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Elmer G. Wiens

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Private versus Public Management of Hospitals In British Columbia

December, 1982 By Elmer G. Wiens, Economist.

Recession in British Columbia.

Canada went through its worst economic crisis since the Great Depression in the early 1980s.

The Province of British Columbia went through this recession, just like most Canadian jurisdictions and capitalist countries around the world. British Columbia, which relies heavily on its natural resources, was especially hard hit economically.

In addition to rents and royalties from companies that took advantage of the province's natural resource riches, the British Columbian government had to deal with quickly diminishing tax income.

The British Columbian government consequently adopted a policy of financial constraint and worked to reduce all of its expenses, including those in the health sector.

The Premier of British Columbia and leader of the Social Credit party, Bill Bennet, regarded the recession as a chance to reduce spending and limit union authority. They ran on a platform of economic moderation in the 1983 provincial election.

In the May 5, 1983 election, Dave Barrett's New Democratic Party lost to Premier Bill Bennett's Social Credit Party.

Leading up to the 1983 election, the Social Credit Government directed its civil servants to examine ways to implement its policy of financial restraint.

During this period, I was seconded as a government economist to the Ministry of Health's Policy, Planning & Legislation Branch from the Ministry of Industry and Small Business Development.

I produced the study, Private versus Public Management of Hospitals in British Columbia, December 1982, by Elmer G. Wiens.

The PDF version of this document appears at the URL: www.egwald.ca/government/BC_private_vs_public_hospital_management.pdf.

In the following, I paraphrase certain aspects of the contents of this document.

Origin and Objective of the Study.

Although my research concentrated on private management of extended care facilities, it was a component of the broader issue of private participation in healthcare in British Columbia. Prior to 1982, the Ministry of Health maintained an unwritten policy that prohibited private organizations from providing health services unless it was impossible for a publicly owned institution to do so. Publicly funded hospital insurance plans and medical care systems led to the evolution of such public control and management of health services.

The government was forced to conduct a thorough examination of its operations, especially its social service ministries, due to the status of declining government income. It was necessary to put strategies in place to improve public health services' effectiveness and lower their cost.

Which extended care facilities would be the best candidates for private administration might be decided if the study's findings are in favor of private management.

Cost and quality comparisons would show whether private management led to a noticeable increase in efficiency and decrease in expenses after a trial period of roughly two years. During the test period, comparable extended care facilities run by the public will be compared in terms of both cost and quality.

Method and Scope.

There is a widely held belief that public or nonprofit hospitals don't economize on how they make use of finances because they have no incentive to do so as long as they operate within their budget.

Furthermore, given a hospital's revenue per occupied bed, it's possible that the quality of care is less satisfactory than it could be if the hospital's inputs were used more effectively.

I discovered a significant disparity in the operating and cost statistics of three extended care facilities in British Columbia—Menno Hospital, Queens's Park Hospital, and Juan de Fuca Hospitals—when I looked at their audited annual reports.

For instance, there was a $4.56 thousand difference in operational costs per bed between Menno Hospital's $24.3 thousand and Juan de Fuca Hospitals' $28.76 thousand.

Interestingly, there don't seem to be any economies of scale. There may be yearly cost savings of more than $2.2 million if Juan de Fuca Hospitals were run as effectively as Menno Hospital.

From the government’s point of view, the reduction in provincial payments would amount to $2,700 per bed per year, or $1.357 million dollars annually just for Juan de Fuca Hospital alone.

One could argue that Menno Hospital's operational costs are too low. But Menno's total nursing hours per bed were higher than Queen's Park's and on par with Juan de Fuca Hospitals. Menno's rehabilitation and physical medicine time units per bed were significantly more than those of Queen's Park and Juan de Fuca.

Strangely, Juan de Fuca spent a lot more on plant operation and maintenance than either Menno or Queen's Park. Given that at least two of Juan de Fuca's extended care facilities were constructed very recently, this is unexpected.

For the data and additional analysis information, download the PDF version of the study.

Conclusions. In order to logically ascertain if private management of extended care hospitals may produce significant cost reductions, the study's goal was to examine earlier research and present indicators.

Three hospitals were examined, and the methods of operation differed significantly. These discrepancies could be explained by a more comprehensive and in-depth inquiry. At this report's level of analysis, it was determined that private management's cost pressure incentives might result in significant cost savings.

To learn how standards of care for residents of extended care hospitals could be applied, view the study's PDF edition.

The Study's Outcome.

By strengthening its oversight, the Ministry of Health might raise the cost and care performance metrics of extended care institutions. Maybe enough to avoid the need for privatization.

In the 1980s, hospital governance was still mostly local, board-driven, and public. Hospitals were governed by boards with overlapping tasks and a strong public service orientation, according to significant research on hospital governance in British Columbia (Azad, 1990).

In this time frame:

        • Hospitals were run and owned by the government,

        • Contracting out was rare and often done on a modest basis,

        • There was strict control by the Ministry of Health.

The political atmosphere in British Columbia after the election on May 5, 1983.

Following the May election, Premier Bill Bennett's Social Credit government introduced 26 austerity laws on July 7, 1983. These bills closed human rights organizations, eliminated labor protections, and reduced social services.

These political measures a triggered massive protest movement, known as Operation Solidarity.

Key points:

        • A coalition of unions, community groups, women’s organizations, faith groups, and social justice activists formed the Solidarity Coalition,

        • It became the largest political protest in BC history, with escalating strikes and mass mobilization,

        • The movement ended on November 13, 1983 when labour leader Jack Munro negotiated a truce with Bennett—sometimes called the Kelowna Accord in this context.

Private versus Public Management of Hospitals in British Columbia, 2026 context.

Looking back from May 2026 at my 1982 study, I asked Microsoft COPILOT AI a series of questions.

Question 1. Tell me about Operation Solidarity (also known as the Solidarity Crisis)?

Question 2. I worked for the Ministry of Health of the BC Government in the fall of 1982. I authored a study, Private versus Public Management of Hospitals, which can be found at the URL: https://www.egwald.ca/government/BC_private_vs_public_hospital_management.pdf Does this study factor into any of the bills mentioned here so far?

Question 3. How did hospital governance evolve in BC after 1983, particularly with private vs public management of hospitals, and the contracting out to private operators of specific hospital functions like food services etc.

Microsoft COPILOT AI Response to questions I posed.

Question 1. Tell me about Operation Solidarity (also known as the Solidarity Crisis)?

On July 7, 1983, also referred to as "Black Thursday," the Social Credit government introduced 26 measures following the election. These bills:

        • Removed oversight organizations like the Human Rights Commission,

        • Tenant safeguards and rent controls were eliminated,

        • Reduce social program financing,

        • Removed important labor rights from public sector unions,

        • Permitted employers in the public sector to terminate employees without cause,

Many people believed that these actions were the most extensive attack on rights in Canadian history.

Question 2. I worked for the Ministry of Health of the BC Government in the fall of 1982. I authored a study, Private versus Public Management of Hospitals, which can be found at the URL: https://www.egwald.ca/government/BC_private_vs_public_hospital_management.pdf Does this study factor into any of the bills mentioned here so far?

Short answer: Based on the content of your 1982 Ministry of Health study Private versus Public Management of Hospitals and the nature of the 1983 “Black Thursday” legislation, there is no evidence that your study directly informed, shaped, or was incorporated into any of the restraint bills introduced on July 7, 1983.

But the longer answer is more interesting — because your study did sit inside the policy environment that the Social Credit government later disrupted.

What your study actually focused on?

Your 1982 report (I’ve reviewed the extracted text) is a comparative policy analysis examining:         • cost differences between public and private hospital management,

        • efficiency and administrative structures,

        • governance models,

        • implications for provincial health care planning.

It is a technical, evidence based planning document, typical of the Ministry’s Policy, Planning & Legislation Division at the time.

Nothing in the report advocates:

        • weakening labour rights,

        • restructuring collective bargaining,

        • enabling mass layoffs,

        • abolishing oversight bodies,

        • cutting social programs.

In other words, your study is not ideologically aligned with the 1983 restraint package.

What the 1983 restraint bills targeted?

The “Black Thursday” bills were not health policy bills. They were:

        • public sector labour legislation (Bills 2 & 3)

        • cuts to social programs

        • abolition of commissions and agencies

        • broad austerity measures

They did affect hospitals, but only indirectly, because hospitals were public sector employers. The bills did not address:

        • hospital governance models,

        • public vs. private management,

        • health care delivery structures,

        • Ministry of Health planning frameworks.

So the subject matter of your study simply does not overlap with the content or intent of the restraint legislation?

Did your study influence the thinking of the government?

Here’s the subtle part.

Your study was produced inside the Ministry of Health during a period when:

        • the government was exploring cost containment,

        • privatization debates were emerging,

        • Treasury Board was pressuring ministries for efficiency analyses.

Your report fits into that broader policy analysis ecosystem. But the 1983 restraint package was not a technocratic policy reform — it was a political shock program driven by cabinet, not by ministry research.

So, while your study was part of the Ministry’s internal knowledge base, the restraint bills:

        • were drafted rapidly,

        • bypassed normal policy development channels,

        • were not grounded in ministry research,

        • were ideologically motivated rather than evidence driven.

Therefore, your study was not a factor in the creation of the Black Thursday bills.

The best way to summarize the relationship?

Your study:

        • Evidence based,

        • Sector specific,

        • Focused on hospital management models.

Black Thursday bills:

        • Ideological austerity,

        • Broad public sector restructuring,

        • Not based on ministry policy analysis.

These two streams of work ran in parallel, not in connection.

Question 3. How did hospital governance evolve in BC after 1983, particularly with private vs public management of hospitals, and the contracting out to private operators of specific hospital functions like food services, etc.

Hospital governance in British Columbia changed dramatically after 1983, and the evolution of public vs. private management — including the contracting out of hospital support services — unfolded in three major phases. The sources you saw above give us a clear, evidence based picture of how this happened.

1. 1980s–1990s: Traditional public governance, incremental reforms.

Hospital governance in the 1980s remained largely public, board driven, and locally controlled. A major study of BC hospital governance (Azad, 1990) found that hospitals were overseen by boards with overlapping responsibilities and a strong public service orientation.

During this period:

        • Hospitals were publicly owned and operated,

        • Contracting out was limited and usually small scale,

        • The Ministry of Health maintained strong oversight.

This is the governance environment your 1982 study was written into — one where public vs. private management was a policy question, but not yet a political project.

2. 2002–2020: Large scale privatization and contracting out (the “Bill 29 era”).

The most dramatic shift came 20 years after your study, under the BC Liberal government (2001–2017).

Bill 29 (2002): The turning point.

Bills 27, 28, and especially Bill 29 removed job security protections from the Hospital Employees’ Union (HEU) collective agreement, allowing hospitals to contract out thousands of jobs. This triggered:

        • Mass privatization of hospital support services,

        • Long term contracts with multinational firms,

        • Loss of 8,000+ unionized jobs, mostly held by women,

        • Wage cuts from $18/hour to $10/hour for many workers,

        • Contracting out of:

                o housekeeping,

                o food services,

                o laundry,

                o patient transport,

                o call centre/help desk functions.

This was the largest privatization of health services in Canadian history.

Private vs. public management in this era.

Hospitals themselves remained publicly owned, but management of key functions shifted to private operators. This created a hybrid model:

        • Public governance of clinical and administrative leadership,

        • Private delivery of non clinical services.

This is the closest BC ever came to the “private management of hospitals” model you analyzed in 1982 — but it was not hospital management itself that was privatized, only support services.

3. 2021–present: Reversal of privatization and return to public management.

Beginning in 2021, the BC NDP government initiated a full reversal of the 2002 privatization wave.

2021: Government announces end of private contracting.

The province declared it would end private contracting of hospital cleaning and food services. CBC confirmed that 4,000 workers would be brought back under health authorities.

2021–2022: Repatriation of services.

        • Over 3,500 privatized workers returned to the public sector.

        • 21 commercial contracts were unwound.

        • Workers regained union protections, pensions, and wage parity.

        • Even some P3 (public private partnership) hospitals began repatriating contracted out services.

This marks a full-circle return to public management of hospital support services.

How this relates to your 1982 study.

Your study examined public vs. private management of hospitals, focusing on governance, efficiency, and cost structures. What happened in BC after 2002 was not privatization of hospital management, but rather:

        • privatization of support services,

        • under a labour law framework,

        • driven by political ideology rather than evidence based policy analysis.

In other words:

        • Your study was policy analysis,

        • The 2002–2020 privatization wave was political restructuring,

        • The 2021–2022 repatriation was policy correction based on labour, equity, and service quality concerns.

Summary Table: Evolution of Hospital Governance in BC