerbated i nto the futu re forcing g reater structu ral and tech nolog ical in novation to

a l low LM P to meet demands. • The chal lenge can on ly be met by sig n ificant i nvestment

i n automation and technology ( incl ud ing i nfo systems) .

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•• Alberta Health II Servlces

Better fjual'ity, Better Ou·tttames, Better Value

Deman d • Lab test util ization is g rowing at

an annual average rate of 5 .3%, a rate over three times faster than the population g rowth in Alberta

J. Alberta population to i ncrease o

43.5% in the next 25 years; 1 3 1 % increase in those 65 years and older

• The breadth of laboratory testing is changing with the advent of numerous new technologies, notably in the area of genomics and proteomics

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• Olemistry & Hematology

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• Transfusion Medicine

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��·- Alberta Health •;· Setv.iees

1J�tte:r· {Ju't#Jlity, Better OuJtomes, Better Value

S ustai n a b i l ity ere a� s s ena • Cost of lab services increase at the same rate as volume growth (5-6% per

year). Cost grows exponentially for new more complex tests. • Skil ls, staffing , eq u ipment and infrastructure will not be sufficient to meet

q ual ity, safety and access standards g iven resou rce constra ints and required investment.

� . We estimate the cu rrent Alberta pool of g rad uating technolog ists wi l l replace only 4 7o/o of elig ible reti rees. The average Canadian pathologist is in his or her m id-fifties (current estimated Canadian pathologist deficit is 370).

• Appropriate uti l ization of lab services requires sophisticated tools, ski l ls and techniques and is d ifficult to accomplish in a frag mented environment.

• Tech nology is changing and we need to ensure we can leverage the opportun ities provided by new platforms, techn iques and information systems.

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11·11· Alberta Health Better Quality, Better Outcomes, Better Va·lue • Services

S pace

� N

• UAH 5th floor (AP) 1 3o/o oversu bscribed , l ittle space for add itional patholog ists

• UAH 4th floor 3 1 o/o oversubscribed , l ittle space to introd uce emerg i ng technolog ies

• RAH : ad min istrative and pathology office space is the

largest need .

• PLPH and Genetic Lab SeiVices (G LS) : requ ire total rebu i ld to operate in existing space constraints

• 1 0 labs i n the province hold interim accred itation d ue to issues with space

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Alberta Health Services

Better Quality, Better OUtcrHt�Jes, Better Value

La b Co ntract

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• The long term contract with Alberta's primary private lab service provider expires March 3 1 , 20 1 5 . It is not reasonable to operate a critical service without a contract.

• The cu rrent providers bui ld ing lease expires in 201 7 and the land lord is re-developing faci l ity and wi l l not

renew. • Sig n ificant contract val ue d ictates a competitive process • Considerable investment in al l laboratory i nfrastructu re

is requ i red and it must be planned and bu i lt q u ickly.

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II. Alberta Health Better Quality, Better Out«Jltles, Bette�r Value • Services

The Pote ntia l

�

An i nteg rated laboratory model provides a mechanism to bring a nu mber of benefits when compared to i ndependent

laboratories

� •Cohesive single point accountabil ity •Best practice qual ity management • I ntegrated information databases •Laboratory uti l ization assistance •Operational standardization •Operational redu ndancy (disaster recovery)

•Operating economies of scale •Bulk purchasing d iscounts •Equity of service i n remote areas •Standardized d iagnostic testing •Targeted automation

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� 01

LAB SERVICES_

GOVERNANCE

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Better QUality, Better Outoomes,. Better Value

Hub and Spoke Integrated Model

Northern Alberta

Southern Alberta

• Newly constructed state of the art ful ly automated lab faci l ity in Edmonton to process al l non-urgent core laboratory d iscipli nes and specialty testing .

• Bui lt in close proximity to the UofA Campus to support the academic mandate of LMP

• I nclude space to co-locate the Provincial Lab for Publ ic Health (PLPH)

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•'• Alberta Health • Setvices

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P roposed Plan a n

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'Finalize' scope of RFP through engagement

• Current services provided by DLDX

·Acute/urgent care lab operations in the Edmonton Zone (AHS and CH)

· Edmonton GLS • Include an option

expand services to North and Central Zones at the discretion of AHS

-1 - . -Release·RF.P, award

contract and negotiate . _

• Based on engagement, refine and release RFP • Evaluation and selection by March 2014

• Complete negotiations by July 201 4

App roach

T ransitibn and optimize ·services in Edmonton Zone

· Staff (public and private) transition to successful proponent April 1 , 201 5

· New facility constructed and operational

• Acute care labs optimized

• Standardized provincial LIS and Meditech interfaces implemented

Expand services to remaining operations

• Evaluate service needs and optimization potential for North and Central Zones

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11111 Alberta Health II Services

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Benefits •

•

Edmonton becomes a major centre for lab capability in Western Canada

Privately funded new "state of the art" lab in Edmonton • Relieves space and capital constraints

• Supports lower test costs through lean processes and automation )> "1J

• Better serves our research and academic community by dedicating space, consolidatin�

� -......�.

•

•

activities to one location, and introducing potential commercialization pipelines � Growth managed within reasonable cost.

Better use of constrained Lab staff • More interaction with clinicians/patients . • More access to expertise/backup.

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••11 Alberta Health • · .Services

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Staff

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• The successful proponent is expected to be a world leader in del ivery of lab services:

• This provides expanded opportunity and career paths for everyone.

OJ • We wi l l have several requ irements of the successful proponent as it relates to employees.

• Specifical ly, employees wi l l : • be offered continued employment • be provided with continued u nion representation (where

presently u nionized) • receive comparable terms and conditions of employment

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SCU SS I O

Staff are encouraged at any time through this process to send their questions and comments to:

XXXX@albertahealthservices.ca

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forcing greater structural and technolog ical innovation to al low LMP to meet demands.

• The chal lenge can only be met by sign ificant investment in automation and technology ( includ ing info systems).

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Alberta Health Services

Demand • Lab test util ization is g rowing at

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01 • Alberta population to increase N 43 .5o/o in the next 25 years; 1 3 1 °/o increase in those 65 years and older

• The breadth of laboratory testing is changing with the advent of numerous new technologies, notably in the area of genomics and proteomics

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year) . Cost grows exponentia l ly for new more com plex tests. • Ski l ls , staffing, equi pment and infrastructure wil l not be sufficient to meet

q uality, safety and access standards given resource constraints and required investment.

• We estimate the current Alberta pool of graduating technologists wi l l replace only 4 7o/o of el igible reti rees. The average Canadian pathologist is in h is or her mid-fifties (current estimated Canadian pathologist deficit is 370) .

• Appropriate uti l ization of lab services requires sophisticated tools, ski l ls and techniques and is difficult to accomplish in a fragmented environment.

• Technology is changing and we need to ensure we can leverage the opportunities provided by new platforms, techniques and information. systems.

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add itional patholog ists

• UAH 4th floor 3 1 o/o oversubscribed , l ittle space to introduce emerg ing technolog ies

• RAH : admin istrative and pathology office space is the

largest need .

• PLPH and Genetic Lab Services (GLS): require total rebui ld to operate in existing space constraints

• 1 0 labs in the province hold interim accred itation due to

issues with space

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•'• ,Alberta Health • Services

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ab Contrclct • The long term contract with Alberta's primary private lab

service provider expires March 31 , 201 5 . It is not reasonable to operate a critica l service without a contract.

• The current providers bui ld ing lease expires in 20 1 7 and the landlord is re-developing faci l ity and wi l l not

renew.

• Sign ificant contract value d ictates a competitive process • Considerable i nvestment in al l laboratory infrastructure

is requ i red and it must be planned and bui lt qu ickly.

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•'• Alberta Health • Servjces

The otential

An integrated laboratory model provides a mechanism to bring a number of benefits when compared to independent laboratories

•Cohesive single point accountability •Operating economies of scale •Bulk purchasing d iscounts • Equity of service in remote areas •Standardized d iagnostic testing • Targeted automation

•Best practice quality management • Integrated information databases •Laboratory uti lization assistance •Operational standardization •Operational red undancy (disaster recovery)

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LAB SERVICES_

GOVERNANCE

,....

--

Better Qunlity, Better Outcomes., Better Value

H u b and Spoke I nteg rated M odel

Northern Alberta

South em Alberta

• Newly constructed state of the art ful ly automated lab faci l ity in Edmonton to process al l non-urgent core laboratory d iscipl ines and specialty testing .

• Bui lt i n close proximity to the UofA Cam pus to support the academic mandate of L M P

• I nclude space to co-locate the P rovincial Lab for Public Health (PLPH )

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•'• Alberta Health • Services

Better Quality, Better Outcomes, Better Value

Proposed P lan and Approa(:h

Finalize scope of RFP through engagement

•C»�t�� provided by DLDX • Acute/urgent care lab operations in the Edmonton Zone (AHS and CH) • Edmonton GLS

• Include an option expand services to North and Central Zones at the discretion of AHS

�li£eiease RFP, ·��:1-d-, contract and negotiate

•:$.�tt..��f·Q!J . engagement, refine and release RFP • Evaluation and selection by March 2014

• Complete negotiations by July 2014

+��(p�pM-�nd private) transition to successful proponent by April 201 5

• New facility constructed and operational • Acute care labs optimized • Standardized provincial LIS and Meditech interfaces implemented

Expand services to remaining operations

���te �J.Qe needs and optimization potential for North and Central Zones

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Benefits • Edmonton becomes a major centre for lab capability in Western Canada • Privately funded new ·'state of the art" lab in Edmonton

•

•

• Relieves space and capital constraints • Supports lower test costs through lean processes and automation

• Better serves our research and academic community by dedicating space, consolidating activities to one location, and introducing potential commercialization pipelines

Growth managed within reasonable cost.

Better use of constrained Lab staff • More interaction with clinicians/patients. • More access to expertise/backup.

• Increased affordability of new complex tests: • Demand for genomic, proteomic. • Access to capital, expertise in managing utilization to ��make room" for new tests. • Experience with leading edge tests in ��scaled up" environment.

• Ability to more quickly adapt and invest in new lab services technology

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M edical Scientific Staff • The winning proponent is expected to be a world leader in delivery of laboratory and

pathology services • We expect 1 OOo/o of medical/scientific staff (public and private) to transfer to the winning

proponent under existing terms and conditions of the ASLP agreement.

• Protected academic and research time has been accounted for and is expected to

� continue. • We intentionally have not been prescriptive in the RFP around the pathologist model

(employees, contractors, ARP, etc). We are requiring the proponent to provide options for the medical professional model and its operation in the Alberta landscape.

• Considerable emphasis has been placed on governance, for both clinical and academics

• Considerable emphasis is placed on the academics and research mandated. We have worked closely with the UofA to ensure that the RFP meets their needs.

- Dr. Lorne Babiuk, VP Research represents the faculty on our Design Team

- Dr. Michael Mengel, Interim Chair DLMP, is an active member on the Medical Design Subcommittee

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/Jetter Quality, Better Outoo.mes, Better VtJ.lue

For D is;cussion

• What medical professional model do you see working best under th is partnersh ip?

