"If cancelling a privatization deal in Britain for one of their small town hospitals saves $122 million, we can only imagine how much money the more than 200 P3 privatization deals are costing Canadians."
Ottawa (12 June 2014) — The decision to cancel a hospital privatization deal in Britain will reduce the cost of a new hospital by $122 million.
Cancelling one P3 saves $122 million
“What should worry Canadians is that the public-private deals (P3s) used by our federal government and some provinces were copied from British privatization schemes like this one, " said James Clancy, National President of the National Union of Public and General Employees (NUPGE). "If cancelling a privatization deal in Britian for one of their small town hospitals l saves $122 million, we can only imagine how much over 200 P3 privatization deals are costing Canadians."
Earlier this month, the Northumbria Healthcare NHS Foundation Trust announced that it will borrow $209 million from the local county council to buy out the company running the privatized Hexham hospital in Northern England. Even with the cost of repaying the loan from the council, cancelling the privatization deal will save $6.4 million a year or $122 million over the life of the contract. The loan is the first agreement of this kind between a local authority and a health care trust.
In Britain more than 20 National Health Services health care trusts area at risk due to costs from P3s
What is happening to many hospitals in Britain shows just how much damage P3s can do. Britain adopted P3s (known as Private Finance Initiatives (PFIs) there) several years before Canada did. In 2012, it was found that over 20 trusts, responsible for more than 60 hospitals, faced serious difficulties that could lead them to be taken over after being pushed to the "brink of bankruptcy."
As an example of the kind of financial ruin the P3 schemes have created, the Telegraph reported that in 2012 the South London Healthcare NHS Trust was losing $1.8 million a week. Sources were quoted as saying that the Trust's deficit at that time was "equivalent to the salaries of 1,200 nurses or 200 hip replacements a week. The Trust was on track to lose between $55 and $136 million a year for the next five years."
The Hexham hospitalis is the first P3 privatization deal in Britain to be cancelled. Unfortunately, this has happened only after the P3 debt has left hospitals facing bankruptcy and cutting services.
The money saved through the cancellation of the Northumbria Healthcare Trust P3 will be reinvested into front-line services.
The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 340,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE