The Campbell government has embarked on what may be its most reckless experiment yet with our system of health care. It has unilaterally implemented an 8% reduction in fee for service payment schedules to medical laboratories effective September 1, 2003, and it has announced a further 12% cut effective April 1, 2004. There is agreement amongst most of those involved with lab services that BC has a problem with high and rising costs, but no one thought government would lower the price it pays for each service rather than working to find the reason for the problem.

On July 9, 2003, the Deputy Minister of Health sent a "dear colleagues" letter to those involved in laboratory services. On page 5 of that letter she talked about reducing the budget for lab services by 8% effective September 1, 2003, and by a further 12% effective April 1, 2004. She estimated that would produce "savings" of $14 million this year and $60 million next year. There was no reason why anyone reading her letter and the accompanying 89 page report would think it meant that government would unilaterally reduce the schedule of fees by 8% and 12%. A reasonable interpretation would be that government was seeking to reduce the budget by dealing with BC's tendency to have higher utilization of lab tests. The BC government simply reduced the fees leaving the providers with the problem of how to adjust! The BC Ministry of Health now has the gall to claim that the fee cut is old news since it was announced in July. There is an enormous difference between reducing the budget by eliminating yet to be identified waste and cutting fees while telling hospitals and private laboratories "tough luck".

Last year BC paid $473 million for laboratory services of which $279 million came from the Medical Services Plan and the balance from the hospital budget. No one knows how private laboratories will react to their loss of revenue. Most businesses could not survive if government suddenly announced that they had to reduce their prices by 20% - 8% now and another 12% six months later. Other dependent contractors should take notice.

Hospitals also bill the Medical Services Plan for out patient laboratory services. That means that the Health Authorities who run the hospitals will lose revenue and will have to cut services in order to balance their budgets. Hospitals have to be able to provide laboratory services in emergency situations to inpatients; however, they can earn extra cash by providing outpatient tests. Part of the government's plan is to move laboratory payments from MSP to the hospital budget and put the contract for all outpatient laboratory work out to bid. The Health Authorities have been told that they cannot combine their efforts to bid on the work. It looks like even services will be cut as inpatient lab services will no longer be available for outpatients.

Government has taken these Draconian steps because it looked at the average cost of lab services per person across Canada and concluded that BC could save $100 million or more if our utilization was reduced to the Canadian average. They then simply cut fees without any idea of the consequences. This is the typical ready, fire, aim approach of the Campbell government. The alternative would be to work with the medical community so as to realize efficiencies without harming patient care. By cutting first and dealing with the consequences later, the health of all British Columbians is at risk.

For further information see the Provincial Laboratory Coordinating Office at http://www.plco.ca/