Alberta Government Allegations: A Costs and Contracts Controversy

Cost Discrepancies and Billing Concerns

A recent investigation has uncovered significant discrepancies in the billing practices of a private surgical company in Alberta, raising questions about government interference in securing overpriced medical contracts. According to documents obtained by The Canadian Press, Alberta Surgical Group (ASG) was charging taxpayers more than double the cost per procedure compared to what it would cost in a public hospital. For instance, hip replacement surgeries in Edmonton were billed at $8,300 by ASG, while Alberta Health Services (AHS) estimated the same procedure would cost just over $4,000 in its own facilities. Another private competitor was charging even less, at $3,600 per hip replacement. These figures have sparked concerns about the transparency and fairness of Alberta’s healthcare contracting system.

Lawyer Rose Carter, representing ASG, has defended the company’s pricing, referencing a 2021-22 report from the Canadian Institute for Health Information (CIHI) that listed the average cost of a hip replacement in Alberta at $10,700. However, AHS has clarified that its internal cost estimates do not include additional expenses such as implant devices, diagnostic imaging, and lab services, which are covered by the agency. This has led to questions about whether ASG’s pricing reflects the full scope of surgical costs.

Allegations of Government Interference and Pressure

At the center of the controversy is a wrongful dismissal lawsuit filed by former AHS CEO Dr. Athana Mentzelopoulos. She alleges that Premier Danielle Smith’s then-chief of staff, Marshall Smith, repeatedly pressured her to sign contracts with ASG despite concerns about the company’s high rates and the beneficiaries of the deal. Mentzelopoulos claims she was forced to approve a six-month contract extension for ASG, which proposed slightly reduced rates for hip, knee, and shoulder surgeries but still charged significantly more than AHS’s internal costs. These allegations have not been proven in court, but they have prompted an investigation by Alberta’s auditor general, Doug Wylie, into AHS and Alberta Health’s contracting and procurement practices.

Premier Smith has dismissed the allegations, arguing that AHS leadership opposed the government’s efforts to expand publicly funded, private surgical delivery. She accused AHS of resisting change, either due to ideological reasons or to protect its own interests. However, Mentzelopoulos’ lawyer, Dan Scott, has rejected this characterization, stating that her concerns were centered on ensuring proper due diligence and transparency in the contracting process.

Government and Ministerial Directives

In October, Health Minister Adriana LaGrange issued a directive stripping AHS and Mentzelopoulos of their authority to approve contracts. This move came as AHS was negotiating a contract extension with ASG. LaGrange’s directive required AHS to accept the terms set by the minister, which included rates slightly lower than ASG’s initial proposal but still higher than AHS’s internal costs. For hip and knee surgeries, the minister’s rates were set at approximately $7,000, while shoulder surgeries were priced at $10,500—higher than what ASG had proposed.

LaGrange’s spokeswoman, Jessi Rampton, defended the government’s actions, claiming that AHS’s internal cost calculations were unreliable because they allegedly excluded overhead, administration, and capital maintenance expenses. However, Mentzelopoulos has countered that the government’s intervention undermined AHS’s ability to negotiate fair and fiscally responsible contracts.

Contract Details and Red Flags

Mentzelopoulos’ lawsuit reveals concerns about the terms of ASG’s original contract, which she claims included provisions unlike those in agreements with other private surgical providers. For example, the contract guaranteed payment for patients to stay in facilities for two nights post-surgery, even though such stays were not required. This unique arrangement raised red flags for Mentzelopoulos, who also discovered that ASG believed it did not need to adhere to the terms of its contract, based on assurances from AHS representatives.

Additionally, the email containing the pricing chart highlights proposed rates for two new surgical facilities in Red Deer and Lethbridge, both owned by numbered companies under the ASG name. Corporate records show that Sam Mraiche, CEO of MHCare Medical, holds a 25% stake in both companies. MHCare Medical had previously secured a $70-million contract with the province to import pain medication, though only 30% of the order was delivered to Alberta. Following that contract, Mraiche provided luxury box tickets to Edmonton Oilers playoff games to several cabinet ministers and government staff. AHS estimates that Mraiche-related firms have completed $614 million in government contracts for goods and services.

Conflicts of Interest and Denials

The allegations of favoritism and conflicting interests have led to widespread scrutiny. While Premier Smith and Health Minister LaGrange deny any wrongdoing, the lawsuit and accompanying documents suggest a concerning pattern of preferential treatment for ASG and its affiliates. Mentzelopoulos alleges that she was pressured to approve not only the contract extension for ASG but also new contracts for the Red Deer and Lethbridge facilities, which were owned by companies linked to Mraiche.

Lawyers for ASG and MHCare Medical have dismissed the allegations as “unwarranted and unjustified,” while Premier Smith has distanced herself and her government from the contract-awarding process. Smith claims that she and LaGrange were not involved in awarding the contracts and has instead accused AHS leadership of hindering the government’s efforts to expand private surgical delivery.

Broader Implications and Calls for Accountability

The controversy has sparked calls for greater transparency and accountability in Alberta’s healthcare system. Auditor General Doug Wylie’s investigation into AHS and Alberta Health’s contracting practices is expected to shed light on whether proper procedures were followed. Additionally, the government has announced an internal review and a third-party probe, though the name of the external investigator has not been disclosed.

At the heart of this issue is the balance between public and private healthcare delivery. While the Alberta government argues that expanding private surgical facilities will reduce wait times and improve access to care, critics warn that such arrangements could lead to inefficiencies and higher costs for taxpayers. The allegations against ASG and the government’s handling of the situation underscore the need for robust oversight and accountability to ensure that public funds are used effectively and equitably.

As the investigations unfold, Albertans will be watching closely to see whether the government and healthcare authorities can address these concerns and restore public trust in the system. The outcome of this controversy will have significant implications for the future of healthcare in Alberta and beyond.