• How best can we involve this group in the RFP evaluation and proponent selection?

We would welcome your thoughts/ideas on what would be helpful to you on any transition.

Staff are encouraged at any time through this process to send their questions and comments to:

XXXX@albertahealthservices .ca

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Executive S u m m a ry

AHS Laboratory Services has undertaken an exercise to determine the optimum Lab Services del ivery model to address the need to have an efficient, high quality fully leveraged laboratory service capabil ity for the long term. Of the three models reviewed, a public private dual hub and spoke model with rational distribution of testing capacity was identified having the most potential.

This document is intended to provide the reader with an overview of Laboratory Services and insight into why the current structure does not have the

scale or influence to effect timely, meaningful system level volume-reducing change. A new model is required to bend the cost curve and create sustainable economics while maintaining and enhancing quality laboratory services.

The proposed dual hub and spoke model wi ll demonstrate: • Reduction in annual operating cost through consolidated services

• Reduction to the cost trajectory of laboratory services through long term system level changes that decelerate volume growth

• Improved patient care through expanded quality programs and leveraged clinical expertise

• Standardized and enhanced performance

• Expanded access to new technologies and services to all communities

• Consolidated infrastructure and expertise

• Enhanced research activity through single source data and platforms

• Ongoing support of academics and teaching

• Enhanced rural services resu lting in lower clinical risk.

• A healthy level of competition between the public and private service providers to keep overal l costs down

• A level of redundancy within the system

The public private dual hub and spoke Lab Model was presented to the Audit and Finance Committee of the AHS Board in June 2012. The committee was su pportive of this direction and approved Lab Services to proceed with the North Laboratory Hub procurement process and continued consultation and engagement on the model design.

Consultants have been engaged to complete a market assessment and develop a shortlist of qualified Laboratory Service Providers to deliver North Hub laboratory services. I n addition, the market assessment firm will provide expert advice and analysis in general Laboratory Services market trends and

best practice.

With the procurement process well underway, Laboratory Services is now initiating the next phase of consultation and engagement. A uDesign Team" and appropriate subcommittees will bring together a number of groups to assist in more detailed discussions on planning and model development,

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potential implementation approach and local or professional consultations to dea l with specific issues.

B us i n ess Ove rview

An effective laboratory service is an essential part of a quality health service and plays major roles in both research and teaching. Laboratory tests provide health practitioners with objective information that is needed to prevent, diagnose, treat and manage disease. It is estimated that laboratory data have an impact on over 70 percent of medical decisions1.

The functions to support patient care performed by laboratory medicine are numerous: • Identify the risk of developing disease

• Disease detection

• Planning and disease management

• Selecting safe and effective treatments

• Monitoring treatment response

• Identifying threats to patient safety and public health

Laboratory medicine plays a vita l consu ltative role in clinical care in the areas of hematopathology, genetics, infection control and transfusion medicine programs. In addition, research scientists and laboratory physicians conduct basic and translational research which advances the understanding and treatment of disease.

Under its mandate, AHS has assumed responsibility for all clinical laboratory and public health laboratory services in Alberta. Laboratory Services

provides an integrated provincial laboratory medicine & pathology service su pporting a ll acute care, community, and public health testing across the province. Laboratory Services offers a comprehensive range of routine and specialized testing and clinical consultation in adult, perinatal and neonatal pathology.

Laboratory services supports over 2,400 employees with services available seven days a week across 133 accredited metropolitan and rural laboratory sites. Laboratory services performed over 65 mil lion laboratory tests in 2011. Each laboratory is equipped with diagnostic instrumentation and staffed by laboratory professionals with extensive technical and scientific training who are all committed to qua lity testing and services.

In addition, Laboratory Services actively supports clinical trials and applied research. Through the i ntegration of Laboratory Services with teaching hospitals and university medical schools and colleges, research, education and training opportunities are provided to a broad range of health care professionals and students of laboratory medicine and pathology.

1 ASLP Pathology's Future: A View from Leaders in Health Care, June 20 1 0 Page 1 3

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Laboratories follow a stringent accreditation process and are accredited through such organizations as the College of Physicians and Surgeons of Alberta (CPSA); College of American Pathologists (CAP) and the International Organization of Standardization (ISO). Laboratory Services has developed objectives that al ign with the strategic direction of AHS. Vision

"Right test, right time, right place, right cast"

Mission

Our mission puts patients first by providing services which are: • Highest qual ity, optimised for our contribution to the care pathway • Responsive to users: convenient, accessible, effective, safe, appropriate • Cost effective: managed from end to end adopting innovative technologies operated by a well tra ined and engaged workforce • Integrated: supporting acute care and community based services; enhancing other clinical services, i .e., cancer care, and population and public

health.

Cu rre nt State

Description of Service

In the major metro of Edmonton, existing laboratory services operate under a mix of public and private service del ivery. The University of Alberta Hospital (UAH), AHS' hub laboratory in Edmonton is a ful l service laboratory2 performing high volume, specialty and esoteric testing for Northern Alberta. UAH laboratory infrastructure, i.e. quality, safety and education, supports Rapid Response Laboratory (RRL) Operations at the fou r metropolitan hospital (two Covenant Health Board Operated), the cancer laboratory (CCI ) and six rural facility laboratories. UAH, cancer and metropolitan hospital laboratories have on site pathology services.

DynaliFEo. (DLDx), a contracted private services provider, operates al l Patient Service Centres (PSC) and the major high volume diagnostic faci l ity in

Edmonton for community testing. With exception of testing at the UAH and CCI, a l l routine testing from the rapid response and rural laboratories is sent to DLDx for testing. This includes al l routine chemistry and hematology; a l l microbiology; and al l anatomic pathology processing (slides are returned to

hospital pathologists for reporting). DLDx maintains a very robust transportation network within the city

The service contract with DLDx, expiring March 3 1, 2015, is very specific in terms of exclusivity and test splits between UAH and DLDx. Duplication, redundancy and excess capacity was intentionally built into the system in Microbiology, Anatomic Pathology and high volume hematology and chemistry. The majority of specialty and esoteric testing (i.e., molecu lar pathology, immunohistochemistry, special chemistry, flow cytometry, etc.) is

not duplicated and is performed at UAH or CCI.

2 Acute Care Microbiology at UAH is integrated with the Provincial Laboratory for Public Health and discussed in that section. Page 1 4

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I n the major metro of Calgary, existing laboratory services are provided by Calgary laboratory Services (CLS), a wholly owned subsidiary of AHS. CLS, an independent service provider, is governed by it s own Board, policies and organizational structure including corporate services (i .e., finance, human resources and supply chain management).

Like Edmonton, a number of PSCs are operated across the city with testing directed, via an advanced transportation network, to a central Diagnostic Service Centre {DSC) for testing. Also similar, is the operation of RRLs in each of the four hospitals, providing u rgent and priority testing, referring routine, esoteric and specialty testing to the DSC. All hospitals have on site pathology services.

Two notable differences from the Edmonton model include: 1. The laboratory at the Foothi lls Medical Centre (FMC), Calgary's academic and tertiary care hospital is not a full service laboratory. Although

some expanded services are centralized to this site ( i.e., flow cytometry and transfusion services), there is l ittle duplication between this laboratory and the testing provided at the DSC.

2. Community and hospital laboratory operations fall to one service provider under one organizational structu re. This effectively eliminates any competitive interests between public/private and community/hospital laboratories, resulting in an integrated model with standardized procedures and qual ity practices. In 2012, a service level agreement between CLS and AHS was executed to manage all Calgary Rural laboratories. U nder this model, staff remained employees of AHS; however, al l operations are managed by CLS.

Outside of CLS, AHS provides some routine and specialized services in the Calgary Zone. This includes Genetic Testing at the Alberta Children's Hospital

(ACH) and operation of Provincial Laboratory for Public Health (detailed below).

Outside of these two primary urban centers, medical laboratory testing and pathology service levels and delivery models vary; however, a hub and spoke test referra l model is commonly used, following legacy regional referral l ines.

Suburban Hospital facilities (5) have relatively full service laboratories performing chemistry, hematology, transfusion medicine, microbiology and anatomic pathology. Each laboratory acts as the major service hub for the smal ler rural laboratories in each zone. low volume and specialized testing

are referred to one of two locations for processing: • South Zone refers to CLS • Central Zone refers primarily to DLDx • North Zone refers to DLDx

One distinct difference is the Northern lights Regional Hospital in Fort MacMurray. DlDx holds the contract for complete laboratory services in the former Northern Lights Region. The Northern Lights laboratory functions much like a RRL with most routine testing transported to the DlDx base laboratory in Edmonton for testing.

The approach to community services varies across suburban communities: • Medicine Hat is contracted to Medicine Hat Diagnostic Labs (MHDL), a small private laboratory operating only in the Medicine Hat area. • AHS operates all lethbridge collection facilities (5) and testing is centralized to the regiona l hospital laboratory. • DlDx operates the collection facility in Red Deer and testing is centralized to the regional hospital laboratory. • AHS operates two collection facil ities in Grande Prairie and testing is centralized to the regional hospital laboratory.

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Alberta Health Services. • DlDx operates the collection facility in Fort MacMurray and testing is central ized to the regiona l hospital (DlDx operated) or to the DlDx base

laboratory in Edmonton.

Outside the suburban communities, rural hospital laboratory menus vary. Depending on former legacy regional design, hospital services and geographic isolation, laboratories range from minimal stat hematology and chemistry menus to basic microbiology and anatomic pathology testing. More complex and specialized testing referrals follow the same patterns as described for suburban laboratories.

Most rural hospital laboratories provide community col lection and testing services, referring offsite testing through their defined hub and spoke referral routes. The exception is Cam rose and Lloyd minster where DLDx operates a stand alone col lection facility in these communities, referring testing to their

base laboratory in Edmonton.

Reference and esoteric testing for the province is performed in both Edmonton and Calgary:

• AHS Genetics and Molecular Diagnostics laboratories are integrated under one administrative and medical structure located at UAH Edmonton and ACH Calgary. Some duplication and redundancy exists across laboratories

• ProvLab performs most specialized and esoteric microbiology testing for the province. Testing is l imited to one site or the other, with necessary redundancy built i n across the two laboratory sites.

• Specialized Cancer Biomarker Testing at the cancer facilities in Calgary and Edmonton are currently in the process of integrating into the service delivery of CLS and UAH/CCI respectively. Dupl ication exists across the two cities.

• UAH and CLS have significant specialized Hematology, Coagulation, Chemistry, Toxicology and Molecular Pathology testing menus. Duplication exists across the two cities and laboratories. Low volume assays are generally performed in one location or the other. Very low volume assays are referred to reference laboratories in eastern Canada or the United States for testing.

• Two HLA Laboratories, UAH and CLS operate in the province. The UAH focus is on solid tissue transplantation while the CLS focus is on bone marrow transplantation. This level of specialization resu lts in l ittle duplication while al lowing for some redundancy of equipment and staff expertise.

