Health Minister Sarah Hoffman says the NDP government's decision to end private lab services is part of a plan to create a single integrated medical testing service for the province to improve stability and accountability.

In an interview, Hoffman said the idea for a single system managed by Alberta Health Services came from a Health Quality Council of Alberta report made public earlier this year.

"Particularly, when you are in a difficult health situation, making sure you have got quality lab results and no matter where you are in Alberta, that you have access to that information in a seamless way is one of the pieces that the Health Quality Council of Alberta report spoke to," Hoffman said.

As CBC News first reported earlier today, AHS will pay Dynalife $50 million when its recently extended contract ends March 31, 2022, and it will take over management of lab services for Edmonton and northern Alberta.

Read More | Alberta Health Services to buy out Dynalife, transfer services back to province

Under the new agreement, AHS will also pay Dynalife another $15 million during the life of the contract to ensure equipment is upgraded. It is expected Dynalife will continue to lease space for its main laboratory in downtown Edmonton from AIMCo, the investment arm of the Alberta government.

Health Minister Sarah Hoffman. (CBC)

AHS and Dynalife are expected to have a transition plan in place by Oct. 1, 2018 and a system for working out any disagreements.

As part of the agreement, AHS will hire all Dynalife staff, including unionized lab workers and non-unionized managers. Dynalife employs about 1,200 people and provides lab testing services for Edmonton and northern Alberta.

The agreement effectively ends plans by AHS from last year to completely outsource all its medical testing in the Edmonton region. Hoffman stopped that plan, saying she was not convinced there was sufficient evidence that showed the private provision of testing would provide better service for Albertans.

Decision provides stability

AHS vice-president Mauro Chies told CBC News the agreement was signed by both AHS and Dynalife earlier today.

Chies said Dynalife had been on a year-to-year contract, which created instability, and so the decision was made to buy out Dynalife at the end of a five-year contract to allow sufficient time to properly plan the transition.

The long-term plan is to create a fully integrated provincial system managed by AHS. But Chies said the model for operating the system has not yet been decided, and some role for private delivery of medical testing has not been ruled out.

"Come January, the recommendation will come forward (with) what that model should look like," he said. "So there is still the possibility that it could be completely run by AHS. It could be a joint partnership with a private entity, or it could be a fully private entity."

AHS will pay Dynalife $50 million when its recently extended contract ends March 31, 2022.

Chies also said AHS will also assume responsibility for managing Covenant Health's lab services.

As part of the new system, the province is also planning to build a giant new lab in the Edmonton area that can handle a larger volume and wider variety of medical tests. Chies said the new lab will serve as the hub for all of Edmonton and northern Alberta.

Dynalife CEO to stay on

Dynalife CEO Jason Pincock said he will continue with the company over the remaining five years of the contract and assist with the transition. He confirmed that, as part of the agreement, all Dynalife employees would be transferred to AHS.

Pincock said it was clear AHS wanted to replace the three separate lab systems now operated by AHS, Dynalife and Covenant Health with one integrated service for the province that would hopefully work more effectively.

One thing the agreement does is provide stability for the provision of services. And stability is a good thing for the system, and a good thing for patients - Jason Pincock

"One thing the agreement does is provide stability for the provision of services," he said. "And stability is a good thing for the system, and a good thing for patients."

The Health Sciences Association of Alberta represents Dynalife's unionized staff. President Mike Parker said he applauds the plan to bring lab services back to the public sector but he wants to ensure Dynalife's staff are treated well during the transition.

"Our first priority is to ensure that all jobs are protected as this transition happens," he said. "Following that, all members deserve the same pay and the same benefits, and that includes a pension plan."

Opposition parties slam decision

Both the Opposition Wildrose and the Progressive Conservatives said the decision was based more on political ideology than evidence.

More and more, this government is deciding that what they are going to do is ideology based, which includes centralizing and standing in the way of where private delivery may provide some efficiencies and better service. - Drew Barnes

"More and more, this government is deciding that what they are going to do is ideology based, which includes centralizing and standing in the way of where private delivery may provide some efficiencies and better service," Wildrose health critic Drew Barnes said.

In a news release, Tory interim leader Ric McIver accused the NDP of protecting the interests of unions over that of taxpayers.

"This decision is political patronage of the highest order and the minister should immediately explain herself by releasing the business cases for all options that were under consideration," he said.

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