Category Archives: P3 Hospitals

Privately-developed London area mental health hospitals justified by massive “risk” calculations

Evaluating value-for-money on a privatized public infrastructure project has always been a bit of a mugs game. A value-for-money (VFM) assessment is produced every time the province engages the private sector in the building of public infrastructure such as hospitals, court houses, or recreation facilities.

The problem with these assessments is they are always done by an organization that has everything to gain by making the assessment support the privatized option. Given these value for money calculations are usually done after the deals are signed, it would be very embarrassing for government to show otherwise.

These assessments were formerly done directly by Infrastructure Ontario (IO), but given IO’s mandate to engage the private sector in such projects, it was felt they failed the test of unbiased independence. A look at the Auditor General of Ontario’s review of one of their earlier projects – the William Osler Health Centre – would suggest IO got quite creative in justifying a project that looks to have cost taxpayers at least $400 million more than had the government taken a more conventional approach to financing and operating the hospital.

After it was acknowledged that perhaps IO wasn’t independent enough, business consultants like KPMG were asked to do this work. Unfortunately these business consultants were also members of the Canadian Council for Public Private Partnerships, and therefore, also subject to criticism of bias. Now a third-party is engaged to evaluate the “fairness” of these evaluations prepared by KPMG and others. These “fairness monitors” are often themselves involved in the world of public-private partnerships, and therefore far from impartial.

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St. Thomas forensic mental health centre opens with fanfare and problems

The bright and shiny new Southwest Centre for Forensic Mental Health has opened in St. Thomas with much fanfare and more than a few problems.

The new building may “fight stigma,” as its proponents say, but a bowl of the cafeteria’s soup will cost a lot more for patients, staff and visitors and a glitch in the computerized security system is creating more than a few security headaches. Nor are there enough beds to facilitate the transfer of all eligible patients from the regional detention centre.

The building is the first of two new privatized regional mental health facilities to open in the London area. During the June 14 opening ceremonies officials praised the architecture, noting it reflects a new level of respect for the hospital’s occupants. The second and larger of the two mental health hospitals will open in London for 2015.

The two mental health facilities are being built as public-private partnerships, which means that in addition to the design and construction being provided by the private sector, 30-year maintenance and financing is also part of the deal. Facilities maintenance can include elevator maintenance, electrical and mechanical systems, ventilation systems and other similar work.

After less than a week in the new facility — patients were not transferred into the building until June 19 — employees are already frustrated by the wristband system that is supposed to monitor and control the whereabouts of patients.

Forensic patients are those who have arrived at the hospital following a tangle with the justice system. They have either been found unfit to stand trial, or the court has deemed them to be not criminally responsible for their actions. Contrary to the stereotype, more than 90 per cent of forensic patients are there as a result of non-violent incidents.

The wristband system is supposed to reflect the individual restrictions placed on these patients by the Ontario Review Board (ORB). However, the new security system is allowing patients with much broader security clearance to bring their much more restricted buddies through doors they are not meant to travel through.

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Friday Kingston mental health workers to highlight volatile situation brought on by cuts

The formal recommendations around addressing the challenges of mental health always seem to get it right. So why is it that we never get beyond the nice words from politicians who claim to understand?

This Friday mental health professionals and support staff at Providence Care Mental Health Services – the former Kingston Psychiatric Hospital – will be taking their case public. The staff will be holding an information picket outside their hospital to let Kingston residents know of the volatile situation they face on a daily basis.

Overcrowding, program cuts, and understaffing – mental health services in this province weren’t supposed to be like this.

For all the talk of making things better, decisions still appear to be based on austerity-driven budgets, not on improving care for patients.

A provincial all-party select committee on mental health had unanimously agreed in 2010 that we need to do better so that all Ontarians get the mental health and addictions care they deserve. That includes regional assessments on the availability of a complete basket of mental health services, including acute inpatient treatment.

The all-party committee particularly noted that presenters had told them admission and discharge decisions were becoming motivated not by clinical need, but by the shortage of available beds.

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P3s for Dummies Part II: Public infrastructure in the private interest

Last week we loosely defined public-private partnerships (a.k.a. PFI, AFP) and how the concept of risk was used to justify much higher costs to the public.

This week we look at private versus public interest.

You can just see it now. Around the board room of one of Canada’s big banks well-heeled business people are discussing how to help out government:

“Geez, that Dalton McGuinty has it tough. He’s overspent his wad trying to give all those striving common people things like health care and education, and now he’s got a big debt,” says the Chair.