The public health laboratory is a full service AHS Microbiology/Public Health Reference Laboratory. Referred to as ProvLab, this fully integrated laboratory is split between s ites in Edmonton (UAH site) and Calgary {FMC site). The Edmonton laboratory is fully integrated with the acute care diagnostic clinical microbiology service for the University of Alberta Hospital in cooperation with UAH Medical Microbiology. The Calgary laboratory, although in close proximity to the CLS laboratories at FMC and the DSC, is not integrated within any other Calgary laboratory service.

Public health laboratories play a role in monitoring, and helping to control diseases and other agents that could potentially threaten population health in contrast to medical laboratories, which conduct testing to diagnose conditions affecting individual patients. Public health laboratories safeguard the

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health of communities. The Provlab collaborates with the other provincial and territorial, national and international public health and emergency response agencies.

Need for Cha nge

ACTIVITY ISSUE PROCESS TECHNOLOGY PEOPLE Integrated patient • Electronic lab results are located • lab tests are referred across • 3 laboratory information • Diversity across clinical result reporting across many systems zones and boundaries to system (LIS) vendors with 9 practice

maximize economies of scale independent database • Patient safety concerns with manual • Inconsistencies in what designs • Difficult/time consu ming to

back entry of results referral tests are reported reach consensus on

back into source systems • Systems not configured to standardization • Inefficient use of resources support data requests/result

(duplicate order entry, result entry) reporting between systems

• Unable to adequately track lab • POSP systems only interfaced specimens across the system with former health entity LIS

• Utilization management difficult to • No standard terminology for implement laboratory test orders and

• Architecture to control flow of results across LIS'

information is very complex and • Multiple testing platforms labor intensive. Multiple points for from multiple manufacturers failure results in methodology and

• Full provincial picture not available reference interval d ifferences.

for epidemiology or research.

Procurement and • Not taking full cost advantage of • lack standardized • M ultiple testing platforms • 3 large organizations (AHS, Supply Chain consolidated procurement performance standards to from multiple manufacturers CLS and DlDx) with separate

select products/equipment • limited capital to support purchasing and contracting

planned standardization departments

• Technical/professional

preferences

Planning and • No benchmarks to compare • No clear definition of test • Variation in LIS design limits • Variation in scope of practice resource allocation resources across menu or diagnostic supplies analytic capabilities and of lab technical and

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facilities/organization

• No defined strategy for

infrastructure and capacity

development

• Difficult to project human resource

needs from year to year

Demand/Volume • Disparate functioning labs do not management have the scale or clout to effect

meaningful volume reducing change

at a system wide level

• lab test continue to grow at over 6% per year

• Aging population, higher burden of

chronic disease and cancer

• Lab system is quickly becoming

u nsustainable

Universal access to • Inequity of service to remote areas all essential tests, • Adoption of new innovations and expertise and technology enhancements required homogeneous

to drive down systemic costs quality management • It is neither feasible nor practical to

establish similar laboratory capacity

at all levels of health care delivery

from central to remote areas

• Access to clinical and quality

expertise in limited in remote and

Page 1 8

PROCESS

required at each level of lab.

• Variability of how expenses

are classified and captured

• Lack standardized clinical

practice guidelines and order

sets within AHS

• There is no disincentive for

inappropriate lab utilization

• Lack a u niform test menu

appropriate for the health

care delivery level

• Logistics and transportation

deficient to current need

• Unnecessary duplication of

testing and testing platforms

leads to higher cost and

capital investment

TECHNOLOGY

comparability

• Difficult and time consuming

to introduce utilization rules

across multiple US systems.

• lack an online rules based

decision support order entry

interface

• Paper based ordering in

Edmonton Zone and all

community/primary care

• Do not have the analytics or

sophistication necessary to

understand current ordering

patterns at a system level

• Older/inefficient technology

in use in remote/rural

• IT system linkages are

deficient

• Rapid advancements in the

field of genetics and

molecular techniques

• Lab systems becoming more

and more automated

• Access to capital funding for �- �- -

PEOPLE

professional staff

• No workload measurement

system for lab pathologists

• Diversity across clinical

practice

• Difficult and time consuming

to reach consensus on

utilization guidelines

• Difficult to recruit

professional and technical

resources to rural/remote

locations

• Duplication of quality and

clinical expertise across the

three organizations.

• Do not have a cohesive

clinical structure to support

L__ standardized quality -

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rural locations

• lab system is falling behind in

technology investment in the area

of genetics, and cancer care

Page 1 9

PROCESS TECHNOLOGY

infrastructure improvement

and new technology

investments is extremely

limited •

PEOPLE

management programs

including performance

standards

Expect ongoing recruitment

pressures as workforce ages

(41% of technical workforce

over the age of 45)

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Projections

I

Projected Alberta Labo1·atory Test Volumes

1 40.000,()()0

120.000.000

I 00,000,000

80,000,000

60,000,000

40.000,000

20.000,000

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Projected Alberta Labo1·atory Expenditures

$ 1,000,000,000

$900,000,000

$800,000.000

$700,000,000

$600,000.000

$500,000.000

$400,000,000

$3 00,000,000

$200,000.000

$ I 00,000,000

$-FY15 FY20 FY25

Estimated Albe1·ta LaboratOI'Y Pathologist Expenditures

$ 160,0011,000

S!4o.ooo.ooo

$ 120.000,000

$ 100.000,000

$80,000,000

$60,000,000

$40.000,000

$20,000.000

S-FY1 5 FY20

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FYZS

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Workforce Pt·ojections

160,000,000

140,000,000

� illl' 1 20,000,000

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}- 40,000,000 -Activity I r 2o.ooo.ooo

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··- ·-··-· -· ·---···· ··---·--Service M odels

Three basic service delivery models were identified as having the potential to serve the needs of the health system during the coming 10 to 15 years.

1. AHS Zones managed. Provide or purchase services from existing major service providers

2. Public private dual hub and spoke with rationa l distribution of testing capacity

3. Ful ly outsourced model

Key Characteristics Key Characteristics Pros

AHS Zone Managed • Managed at the zone level

• Zone to provide or purchase laboratory services at their

discretion

• Consist of optimized hub and spoke model within the

zone

• Standardization initiatives driven through provincial

integration • Networks • Consolidated purchasing and contracts through AHS

infrastructure • Decentralized delivery of laboratory services

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s.24( I )(a)

Cons

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Key Characteristics

Publ ic/Private Dual • Tiered network of testing facilities (hub and spoke) Hub and Spoke operating under central management with a rational

distribution of testing capacity

• Uniform test menu appropriate for the health care

delivery level • Two central labs or "hubs" (one public, one private)

responsible for the medical direction and coordination of

operational functions for all labs in the network (spokes) including quality, client services, appointment bookings,

transportation networks, etc. • Common operating, quality and safety procedures for

within the respective networks

• Advanced logistics and specimen tracking

• Public and Private Networks are connected scientifically

and operate under a unified governance model • Specialized testing and provincial centres of excellence

(includes Provincial Lab for Public Health and Genetics)

• Integrated information technology platforms and business intelligence tools

Fully Outsourced • Delivery of hospital and community laboratory services

would be provided by a private laboratory service provider

• Delivery would be managed through accountabi lity and

contract agreements

Page 1 1 2

s.24( l )(a) Pros Cons

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Analysis

The following tables compare each potential model against identified opportunities and impact to long range projections.

Opportunities

Opportunity

Cost savings and future cost avoidance

Revenue potential through subspecialty pathology practice

Operational standardization

Standardized diagnostic testing and nomenclature

Homogenous quality management

Leverage laboratory and analytical eXQertise

Common Laboratory Information System and Order En!_ry_ System

Leverage investment in a much better and coordinated way

More effective and timely decision making Ability to influence practice that will improve outcomes at a lower cost of

patient care

Research and revenue potential to access or mine consolidated provincial

laboratory data

Effect meaningful volume reducing change at a system wide level

Projectio ns -Zone Managed I

Activity

Technical Workforce

Professional Workforce

Page 1 14

s.24( 1 )(a)

Zo M d I Dual Hub and I ne anage Spoke

s.24( 1 )(a) Dual Hub and Spoke

Fully Outsourced

I Fully Outsourced

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--Operating Expenses

capital

Investment

Information Technology Investment

s.24( 1 )(a)

----- --

-

-

- -Of the three potential models, the public private dual hub and spoke model was selected. The Zone managed model was rejected on the premise that it does little to support the opportunities existing in an optimized laboratory model and projections were either unchanged or slightly worse than the current systems.

The fu lly outsource model, although demonstrating a number of opportunities, was rejected for the following reasons: • Politically unacceptable

• Very high risk

• Massive labour implications

• Budget gains (excluding ongoing capital investment} do not appear to be significant gains over internal or partially outsourced solutions

• Past experience with private service provider specifically poor responsiveness and l imited relationship between the laboratory and clinical sites.

Progress and N ext Steps

The proposed public private dual hub and spoke Lab Model was presented to the Audit and Finance Committee of the AHS Board in June 2012. The committee was supportive of this direction and approved Lab Services to proceed with the North Laboratory Hub procurement process and continued consu ltation and engagement on the model design.

North Laboratory Hub Procurement is currently underway. The process is designed to seek out a long term provider for the North Hub as follows: • A proven, viable, financially stable provider that has very low risk of business fai lure

• The means and will ingness to invest capital to develop a new high volume, high performance laboratory capability in the Edmonton area,

including bui lding a new facility

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Alberta Health Services • Agreement to contractual terms such that given the dynamics of a long term arrangement assure AHS of "value for money" on an ongoing basis

• Be willing and capable of accepting our required terms and conditions

The market assessment, designed to identify and evaluate potential suppliers of Laboratory Services, is expected to be complete by January 2013,

proponent selected and negotiations commencing April 2013.

Consultation and engagement, up to this point, has been at a relatively high level. Discussions have occurred with the University of Calgary, University

of Alberta and select AHS Board members where the model has met with wide acceptance.

The next phase of consultation and engagement wil l bring together a number of grou ps to assist in more detailed discussions on planning, potential implementation approach and local or professional consultations to deal with specific issues. Immediate next steps are to bring together a "Design Team" and appropriate subcommittees comprised of pathologists, clinicians and administrators representing clinical and academic interests to engage

in: •

•

•

•

•

Detailed discussion on model planning and development

Local and professional consu ltations

Potential implementation approaches

Change management planning

Act in an advisory capacity for the Northern Lab Hub Procurement work .

Page 1 1 6

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Need for Change

ACTIVITY STATUS QUO ISSUES PROCESS

Integrated • Electronic lab results are • Lab tests are referred patient result located across many systems across zones and reporting • Patient safety concerns with boundaries to

manual back entry of results maximize economies

• Inefficient use of resources of scale

(duplicate order entry, result • Inconsistencies in entry) what referral tests are

• Unable to adequately track reported back into

lab specimens across the source systems

system

• Utilization management

difficult to implement

• Architecture to control flow

of information is very

complex and labor intensive.

Multiple points for failure

• Full provincial picture not

available for epidemiology or

resea rch.

