DynaLife insolvent less than 90 days into contract for lab services, government documents show

When Alberta's United Conservative government contracted out community medical lab testing to a private company in December 2022, it said it would save tens of millions of dollars.

Two weeks before that contract with DynaLife Medical Labs was set to take effect, the company told the province it needed additional funding.

Less than three months later, DynaLife's owners said the company was insolvent and needed an additional $70 million. They soon asked the province to buy DynaLife, which it ultimately did at a cost of almost $100 million.

These revelations come from documents obtained by CBC News through freedom of information requests, including Alberta Health emails and briefing notes prepared for Premier Danielle Smith and health ministers Jason Copping and Adriana LaGrange.

The documents fill a gap in the public narrative of what happened between DynaLife taking on community lab services — such as collections of blood or urine for medical tests — in December 2022 and its purchase by the government nine months later.

Although increased wait times and other issues played out publicly, neither DynaLife or the government gave any indication of financial troubles.

"We have the benefit of knowing how the story ends," said Fiona Clement, a professor in community health sciences at the University of Calgary who reviewed some of the documents.

"But as I was reading through, I thought, it seems like there were lots of red flags at many different points along the way here."

DynaLife was a major provider of lab services in Edmonton and northern Alberta when the request for proposals for the privatization contract was issued in December 2020.

Two companies were shortlisted: DynaLife and Australian firm Sonic Healthcare. Sonic later withdrew, according to the documents, "based on timelines and Covid restrictions limiting travel."

In June 2021, DynaLife was selected. One year later, the contract had been finalized and was set to take effect Dec. 5, 2022.

However, two weeks before that date, "concerns with the financial viability of DynaLife emerged," according to a briefing note prepared for the premier in July 2023. The company requested additional funding "beyond the terms of the contract. No formal action was taken at this point as the transition was just underway."

The handover of community lab services from public provider Alberta Precision Laboratories (APL) to DynaLife was not smooth. Although the company had operated in Edmonton and northern Alberta for years, it was newly establishing itself elsewhere in the province.

In Calgary, lab wait times ballooned as DynaLife struggled to manage the volume of tests. Based on the documents, other problems were emerging behind the scenes.