Says the earnest new board member: “Didn’t our industry actually crash the world economy and create this mess in the first…”

“Johnson!” says the Chair. “We agreed not to talk about that ever again. It was people who are sending their grubby little children to school and old people who needed hospitals that did this, not our Wall Street friends. Practice that.”

“Yeah, Johnson – tow the line!” says another.

“Sorry, my Mom is in the hospital, I’m a little distracted today.”

“I hope it is not one of those public hospitals,” says the Chair empathetically. “We can give you the name of a good private facility in Florida.”

“I’d appreciate that,” says Johnson.

“Now that Dalton has this big debt, we got to thinking how can we help him out?”

“Lower our interest rates and bank charges?” asks Johnson. The room erupts in laughter.

“Oh, Johnson,” says the Chair with a big smile.

“Send our own people in to tell government how to run things?” proposes another board member.

“No, we’ve pretty much covered that off already,” says the Chair. “I was thinking we can help the government by facilitating all that infrastructure that we, um, the public still needs.”

“We can afford to do that?” asks Johnson earnestly.

“Can we afford not to?” asks the Chair. “There are huge returns on these projects, and once they are built, we continue to profit for years.”

“That sounds more like helping ourselves,” says Johnson.

“We like to portray it as being of mutual interest,” says the Chair.

“Of course, these infrastructure projects would have to serve our needs and those of our corporate friends. Now take this project here. They want to build a new school to service this growing community,” he says, tapping a map. “We could build it there and make some money, but our developer friends are building new housing way over here. A new school could bring up the value of those houses and we’d all make a killing.”

“But wouldn’t that be out of the way for all the kids that live back there in the other neighborhood?” asks Johnson.

“That’s what those orange buses are for,” says the Chair.

Think this is far fetched? There is a long history of P3s where the public interest was set aside to help the private consortiums stay profitable.

Take Nova Scotia’s Highway 104. The highway was to speed up traffic between Truro and the provincial border with New Brunswick by re-routing 45 kilometers of the Trans-Canada Highway through what is called the Cobequid Pass. The old route through the Wentworth Valley was slow and prone to accidents due to the volume of traffic on it.

That 45-kilometer stretch was developed as a public-private partnership and a toll established at the southern end of the route. What the public didn’t know at the time was the province agreed to prohibit trucks from using the old route and promised to maintain a 30-kilometer an hour difference in the speed limit to keep traffic volumes up on the new route.

Similarly Highway 407 (north of Toronto) was originally built to relieve traffic from the more southern Highway 401, but the private company that has a 99-year lease uses the price of the tolls to send drivers back to the already congested 401. Whose interest is that? On top of all that, the province serves a unique role as debt enforcer for the highway. Even if the amount you owe is in dispute, it may stop you from getting your car license plate renewed.

What about our school example? There have been numerous examples where developers insisted on moving the location of new P3 schools to “accelerate real estate sales” in their developments. This includes the P3 Auguston Traditional Elementary School in Abbotsford BC. The developer had lobbied the government to put the school in their new development, shaving $500,000 from the construction costs to win that concession on location. In the end, according to media reports, only 20 students from that new development attended the school, while more than 200 others had to come from neighbouring districts. If the school had been situated on the basis of the students who would attend, instead of what best benefited the private developer, the location would have been different. In 2003 the Alberta School Boards Association expressed concern that P3 schools will mean a loss of control where schools are built.

Next week: Fool us once, twice, fool us some more.

P3s for Dummies: Part I: Protecting against giant Gila monsters

We’ve noticed that our posts about P3s – public-private partnerships – tend to be of less interest than others. We hope it’s not because our readers are less interested in how billions of dollars are being squandered at a time when front line health care workers are facing layoffs, but because your head goes numb around all the technical mumbo jumbo from issues of risk transfer to value-for-money comparisons. Trust us, slogging through this stuff is hardly fun for us either.

So, we thought, better make it fun and educational because these P3s are eventually going to come around and bite us all on the bum as they presently are in Britain. Ouch!

Here is our sly attempt to describe in really basic terms what’s going on and why we should all be concerned.

What is a P3?

This is the first problem with P3s – there is no hard definition of one. Just to confuse the heck out of everybody, Ontario decided they weren’t doing P3s at all, rather they were engaged in Alternate Financing and Procurement (AFPs). It occurred to them that some people might put together all these news stories about P3s gone wrong and start to question why Ontario is still charging ahead with them, especially when Dalton McGuinty and company actually campaigned against two Tory-inspired P3 hospital deals in 2003. Whoops! Just to make matters even more confusing, in Britain, the birthplace of such schemes, they call them PFIs – private finance initiatives. At least the Brits had the decency to realize there’s not much public about these projects.