Procurement • Not taking full cost advantage • Lack standardized and Supply Chain of consolidated procurement performance

standards to select

products/equipment

APPLICANT COPY

FACTORS

TECHNOLOGY

• 3 laboratory information

system (US) vendors

with 9 independent

database designs

• Systems not configured

to support data

requests/result reporting

between systems

• POSP systems only

interfaced with former

health entity US

• No standard terminology

for laboratory test

orders and results across

LIS'

• Multiple testing

piatforms from multiple

manufacturers results in

methodology and

reference interval

differences.

• Multiple testing

platforms from multiple

manufacturers ·• limited capital to

support planned .� - ----78

PEOPLE

• Diversity across

clinical practice

• Difficult/time

consumin� to reach

consensus on

standardization

• 3 large organizations

(AHS, CLS and DLDx)

with separate

purchasing and

contracti11g

-- ·-·--

MODIFIED RFP - ASSESSMENT

IMPROVEMENT UNITENDED MITIGATION

OVER STATUS QUO CONSEQUENCES STRATEGIES

Moderate • Include need for a I • Maintain the Meditech I

requirement for reference lab

Cerner interface in the Millennium RFP. conversion • Continue to

• Multiple implement

Meditech installs protocols

not addressed eliminating back

entry result

reporting in source

systems

• Continue with Lab

Standards Project

Minimal • Continue to have • EZ Lab would be CLS act as the

combined u nder purchasing agent one purchasing for the North, agent, however Central and South depletes the AHS -

APPLICANT COPY

FACTORS MODIFIED RFP - ASSESSMENT

ACTIVITY STATUS QUO ISSUES PROCESS TECHNOLOGY PEOPLE IMPROVEMENT UNITENDED MmGATION

OVER STATUS QUO CONSEQUENCES STRATEGIES

standardization departments purchasing Zones to improve

• Technical/professional power for the consolidation.

preferences Central, North and South Zones

Planning and • No benchmarks to compare • No clear definition of • Variation in US design • Variation in scope of Moderate • Be more d ifficult to resource resources across test menu or limits analytic practice of lab • Will be able to staff in regional and allocation facilities/organization diagnostic supplies capabilities and technical and more closely rural locations with

• No defined strategy for required at each level comparability professional staff benchmark EZ the majority of

infrastructure and capacity of lab. • No workload and CZ training taking

development • Variability of how measurement system place in Edmonton

• Difficult to project human expenses are for lab pathologists and Calgary

resource needs from year to ·classified and (medical and

year captured technical}. Employer competition and '

Incentives across ' organizations.

Demand/Volume • Disparate functioning labs do • Lack standardized • Difficult and time • Diversity across Moderate • Balance of power • Continue to management not have the scale or clout to clinical practice consuming to introduce clinical practice • Some time on decision support resource the

effect meaningful volume guidelines and order utilization rules across • Difficult and time benefits when EZ will be in Edmonton laboratory

reducing change at a system sets within AHS multiple LIS systems. consuming to reach converts to and Calgary. AHS utilization office

wide level • There is no • lack an online rules consensus on Cerner labs will have less within AHS to push

• Lab test continue to grow at di�incentive for based decision support utilization guidelines • Assumes some of a voice. the utilization

over 6% per year inappropriate lab order entry interface decision support agenda

• Aging population, higher utilization • Paper based ordering in and online order • Continue with the

burden of chronic disease and Edmonton Zone and all entry will be Central Lab Data

cancer community/primary care introduced with Repository within

• Lab system is quickly • Do not have the the conversion CLS to locate all

becoming unsustainable analytics or to Cerner Lab Information in

sophistication necessal)l

79

APPLICANT COPY

FACTORS MODIFIED RFP - ASSESSMENT ACTIVITY STATUS QUO ISSUES PROCESS TECHNOLOGY PEOPLE IMPROVEMENT UN !TENDED MITIGATION

OVER STATUS QUO CONSEQUENCES STRATEGIES

to u nderstand current one place.

ordering patterns at a

system level

Universal access • Inequity of service to remote • Lack a uniform test • Older/inefficient • Difficult to recruit Moderate • AHS Lab expertise • At minimum to all essential areas menu a ppropriate technology in use In professional and • New state of the (medical, need to Include tests, expertise • Adoption of new innovations for the health care remote/rural technical resources art central lab in administrative and an option for and homogeneous

and technology delivery level • IT system linkages are to rural/remote Edmonton technical) is North Zone -quality enhancements required to • Logistics and deficient locations • Will see further heavily weighted Medical,

management drive down systemic costs transportation • Rapid advancements in • Duplication of quality consolidation of within EZ. AHS lab Technical and I • It is neither feasible nor deficient to current the field .of genetics and and clinical expertise automation expertise Quality

I

practical to establish similar need molecular techniques across the three • Access to capital (operations, Consultations in

laboratory capacity at all • Unnecessary • Lab systems becoming organizations. for genetics and scientific and the RFP.

levels of health care delivery duplication of testing more and more • Do not have a molecular quality will be • Need to include

from central to remote areas and testing platforms a utomated cohesive clinical techniques can significantly optimized

• Access to clinical and quality leads �o higher cost • Access to capital funding structure to support be addressed compromised. transportation of

expertise in limited in and capital for infrastructure standardized quality • Will not address North Zone will be referral testing in

remote and rural locations investment Improvement and new management the the most effected the RFP

• Lab system is falling behind technology investments programs including transportation • Access to Capital • AHS needs to

in technology investment in i� extremely limited performance limitation for remaining AHS continue to

the area of genetics, and standards between operations will be develop a Point of

cancer care • Expect ongoing regional, rural even more limited Care/Labless

recruitment and EZ because of their strategy for the

pressures as depleted scale. remote low

workforce ages (41% • Be more difficult volume rural

of technical to staff In regional sites.

workforce over tile and rural locations • Continue with the

age of 45) with the m ajority Alberta Lab

of training taking Networks to ' place in Edmonton continue to

and Calga ry promote lab -80

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FACTORS MODIFIED RFP - ASSESSMENT ACTIVITY STATUS QUO ISSUES PROCESS TECHNOLOGY PEOPLE IMPROVEMENT UNITENDED MITIGATION

OVER STATUS QUO CONSEQUENCES STRATEGIES

(medical and standardization technical). and sharing of Employer best practice. competition and I Incentives across organizations. I

• Will not easily be a ble to temporarily transplant workforce from Edmonton or Calgary to rectify urgent workforce issues in rural areas (different employers, standardization challenges, etc)

8 1

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I I I 2outs2 I 2outn I 2013/14 I 2014/15 I 2015/16 I 2016/17 I 2017/11 I 20111� 1 2019/2o I 2020121 I 2021122 I 2022/23 I 2out�4 I 2024/25 I 2025/26 I 2026/27 I ----- I Activity 62,353,569 62,353,569 65,595,955

MLT Reqlred 2,234 2,303 MLT Av•ll•ble 2,277 De fecit 125) MLT 2ll4 2234 2234

Vacancy Def cit (22)

Activity (46)

Over 55 430 (611

45-55 663 (44)

35·45 504

Grads 149 149

Total (25) Te•t/FTE 27,911

Incremental 69,777 94

24 yean & Job cateeorv youncer 25·34 years 35-44 years

Comb,ned Lab & 68 112 48 Lab Tech 54 403 456

122 515 504

69,006,944 72,595,305

2,374 2,448 2,321 2,364

(53) (84) 2234 2234

)22) (22)

(49) IS!) (61) (61)

(441 (44)

149 149

(28) (30)

45·54 years 55·64 years

76 27

587 383

663 410

76,370,261

2,524 2,407 1117) 2234

(22)

(541

(61)

(44)

149

(33)

65 years and

older

0 20

2.0

80,341,515

2,603 2,451

(153) 2234

3,700 1,600 3,500 3,400 3,300 3,200 1,100 1,000

c: l:m 2�700 2,600 2,500 2,400 1,300 2,200 2,100 2,000

(22)

(57)

161)

144)

84,519,274

2,686 2,494

(191) 2234

(22)

(60) 161) (44)

149

9

88,914,276 93,537,818

2,771 2,538

1233) 2234

(22)

163)

(61)

(44)

149

_42 __ _ 160,000,000

140,000,000

120,000,000

100,000,000

2,860 2,642 (217) 2234

(22)

(66)

144)

149

16

98,401,785

2,952 2,747

(204) 2234

(22)

(70)

(44)

149

13

!0,000,000 -MLT Requlred 60,000,000 - Ml T Av1i11ble 40,000. 000 -Atthtltv 20,000 000

�,� �'"" �b,v �,� �o� .... ��� �1' �b� ,a ,o -& '\.o '\.o .,_.o ,a '\o

Total

331

1903

2234

82

103,518,677 108,901,649 114,564,534 120,521,890 126,789,029 133,382,058

3,047 3,147 3,250 3,358 3,470 3,587 2,818 2,890 2,961 3,032 3,103 3,174 (229) (257) (290) (326) (367) (4131 2234 2234 2234 2234 2234 2234

(22) (22) (22) (22) (221 122) 1335)

(73) 177) (81) (85) (90) (94) (1,018)

(430)

(44) (44) (44) (44) (44) (44) (663)

134) (34) (34) (34) (34) 134) (202)

149 149 149 149 149 149 2,235

(241 (28) (32) (37) (41) (46) (4131

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DRAFT Not for Distribution

Laboratory Services

Service Model i ng September 20, 201 1

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Table of Contents Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Business Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Current State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 Cost Drivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . J O Service Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Error! Bookmark not defined.

A: Status Quo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Error! Bookmark not defined. B: Ultra-Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Error! Bookmark not defined.

Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

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Exe c ut ive S u m m a ry

B u s i n es s Ove rvi ew

An effective laboratory service is an essential part of a qua lity hea lth service and plays major roles in both

research and teaching. Laboratory tests provide health practitioners with objective information that is

needed to prevent, diagnose, treat and manage disease. It is estimated that laboratory data have an impact

on over 70 percent of medical decisions1•

The functions to su pport patient care performed by laboratory medicine are numerous: • Identify the risk of developing disease

• Disease detection

• Planning and disease management

• Selecting safe and effective treatments

• M onitoring treatment response

• Identifying threats to patient safety and public hea lth

Laboratory medicine plays a vital consu ltative role in cl inical care in the areas of hematopathology, genetics,

infection control and transfusion medicine programs. In addition, research scientist and laboratory physicians

conduct basic and translational research w hich advances the understanding and treatment of disease.

U nder its mandate, AHS has assumed respons ibi lity for all clinical laboratory and public hea lth laboratory

services in Alberta. Laboratory Services provides a n i ntegrated provincial laboratory medicine & pathology

service supporting all acute care, community, and pu blic health testing across the province. Laboratory Services offers a com prehensive range of routine a nd s pecialized testing and clinical consultation in adu lt,

perinatal and neonata l pathology.

Laboratory services supports over 2,400 employees with services available seven days a week across 162

accredited metropol itan and rural laboratory s ites. Laboratory services performed over 60 mill ion laboratory

tests in 2010. Each laboratory is equipped with diagnostic instru mentation and staffed by laboratory

professionals with extensive techn ical and scientific tra in ing w ho are a l l committed to qua lity testing and

services.

