Australia's Sonic Healthcare nets $3B contract for Edmonton labs

A huge Australian health care corporation has been awarded a $3-billion contract to provide laboratory services in Edmonton.

Sonic Healthcare Limited was selected by Alberta Health Services to provide lab services intended to replace hospital labs operated by AHS and Covenant Health, as well as the services now provided by the private company Dynalife.

The change in companies is expected to affect about 2,000 lab workers, represented by several unions, all of would likely have to negotiate new contracts.

“There was an expectation that because Dynalife has been doing this work in the Edmonton area for 10 years now, that they would likely be the successful proponent," said Elisabeth Ballermann, president of the Health Sciences Association of Alberta, which represents 1,200 of those workers.

"(Dynalife) would have the knowledge about the market, about the needs within Alberta. They know who the players are. So it is a bit surprising to see that going somewhere else."

The contract came after what the company called "a rigorous and comprehensive" request for proposals that began in 2013.

Sonic said in the news release it expects the contract will initially generate annual revenue of more than $200 million. The anticipated contract term is 15 years, with an option for AHS to extend the agreement for a further term.

“We are delighted to have been chosen as the preferred proponent by AHS following a very intensive evaluation process," CEO Colin Goldschmidt said in a news release. "We welcome the opportunity to enter the Canadian market and to partner with AHS and staff in the delivery of high-quality pathology services in Edmonton."

AHS announced last year a plan to privatize all of its diagnostic lab services in Edmonton.

In December, it announced that a request for a proposal had been issued for a private provider to establish a single $3-billion lab for the Edmonton zone. Physicians and unions raised concerns at the time about losing lab services inside hospitals.

AHS said then that no jobs would be lost and all staff positions would be protected by the new employer.

In an email Thursday evening, AHS spokesman Korey Cherneski confirmed Alberta Health Services is working on "a final agreement regarding lab services for Edmonton and area. At such time that an agreement is reached, we will publicly share further details."

The Health Sciences Association of Alberta represents 17,000 workers in the province.

"About 1,200 of those workers are currently employed by Dynalife, which does all of the out-patient work and a lot of the work for the hospitals," said Ballermann. "And then they will include the hospital labs now in this whole contract. That was the way the proposal was put out for tender.