P3s are essentially the privatization of public infrastructure. Of course the Conference Board of Canada insists this is a myth, that the public technically still owns these structures (even if they don’t fully control them) or if they don’t, will get back ownership of these building after the contracts are up and the buildings are towards the end of their useful life. How reassuring! Then, of course, they can be P3’d all over again!

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Private hospital schemes like Ontario’s P3s lead to massive debt problems in the UK

It might be a good idea to get the next Premier a subscription to the UK Guardian.

Ontario has led the country in the number of public-private partnership infrastructure projects, racking up billions in long-term obligations to private companies for everything from hospitals to court houses.

Britain has been exporting this nonsense to the rest of the globe for some time now, making it a cottage industry for consultants to travel abroad and encourage other countries to similarly emulate their no-money-down miracle.

Did the UK government really believe this was not going to come back and haunt them?

The UK Guardian has consistently reported on the endless problems such schemes – called Private Finance Initiatives for PFIs in the UK — have generated, particularly in the health care sector.

The latest is a series of recommendations by a special administrator sent to sort out the mess that is the South London Healthcare NHS Trust (SLHT).

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The best of Diablogue in 2012

It’s time for us to take our seasonal break and wish the best of the season to all our readers and posters. Next year will be challenging for health care activists as hospitals continue to shed services to balance their budgets, home care faces unrealistic and high expectations over relatively modest funding increases, bed shortages compound wait times in long-term care and all health providers try to find ways to better work together.

If you are new to our BLOG, or are an occasional viewer, you may have missed some of our postings throughout this year.

Here is a sampling of some of our more popular stories from 2012:

1. In recent days we have been unpacking the contents of the Auditor General’s chapter on long-term care in his 2012 annual report. Much of Ontario’s bed shortage problem is based on the Health Minister’s insistence on holding the line on opening new beds, noting Denmark’s success in diversifying long-term care options. But Denmark still has more nursing home beds per capita than Ontario and has made massive investments in home care. To read more, click here.

2.  When the province introduced its new Long Term Care Act, it was to include stepped up inspection. Problem is, they never hired enough long-term care inspectors to get the job done. Most Ontario nursing homes have not had a thorough inspection since 2009, and some may never see a detailed inspection. To read more, click here.

3. Norma Gunn won a disability rights award this year from the Ontario Federation of Labour for telling her own story about being assaulted at the Ontario Shores Centre for Mental Health Sciences and coping with the subsequent post traumatic stress disorder. A psychiatric nurse at the Whitby-based hospital, Gunn has been at the center of a struggle to reduce incidents of violence at the hospital. In recent days we’ve learned that CEO Glenna Raymond is stepping down in April. Will it be an opportunity for the hospital to press its own reset button on this issue and repair its relations with the staff who work there? To read more, click here.

4. This spring we were in Thunder Bay for a rally around the closure of the Canadian Blood Services plasma donor clinic.  Canadian Blood Services was created following the tainted blood scandal of the late 1980s and the subsequent inquiry by Justice Horace Krever. As we probed the decision by CBS to close down the Thunder Bay donation centre, we began to wonder if all the lessons from the inquiry were truly learned. To read more, click here.

5. One of our most popular stories this year was a posting about corporations stashing away record amounts of “dead” cash and the rich squirreling away billions in tax havens while insisting on further tax cuts. The impact is juxtaposed against a backdrop of hospital cuts across Ontario as the province claims it is broke. To read more, click here.

 6. This was the year that P3s (Public Private Partnerships) came back into the news. This summer we were reminded of how bad the situation is in Britain, the birthplace of these schemes. These so-called PFIs — Private Finance Initiatives — are saddling generations of Britons with a mountain of debt. Worse still, the actual value of these projects is about half the size of the accumulated debt, raising questions about value. Ontario represents more than half of such P3 projects taking place in Canada. To read more about the British experience, click here.

7. Ontario is the only province where the ombudsman does not have jurisdiction over the health sector. In BC the ombudsman has made significant contributions to staffing issues in that province’s long-term care homes. Why not here in Ontario? Click here.

8. What would Diablogue be without its bad hospital food stories? Truly if there is one issue that galvanises everyone — including hospital administrators concerned about patient satisfaction scores — it’s bad hospital food. Now the evidence would suggest it’s about more than just tasteless taters and mountains of wobbly Jello. Click here for more.