In addition, Laboratory Services actively supports cl inical trials and applied research. Through the integration

of Laboratory Services with teaching hospita ls and u niversity medical schools & col leges, research, education

and tra in ing opportunities are provided to a broad range of health care professionals and students of

laboratory medicine and pathology.

La boratories follow a stringent accreditation process and are accredited through such orga nizations as the

College of Physicians and Surgeons of Alberta (CPSA); College of American Pathologists (CAP) and the

I nternational Organization of Standardization ( ISO). Laboratory Services has developed objectives that a l ign

with the strategic direction of AHS.

1 ASLP Pathology's Future: A V iew from Leaders in Health Care, June 20 1 0

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Vision

"Right test, right time, right place, right cost"

Mission

Our mission puts patients first by providing services which are: • Highest qual ity, optimised for our contribution to the care pathway • Responsive to users: convenient, accessible, effective, safe, appropriate • Cost effective : managed from end to end adopting innovative technologies operated by a well trained

and engaged workforce • Integrated: supporting acute care and community based services; enhancing other cl inical services

( i .e. cancer care) and population and public health.

C u rrent State

Description of Service

In the major metro of Edmonton, existing laboratory services operate under a mix of public and private

service del ivery. The Un iversity of Alberta Hospital (UAH), AHS' hub laboratory in Edmonton is a fu l l service

laboratory2 performing h igh volume, specialty and esoteric testing for Northern Alberta. UAH laboratory

infrastructu re, i .e. qua l ity, safety and education, supports Rapid Response laboratory (RRl) Operations at the

fou r metropolitan hospital (two Covenant Health Board Operated), the cancer la boratory {CCI ) and six rural

facility laboratories. UAH, cancer and metropolitan hospita l laboratories have on s ite pathology services.

Dynalife DX {DlDX), a contracted private services provider, operates a l l Patient Service Centres { PSC) a nd the

major h igh volume d iagnostic facil ity in Edmonton for community testing. With exception of testing at the

UAH and CCI, a l l routine testing from the rapid response and rural laboratories is sent to DLDx for testing.

This includes a l l routine chemistry and hematology; all microbiology; and a l l anatomic pathology processing

(s lides a re returned to hospita l pathologists for reporting). DlDx maintains a very robust transportation

network within the city

The service contract with DlDx, expiring March 3 1, 2015, is very specific in terms of exclusivity and test splits

between UAH and DlDx. Duplication, redundancy and excess capacity was intentional ly bui lt into the system

in M icrobiology, Anatomic Pathology, toxicology and h igh volume hematology and chemistry. The majority of

specia lty and esoteric testing ( i .e . molecu lar pathology, immunohistochemistry, special chemistry, flow

cytometry, etc) is not duplicated and is performed at UAH.

In the major metro of Calgary, existing laboratory services a re provided by Calgary laboratory Services (ClS),

a whol ly owned subsidiary of AHS. ClS, an independent service provider, is governed by it s own Board,

pol icies and organizational structure including corporate services ( i .e. finance, human resources, supply chain

management).

like Edmonton, a number of PSCs are operated across the city with testing directed, via an advanced

transportation network, to a central Diagnostic Service Centre (DSC) for testing. Also s imi lar, is the operation

of RRls in each of the fou r hospitals, provid ing urgent and priority testing, referring routine, esoteric and

specialty testing to the DSC. All hospitals have on s ite pathology services.

Two notable differences from the Edmonton model include:

� Acute Care Microbiology at UAH is integrated with the Provincial Laboratory for Public Health and discussed in that section.

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1. The laboratory at the Footh i l ls Medica l Centre (FMC), Calgary's academic and tertiary care hospital is

not a fu l l service laboratory. Although some expanded services a re centra lized to this site ( i .e. flow

cytometry and transfusion services), there is little duplication between this laboratory and the testing

provided at the DSC.

2 . Community and hospital laboratory operations fal l to one service provider under one organizationa l

structure. This effectively el iminates any competitive interests between public/private and

community/hospital laboratories, resulting in an integrated model with standard ized procedures and

qua lity practices.

Outside of CLS, AHS provides some routine and special ized services in the Calgary Zone. This includes Genetic

Testing at the Alberta Chi ldren's Hospital (ACH ), operation of Provincia l Laboratory for Public Health (deta iled

below), Special ized Cancer Care Diagnostics at Tom Baker Cancer Cl inic (TBCC) and operation of all Calgary

Rural Facil ity Laboratories. As of January 1, 2012" all c l inical testing from TBCC will t ransfer to CLS, and CLS

wil l have taken over management of a l l Calgary Rura l Laboratories.

Outside of these two primary urban centers, medical laboratory testing and pathology service levels and

delivery models va ry; however, a hub and spoke test referra l model is commonly used, following legacy

regional referral l ines .

Suburban H ospital faci l ities (5) have relatively full service laboratories performing chemistry, hematology,

transfusion medicine, microbiology and anatomic pathology. Each laboratory acts as the major service hub

for the smaller rural laboratories in each zone. Low volume and s pecialized testing are referred to one of

three locations for processing: • South Zone refers to CLS • Central Zone refers to DLDx or UAH (former legacy region contracts) • North Zone refers to DLDx or UAH (former legacy regional contracts)

One distinct d ifference is the Northern Lights Regional Hospital in Fort MacMurray. DLDx holds the contract

for complete laboratory services in the former Northern Lights Region. The Northern Lights Laboratory

functions much l ike a RRL with most routine testing transported to the DLDx Base Laboratory for testing.

Approach to community services vary across subu rban communities:

• Medicine Hat is contracted to Medicine Hat Diagnostic Labs (MHDL) a smal l private laboratory

operating only in the Medicine Hat a rea.

• AHS operates a l l Lethbridge collection facilities (5) and testing is central ized to the regional hospital

laboratory.

• DLDx operates the collection faci l ity in Red Deer, referring testing to the regional hospita l laboratory.

• AHS operates two collection faci l ities in G rande Pra irie and testing is centra lized to the regional

hospital laboratory. • DLDx operates the collection facility in Fort MacMurray and testing is centra lized to the regional

hospital (DLDx operated) or to the Edmonton DLDx Base Laboratory.

Outside the subu rban communities, ru ra l hospita l laboratory menus vary. Depending on former legacy

regional design, hospital services and geographic isolation, laboratories range from minimal stat hematology

and chem istry menus to basic m icrobio logy and anatomic pathology testing. More complex and special ized

testing referrals fol low the same patterns as described for suburban laboratories.

Most rural hospital laboratories provide com munity collection and testing services, referring offsite testing through their defined hub and spoke referral routes. The exception is Cam rose and Lloyd minister where DLDx

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operates a stand a lone collection facil ity in these communities, referring testing to their base laboratory in

Edmonton.

Reference and esoteric testing for the province is performed at in both Edmonton and Calgary:

• AHS Genetics and Molecu lar Diagnostics Laboratories a re integrated under one administrative and

medical structure located at UAH Edmonton and ACH Calgary. Some duplication and redu ndancy

exists across laboratories

• ProvLab performs most specia lized and esoteric microbiology testing for the province. Testing is

l imited to one site or the other, with necessary redundancy bui lt in across the two laboratory sites.

• Special ized Cancer Biomarker Testing at the cancer facilities in Calgary a nd Edmonton are currently in

the process of i ntegrating into the service del ivery of CLS and UAH respectively. Du plication across

the two cities exist.

• UAH and CLS have significant special ize Hematology, Coagulation, Chemistry, Toxicology and

Molecular Pathology testing menus. Du plication across the two cities a nd laboratories exist. Low

volume assays are genera l ly performed in one location or the other. Very low volume assays are

referred to reference laboratories in eastern Canada or the United States for testing.

• Two H LA Laboratories, UAH and CLS operate in the province. UAH focus on solid tissue

transplantation while CLS focus on bone marrow transplantation. This level of special ization results in

little duplication whi le a l lowing for some redundancy of equipment and staff expertise.

Public health laboratory is a full Service AHS Microbiology/Public Health Reference Laboratory (ProvLab) is a

fu lly integrated laboratory located across two sites in Edmonton {UAH site) and Calgary {FMC site). The

Edmonton Laboratory is fully integrated with the acute care d iagnostic cl inica l m icrobiology service for the

University of Alberta Hospita l in cooperation with UAH Medical M icrobiology. The Calgary Laboratory,

a lthough in close proximity to the CLS laboratories at FMC and the DSC is not integrated within any other

Calgary Laboratory Service.

Public health laboratories play a role in monitoring, and helping to control diseases and other agents that

could potentially threaten population health in contrast to medical laboratories, which conduct testing to

d iagnose conditions affecting individua l patients. Public hea lth laboratories safeguard the health of

communities. The ProvLab collaborates with the other provincial and territorial, national and internationa l

publ ic health and emergency response agencies.

Core Functions: • Acting as the provincial laboratory centre to su pport disease prevention, control, surveillance and

epidemiology through integrated data management. • Providing specialized reference laboratory testing in cl inical and public health microbiology and

environmental toxicology. • Providing expertise in the identification of new or emerging infectious agents and the development of

appropriate tests. • Providing ongoing data and information to the Chief Medical Officer of Health and Alberta Health Services

Medical Officer of Health in order to monitor health and disease of the population. • Providing the laboratory expertise in Emergency Preparedness and Response. • Responding to requests from the Chief Medical Officer of Health and Alberta Health Services Medical

Officer of Health in epidemic or other emergencies.

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• Pursuing education, research and development activities in support of its other responsibil ities for

securing optimum public hea lth. • Providing input as requested to assist the development of public policy to support population health. • Promoting laboratory improvement through input into legislation regulation and accreditation processes. • Providing acute care, d iagnostic c l in ical microbiology for the University of Alberta Hospita l .

Service areas include: • M icrobiology to include Bacteriology, Parasitology, Mycology • Level l I I Laboratory - Centra lized testing for provincial lab diagnosis of tubercu losis • Bacteria l Typing Unit (BTU)

• Environmental M icrobiology • Molecular D iagnostics • Virology/Serology

Summary of Testing Facilities by Provider

North Zone Edmonton Central Zone Calgary Zone South Zone

Zone

AHS 33 21 29 9 16

CLS - - - 10 -Covenant 1 2 5 1 -DLDx 4 1 - - -M H DL - - - - 1

Un ited - - 1 - -Total 38 24 35 20 17

Summary of Operating Budget and Activity by Zone and Program

Zone 2010/2011 2010/2011 2010/2011

Operating Budget Medical Affairs Activity

(millions) Budget (millions)

(millions)

North $42.2 4.6

Edmonton $137.5 $ 19.7 22.0

Central $43.3 5.7

Calgary $ 196.2 Included in 22.0

Operating

South $37.8 4.3

Provincial Lab for Public $40.6 1.6

Health

Genetic Services $16.0 0 .1

Cancer Services $ 11.6 <0. 1

Provincial Administration $5.1 n/a

Total $530.4 60.5 •covenant operatmg budgets not available

Total

108

10

9

5

1

1

133

2010/2011

Activity -

Covenant*

(millions)

0.5

1.7

.4

<0. 12

2.6

Calgary Zone laboratory services operating budget is $39 mil l ion more than the Edmonton Zone for rough ly

the same activity. CLS budget comprises the majority of Calgary Zone ($ 190.4M). This amount includes

internal amortization and all corporate fu nctions that are not costed to laboratory services budgets across any

other zones. When comparing Edmonton and Calgary, some consideration must a lso be given to

misal ignment of budget between Edmonton Zone and provincial programs ( i .e . UofA acute care microbiology

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is budgeted for under the Provincial Lab for Public Health Budget). Furthermore, the laboratory operating

budgets for the M isericordia and Grey N uns Hospitals (Covenant Sites) a re not reflected in the Edmonton

Zone Operating Budget, further skewing a h igh level comparison. Further review of Edmonton and Calgary

Laboratory Costs is currently u nderway and wil l be reported under separate cover.

