Media Release -February 10, 2014

Kingston’s New Hospital’s Costs Sky-Rocket:

Health Coalition Questions Waste of Health Care Dollars on Private Profit

The cost for Providence Care’s new privatized P3 hospital in Kingston has skyrocketed from an initial estimate of $350 million to $901 million.

Based on the evidence from other P3 privatization projects across Canada, the Coalition calculates that the extra payments to the for-profit consortium financing and operating the P3 hospital will take $144 million dollars out of patient care in Kingston. 

The money wasted by opting for  the P3 privatization of  Providence Care Hospital rather than building it with public financing   is equivalent to hiring 64 more full time RNs in Kingston each year for the next 30 years or providing needed home to an additional  857 patients each year for the next 30 years.

“It is really inexcusable,” commented Ross Sutherland, Chair of the Kingston and Area Health Coalition.” We had a very open public debate on the financing, operation and control of the new hospital and never in that debate did anyone mention that the cost might be higher than $400 million.   Not only did government officials not disclose the true costs, but they actively evaded questions that it was their duty to answer. It is a breach of public trust and accountability.”

“The extraordinary costs caused by the private for-profit financing of the new hospital will siphon scarce public dollars from patient care for decades to come. The consequence is that public monies are taken away from needed patient services for profits. This is totally unacceptable, particularly when the government had a choice. They could have a used a public non-profit approach to finance, maintain and operate the hospital.”

Background

A 2012 study published in the Journal of the American Planning Association found that on average P3s coast 16% more than a public option. (Reference: Value for money and risk in public–private partnerships, Siemiatycki & Farooqi, Journal of the American Planning Association, 78:3, Summer 2012, p. 286–299.)

Siemiatycki & Farooqi Ontario’s findings are supported by the only  audit of a hospital P3 done by Ontario’s Auditor General. He found that the William Osler Hospital in Brampton cost $200 million more than a public option.  The main reasons are higher financing costs, operational inefficiencies, consultants and lawyers are also significant contributors.

16% of 901 million dollars currently budgeted for the new Providence Care hospital in Kingston would mean an extra cost of $144 million  over a public option in a 30 year contract, or $4.8 million a year.

At an average RN salary of $75,000 per year that means that 64 full-time RN could be hired in Kingston and area or an extra 857 home care patients could receive care each year for the next 30 years.

The number of home patients is derived from a statement by the Health Minister Deb Mathews in last year’s budget announcement that $260 million extra  allocated to home care would provide services to an extra 46,000 patients. ($260m increase / 46,000 patients = 5,600 per patient: $4.8M/ 5,600 = 857 more patients)

Hon. Deborah Matthews

Ministry of Health and Long-Term Care

10th Floor, Hepburn Block

80 Grosvenor Street

Toronto, Ontario M7A 2C4

Open letter re: Sisters of Providence and the Kingston P3

Minister Matthews,

I am writing today in response to an answer I received during question period on the 29th of May this year. On the subject of the private public partnership you made the following statement:

“I’ve met with the Sisters of Providence. They are delighted that we’re moving forward with this. If it’s good enough for the Sisters of Providence, if the Sisters of Providence support this, then I am very proud to support it too.” Hansard, 29 May 2013

Madam Minister, as you know, the Sisters of Providence have steadfastly refused to be drawn into the debate on the Kingston hospital and the government’s decisions on how to fund it. Their official position is to make no comment “whatsoever” on the process and making any comments on their opinions amounts to a mistruth.

I encourage you to apologize to the Sisters of Providence and the people of Kingston for misrepresenting the opinions of such an important and dedicated group of stakeholders.

Sincerely,

France Gélinas MPP for Nickel Belt

Mathews apology to sisters PDF

On April 26, in the provincial legislature, in response to a question asking if the province will

“listen to the thousands more who want you to stop this wrong-headed P3 plan [for the new

Kingston hospital]?”, the Minster of Health, Deborah Mathews, said, “If it’s good enough for the Sisters of Providence, if the Sisters of Providence support this, then I am very proud to support it too.”