9. It’s a catch-22. We criticize much that takes place within our public health system. Then we defend the hell out of it when someone suggests we should replace it. This post reminds us of what it is we are fighting for. Click here.

10. Another of our more popular posts this year was the analysis of how former bank executive Don Drummond has skewed his economic projections to make it look like Ontario was in an even worse crisis than actually existed. To what end? Click here.

See you all back in January!

Expensive systems — privatization in other public sectors should be a warning for health care

Health care is not the only public service to experience reckless ventures into private delivery of key components.

The Auditor General of Ontario (AG) raises numerous questions about costly private delivery of public services in his recent review of Metrolinx, the regional transportation planning body in the Greater Toronto Area.

Among the findings in Jim McCarter’s 2012 annual report –

  • Metrolinx’s Presto Card is among the most expensive transit fare card systems in the world, yet it does little more than substitute as a fare purse.
  • The airport-downtown rail link was delayed after the private partner in the public-private partnership (P3) had to pull out due to questions raised by its financial backers over optimistic ridership projections. The projected high cost of fares is anticipated to weaken ridership. The P3 was eventually abandoned.
  • Cost have dramatically increased on the Union Station revitalization project – the construction being handled by Vanbots, a division of Carillion Construction, one of the consortium partners presently bidding on the new Kingston hospital to replace that city’s aging mental health facilities.
  • Metrolinx is using the P3 model for a three kilometre spur line that connects to the GO line from the airport. The auditor notes that the P3 option was $22 million more expensive, justified by the now familiar “risk” calculation of $42 million on a $128.6 million project. Like the William Osler Hospital, the auditor raises questions about the methodology used to calculate such risk and justify the more costly option.
  • The consulting firm used to evaluate the risk on the spur line project won the bid to provide engineering and technical advisory services to support planning and procurement for the project.

By now this mess is all beginning to sound very familiar.  

Dalton McGuinty initially ran an election in opposition to Tory plans to build two P3 hospitals in Brampton and Ottawa. In power, he not only signed off on those deals with only superficial changes, but he embarked on more than 30 more such projects in the hospital sector alone. Ontario now represents more than half of all P3 projects in Canada.

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Report identifies cost of Ontario P3s: 16 per cent more

Ontario has moved much faster than other provinces in establishing private contracts to design, build, finance, maintain and sometimes operate public infrastructure projects. Despite many warnings, the province appears to have dismissed evidence that shows these kinds of arrangements can be poor value for the public purse.

Now researchers at the University of Toronto have put a price on what the average public-private partnership (P3) costs compared to traditional public procurement – 16 per cent more.

The new research, highlighted in Sunday’s Globe and Mail Report on Business (ROB), looks specifically at 28 Ontario P3 projects worth more than $7 billion. At a 16 per cent premium, that means the projects in the study would have been about $1.12 billion less had the government tendered these contracts under traditional procurement rules. Or about what it would cost to build three Peterborough hospitals.

Most of this additional expense is based on the higher cost of borrowing for the private sector, although about 3 per cent is additional transaction costs, one of the reasons why so many law firms belong to the Canadian Council for Public Private Partnerships.

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Could it happen here? P3 hospital costs leading to meltdown of health care in the UK

If you wanted to see the future of Ontario’s health care, there used to be a time when you could simply fly to Tony Blair’s Britain and have a look.

Blair couldn’t privatize fast enough, creating more than 200 PFI projects – private finance initiatives – to replace aging infrastructure.

It really was the ‘no money down’ miracle. Hospitals, schools and roads were all built using private money. These facilities would be run by the private consortia for periods typically between 25-30 years, although some for as long as 60 years.

Typically no money down usually translates into whopping high borrowing costs, costs that will have to be paid back some day.

Now the PFI party is over in Britain, the country is experiencing one helluva hangover.

Ontario has initiated more than 30 hospital projects under similar schemes, the most notorious being the William Osler Health System in Brampton. The Osler public-private partnership (P3) has been well documented as a costly blunder. The Ontario Auditor General highlighted almost $400 million in higher costs to develop Osler privately. This does not include the almost doubling of construction costs between the first estimates and the final contract sign off.

P3s are North America’s version of the PFI. In Ontario, just to add to the confusion, these are sometimes also called AFPs – alternative financing and procurement projects.

Like the UK, the more disastrous these deals looked, the more the government kept on signing new private deals.

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