Coming soon to New Brunswick: corporate control of hospital services

Written by Susan O'Donnell on February 7, 2017

Will a corporation care more about the quality of its hospital services or the profits it can make for its shareholders? New Brunswick residents will soon have an opportunity to find out. The provincial government is negotiating a multi-million dollar contract with Sodexo, an international corporation with operations in Canada. After the contract is signed this spring, Sodexo will take over the management of the food, cleaning and patient transportation services in New Brunswick hospitals.

Multinational corporations survive by making big profits. Headquartered in France, with 425,000 employees in 80 countries, Sodexo is the 19th largest employer in the world. Sodexo is owned primarily by the Bellon family of France. The family patriarch Pierre Bellon is #338 on the Forbes list of billionaires with a net worth of $4.1 billion (James Irving is #240 and Arthur Irving is #308 on the same list). At its 2017 annual shareholder’s meeting outside Paris in January, Sodexo announced it is aiming for an average annual growth rate of 4 to 7 percent in sales and 8 to 10 percent in operating income.

How will the Sodexo corporation’s need for profits play out in New Brunswick? Few if any Sodexo shareholders live in New Brunswick, so the dividends from their corporate stocks are unlikely to be spent in the province. In fact it is difficult to see how any of the profits Sodexo will make from its public contract will benefit the province financially.

Many Canadians believe that corporations should not be operating hospital services. One is Norma Robinson, president of CUPE local 1252, the union representing the cleaning and food services staff in New Brunswick hospitals. In the new system, the staff who keep their jobs will remain with CUPE but be supervised and directed by Sodexo staff instead of provincial government staff. Robinson is very concerned about what the transition will mean for the quality of health services in hospitals. Her main concern is a reduction of care for patients. “It’s very disheartening that the Government of New Brunswick is going down the road of privatizing health services,” she said. “Where will it end?”

The government has already advised Robinson that 280 full-time hospital services jobs will be eliminated during the two to three-year transition period. “They said the losses would happen through vacant positions remaining unfilled and through retirements,” said Robinson. She questions that scenario, given that there are few existing job vacancies and the retirement plans of many staff remain unknown. Robinson expects significant lay-offs ahead.

The planned loss of 280 full-time jobs will have a negative impact on the provincial economy. For the province’s smallest hospitals, the loss of even one or two jobs will mean less local economic and social capacity in rural regions. If staff wages and benefits are kept low in future to maximize profits, cleaners and food services staff, already among the lowest paid in hospitals, will fall closer to the poverty line. The added stress will have a negative effect on their families and communities.

The New Brunswick Health Coalition believes not only that the quality of services and overall patient health will be reduced but also that patients and health advocates will have no clear channel to voice concerns. When a multi-national corporation is responsible for managing hospital services, where is the local ownership and control? Green Party leader David Coon believes that hospital services should be run by hospitals and be the source of good local jobs. “Privatization is not the answer,” he says. The New Brunswick Medical Society has stated it is disappointed at the job losses and will be monitoring the transition to see the impact on patient health. The provincial Official Opposition party believes the move is premature and has called for more consultation with CUPE to discuss other options.

Indeed the previous Alward government rejected privatization of common hospital services in 2014 after reviewing a study on the topic. In 2015, CUPE presented a report to the new Gallant government when it announced its plans to move forward with privatized hospital services. The CUPE report contained a comprehensive history of significant problems with privatization in hospitals across Canada, the US and the UK. In Canada, problems with cleanliness, sanitation and infection surveillance were found in hospitals with privatized cleaning services in British Columbia, Ontario and Quebec. In the UK, Sodexo was linked to unsatisfactory levels of cleanliness in hospitals in Liverpool, Glasgow, Manchester and London. The UK in particular has an extensive history of privatization of hospital services and numerous reports from that country have recommended against privatization.

The CUPE report found that “there is little room for innovation … when it comes to cleaning, there is very little new under the sun.” The main source of profits in privatized hospital services is “to cut costs, namely wages, person hours, training, cleaning protocols and prevention schedules, and cleaning supplies. Layoffs is the first and main tactic.” To prepare for the privatization of hospital services in BC, the provincial government passed Bill 29 to allow them to override collective agreements. Soon after the privatization, CUPE’s health care division in the province took legal action against the government for passing Bill 29. In 2008 the Supreme Court of Canada sided with the union who then negotiated $68 million in compensation from the provincial government for lost wages for the 7,000 union members who had been let go.

More recently, in 2016, in-house cleaners at the London Health Sciences Centre in Ontario were replaced by Sodexo workers. The in-house cleaners are unionized and make $22 an hour, while the Sodexo workers make $17 an hour. Also in 2016, shortages and bad “rethermalized” Sodexo food were reported at long-term care homes in Powell River, BC under Vancouver Coastal Health. In media reports, seniors said the food was bordering “on elder abuse.” An investigation found that “ its cost-cutting pursuit of profits” Sodexo does not leave the food services workers enough time to serve the food and clean up.

Sodexo has a small army of public relations staff producing good news stories about itself. Almost every day, in a media outlet somewhere in the world, a story is published about Sodexo’s award-winning corporate social responsibility programs, its commitment to diversity and women employees, or its focus on innovation. What will the New Brunswick story be? The most positive possible future scenario is that the transition will be a good news story for the quality of hospital services and hospital workers. However the track record of hospital privatization experiments elsewhere suggests a different story might unfold in New Brunswick.

Susan O’Donnell is a Fredericton-based researcher and a group executive member of the Professional Institute of the Public Service of Canada (PIPSC) union. 

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