The problem is that the Sisters of Providence do not support the P3 proposal for the new hospital. The Sisters have steadfastly refused to be drawn into the debate. Their official position is to make no comment “what-so ever” on the process.

“The Minister of Health has placed the Sisters of Providence in a terrible position by threatening the future of the new hospital and then incorrectly using them. We abhor these tactics,” said Ross Sutherland, Chair of the Kingston Health Coalition. “The discussion on the new hospital should take place on facts and not misinformation. The government is relying on misinformation because the facts are that their P3-privatization will cost more, be less flexible and less accountable than a public hospital”.

“This is a democracy; we all should be able to speak our conscience and support our values free of intimidation. And, in Kingston, the public has overwhelmingly upheld the values of public non-profit health care based on compassion not private-profit-taking”.

“It is time for the government to listen to the residents of Kingston. They need to publicly fund our new hospital and ensure non-profit maintenance and management for the facility. The contract can still be changed without penalty. We will save tens of millions of dollars and enhance the democratic control and accountability of our new hospital”.

For more information contact:

Ross Sutherland,

613-532-7846,

613-374-5211,

elbe@web.ca

sister media release – PDF

At the April 11 Kingston City Council meeting you stated, in your comments to Council,  that you had read the  Ontario’s Auditor General’s reports on the Brampton Civic Hospital and that the Auditor said, indicating a direct quote, “P3s,  [like the proposal for the new Providence Care Hospital] were the way to go.” 

I cannot find any reference anywhere to any such statement. Only one hospital P3 project in Ontario has ever been audited by Ontario’s Auditor General. This project, the Brampton Civic Hospital P3, was found by the Auditor to be $200 million more expensive on the private financing alone. We have carefully read the two reports on the Brampton P3 in the 2008 and 2010 Annual Reports of the Auditor General. In neither report does the Auditor recommend continuing with privatized P3 schemes. Further, we have done a thorough media search and internet search. Yet I can find no reference to the policy recommendation you allege the Auditor made – neither in the colloquial terms as you put it —  nor in any less prosaic language.  

Could you please direct me to the evidence that Ontario’s Auditor General stated that privatized P3s “are the way to go.”

Thank you for your help on this matter.

The results were released this morning by the Vote Monitors: Barb Linds, James Leake and Susan Shaw.   The results were: total votes, 9,885; 9,492 voted in favour of the proposition that “the new Kingston hospital should be publicly funded with 100%  non-profit ownership, operation, administration  and maintenance; 250 voted against and there were 143 spoilt ballots.

“It was a great day for Kingston and Area residents and for local democracy, “said Ross Sutherland, Chair of the Kingston Health Coalition. “Almost 10,000 people braved the cold, rain and wind to vote at 55 polling stations staffed by 180 volunteers to keep their new hospital public and non-profit.”

“ Voters were knowledgeable about P3 hospitals and wanted the government to pay attention to the community’s desire for a public non-profit  hospital without the expensive private financing and long term contracts with for-profit multinationals. Many of the voters thanked the volunteers for giving them  a voice on this important decision. The results are clear: Kingston and area residents want the government to drop the long term for-profit financing, maintenance and facility management contracts from the new hospital plans.”

Sutherland thanked all those who worked on the campaign, all the business and organizations that permitted the voting on their premises and all the residents who took the time to vote.

“The Health Coalition will be taking these results to Queen’s Park to increase the pressure on the government to make the financially responsible decision, the decision that improves health care and the one that respects the wishes of Kingston and area residents.”

For more information contact:

Ross Sutherland,

613-532-7846,

613-374-5211,

elbe@web.ca

We appreciate that you both took the time to attend Keep Our Hospitals Public events and took the time to look at the written information that we provided to Council.  We feel it is important to correct comments based on the article from the University of Toronto professors.

The study starts with a simple problem: the province pays 16% more for P3 hospitals that public hospitals: how can it justify this use of tax payer dollars.  The answer is that it would be justified if the risk transfer to private sector was of great value than the 16%.  You both were correct in pointing out this possible solution but it is not their conclusion as you stated.

