Survey supports P3 for hospital, other projectsMonday, April 21, 2014 by: Darren Taylor
Three years after Sault Area Hospital (SAH) opened the doors of its new facility on Great Northern Road, officials say financing of the hospital’s construction and ongoing maintenance has been a success.
The hospital was built under what is known as a public-private partnership, or P3.
In Ontario, a P3 is often referred to as an alternative financing and procurement (AFP) approach.
Health care services at SAH are administered and funded by the province, while a consortium known as Hospital Infrastructure Partners (HIP) that built the facility is responsible for the building’s maintenance over the next 30 years.
HIP consists of Carillion, EllisDon, Fengate Capital and LPF Infrastructure (the Labourers' Pension Fund of Central and Eastern Canada).
Critics of the P3 model, such as the Ontario Health Coalition, say private sector involvement in the building and maintaining of health care facilities such as SAH cuts corners on the quality of health care.
Proponents of the P3 model say it produces new health care facilities on time and on budget.
A recent nationwide survey conducted by Nanos Research for the Canadian Council for Public-Private Partnerships (CCPPP) shows 62 percent of respondents are open to the P3 model for various infrastructure projects, 63 percent in favour of going the P3 route for construction of hospitals.
The group also conducted a more in-depth survey gathering responses to specific P3 projects, such as Sault Ste. Marie’s SAH, a bridge project in Winnipeg and a water treatment facility in Moncton.
CCPPP says out of 300 respondents to the survey in Sault Ste. Marie in regards to SAH, 63 percent showed support for P3, 64 percent recognized P3 as a benefit to the taxpayer, and 70 percent agreed the new SAH may not have been built without the private sector in the design, construction, financing and maintenance of the facility.
Mark Romoff, president and CEO of the CCPPP, speaking to SooToday.com, said SAH “is definitely a success story.”
There are 207 infrastructure projects currently in procurement, under construction, or in operation across Canada through the P3 model.
79 of those projects are in the health care sector, Romoff said.
“The results of the survey in the Sault were very compelling.”
While comment from P3 critics from the Ontario Health Coalition was not available, Romoff dismissed their viewpoint that P3 opens the door to private sector involvement in the delivery of health care.
The view that P3 cuts staff and services to pay for facility maintenance “is not accurate,” Romoff said.
“I’m always disappointed with organizations that don’t have all the facts in front of them.”
“Public-private partnerships are simply a method of procurement, and with P3 the private sector always assumes the risk around design and construction…with traditionally procured projects they often come in way over budget and way behind schedule.”
“In the case of P3 there are penalties that apply should the private sector group not meet the deadline set, which is why our experience across Canada has seen 200 projects done on time and on budget, with significant government savings,” Romoff said.
Under P3, SAH opened March 6, 2011, a month ahead of schedule.
Romoff said the various levels of government can learn a lot from the P3 model, encouraging more P3 partnerships as the need for infrastructure renewal keeps growing as governments deal with financial challenges.
Ron Gagnon, president and CEO of SAH, said he was pleased SAH was given the spotlight as a P3 success story in the survey.
“It is gratifying, and I think in the case of Sault Area Hospital it’s very warranted as well.”
“I think our project, not just from a P3 perspective but from a new hospital perspective, is probably among the best in the province,” Gagnon said.
“We had a project management team that worked with the consortium on this project and they did a fabulous job, and I think the community is benefitting.”
Gagnon also dismissed critics claims that P3 cuts corners on the quality of health care.
“That shows a basic misunderstanding or lack of knowledge of the actual model and the agreement that comes with the model.”
“The agreements we have with the consortium are pretty prescriptive with regards to what type of work needs to be done if the facility isn’t in a certain state, or if a certain amount of rooms aren’t available, there are remedies for that.”
“We meet on a monthly basis with the consortium to review the operation of the facility,” Gagnon said.
“The consortium is accountable for the operation and maintenance of the building itself, they don’t have anything to do with nursing and the delivery of care.”
“I don’t think anybody who works here or who sits on our Board would want to be sacrificing the future of the hospital just for a pretty deal, and nobody did…this is an excellent deal for this community,” Gagnon said.
ThinkAgain 4/21/2014 10:29:15 PM Report
And its already falling apart
IgnorantNortherner 4/21/2014 11:09:05 PM Report
"Survey supports P3 for hospital..."
That's gold, Jerry! Gold!
Smallish sample, no?
Loaded questions, no?
jimbob 4/21/2014 11:20:25 PM Report
This is just another example of government paying off their corporate supporters by transferring huge sums of money to the private sector to keep it off the government books. If they did the right thing, the hospital would have been financed by public debt at a reasonable cost and no corporations would have profited from the operation of it. P3 my a$$. Just another taxpayer rip-off.
Floyd 4/22/2014 1:05:52 AM Report
Parking lot is the real Cash Cow!
OrlandoFlorida 4/22/2014 6:29:02 AM Report
How come we as tax payers have yet to find out the final cost of the P3 SAH, and why can we not have access to see what is in the contract? If I recall before Ontario went down this road of funding hospitals using the P3 model, the former Health Minister of England advised Ontario NOT to follow the P3 model as they had done. Why does this government insist on doing what other governments have proven a mistake.
statusquo 4/22/2014 7:55:28 AM Report
Cost cutting and privatisation.
That line above sums up what it took them several paragraphs to say in bureaucratic goobly doops, i.e the vocabulary of obfuscation to make something indigestible appear palatable.
It's like wrapping a dog turd in bacon to make it taste delicious.
Does any one in here think the top heavy bureaucracy at SAH (and healthcare in general) or Mr. Gagnon's salary is even remotely justifiable ?
mallet 4/22/2014 9:36:01 AM Report
That was dreamed up by a Labour (NDP) government in England... They did not want to spend the total monies required to fund the health care system so they tried this out as a way of getting more money into the actual staff. However as with most govt plans it went sideways and now they are paying out more for the shoddy work when put out to contractor friends of the private sector investors, and of course not taking into account the aging of the population that would need more attention. My hometown hospital which was built about 10 years ago, is undergoing renovations to increase the size of the A and E section so they do not have to have patients waiting outside in the ambulances. Last year they had all 20 Norfolk ambulances tied up at the hospital awaiting care for patients as the emerg was full to overflowing. Response times for an ambulance was in the 1 to 2 hour range...But it is free for all or should that be a free for all..
jimbob 4/22/2014 11:09:24 AM Report
If you think the hospital is overloaded with high salaries, you should take a look at the North-East LHIN. This is a huge bureaucracy that was set up as a buffer between us taxpayers and the government so there would be someone other than Queens Park to take the heat when it all goes sideways. A pox on Queens Park and all who inhabit it.
Sam C 4/22/2014 12:04:18 PM Report
Question: If you believe the government should contribute more to the cost of health care, would you support...
a) higher taxes; or,
b) cuts to other services.
If you choose 'b', state which services should be cut back or eliminated.
Oldie Goldie 4/22/2014 3:43:50 PM Report
Most taxpayers don't realize that a P3 Hospital takes twice as much taxes from the Ontario Taxpayer in the long run---but if they don't know they don't care until the 30 year-old Hospital becomes our direct burden.
Then it needs new roofing---newer or renovated facilities and a run-down building that now won't be taken care of by the Builders.
The Interest that the Builders collect was never told to the public but the $ 400,000,000 Hospital will cost the taxpayers $ 900,000,000 over the 30 year period and then we get to own a 30 year old building.
Out of sight means out of mind to many taxpayers but there is only 1 taxpayer and that is us.
Any Taxpayer should have known when the Financial Consortium gave a big gift to the Hospital Foundation just recently and that was a small portion of the Interest they earned to date.
Oldie Goldie 4/22/2014 5:38:36 PM Report
Sam C. It is the P3 approach that costs taxpayers more money.
That extra money could have been put into more and better Health Services.
It is not a more taxes or cuts in Services situation. It is more taxes and Cuts in Services under the P3 approach.
nurse-boi 4/22/2014 9:20:42 PM Report
P3 infrastructure actually contributes to the economy within the community that construction is occurring. P3 shifts the responsibility of the project to the private sector ie your contracted services for all or many of the phases of the project. Simply, the private sector assumes the risk between the phases of development and becomes fully accountable for whether the asset delivers the quality that has been outlined or defined for the project. The incentive is to produce the most effective result over the suspected lifespan of the project, this becomes the goal of the private sector, basically the private sector uses their expertise to create the best solutions for that specific project.
So for all you people who think that the private sector walks away when the building is complete that is not how it works, any problems with poor design, sub-standard construction or inadequate maintenance become the responsibility of the private sector. It is similar to building a home, there is a responsibility to the assurance of the workmanship being delivered. Monies are managed much the same, payment is based on performance and levels of completion so projects stay on time, projects that stay on time save money. The private sector is also responsible for the fiscal portion of the project, which ensures diligence to the development of the project to be on schedule and on budget. A project that remains on time and within budget saves money, but of course you already know that.
stakeholder 4/22/2014 9:24:22 PM Report
well that survey sure must be an accurate representation of the opinion of the community-let me math you -300 respondents surveyed in a community of lets just say 75000 (not at all considering the catchment area)equals -wait for it........ 0.4 percent-my my what a representative polling of the community-or did they just poll the nepotism group of about 300 persons and family members belonging to the Senior Management Team, SAH Hospital Board and the LHINs Board?
SMOKE AND MIRRORS folks!!!!
this report is a joke-open your eyes and at the very first glance you can see the lime leeching out of the concrete-did a little deeper and ...............
stakeholder 4/22/2014 9:28:51 PM Report
another thought.... in 25 years when the life expectancy is done on this structure what happens??? Do they list it with the Realtor for $6.5 million and sell it WITHOUT public consultation for $60000 to profit a nice little private company of their peers?????
I would have bought it for $60000 and could have too! As they say -if I had only known!!!!!!!!!!!!!!
nurse-boi 4/22/2014 10:24:01 PM Report
Where in the article does it say the building's life expectancy is only 25yrs or does it state it would be sold at that time? I am not sure you actually understand the article as the maintenance agreement is for 30yrs as a respnsibilty of the private sector to be raccountable for the integrity of the project. The article also states that 300 people responded to the poll.
Oldie Goldie 4/23/2014 5:46:02 PM Report
nurse-boi---When a $ 400,000,000 Hospital costs the Taxpayers
$ 900,000,000 over a 30 year period and the Taxpayers are left with a 30 year old building that will need repairs---I call that short-term gain for long- term pain.
Not a wise Economical Decision.
A strictly Political decision so the costs don't show up in the yearly Budgets.
Our Hospital has a Mortgage and anyone who has ever had a Mortgage on their home knows that the overall costs are double the original price of the home.