Workforce

Technical and Administrative

Combined AHS, CLS and DLDx Workforce Demograph ics as of June 2011

24 years & 25-34 35-44 45-54 55-64 65 years

Job Category younger years years years years and older Total

Combined Lab & X-Ray Tech 68 112 48 76 27 0 331

Lab Assistant 331 731 672 499 267 29 2529

Lab Tech 54 403 456 587 383 20 1903

Exempt 17 59 82 134 94 12 398

Total 470 1305 1258 1296 771 61 5161

% of Total 9% 25% 24% 25% 15% 1%

Combined AHS, CLS and DLDx Workforce expressed as a percentage of Job Category

24 years & 25-34 35-44 45-54 55-64 65 years

Job Category younger years years years years and older

Combined Lab & X-Ray Tech 2 1% 34% 15% 23% 8% 0%

Lab Assistant 13% 29% 27% 20% 1 1% 1%

Lab Tech 3% 21% 24% 31% 20% 1%

Exempt 4% 15% 21% 34% 24% 3%

There are three training programs for laboratory technologist in Alberta: University of Alberta (BSc M LS),

Northern Alberta I nstitute for Technology (NAIT) and Southern Alberta I nstitute for Technology (SAlT). Formal

medical laboratory assistant tra in ing programs are offered through NAIT, SAlT and Red Deer Regional College

(RDRC). The following table detai ls program and training capacity.

UofA NAIT SAlT RDRC Total

M LT/M LS 29 32 48 109

M LA 42 64 20 126

CLXT 40 40

Cyto Tech 7 7

Each of the above training programs requires significant practical tra in ing in the laboratory. AHS, CLS and

D LDx actively partner with the educational institutions to provide practicum space for tra in ing. Approximately

85% of practicum train ing is provided in Edmonton and Calgary, with 15% offered in the suburban and rural

faci l ities.

Medical Professional

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Adequate AHS data on medical professiona l staff demograph ics is not avai lable. The fol lowing information

was obta ined from CLS.

24 years & 25-34 35-44 45-54 55-64 65 years

Job Category younger years years years years and older Total

Medical 0 7 18 28 24 7 84

Percent of total 0% 8% 21% 33% 29% 8%

Univers ity of Alberta medical residency programs (Anatomic Pathology, General Pathology, Hematologica l

Pathology, and Medica l M icrobiology) a re five-year programs based at the U n iversity Hospita l and supported

by other sites within the Edmonton Zone. Residency programs in the laboratory specialties are provided under

the u mbrel la of the Uof A division of Postgraduate Medical Education (PGME). Twenty-five res idents a re

cu rrently registered in these programs ( 15 anatomica l/general pathology; 5 medical microbiology; 5

hematological pathology). Junior residency training is centered at the UAH; senior/specia lty rotations a re

done in collaboration with a l l the laboratories in the zone. The laboratories a lso provide training experiences

for about 45 'off-service' residents per year, who are studying towards medical and surgical specialties .

U niversity of Ca lga ry residency programs in the laboratory specialties are five-year programs provided at CLS

under the umbrella of the University of Calgary Postgraduate Medical Education (PGM E) office. The U of C

Department of Pathology & Laboratory Medicine (DPLM) offers residency train ing programs in Anatomic

Pathology (AP) and Neuropathology (NP) and a tra ining program in General Pathology is being developed.

Currently, there are 17 AP and 3 NP residents in these programs (n.b., despite the small numbers in the N P

residency training program, i t i s t h e largest a n d most active i n Canada). These training programs a lso su pport

res idency tra in ing in other medical and surgical d isciplines; � 12 and � 15 off-service residents rotate in AP

and NP each yea r, respectively. Although not official residency programs in themselves, Hematological

Pathology and Medical M icrobiology training is provided to rotating off-service residents (n = �18 and �4,

respectively). The DPLM and CLS a lso provide sub-specialty fellowship tra in ing in about a dozen disciplines.

Cost D rive rs

A number of broad hea lthcare trends wil l significantly increase the demand and cost of laboratory services.

Demographic • Aging population

• Longer l ife expectancy

• Increased burden of cancer

• Increased burden of chronic d isease

• I ncreased doctors in the workplace

Health System Goals • Increased numbers of doctors in the workplace

• Clin ica l practice changes in acute and primary care

• Emphasis on prevention and public health

• Chronic disease management

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Science and Technology

• Better, faster, smal ler, less invasive point-of-care systems

• Rapid advances in technology (Mass Spectrometry, proteomics, Lab on a Chip)

• Molecu lar Diagnostics

• Automation

• In vivo diagnostics

• Personalized medicine

Consumer

• G reater consumer awareness

• Patient self screen ing

Health Information Technology • Advances in hardware and software

• Improved connectivity

• Electronic Health Record

• Digital Pathology

• Patient Self Service

• Automated specimen logistics

• Uti lization management

• Rules based decision support

• Data min ing

P roject i o n s

Activity

Futu re Alberta laboratory test

volumes are forecasted using

historical activity data for a l l

laboratory areas and operators

between 2008/09 to 2010/11.

Average annual test activity

increase for this period was

5.28%. Annual activity

projections are 74.3, 96.1 and

124.3 m il l ion tests in years

2015, 2020 and 2025

respectfu lly.

Projected Alberta Laboratory Test Volumes

140,000,000

120,000,000

100,000,000

80,000,000

60,000,000

40,000,000

20,000,000

124,273,3 55

FY09 FY1 0 FYl l . . . . . . . . . . . ... F¥1 5 F¥20 F¥25

92

Operating Expenses

APPLICANT COPY

Projected Alberta Laboratory Expenditures

Laboratory expenditu res a re extrapolated

using h istorical cost data from key

laboratory areas with sufficient and

consistent financia l reporting ( Edmonton

Zone, Centra l Zone, Calgary Zone, a nd the

Provincial La boratory for Pu blic Health)

between 2007/08 to 2010/11. Average

annua l expenditu re increase for this period was 4.73%. This increase included

expenses related to both inflationary and

volume increases. Laboratory Services

gross operational expenditures

extrapolated from $496M in base year

2010/2011 out to 2025 is $940M to

$ 1,000,000,000 $900,000,000 $800,000,000 $700,000,000 $600,000,000 $500,000,000 $400,000,000 $3 00,000,000 $200,000,000 $ 1 00,000,000

,---------------$9.49,.60.8,.4_7_9 __

lJ8;454,b84

$-

FY15 FY20 FY25

satisfy an estimated demand of 120M

tests provincially. In addition, Laboratory

Medical P rofessional expenditu res, which

fa l l outside of the Laboratory Services

budget, are expected to dramatica l ly

increase. Based on the information

obtained from Medical Affa irs, Ca lgary and

Edmonton spent over $43 mi l l ion on

Laboratory Medical P rofessionals and have

seen a combined average increase from

2007/08 to 2010/11 of 7 .57% annually.

Extrapolated Laboratory Medical

P rofessional expenditures from the base

year (2010/11) out to 2024/25 using the

7.57% average increase projects

expenditu res of over $150 mil l ion. It is

important to note that the projected $150

mil l ion does not include costs for

La boratory Medical Professionals from

North Zone, Central Zone, South Zone, Provincia l Laboratory for Public Health, or

Genetics.

Estimated Alberta Laboratory Pathologist Expenditures

$ 1 60,000,000

$140,000,000

$ 1 20,000,000

$ 1 00,000,000

--- -U52 096 7.95 t . . ,. -

Capital Investment

$80,000,000

$60,000,000

$40,000,000

$20,000,000

$-

$73.292,776

·;I -

-·:

-

!'-FY1 5

--

:u uS;582;1.7 o ....---

F>

FY20 FY25

Significant ca pita l investment in Laboratory Services is requ ired. AHS, and legacy health regions before, have

not kept pace with the requ ired investment in equipment, IT systems and space infrastructure.

Immediate investment of $25M in equ ipment is requ i red. Additiona lly, AHS should expect to invest $12 -$ 15M annua lly on equipment replacement (based on a 10 year replacement schedule of $150M capita l asset

calcu lation, includes CLS).

I nvestment is a lso required in aging faci l ities that a re poorly configured to meet cu rrent capacity and

workflow. 60 infrastructure management projects ( IMP) have been identified in laboratory facilities across

93

--

L--

-

I--

1 -=

APPLICANT COPY

the province. A conservative estimate of magnitude on immediate renovation requ i rements is $3 M ill ion.

This does not i nclude the capacity and workflow problems identified at the UAH, RAH and ProvLa b as deta iled

below. Ongoing investments in laboratory space and infrastructure maintenance should be at minimum $0.75

M i l l ion per year.

I n January of 2007, F lad & Associates (Fiad) was commissioned to conduct a cl inical laboratory masterplan for

the UAH, RAH and ProvLa b faci l ities in Edmonton. The scope of the study focused on near-term (0-5 years)

and long-term (5-10 years) deve lopment horizons.

The assessment of existing Walter M ackenzie space (UAH) and the RAH laboratory revealed • ProvLab's corrected space deficit not insurmountable, but requ i res a tota l "rebuild" to operate in the

projected M2

);> Rebui ld does not fu l ly accommodate future requ irements • Fifth F loor (AP) 6% oversubscribed

);> Requires captu ring underutilized space for grossing and h istology - high infrastructure

requirements

);> 13% oversubscribed by 2012 );> 50% increase in workload requ ires additional pathologists

• Fourth Floor is currently oversubscribed by 13%

);> 31% oversubscribed by 2012; 40% by 2017 );> Emerging technologies al l located on fourth floor

• RAH Lab is currently oversubscribed by 2 1% );> Admin istrative and pathology office space is largest need

);> Additional lab space is needed primarily for expanding AP grossing and blood bank );> Repatriation and projected growth of routine core lab testing wil l requ ire 58% more space by

2012

);> Expanded on site test menu wi l l requ ire additional

An order of magnitude budget was calcu lated by Flad & Associates for the Lab Master Plan. The budget for the relocation of the ProvLab and subsequent renovation is estimated at $98.8 mi l l ion.

New Area 8,970 m2

Renovated Area 8,430 m2

Total Area 17,400 m2

Construction Cost $71,624,203

Esca lation - 1 year ( 15%) $10,743,630

Contingency (20%) $16,473,567

Owner's Costs By Owner

Equ ipment By Owner

Total Costs $98,841,400

* This cost does not include long-term relocation of the RAH lab, estimated at $17 . 1 mi l l ion.

Capital Expenditure Summary

Immediate Equ ipment $25,000,000

Immediate IMP $3,000,000

UAH, Prov Lab and RAH Relocation and Redesign $98,800,000

Annual Equipment Expenditure (10 years) $150,000,000

Annual I M P Expenditure(10 years) $7,500,000

Total 10 Year Investment $284, 300,000

94

APPLICANT COPY

Information System Investment

The current laboratory service is supported by 9 separate Laboratory Information Systems { LIS) . To improve

integration of laboratory resu lts, streamline information management, reduce duplication of testing,

el iminate manual reentry of resu lts, facil itate specimen tracking and logisitics, and support testing

consol idation, a un ified LIS system is necessary. Regardless of the laboratory service model selected, a

com mon LIS is requ ired. Budget to deploy Cerner Mi l lennium LIS (current Calgary Zone System) is estimated

at $30 M il l ion.

Computerized Provider Order Entry {CPOE) systems offer many benefits, including reduced test turnaround

time, improved test uti lization, and better adherence to practice guidelines. Stud ies have shown a s ignificant

reduction in laboratory orders {15 - 40% need to find a reference). CPOE, a lthough not standard ized or

optimized, is currently in use in a l l acute care faci lities with the exception of the Edmonton Zone. Significant

opportunity exists to impede uncontrolled laboratory testing increases and reduce unnecessary duplication

through the implementation of a provincial community based CPOE system and fu rther rol l out to the Acute

Care Facil ities in the Edmonton Zone. Budget to implement is estimated at $35 M il l ion.

D igital Pathology, the practice of digitizing glass s l ide images ordinarily view under the m icroscope for virtual

review and diagnosis is expected to improve d iagnostic outcomes while maximizing pathologist resources.

While still in early stages of deployment, d igital pathology is expected to become common practice over the

next five years . Budget to implement is estimated at $50 M il l ion.

Summary of Information System Needs

Project Total Cost Estimate

Unified LIS $30 M

Computerized $35 M

Provider Order Entry

D igital Pathology $50 M

Total IS Needs $115M

Workforce

Overa ll , approximately 41% of the overa l l laboratory workforce in Alberta is expected to ret ire over the next

10 years (assumes reti rements in current age categories of >45 years) . When looking at individua l job

categories, 52% of Laboratory Technologists and 61% of Exempt Staff should be eligible to retire over this

time {2301 total staff). The cu rrent pool of graduating technologists is 109 students per year. Based on

cu rrent trends, only 47% of e ligible retirees would be replaced, assuming retirement forecasts a re accurate.

This does not account for non reti rement related separations, maternity leaves and new position resu lting

from increased activity levels.

At the cu rrent training levels and demographic profiles of existing employees, laboratory assistant training

programs appear to be sufficient to match future need.

The Canadian Association of Pathologist have published . . . . need publ ished information

Factors

95

APPLICANT COPY

There are difficu lt challenges to overcome and factors that must be considered in the design of a new

laboratory model in Alberta.

1. Vast geograph ies with concentrated popu lation in two u rban centers.

2. Need to provide equal access to testing to geographically remote rura l regions.

3 . Conflicting end-state beliefs among stakeholders.

4. M isal ignment between administrative and medical visions.

5. Competing research agendas among stakeholders .

6. Strong academic focus which is raised frequently and has impacted any service level changes at the

Un iversity of Alberta Hospital .

7. Alberta Hea lth and Wellness {Ch ief M edica l Officer of Health and ADM Commun ity and Popu lation

Health D ivision) have an active interest in the operation of the Provincial Laboratory for Public Health.

The true mandate of the public health laboratory is yet to be clearly defined.

8. Site based and local operating focus of pathologists.

9. I ndependent regional laboratories support "customized" service delivery to Zones.

10. The need for laboratory services in rural locations as a physician recruitment tool.

11. CLS continues to operate at a rm's length from AHS Laboratory Services.

12 . M istrust of the private laboratory among stakeholders.

13. Political tendencies of the private laboratory.

14. Limited access to capital i nvestment

15. Disparate information systems

16. Political misa lignment

O p p o rt u n it ies

A number of opportunities present themselves when considering an optimized laboratory model .

1 . Cost savings and futu re cost avoidance

2. Revenue potential through subspecia lty pathology practice

3. Operational standardization

4. Standard ized diagnostic testing and nomenclature

5. Homogenous qua lity management

6. Leverage laboratory and analytica l expertise

7 . Common Laboratory Information System and Order Entry System

8. Leverage investment in a much better and coordinated way

9. More effective and timely decision making

10. Abil ity to influence practice that will improve outcomes at a lower cost of patient care

11 . Research and revenue potentia l to access or mine consolidated provincial laboratory data

Se rv i ce M o d e l s

Given the existing resources and infrastructure for medical laboratory and pathology testing i n the Province of

Alberta, three basic service delivery models were identified as having the potential to serve the needs of the

health system during the coming 10 years.

96

APPLICANT COPY

1. AHS Zones managed. Provide or purchase services from existing major service providers

2. Tiered hub and spoke consolidated model with optim ized regional facilities.

3. Fu l ly outsourced Model

AHS Zone Managed

Key Characteristics • Decentral ized delivery of laboratory services.

• Managed at the zone level.

•

•

•

•

Zone to provide or purchase laboratory services at their discretion .

Consist of optimized hub and spoke model within the zone .

Standardization initiatives driven through provincial integration networks .

Consolidated purchasing and contracts through AHS infrastructure . s.24( I )(a) Pros Cons

Tiered Hub and Spoke Consolidated Model

Key Characteristics

• On site laboratory testing consisting of basic test menus based on cl inica l program need and specimen

stabi l ity l imitations

• Advanced logistics and specimen tracking

• Tiered hub and spoke concept ( referra l sphere)

• Tier 1 regional hubs having expanded test menus to meet the clin ical needs of the regional facilities.

Service level/test menu decisions based on LEAN principles, capacity and cost effectiveness.

• Tier 1 hubs provide basic su pport to spoke laboratories.

• Tier 2 hubs ( Edmonton and Ca lgary) consolidating testing not performed in Tier 1 regional hubs

• Tier 2 hubs administer standard operating, qual ity and safety procedures for al l labs in their referra l

sphere.

• Tier 2 hubs provide more complex support, includes pathologist consu ltation, qua lity management,

accreditation, professional development, etc.

• Tier 2 hubs manage patient service centres (stand alone and in hospita l ) : standard operating

procedu res; patient appointment bookings; transportation networks.

97

APPLICANT COPY

• Specia lized testing and provincia l centres of excellence ( includes Provincial Lab for Public Health and

Genetics)

Structure • Single management (administrative and medical) and point of accountabil ity for each hub and a l l

laboratories within the referra l sphere.

• Accountable for standardized practice across al l sites in the referral sphere.

• North and South spheres would be connected scientifically and operate as a cooperative with a

un ified administration.

• Integrated information technology platforms.

• I ntegrated bus iness intell igence tools.

Pros

Design

s.24( 1 )(a) Cons

98

APPLICANT COPY

• CLS would be expanded and would be responsible for service provision for South, Calgary and South

Central Zones.

• A portion of Provincial AHS Laboratory Services Staff would be integrated into the expa nded CLS

structure.

• Little infrastructure investment requ i red to support this transition.

North • AHS/DLDx partnership to manage laboratory services in the North, Edmonton and North Central

Zones.

• Propose a new base laboratory (Tier 2 hub) be bui lt in close proximity to the UAH campus to handle

al l community, hospital and specialty testing.

• A portion of Provincia l AHS Laboratory Services Staff would be integrated into the AHS/DLDx

partnersh ip.

• Draw on DLDx parent company resources and expertise to manage the referra l sphere.

Assumptions: • DLDx would invest capital to facil itate new base laboratory

• Partnership would involve integration of admin istrative, technica l and medical staff across both

organizations.

Issues/Risks s.24( 1 )(a)

Fully Outsourced Model

Key Characteristics

• Delivery of hospita l and community laboratory services wou ld be provided by a private laboratory

service provider

• Delivery would be managed through accountability and contract agreements s.24( 1 )(a)

Pros Cons

99

APPLICANT COPY

s.24( l )(a)

A n a lys i s

The fol lowing tables compare each potential model against identified opportunities and impact t o long range

projections.

Opportunities

Opportunity

Cost savings and future cost avoidance

Revenue potential through subspecia lty pathology practice

Operational standardization

Standardized diagnostic testing and nomenclature

Homogenous quality management

Leverage laboratory and analytical expertise

Common Laboratory Information System and Order Entry System

Leverage i nvestment in a much better and coordinated way

More effective and timely decision making

Ability to i nfluence practice that will improve outcomes at a lower cost of

patient care

Research and revenue potential to access or mine consolidated provincial

laboratory data

Projections s.24( l )(a)

Zone Managed I Tiered Hub and Spoke I Activity

Technical Workforce

1 00

s.24( I )(a)

Z M d I Tiered Hub and I one anage Spoke

Fully Outsourced

Fully Outsourced General Comments

Specific utilization strategies, independent of the laboratory model, are required to have any significant impact on activity growth and associated costs.

Regardless of model, still project significant workforce shortages over the next 10 years. Detailed review of workforce projections and

APPLICANT COPY

s.24( 1 )(a)

training programs is required.

Professional Workforce

Operating Expenses

Capital Investment

Information Technology Investment

Of the three potential models, only the tiered hub and spoke model wi l l be ana lyzed in more deta i l . The Zone

managed model was rejected on the premise that it does little to support the opportunities existing in an

optimized laboratory model and projections were either unchanged or s l ightly worse than the current

systems.

The fully outsource model, although demonstrating a nu mber of opportunities, was rejected for the following

reasons: • Pol itica l ly unacceptable

• Very h igh risk

• M assive labour implications

1 0 1

APPLICANT COPY

• Budget gains (excluding ongoing capital investment) do not appear to be significant gains over

internal or partia l ly outsourced solutions

• Past experience with private service provider specifically poor responsiveness and l imited relationship

between the laboratory and cl in ical sites.

Tiered Hub and Spoke Model <<Detai led Analysis>> What is this going to do to the projections??

