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Canada Archives Canada Published Heritage Direction Du Branch Patrimoine De I'edition Carleton University Biting the Hand that Feeds You: The Political Economy of Ontario's Community Laboratory Services A thesis submitted to The Faculty of Graduate Studies and Research in partial fulfillment of the requirements for the degree of Master of Arts Institute of Political Economy by Ross Sutherland, B.A. (Hons), BSN, RN. Ottawa, Ontario December 2007 © 2007, Ross Sutherland Library and Bibliotheque et 1*1 Archives Canada Archives Canada Published Heritage Direction du Branch Patrimoine de I'edition 395 Wellington Street 395, rue Wellington Ottawa ON K1A0N4 Ottawa ON K1A 0N4 Canada Canada Your file Votre reference ISBN: 978-0-494-36816-9 Our file Notre reference ISBN: 978-0-494-36816-9 NOTICE: AVIS: The author has granted a non­ L'auteur a accorde une licence non exclusive exclusive license allowing Library permettant a la Bibliotheque et Archives and Archives Canada to reproduce, Canada de reproduire, publier, archiver, publish, archive, preserve, conserve, sauvegarder, conserver, transmettre au public communicate to the public by par telecommunication ou par I'lnternet, preter, telecommunication or on the Internet, distribuer et vendre des theses partout dans loan, distribute and sell theses le monde, a des fins commerciales ou autres, worldwide, for commercial or non­ sur support microforme, papier, electronique commercial purposes, in microform, et/ou autres formats. paper, electronic and/or any other formats. The author retains copyright L'auteur conserve la propriete du droit d'auteur ownership and moral rights in et des droits moraux qui protege cette these. this thesis. Neither the thesis Ni la these ni des extraits substantiels de nor substantial extracts from it celle-ci ne doivent etre imprimes ou autrement may be printed or otherwise reproduits sans son autorisation. reproduced without the author's permission. In compliance with the Canadian Conformement a la loi canadienne Privacy Act some supporting sur la protection de la vie privee, forms may have been removed quelques formulaires secondaires from this thesis. ont ete enleves de cette these. While these forms may be included Bien que ces formulaires in the document page count, aient inclus dans la pagination, their removal does not represent il n'y aura aucun contenu manquant. any loss of content from the thesis. Canada Abstract This historical case study examines the development of Ontario's community medical laboratory services from 1968 to 2006. This study found that to adequately account for the broad shifts in government medical laboratory policy towards private capital accumulation over collective needs it is necessary to take account of the changing balance of class power as a result of capital's strategy to expand world capital markets and integrate production globally. Particular attention is paid to how the dominant sectoral ideology, biomedicine, interacts with other forces to reinforce individualism, structures of authority and creation of needs that support the dominant power relations and facilitate capital accumulation. This study challenges the assertion that increasing private sector involvement in health care is the solution to many of the system's problems. Rather it argues that for-profit delivery of community laboratory services increases cost, decreases system efficiency and undermines universal public health insurance. u Acknowledgments I would like to thank my thesis committee, Hugh Armstrong and Lisa Mills for their support and many helpful suggestions. The research for this study would not have been possible without public funding from the Graduate Student Scholarship and Carleton University that allowed me to take time off work. Similarly the information gathered depended upon the generous input of dozens of individuals involved in medical laboratory services and the invaluable help of the archivists in the Ontario archives: thanks to all of you. I would like to dedicate this work to my parents, Ralph and Eleanor Sutherland, for inspiring me to stand up for what believe; and to my grandchildren, Brianna Ramsey and Ronnie Johnson, in the hope that we may find a way to build a community that serves human needs rather than private greed. in Table of Contents Abstract ii Acknowledgments iii Tables vi Chapter One: Introduction 1 Nomenclature: Public, Non-profit, For-profit and Private 5 Nomenclature: Inpatient, Outpatient and Community patient 7 Data Collection 7 Difficulties in Data Collection 8 Why Only Cost and Integration? 12 Introduction to the Laboratory Industry 14 Chapter Outline 15 Chapter Two: Class, State, Ideology and Policy - The Divided Society 16 The State and Policy - Contained Contradictions and Antagonisms 19 Maintaining Hegemony .21 Ideological Institutions and the State 27 Biomedicine and Capitalism 31 Biomedicine, Cure and Standardization 34 Biomedicine and Need 38 Biomedicine and Progressive Policy 40 Conclusion 42 Chapter Three: Non-Profit Alternatives: 1968-1990 44 Hospital Insurance and Diagnostic Services Act 45 Hospital Regionalization Initiatives 46 Hospitals In-Common Laboratory 47 The HICL Moves into the Community 51 Hamilton Health Sciences Laboratory Program 53 Other Hospital-Community Initiatives 55 Laboratory Outpatient Pilot Project (LOPPP) 57 Public Support and Private Concerns 60 Summary 66 Chapter Four: The Privates Consolidate: 1968-1990 68 The Insurance Honey Pot 69 Hospital Insurance and Doctors 74 Licensing the Laboratory Sector 78 Directly Funding Private Laboratories 80 No New Laboratories 85 Conflict of Interest 91 Quality Initiatives 95 Global Budgets and Limiting Hospital Access to OHIP Money 97 Over Utilization: The Trouble is Doctors 103 The Acceptance of the Private Sector 104 Consolidation of the Laboratory Industry 107 Interconnections - Profession, Industry, Hospitals and Government 109 Impact of the Commercial Laboratory Sector Ill iv Summary 115 Chapter Five: For-profit Dominance: 1990-2006 119 Laboratory Services Review 120 Social Contract Costing Study 123 Laboratory Services Restructuring - Regional Laboratory Committees 125 Regional Requests for Proposals - Failed Forced integration 127 Ontario Regional Laboratory Services Planning - Facilitated Hospital Integration ..129 Maintaining Silos - Strengthening the For-profit Laboratories 134 Labs Respond to Hard Caps - Service Cuts 137 Regulation 02/98 141 Management Contracts and Joint Ventures 143 Reduction in Non-profit Community Lab Services 145 Resistance Movements 146 Health Care Workers 147 Hospital Pathologists - the Campaign for Medical Laboratory Funding Reform 148 Small Laboratories 150 2006 - The Big Three and Other Consequences 152 Privileged For-profit Position in Decision Making 154 Why the For-profit Sector 155 Support for the Free Market 155 Trade and Industrial Strategy 156 The Economic Strength of the Commercial Laboratories 158 Conflict of Interest 159 Conclusions 161 Chapter Six: The Cost of Using the For-profit Sector 164 Why Cost? 164 The Logic of the Argument 167 Saving Money with Hospital Laboratories 170 Individual Examples 172 Unit-cost Analyses 173 An Inflated OMA Tariff. 178 Integration of Services 181 Quality 184 Accessibility 185 Democracy 186 Chapter Seven: Class, Biomedicine and State Policy 187 Glossary.. 197 Bibliography 200 v Tables Distribution of Medical Laboratories - 1973 79 Laboratories and SCCs - 1967-1984 89 Consolidation of Ontario's Commercial Laboratory Industry 109 Opening Dates - HICL SCCs 140 Concentration of Laboratory Services 151 vi Chapter One: Introduction Right-wing attacks on Canada's health care system based on its alleged inability to reform and its unsustainable costs set the stage for this historical case study of the political economy of one of the many paradoxes of Canadian medicare: Ontario government policy on community medical laboratory services. Why did our public health care system fund the development of three for-profit multinational laboratory service corporations which increased health care costs and worked against government policy objectives at the same time as government policy led to the demise of not-for-profit alternatives that were more responsive to public policy goals and delivered similar services at less cost? Ontario's community medical laboratory sector provides services to patients not in hospital. It is usually identified as the business of MDS, Dynacare and CML, for-profit medical laboratories where most people have their blood taken after seeing their family doctor. This thesis examines the development of these health care services from 1968, the date Hospitals In-Common Laboratory (HICL)1 was founded to 2006. This time frame roughly coincides with the introduction of universally funded medical insurance in Ontario and ends with the consolidation of for-profit control over community laboratory services. A second development that took place during this period was the shift in capitalist strategies for capital accumulation from the Keynesian welfare state to the neo- liberal welfare state and global economic integration through free capital markets, free trade and deregulation. Two questions focused the examination of this paradox. First, how has the provision of the community medical laboratory services in Ontario come to be dominated by three multinational corporations? What were the forces and mechanisms affecting this development? Like Porter's work on Canada's unemployment insurance system, this is 1 HICL was the most significant of the NFP alternatives providing community laboratory services and its history provides one of the
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