The article then looks at whether the risk transfer justifies the extra cost and finds that due to lack of information provided by Infrastructure Ontario “it is not possible to assess key issues such as the cost of raising private finance, or the cost of transferring specific risks”. The article continues to be generally supportive of the short term design, build, finance models, like the KGH project, and critical of the long term finance and maintenance agreements, like the Providence Care project.

What their finding leaves us with is a simple statement that P3 hospitals cost 16% more.

We look forward to continuing the discussion on rebuilding health infrastructure and the municipal role in that process.

Yours sincerely, Ross Sutherland.

Kingston , Ontario – Final preparations are underway for a community-wide vote to be held tomorrow in Kingston where, weather permitting, the Kingston Health Coalition expects thousands of local residents to cast their ballot as to whether they want the 30-year P3 privatization of the community’s new hospital or whether they want to support the project as a public non-profit hospital.  More than 180 residents from Kingston and outlying areas are preparing to staff voting stations set up at 55 local businesses across the community.  Workplace votes are underway today.

Health Coalition spokespeople are pleased to have successfully created the debate about the role of for-profit multinational corporations in the new hospital development in Kingston, but are disappointed in the close result in last night’s Council meeting. The Mayor’s vote were enough to tip the balance and defeat a motion that would have seen Council send a letter to the provincial government asking them to remove the 30-year privatization of hospital facility management, financing and maintenance from the redevelopment plan.

“We are disappointed with the result of the vote on one hand,” said coalition chair Ross Sutherland. “But we are really pleased that we have been able to successfully start a serious democratic debate about the privatized P3 hospital proposal.”

“The privatized P3 proposal would bind our new hospital into 30-year long contracts with a for-profit multinational consortium for the facility management and maintenance and allow for additional privatization proposals to be included into the long-term contracts in the future,” he noted. “It deserves close public scrutiny and much more public accountability than has been afforded so far and we are pleased that Council started that process in its meetings this week.”

This week in City Council, the Coalition reported that the publicly-reported costs for the new hospital have already increased over the last three months by up to $50 million and the new hospital is 6 – 8 months late. All the privatized P3 hospital projects have seen significant cost increases and higher financing costs, and all of them have been significantly later than announced.

“The feedback we are getting from the community is that people are concerned about the long-term privatized service contracts and the for-profit multinational consortium’s involvement in the financing of the hospital,” said Sutherland. “We expect a huge turnout tomorrow with thousands coming out to vote and more than 180 volunteers staffing voting stations all across our community.”

“The evidence shows that P3 privatization costs more and the higher costs would siphon millions of public dollars away from needed health care services to the for-profit consortium,” he concluded. “There are better alternatives that would ensure that the new hospital is built without long-term privatization contracts and financing.  We will continue to advocate with the provincial government to have these long-term contracts removed from the deal and we look forward to the final vote count and the community’s say in the process.”

We actively support viable hospitals and good quality hospital services, for which both St. Mary’s and Providence care are noted.  The P3 proposal is a political problem caused by Infrastructure Ontario and the Provincial Government which we feel weakens our hospitals and the sustainability of public health care.

We are writing to ask you to cease and desist both:

 1) your claims that the Health Coalition is fomenting a “coordinated effort to misrepresent the project in the community”, that we have engaged in a “distortion of the truth”, that we are “actively spreading misinformation”, and any other suggestion that we are maliciously lying; and,

 2) attempts to intimidate the residents of Kingston with threats of loss of service if they express their support for a publicly funded hospital with non-profit maintenance and administration.

 Neither of these assertions are beneficial to improving healthcare in our community.

We welcome public debate and democratic scrutiny about the P3 privatization of the new hospital. Indeed, our whole campaign is an attempt to instill some democracy into the public policy decision to privatize the financing and redevelopment of our hospital.  While you are welcome to hold whatever opinion you like about P3 privatization, and to state those opinions wherever you like, the attacks on our integrity and the democratic rights of residents cross the line.

