Coalition demands probe into soaring cost of P3 hospitals

Ontario's first P3 facility in Brampton was two years late opening and went wildly over budget.

Don't privatize our hospitals Toronto (9 Jan. 2008) - The Ontario Health Coalition is demanding that the provincial auditor investigate all public-private-partnership (P3) infrastructure projects following massive cost overruns at the Brampton Civic, the province's first P3 hospital.

A health care watchdog group, the coalition is also seeking a moratorium on P3s until the auditor declares that they provide the value for taxpayers that the for-profit companies involved have promised. Ontario has 44 P3 projects valued at $30 billion in its pipeline, including 30 hospitals.

"The government's justification for its P3 privatization policy has been that going to the private sector brings hospitals in on time and in budget," the coalition says.

"The evidence from the Brampton case shows that this hospital is (not) on time; it doubled in price and the bed totals are approximately half of the assessed needs of the community," says coalition director Natalie Mehra.

The coalition has issued a new report, based on documents obtained following a four-year access to information battle with provincial authorities. It says cost overruns have pushed the Brampton price tag from $350 million to $650 million. Adding equipment costs, the total bill for taxpayers is an estimated $790 million.

25-year lease

With a 25-year P3 lease covering many of the services needed to run the hospital, the ultimate bill for taxpayers will top $3 billion, the coalition estimates. "What we found is a deeply disturbing picture," Mehra says.

The province disputes some of the group's calculations.

The initial construction deadline in Brampton was 2005. However, the facility was not completed until July 2007 and did not open until last October. Originally, it was to have had 720 beds, including 608 at the new facility and 112 at a redeveloped Peel Memorial Hospital, which the Brampton facility replaced. In fact, the hospital opened with 479 beds, a number not scheduled to reach 608 until 2012.

Also, the original plan called for 20 operating rooms. This was cut to 12 with the remaining six also pushed back as late as 2012. Mehra says the Brampton experience could be repeated with many other P3 hospitals in Ontario. If so, the public will suffer because there "will be no option but to shrink the scope of public health-care services" to cope with construction costs, she argues.

The coalition believes the private consortium in Brampton will make "exorbitant" profits of $260 million on the hospital. The deal includes a 25-year lease to handle non-medical services such as portering, parking, food and housekeeping. "We fundamentally believe it's a bad idea to take the governance of a local hospital and its services out of the hands of its local community, to hand them over to companies whose investors might live half a world away, who couldn't care less whether my grandmother gets great care or not but who are in it to siphon as much money as possible out of the hospital," Mehra says.

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More information:

OHC Report (January 2008)

(Published as n09ja08b.htm)