Alberta ends procurement talks with two firms tied to businessman at centre of health care controversy

Alberta’s health agency has cancelled negotiations with two companies owned in part by Sam Mraiche, the Edmonton businessman at the centre of the province’s procurement controversy.

The companies were in talks with Alberta Health Services to open private surgical facilities. Matt Jones, the Minister of Hospital and Surgical Health Services, made the surprise announcement in the legislature on Tuesday, saying discussions related to proposed clinics in Red Deer and Lethbridge were terminated because of procurement issues and conflicts of interest at AHS.

Premier Danielle Smith’s government has been roiled by controversy since February, when Alberta Health Services’ former chief executive alleged some of the agency’s private surgical contracts contained inflated prices, may have been tainted by conflicts of interest, and that political officials put pressure on her to proceed with the deals. The former executive, Athana Mentzelopoulos, in a wrongful dismissal lawsuit, alleged the government fired her for investigating these deals, some of which involved Mr. Mraiche’s companies.

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Mr. Jones made the announcement during Question Period.

“Concerns were raised about the procurement practices and procedures and handling of conflicts of interest in AHS procurement,” he said. “I am pleased to share that the procurements for the central and south zone surgical facilities have been cancelled.”

Mr. Jones, in a statement, said Alberta Health Services cancelled the negotiations on Nov. 28 and the “proponents were informed immediately.” He added there will be a “new competitive procurement process in early 2026 to secure additional surgical capacity.”

The Globe and Mail in February first reported that Mr. Mraiche owned stakes in the two companies negotiating with the health agency to open surgical facilities in Red Deer and Lethbridge. Further, The Globe reported the companies pushed for rates far exceeding what Alberta Health Services paid a private company in Calgary – and what it cost the agency to perform the same procedures itself.

The Globe also revealed one of Alberta Health Services’ former procurement officials, Blayne Iskiw, owned stakes in the proposed projects in Red Deer and Lethbridge, alongside Mr. Mraiche. The other owners are D’Arcy Durand, Leslie Scheelar, and Kenneth Hawkins – three physicians who control Alberta Surgical Group, another private clinic.

The owners of the Red Deer and Lethbridge projects intend to push back against the sudden cancellation, according to a statement Mr. Iskiw provided The Globe on behalf of an entity known as Prairie Surgical. That entity represents the companies involved in the Red Deer and Lethbridge efforts, according to a letter that MHCare Medical Corp., a separate company owned by Mr. Mraiche, sent the government in April.

“Prairie Surgical was surprised to learn of the minister’s public announcement in the legislature today. It comes without explanation or rationale, either to the public or more importantly to Prairie Surgical,” the statement said, noting the owners will be seeking clarification before determining their next steps.

“Alberta Health Services has very specific procurement and contractual obligations that cannot be ignored without valid reasons. We have not been offered a meeting to even discuss this with Alberta Health Services or the minister.”

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Mr. Mraiche, via the letter MHCare sent in April, denied that the Red Deer and Lethbridge projects proposed to overcharge Alberta Health Services. That letter also said Mr. Iskiw satisfied conflict-of-interest requirements.

The Globe on Saturday published an investigation that found Mr. Mraiche’s connections with senior political figures and former Alberta Health Services purchasing officials were more extensive than previously reported. Mr. Mraiche has maintained he acted appropriately at all times.

The RCMP and Alberta’s Auditor-General are conducting separate probes into health procurement and contracting in the province. Ms. Smith appointed a retired judge to conduct an independent review, which concluded the health agency and ministry at times broke their own rules, but did not find evidence elected officials and political staff acted inappropriately. Earlier this year, a cabinet minister resigned in protest of what he considered a lax response from government to Ms. Mentzelopoulos’s allegations.

The government said it fired her because she failed to execute its plan to expand the use of private surgical facilities and was incompetent. None of the allegations have been tested in court.

Ms. Smith has long touted private surgical facilities as key to easing waiting lists for procedures such as cataract removals and hip replacements, while also driving down the government’s health care expenses. Alberta Health Services contracts these companies to perform operations paid for by the public purse.

The owners of the Red Deer and Lethbridge projects proposed 15-year contracts worth a combined $430-million, according to a confidential memo from January summarizing Alberta Health Services’ internal investigation.

Mr. Iskiw represented the health authority in the 2022 negotiations with Alberta Surgical Group to open its facility in Edmonton, The Globe reported in September.

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Raymond Wyant, the retired Manitoba judge the Premier appointed to review health procurement, in his report in October said Mr. Iskiw told him Alberta Surgical Group’s owners gave him a 12-per-cent stake in the Red Deer and Lethbridge efforts for taking care of the “day-to-day business.”

Mr. Iskiw started consulting for MHCare, Mr. Mraiche’s medical-supply company, after leaving the health agency in 2022.

Mr. Jones, in the legislature, said procurement and contracting are being transferred to Alberta’s new Health Shared Services organization and that the province hired a consultant to “align” procedures with those in top jurisdictions.

“That’s going to result in more transparent [and] accountable public processes for all Albertans,” the minister said.

Holly Budd, a spokeswoman for Alberta Health Services, said her organization cancelled negotiations over the proposed projects in accordance with the “terms and conditions” of the requests for proposals.

“Alberta’s health system has undergone transformational change since these agreements were signed, and it is prudent to re-evaluate in the context of these changes,” she said in a statement. Acute Care Alberta, a new organization the government created as part of its effort to redesign the province’s health system, is now responsible for procuring surgical agreements, Ms. Budd added.

“Moreover, given that several years have passed since the successful proponent was first identified, the economic assumptions and costing underpinning the original awards are no longer valid and it is in the best interests of Albertans to negotiate new agreements that reflect current conditions.”