Reco m m e n d at i o n

1 02

Labontory ServitH

Fl!Uil'ldd An�tyall of Syltematk Chln&H

s.25( 1 )( c )(i i i)

Le1•M

Whit• S��tus Chla Model

Blue Activity or tMI1et lmp�ct for e�ch ch�n1e Initiative

Green Post Ch�n1e Model

APPLICANT COPY

1 03 P11e 1 of 6

LabDntory Servtcu

Fhundal AM!ysb of Systemltk Chlil\ltl

Metro/Terdny/Rd•rence

Chemlstty/Hem•toiiY

Chemlstry/Hematolty Chemlstry/HematoliY

Ttanduslon M@diclne

Tr.anduslon Medicine

Tr.anduslon Medldne MluobloloJY

MlucbloloJY Mluobk>loJY !Anatomic PatholoBY

Anatomic Patholorv

Anatomic PathoiOIV

Esoteric

Esoterit

s.25( 1 )( c )(i i i) Activity

Cost/T�t Total Cost

Activity

Cost/Test

Total Cost

Activity

Cost/Test

Total Cost

Activity

C05t/Test

Tat11I Cost

Attlvlty

Cost/Test

49,011,7&4 $ J4J,DM,745

53.542.209 $ !H,601,tS4

UAH olilalal. ...,_IMknl' Closure of MitHdrii Hit Cornrnu Lab Chem Hem: Closutt of Medkfne"Hat ��_Lib (Micro ... O<ftiiHM� Chemlstry/Hem�toi&Y • Activity

Chemlmy/Hematofay Cost/Test

Chemlstry/Hematoljy Total Cost

Transf�nlon Medicine Activity

Trandusion Meditlne Cott/Test

TrarufusJon Medltine M.croblolosv

M croblolorf

M·crobioloJY

An.Jtomlc Patholoav Anatomic Patholoty An1tom c PilthoiOIY Esoteric Esoteric

Esoteric TotaiArtlvlty Total Spend PSC

Total With PSC �

Lea•nd

White: StiltUI Quo Model

Tati11Ca5t

Activity Cast/Test

TatiiiCast

Activity

Cast/T•lt

TataiCo1t

Activity Can/Test

Total Cost

TataiCost

� 34J,OU,745 $

53,542.209 s 196,601,95-t s • ·S

Blue: Ac:Uvlty or bud1et impact for eath thanae Initiative

Green: Po1t Chante Madel

52,602,951 56,534,336 59,474,122 62,566,776 59,481,301 359,561,712 $ 375,640,1Z6 $ 4DD,IlZ,IZ4 S 404,715,157 $ 403,803,112 $

55,148. 475 s 56,802,929 s 5B.S07,017 $ 60,262,228 s 62.070.095 $

414,710,187 $ 43Z,441,055 $ 4S!t,Jl9,14J $ 4&5,047,115 $ 465,871,177 $ 4,953.567 ·S 11,664,647 s 10,686.243 ·S 32,462,083 ·S 60,780,755 ·S

APPLICANT COPY

62 093,649 64,722,993 67,9",n6 70,150,291 73,964,536 77,JD5.3Z!t

426,664,6&0 $ 452,954,9U $ 415,091,061 $ 503,353,1U S 521,625,014 $ 551,291,421 $ 63,932.197 s 65,850,163 $ 67,825,668 s 69,860,438 s 71,956,251 s 74,114.939 s

490,596,151 $ 511,1105,015 $ 54Z,9Zl,l19 $ 573,U4,070 $ 600,511,335 $ 615,41),361 $ 66,965,065 · S 71.536,534 -S 12,1B4,6ll0 ·S 88,770,342 ·S 100,518,410 ·S 107,179,192 ·S

1 04

10,179,751 710,270,140

� 716,W,121

10,380,J86 593,162,717 $

76,338,387 s 670,20J,174 $ 116,408,054 ·S

94,lU,100 754,676,971

18,628,539 111.305.512

83,7S4,162 621,Jl1,171 $

78,628,539 s 706,!60,417 s 126,345,095 ·S

� IOJ,I59..J71

� 112,1.U,17l

17,155,366 564.117,!71 s

80,987,395 s 745,105,171 s 137,041,400 ·S

104,992.011 l5J,H1,626

1),411,017 9l5,40&,&.U

91,0&7,964 703,440,029

83,417,017 786,157,045 148.551,598

Pate 2 af 6

Llbon1tory Services Flnandal Analysis of Systematic Chanaes s.25( 1 )( c )(i i i)

'oi>IAII Lobs Chemistry(Hematolav A<thrity Chemistry/HematoliV Cost/Ten Chemistry/HematoliV Total Cost Transfusion Medicine Actlvlty

1Transfusion Medicine Cost/T�I Transfusion Medidfle Total Cost Microblolocv Activity

'Microbiolocv Cost/T�I MicrabloloiY Total Cost

�Anatomic Patholoay Activity

,Anatomic Pathaloav Cost/Test Anatomic Patholoav Total Cost Esoteric Activity Esoteric Cost/Test Esoteric Total Cost �otaiActlviry Total 5pend �

471.442.014 PSC Total Cost 53,542,209 !Total With PSC

Activ1ty

I

Chomi"'V/HomotoiiY Chemistry/Hematolay Cost/Test Chemistry/Hematolav Total Cost

515,914,123

Transfusion Medicine ActiVity Transfusion Medicine Cost/Test Transfusion Medicine Total Cost M uabioloav Activity Mlcrobloloav Cost/Test M1crobioloav Toto11 Co�t Anatomlc Patholoay Activity Anatomic PathaloiV Cast/Test Aniltomlc PathoioBY TotiiiCon Esoteric Activity Esoteric Cost/Test Esoteric Totai C01t

��::::::�� 12.353 569 471,441,014

PSC Total Cos� 53,.$42 09

65.515,955 501,979,019

55.141,475 557,127,564

$ --4�:.�:::�� $

551 ... 475 5 ITotaiWith JtSC 525.!14,223 s ..... "'

·I 12,Mo 115 -$ NI'V ' " $11,SH, 7�

Leaend White Status Quo Model Blue. Activity or bud1et Impact for each chanae initiative Green• Post Chanse Model

59,006,144 533,362,822

S5.8"l)2,92!:1 590,165,751

69,006 !44 496,65!,7'74 $

50.102.!29 s 553,411 70:5

36 704,041 s $34 908,190

71,595,305 � 58.507,017

625,115,681

72,595305 530,066,439 $

51..507017 $ 7J .. 5

36,641.116 -s 5ll.!illfr,l•(

71.370,161 601,139,191

iO,M2.na 661,401,519

76,370,151 525,091,457 $

6016 311 s 515 ICI,&IS

77,040,134 ·S $69 686,351

� 639,785,039

62,070,095 701,155,134

71,515,199 511,491,114 $

62 010..ot5 ........... s 118,292,115 ·S

$104 349,85

APPLICANT COPY

� 679,714,400

� 722,214,521

93,537,111 � .fi3,932.197 65.850.163 167.125,668

743,716,597 711,134,614 135,167,417

75,649,121 71,141,196 11,177,073 533,188,783 $ 565,512,934 $ 576,701,386 $

63,3 1!7 65.150 163 $ 57..115.668 s 597120 10 $ 111,17 ... Z7 s 146 SH,Il7 ·S Ui,7&1,SB6 -$ J,tof4CI,J63 · $ SI1£o l llJ!:i $13151838 S I �06l 61

1 05

� 115,422,207

69,860,438 185,112,645

85,652 1&9 610,520,956 $

69160431 s u 94 $

204,901,151 ·S $161,0!., 1 1

103,511,177 166,402,404

71.956,251 931,351,655

19,176,330 620,571,937 $

71 956 251 $ .. , .. s 145,830,466 s 5191.294,54

51 C23,936,3D&

101,901,&49 920,569.112

74,114,U!J H4,614,121

U Oi3,712 658,121.624 $

74-114,39 s .... s

162,441 257 -$ $199 16693

114,564,534 97i.iii'9ii 76.331,317

1,0$4,461,191

16,991,741 "5,821,934 $

76 33 317 , .. s

282,301 !77 ·S $208.926,80

120,511,190 1,039,276,118

78,628,539 1,117,!04,756

101,097,131 735,700,466 $

71,611�9 s 1102! 005 $

101 75,751 -s $219.105.86

126,719,02t 1,104,251,767

80,587,395 1,115,239,161

1D5,3n,o86 777,!84,113 $

10917395 151,11UII S

316,367,643 ·S $229,72100

133,312,058 1,173,289,587

83,417.017 1,256,706,604

109,139,069 !22,507,263

!3 17017 !05.!l4,110

J!t0.71Z,325 5240 7!9 75

52 1 2 1,646 68

Pa1e l of 6

Llbontory S.Mces fln11ndal Analysis of !iystematk Chanan

......., �. Rurai H�tal Rnlonal Hospital Metro/Tenlary/Reference Total " lnuease Operational SpeiMI

� RuralH�tal Re1tonat Hospital

incrust 0� Net Between Models

1-10000

sao.oo 560.00

$40.00

$20.00

s

JOllfU Cunent 6,090,619 7,181,186

49, 081,764 i1.i5i:56i

JOZ6flOZ7 Status Quo I10Z5IJOJ7 New Model u..o2s.sn I 7,296,233 15 361,452

104,9!'J2,012 iii.iii:iii 11,474,871 91.067,964

109,139,069 114"1 76"1

2011/12 Current 1016/2027 Status Quo 202&/2027 New Model

$ 62 2M S 154.4M S 58.0M

S 67 2MI S 166 9MI S 61 1M

2011/12 Current

CostfTestAII

S 700.8MI S 3S0.07MI $ 350.8M

$120.00

$100.00

$10.00

$60.00

$.40.00

$2000

s-•Chemlstry/Hematofn'•Tramf�.Aion Medicine

160,000,000 1-tO,OOO,OOCI

] 120,000,000 100,000,000 !0,000,000 • 60,000,000 � 40,000,000 20,000,000

f•Mttro/Tt:rtlary/Rel'ereMe •RqlonaiH!Kpital •Riol'aiHIKpCal

Coit/Ttst AII

APPLICANT COPY

Activity

t=J 1-: � s 201U12 Cunent

419,011,7'-t

7,111,116

6.090,619

M26/2027Staha 20l6/2027New

a ... ....... 104,992.012 91,067,964 15,361,452 11,474,171

13,011,593 7,2%,133

2026/27 Post All Changes 5120.00

510000 ---­SIO.OO 560.00

s.o.oo SlOOO

S-

Operational Spend

I • Mic.roblo&oav •An�tomk PatholoJY I •boterlc:

e Chemlstry/HerNtolcY • Transh.alon Medklne • MkrobiokJty

eAM�om1CP14holon ebotffk

CIKt/Test.-.11

echemlsttv/HematoiiY •Transi�.Aion MediciM •Mkrobioloo e.t.natomkhthokln e boterk ' ------

Lqend

2011/12 Current Operational Spend

White Status Quo Model

• chemistry/Hemat•trv

eTraMILAion Medicine

•MkrobloloiV

•Anatomk Patholol"'

•Esoteric

Blue. A.ttlvlty or budaet lmpiict for each ch•nae lnlt alive Green Post Chiin&e Model

2026/27 Status Quo Operational Spend

• ChemiltJy/Hematolr't'

• TIIMI�.Aion Medil:lne

• Mkrob'olol'l

eAnatomkPatholon

eEsoterk

2026/27 Post All Changes

• Chemlnry/Hematol(v

e Tramluslon Medltlne

• M•uobtolon

eAnatom< Patholoty

•Esotttk

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