Board spokespersons have stated that the new hospital will be a public hospital. In fact, it will be a P3 hospital, bound into a multi-decade contractual arrangement with for-profit corporations likely covering the maintenance of the hospital, the usage of its lands, the building and patient areas, and the financing of its construction. The Health Coalition has spent the last 12 years researching and following the experience of P3s in Ontario, across Canada and internationally. In our experience, no one who has any kind of serious understanding of P3s actually tries to claim that they do not involve privatization.  The industry lobby group for the multinational financiers has defined P3s as follows:

Public-private partnerships span a spectrum of models that progressively engage the expertise or capital of the private sector. At one end, there is straight contracting out as an alternative to traditionally delivered public services. At the other end, there are arrangements that are publicly administered but within a framework that allows for private finance, design, building, operation and possibly temporary ownership of an asset.(emphasis added)

While we disagree with the value-laden language and the glowing terms used to describe the private (for-profit) sector, there is no disputing the fact that P3s are privatization.

Hospital spokespeople have also made some statements that do not withstand the test of public scrutiny. In one, of numerous possible examples, the Niagara P3 hospital is described as a success, which the facts do not support. The hospital just opened, it was more than a year late, and the costs have increased dramatically. The latest documents from Infrastructure Ontario show that the P3 deal commits Ontarians to paying the private sector consortium $1.05 billion.  The financier in the consortium, the multinational Deutsche Bank, was caught in the midst of the financial crisis in 2008 and was unable to complete the negotiation of the P3 contract to meet commercial and financial close.  Eventually, the financier was replaced and the deal was completed much later than scheduled. The hospital is now opening with fewer beds than promised; resulting in much less hospital capacity for much more money.

We could give you literally hundreds of examples of serious problems in privatized P3 projects in Ontario, across Canada and internationally.  One resource you may want to look at is University of Manitoba Professor John Loxley’s recent book, “Public Service, Private Profits: The Political Economy of Public-Private Partnerships in Canada”.  For more specific examples of increased cost and inflexibility in Ontario’s P3 or “Alternative Financed and Procurement” hospitals, please read the following 2012 peer reviewed study that examines twenty-three P3 hospitals in Ontario: “Value for money and risk in public–private partnerships”, Siemiatycki, Matti & Farooqi, Naeem, Journal of the American Planning Association,  78:3, Summer 2012, p. 286–299.

We are happy to discuss this matter with you further. We look forward to improving hospital care in the Kingston region through a constructive and respectful debate.

Yours sincerely,

Ross Sutherland,

Chair, Kingston Health Coalition

Kingston, Ontario – In a briefing hosted by the Health Coalition, Dr. John Lister a U.K. expert on P3s, recounted the shocking story of excessive profits, massive public debt and hospital insolvency as a result of the P3 program in the U.K.

The Health Coalition, which is holding a plebiscite (a referendum called by the citizens) on Saturday, April 13 to give an opportunity to Kingston residents to vote as to whether or not they want to allow the P3 privatization of their new psychiatric and rehabilitation hospital, warned that the British P3 disaster should serve as a wake-up call for Ontario’s politicians who generally have little knowledge about these schemes to which they have committed billions of Ontario residents’ dollars.

In a video briefing live from the U.K., Dr. John Lister cited a litany of problems in the British P3s.

“Private finance seemed like the solution to everything but it turned out to be a nightmare for the public and for those in the communities of the P3 hospital, who are left paying the consequences,” said Dr. John Lister, from Coventry University. “And this is for a generation to come, we have decades more of this to come.”

Key Facts and Quotes from the U.K.:

• “The current model of PFI [P3] is unsustainable. Thirty year contracts are inflexible and don’t allow managers to alter priorities or change services that have become outdated. We have seen evidence of excess profits being priced into projects from the start.” Margaret Hodge, MP, Chair of the Public Accounts Committee of the British Legislature.

• Some English hospitals are using up to 1/5 of their budgets servicing the debt costs to the P3 consortia, according to the Daily Telegraph.

• “I regret that contracts were signed that paid private sector costs when the public took the risk. That is indefensible.” Stephen Dorrell, Chair of the Health Select Committee of the Department of Health, U.K.

For more information:  Ross Sutherland 613-532-7846; Natalie Mehra 416-230-6402