Alberta Premier Danielle Smith answers questions at a news conference about Alberta Health Services while Health Minister Adriana LaGrange listens in the background in Calgary, on Feb. 19.Todd Korol/The Globe and Mail
Two private surgical facilities that were negotiating contracts with Alberta’s health authority are part-owned by an Edmonton businessman whose company imported children’s pain medication for the province and who hosted politicians at NHL playoff games, according to documents obtained by The Globe and Mail.
The two private surgical facilities are among those at the centre of allegations that government officials put pressure on Alberta Health Services to sign contracts with higher prices than competitors’ rates. Documents obtained by The Globe show some of those prices were more than double what a competitor was charging for the same procedures.
The Auditor-General is now reviewing AHS and the health ministry’s contracting and procurement procedures, in light of allegations detailed in a lawsuit by the health authority’s former CEO. The allegations also prompted AHS to launch its own investigation. The government and the parties connected to the surgical facilities have denied wrongdoing and the allegations have not been tested in court.
The documents reveal for the first time that the company that facilitated the children’s pain medication deal and a pair of proposed surgical facilities in Red Deer and Lethbridge share a common owner.
Sam Mraiche owns MHCare Medical and was awarded a $70-million government contract in 2022 to import children’s pain medication from Turkey during a nationwide shortage. The Globe reported last year that he hosted cabinet ministers and advisers from Premier Danielle Smith’s office in box seats during the Edmonton Oilers’ playoff run.
The former AHS CEO’s lawsuit alleges conflicts of interest in the pain medication deal. It also alleges government interference in negotiations for chartered surgical facilities, including with a company called Alberta Surgical Group (ASG) for an existing facility in Edmonton, and proposed facilities in Red Deer and Lethbridge.
An internal AHS document obtained by The Globe identifies two numbered companies behind the Red Deer and Lethbridge facilities.
Corporate records show Mr. Mraiche owns 25 per cent of the voting shares in each of those two numbered companies. Records also show that a business consultant with MHCare, Blayne Iskiw, is listed as a director of those companies, and he and his wife own a firm that controls 12 per cent of the voting shares.
D’Arcy Durand and Leslie Scheelar, two physicians who own part of Edmonton-based ASG, each control 25.5 per cent of the voting shares in each of the numbered companies. Dr. Durand and Dr. Scheelar, along with Kenneth Hawkins, another doctor with a stake in ASG, are listed as directors.
The corporate records exclude ownership information for the remaining 12 per cent in each of the numbered companies.
Jessie Bakker, a lawyer representing Mr. Mraiche and MHCare, said in a statement that her clients “have no comment other than to state that any allegations or insinuations of wrongdoing on the part of MHCare Medical Corporation and/or Sam Mraiche are unwarranted and unjustified.”
Dr. Durand, Dr. Scheelar and Dr. Hawkins did not respond to messages seeking comment.
Mr. Iskiw joined MHCare days after leaving his job as AHS’s interim senior program officer for strategic and clinical contracting in the agency’s contract, procurement and supply management division, according to his LinkedIn profile and documents obtained by The Globe. Neither he nor a law firm representing him in a separate matter responded to messages seeking comment.
AHS contracts thousands of operations to CSFs each year and the United Conservative Party argues the private facilities are more efficient than the provincial health authority and reduce surgical waiting times.
The Globe obtained AHS’s internal price comparison for surgical facilities that shows the proposed projects in Red Deer and Lethbridge were negotiating rates far higher than what a competitor in Calgary is paid. Further, the fees on the table surpassed what it costs AHS to perform the same surgeries, according to the internal document.
AHS’s former CEO, Athana Mentzelopoulos, in her lawsuit, says she was negotiating those two deals, as well as a contract extension for ASG, in the summer and fall of 2024.
Ms. Mentzelopoulos alleges the Premier’s then-chief of staff, Marshall Smith, repeatedly put pressure on her to sign these deals, despite AHS reservations about the true ownership and costs. Mr. Smith, in September, called Ms. Mentzelopoulos for an update on the negotiations over the new facilities and advised her that people tied to the projects were unhappy with the delays, the lawsuit alleges.
Mr. Smith, who is not related to the Premier, has not returned messages seeking comment.
On Oct. 1, Ms. Mentzelopoulos sent Darren Hedley, now the deputy minister of health, a draft letter she prepared for Health Minister Adriana LaGrange, according to the documents obtained by The Globe.
“CSFs continue to demand higher pricing than the equivalent comparable cost within AHS and with other surgical providers,” Ms. Mentzelopoulos said in her draft letter, which she suggested should be sent to Andre Tremblay, then the deputy minister of health and an AHS director.
“To prevent unmitigated upward price pressure, CSF pricing should not exceed the validated AHS internal costs,” Ms. Mentzelopoulos said in the draft letter. She argued CSFs should have a lower cost compared with hospitals because the private centres focus on select services, which lowers overhead expenses.
The draft letter included a chart labelled: “High level arthroplasty pricing comparison between CSF vendors and AHS.”
According to the chart, AHS and the two new CSFs were negotiating rates of $10,500 per shoulder replacement and $6,950 for every hip and knee procedure. Overnight stays would be billed as necessary, at a rate of $1,250, according to the chart.
These fees exceed what AHS pays Calgary’s Canadian Surgery Solutions, which is part of the Clearpoint Health Network, and the health authority’s own costs to perform the same operations, according to the chart.
AHS pays Clearpoint $3,874.73 for each shoulder replacement, $3,622.32 for hip procedures and $3,276.38 for knee operations, according to the chart. Overnight stays are billed at $1,378,38 when required, according to the chart tied to Ms. Mentzelopoulos’s draft letter.
Clearpoint’s seven-year contract started in 2023. Sarah Carlisle, the firm’s spokesperson, declined to comment.
ASG’s original two-year contract expired at the end of October. Ms. LaGrange, in a directive signed Oct. 18, stripped Ms. Mentzelopoulos of power to negotiate and finalize the surgical facility deals. The directive from Ms. LaGrange ordered AHS to immediately take steps to extend the ASG agreement to April 1, 2025, mirroring the prices for the new CSFs, according to documents obtained by The Globe.
The Premier has argued that any problems with the contracts are the fault of AHS, not the government. During a news conference on Wednesday, she confirmed figures contained in the internal AHS table, but pointed to data from the Canadian Institute for Health Information to show what surgeries cost in the public system.
The CIHI figures are not comparable to the AHS table because the provincial analysis excludes expenses such as diagnostic imaging and implant devices.
Rose Carter, a lawyer for ASG, disputed the prices the chart listed for her client. “The pricing you quote below is incorrect so ASG objects to those figures being used,” she said in a statement Tuesday. She, too, pointed to CIHI’s data.
AHS said earlier this month that it is reviewing its procurement procedures and processes in the wake of Ms. Mentzelopoulos’s allegations. The health authority said it will not award any contracts involving parties in the review and the Premier ordered government staff to co-operate with the Auditor-General.
Alberta terminated Ms. Mentzelopoulos as AHS’s CEO on Jan. 8. She is seeking $1.7-million in her wrongful dismissal suit, what she would have received if she had worked the entirety of her four-year contract. She has not commented.
— With reports from Stephanie Chambers